Merck Scores More Vioxx Wins; Did it Reach its Big Settlement too Soon?

[WSJ_law_blog]

Hear that cheering sound from the other side of the Hudson River? We do, and we suspect it’s Merck lawyers out at headquarters celebrating their latest dose of good legal news. The latest: Today Merck won appellate reversals in New Jersey and Texas of two multimillion-dollar awards to plaintiffs who claimed the painkiller had caused serious illness and death. Here’s the WSJ story, from our own Heather Won Tesoriero.

In the Texas case — which in 2005 became the first Vioxx lawsuit to go to trial — a jury in Angleton had awarded plaintiff Carol Ernst $253.4 million after finding Merck liable in the death of her husband. The figure was later reduced to $26 million under state damages caps. In a ruling Thursday reversing the verdict, the Fourteenth Court of Appeals in Texas ruled that there was “no competent evidence that a blood clot triggered by Vioxx ingestion” caused Mr. Ernst’s death.

Separately, the Superior Court of New Jersey’s Appellate Division tossed out punitive damages and some compensatory ones in two Vioxx cases tried simultaneously in Atlantic City in 2006. A jury had awarded John and Irma McDarby $4.5 million in compensatory damages and $9 million in punitives. The appellate court threw out the punitive award as well as the portion of compensatory damages that was based on the state’s consumer-fraud statute.

“Today’s decisions overturn almost $40 million of damages and attorneys fees previously awarded to plaintiffs at trial,” said Merck’s general counsel, Bruce Kuhlik. “We intend to seek further review of the portion of the award that remains standing after the New Jersey decision. We continue to believe Merck acted responsibly.”

Ernst’s lawyer, Mark Lanier, could not immediately be reached for comment.

Our friends over at the WSJ Health Blog were quick on the draw this morning, and asked in a post whether the two wins calls into question the wisdom of Merck’s $4.85 billion settlement, which it reached last November with plaintiffs. “Things already looked pretty good for the company?s Vioxx cases, all things considered,” writes the Health Blog’s Jacob Goldstein, “but we can?t help but wonder if Merck might have cut a better deal if it waited a few months longer on the multi-billion settlement it announced late last year.”

LBers, any thoughts on this?

Update: Just a few minutes ago, we got in touch with David Bernick, a product-liability specialist at Kirkland & Ellis. We asked him the same question. His answer was a resounding “no,” that Merck shouldn’t necessarily have waited.

Bernick explained that at the time Merck made the settlement, it was staring down a flood of cases nearing trial that threatened to overwhelm the company. “At that point, there was a shared incentive to reach a global deal,” he says. For that reason, says Bernick, “you can’t look at a track record that precedes or follows a settlement because it doesn’t capture the dynamic facing a company at that point, which is that it won’t be able to defend itself” against an onslaught of cases.