Today’s Wall Street Journal contains a fullsome report on the $253 million verdict against Merck in the first Vioxx trial. Two things jumped out at me as being significant from a client perspective standpoint. First, the jurors referenced the absence of Merck CEO and another senior executive from the courtroom. They gave videotaped testimony. What, a reasonable shareholder may wonder, could be more important than testifying live in a trial that sets the table for tens of thousands of other trials and billions of dollars in litigation and judgment expense. How is it possible that Merck’s lawyers failed to convince their clients of the importance of spending a few days in the courtroom?
The other thing of concern was the failure of the trial lawyers to educate the jurors about Merck’s scientific themes. One juror compared the presentation the sound Charlie Brown’s teacher makes on TV—”wah, wah, wah.” William Bowen, an outside director at the company, is quoted as saying the company will seek ways in future trials “to make basic scientific points as simple as possible.” I hope it was not news to Merck that they needed to do that it in this case. If Merck didn’t run its scientific themes and evidence past 30 or more different mock jurors or other panels of lay people to be certain, absolutely certain, that every lay person in America could understand their trial themes, the trial lawyers woefully served their clients.
Finally, although not technically a service issue, I sure hope Merck’s commitment to try every case was a strategy reached over the objection of outside counsel. They could have settled a whole lot of cases for $26 million ( the amount the verdict likely will be reduced to) and its willingness would have no greater impact of the likelihood of future claims than this verdict will have. Goodwill could have been maintained. Publicity could have been kept to a minimum.
The litigation math is interesting: Assume 5,000 cases. Assume half are dismissed. Assume Merck keeps its commitment to try everyone. 2,500 trials. Merck wins 9 of every 10. 250 losses at an average of $5 million a piece. Thats $1.250 billion. But winning 90% is not likely, so let's assume they win half (again, pretty generous). 1,250 trials at $5 million. $6.250 billion, not including legal fees. Then you can start figuring what will happen if the $5 million turns out to be more like $10 million. Or toss in a few punitive damage verdicts. The numbers are staggering. I can only hope for the sake of Merck's shareholders that this "damn the torpedos, try every case" rhetoric is somebody's idea of a public relations ploy and not what the insiders really are thinking.
Merck must have been listening to you, since a few days after your post went up, Merck changed its strategy. It is now saying that it will consider settling heart attack and stroke cases in which Vioxx usage was 18 months or more and there were no pre-existing heart problems. Merck's decision to focus solely on these claims isn't supported by the science, but I suppose it's a start.
There's an article about settlement here: http://www.msnbc.msn.com/id/9084011/
Posted by: [email protected] | Monday, August 29, 2005 at 06:05 AM