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BREAKING: Merck settles Vioxx suits?



The reported settlement (which has not been officially confirmed), expected to be announced tomorrow morning in federal court, requires approval from the courts, and can crater if too many plaintiffs opt out. And it is unclear from the press coverage what protections Merck will have against fraudulent claims.

The $4.85 billion settlement for 27,000 cases (and 47,000 plaintiffs), astonishingly works out to not much more than the nuisance value to Merck of defending themselves against the cases, which had largely proven to be meritless. But doing so cost Merck $600 million in attorneys' fees (plus countless hours of executive time wasted) a year, and this is an extortionate insurance payment against having to continue to do so plus the small risk that there would be a set of outlier courts that chose to bankrupt Merck.

The settlement can be seen as a vindication of sorts of Merck's hard-line stance against an early settlement, given some Wall Street analysts' claims that the mass tort litigation could be bankrupting—but, with a nearly $2 billion payday for plaintiffs' lawyers, it can also be seen as a vindication to the trial bar, which will be rewarded despite the extensive fraud they engaged in in bringing meritless cases. Individual plaintiffs themselves won't be receiving much in the way of money, but, then, they weren't legally entitled to anything. It's unclear how much Carol Ernst will be collecting of her original $253 million verdict of $26 million judgment, but that plaintiffs agreed to settle for so little per case suggests that they were not anticipating positive rulings from federal, Texas, or New Jersey appellate courts. [NY Times; WSJ]

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Isaac Gorodetski
Project Manager,
Center for Legal Policy at the
Manhattan Institute
igorodetski@manhattan-institute.org

Katherine Lazarski
Press Officer,
Manhattan Institute
klazarski@manhattan-institute.org

 

Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.