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Did Merck settle too generously?

The drug company's stunning victory yesterday in two Vioxx appeals has led to speculation that it may have been too generous in reaching a $4.85 billion settlement with many other claimants last November. But the WSJ law blog talks to Kirkland & Ellis product liability specialist David Bernick, who emphatically disagrees:

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.

Shorter version: when it comes to mass torts and their settlement value, quantity is its own kind of quality. Can anyone still be confident that such a system yields optimal incentives for either defendants or the lawyers suing them? More: Jane Genova has some interesting thoughts from another defense attorney, this one anonymous.

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Rafael Mangual
Project Manager,
Legal Policy

Manhattan Institute


Published by the Manhattan Institute

The Manhattan Insitute's Center for Legal Policy.