Unanimous Supreme Court Finds Plaintiffs’ Securities Fraud Action Against Merck Is Timely

The U.S. Supreme Court, in a unanimous decision by Justice Breyer, ruled today that a complaint filed in a private securities fraud action against Merck & Co., Inc., arising out of allegations that it knowingly misrepresented the heart attack risks associated with its drug Vioxx, is timely. 

The Court explained that, under the law, the complaint was timely if filed no more than two years after the plaintiffs “discover[ed] the facts constituting the violation.” 28 U. S. C. §1658(b)(1). Construing this limitations statute for the first time, the Court held that a cause of action accrues (1) when the plaintiff did in fact discover, or (2) when a reasonably diligent plaintiff would have discovered, “the facts constituting the violation” – whichever comes first. The Court also held that the “facts constituting the violation” include the fact of scienter, “a mental state embracing intent to deceive, manipulate, or defraud.” Applying this standard, the Court affirmed the determination by the U.S. Court of Appeals for the Third Circuit that the complaint against Merck was timely.
 
The case is Merck & Co., Inc. v. Reynolds, No. 08–905 (Apr. 27, 2010).