Thursday, January 17, 2013

ENHANCE Federal Securities Class Action Litigation Nears Trial On Merits

It has been quite a while since we last updated the readership on the status of various pieces of material litigation at New Merck. We do so now. New Merck is the successor to legacy Schering-Plough here (and legacy Merck has been similarly sued, as well).

The claim in these federal class actions is that investors in Merck and Schering-Plough were damaged by the alleged late-2006 to March 2008 delay in disclosing the ENHANCE study null-result. That is a gross oversimplification of these cases, but it captures the essence of it.

Various of the securities defendants have asked that the trial -- now docketed for March 14, 2013 -- be bifurcated into two phases, the first of which would address class-wide issues of liability, and the second, individualized issues of reliance and damages. The very able Judge Cavaqnaugh will decide that motion on February 19, 2013. [I think he is likely to grant it.]

Also pending is a motion to allow all the class members (perhaps well-into the low hundreds of thousands of individual securities holders/beneficial owners) to receive a class notice explaining their rights, as to whether they agree to be bound by the outcome of the March 14, 2013 trial on the merits -- or whether they'd rather bring their own individual lawsuit.

It is my experienced opinion that time is now running short -- to get such a large class notified in a meaningful way -- given that many many of the holders will need to receive the notice by retransmission, from their broker or advisor. These are important decisions -- so hopefully Judge Cavanaugh will allow the notice to be sent shortly. Here is a bit of that back and forth (from before Christmas 2012):
. . . .On October 31, 2012 – nearly two [now three] months ago – [plaintiffs] sent copies of the proposed notices and orders to Defendants [including legacy Schering-Plough Executive Officers Hassan, Bertolini and Cox, as well as New Merck, as successor to legacy Schering-Plough] requesting that they provide us with any comments to the language in the proposed notices and orders. . . .

On November 2, 2012, Defendants stated that, although they viewed the notices as premature, they would get back to us with any such comments. . . . Having not received a response from Defendants regarding their position on the language in the notices and orders, on November 14, 2012 and December 13, 2012, we again requested that Defendants provide us with any comments to the language in the notices and orders.

Plaintiffs first received comments from Defendants yesterday [December 18, 2012] and have incorporated most of Defendants’ changes to avoid any further delay. However, Plaintiffs cannot agree to Defendants’ request that Merck (as opposed to the notice administrator) issue the notices to the classes in these actions. . . .

Another month has passed -- and still the class notices have not gone out. As I say -- I am hopeful that Judge Cavanaugh will order them sent shortly. I have no role in this litigation, and I hold no investment affected by it -- I just want to see the right thing done, here. Whether the securities law claims prevail, or they don't -- class members need adequate time to decide whether to "ride along, with the posse" or "go it alone." In the vast bulk of the cases, then, these notices will need to be remailed once, and in some cases, twice, to reach the beneficial owner. Time is running out.

Here endeth the sermon -- but people must know they have rights, before they may meaningfully exercise them. Thus, the notices should already be on their way to them.

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