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In the Supreme Court case of Merck v. Reynolds, No. 08-905 (U.S.), the court affirmed the lower court’s holding that the statute of limitations did not begin running when questions about the side effects of Vioxx came to light. The plaintiffs, who owned Merck stock, sued Merck, the maker of Vioxx, for failing to properly inform or, alternatively, concealing from its investors the serious risks associated with the use of Vioxx. Apparently it doubled the risk for heart attacks, strokes, and death in those who took it for more than 18 months which Merck allegedly knew back in 2001. (Vioxx was withdrawn from the market by Merck in 2004).

The Supreme Court ruled that in general the 2-year statute of limitations for securities fraud does begin to run until the plaintiff actually discovers or reasonably should have discovered that the defendant had committed fraud. This ruling will permit the Merck investors to continue their securities fraud suit in federal court. It is a significant rule given all of the recent allegations of fraud in the private sector. It essentially prevents companies from running out the statute of limitations by concealing its fraud after problems begin to go public. This will allow investor suits to be brought in situations where the actual fraud does not come out until after problems with the subject product or service are made public. It would be unfair to force plaintiffs to file at the first sign of trouble, especially without having access to all of the facts that the defendant corporation has.

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