August 31, 2007
Merck's Post-Vioxx Comeback
Article on cnn.com -- Merck's post-Vioxx comeback, by Aaron Smith. Here's an excerpt:
When the Vioxx lawsuits started piling up, analysts projected, on average, some $30 billion in potential legal liabilities. But three years later, Merck hasn't paid a penny to anyone blaming Vioxx for their heart attacks.
The company has won 10 of the 15 lawsuits filed against it and has appealed all the cases it lost.
"They're winning 65 percent of the cases," said Joseph Tooley, analyst for A.G. Edwards. "When it's all said and done, I think the ultimate liability is going to be a much more manageable number than was originally anticipated."
But Merck still faces nearly 27,000 more cases. That hardly seems like cause for celebration.
Nonetheless, Ken Frazier, the company's lead counsel throughout the Vioxx debacle, has forged a simple legal strategy that analysts say has helped Merck escape major damage. He has refused, from the beginning, to consider any kind of mass settlement and has instead vowed to fight the cases one at a time.
"Their strategy in fighting every case and being very clear about it, and telling the whole world they were going to fight every case, was a brilliant strategy. Merck is, of course, in a much better position to defend itself than individual plaintiffs trying to take on this organized effort," said Bryan Liang, professor of health law studies at the California Western School of Law in San Diego.
Analysts believe this case-by-case strategy prevented some lawsuits from opportunists looking for an easy cash-out to ever make it to trial. So far, 4,650 plaintiffs have been dismissed, according to Kent Jarrell, the spokesman for Merck's outside counsel.
"Our core strategy has been examining individual cases," said Jarrell. "The approach is working. We've seen thousands of cases dismissed because the cases, on closer examination, weren't backed by facts."
The next Vioxx trial is scheduled for Sept. 17 in Florida Circuit Court in Hillsborough County.
A couple of thoughts in reaction -- First, the strategy of holding off settlement is only working for Merck because Merck is winning the individual cases. If Merck continued to lose case after case, the number of cases filed would likely increase, and the jury awards would add significantly to Merck's already-burdensome defense costs. Second, I would generally disagree with the implication of Professor Liang's comments about Merck being in a "much better position" to defend itself in individual cases, compared to plaintiffs. In modern mass tort litigation, not only do most plaintiffs' law firms invest in hundreds or thousands of cases for a product, but the plaintiffs firms generally work with other firms and use information technology to share information, pool resources, and coordinate strategy. As has been remarked, the situation is no longer "David versus Goliath" between the plaintiff and defense counsel in mass tort litigation, but "Goliath versus Goliath." That is a good thing, because it means that representation is more likely to be equal in individual litigation.
August 29, 2007
Altria Will Spin Off International Tobacco Unit
Article on cnn.com -- Altria to spin off international tobacco unit, by Reuters. Here's an excerpt:
Altria Group Inc. said Wednesday it plans to spin off its international tobacco unit but will not give details on the timing on the much anticipated move until January.
The company also raised its quarterly dividend by 8.7 percent to 75 cents per share, less than the 10 percent increase some analysts had been expecting.
Altria (up $0.45 to $69.52, Charts, Fortune 500) shares gave up their early gains and were down 11 cents at $68.96 in mid-morning trade on the New York Stock Exchange. The stock traded as high as $70.98 earlier in the day.
The spinoff is the second in a corporate restructuring that has seen Altria spin off its Kraft Foods Inc. Holdings.
The Philip Morris International business is seen as having better growth opportunities, especially in emerging markets, than the Philip Morris USA business. U.S. cigarette consumption has fallen steadily since 1981.
August 28, 2007
Assessing the 9/11 Victim Compensation Fund
Article in the ABA Journal -- Accounting for Lives: The 9/11 Victim Compensation Fund Worked. But What About Next Time?, by Jill Schachner Chanen and Margaret Graham Tebo. The ABA is also hosting a teleconference -- Compensation Funds: Are They Enough?, on September 19. Here's an excerpt from the article:
Mari-Rae Sopper thought she was embarking on a new stage in her life when she boarded American Airlines Flight 77 the morning of Sept. 11, 2001, at Washington Dulles International Airport. Sopper had decided to leave behind her law practice in Washington, D.C., and return to gymnastics, the passion of her youth. After the flight reached Los Angeles, Sopper would go to her new job as head coach of the women’s gymnastics team at the University of California at Santa Barbara.
Sopper never made it to that new life. Instead, she and everyone else on Flight 77 died when terrorists took over the plane and crashed it into the Pentagon.
Sopper’s griefstruck parents wanted answers. Her mother, Marion Kminek of Cape Coral, Fla., says her initial inclination was to file a lawsuit in efforts to get them. But after consulting with two leading plaintiffs lawyers in Chicago, Kminek says, she decided to heed their advice that she avoid the frustration and delays of litigation and seek compensation, if not resolution, through the September 11th Victim Compensation Fund of 2001. Congress created the fund to handle claims by victims of the terrorist attacks as part of legislation providing relief to the airline industry.
Going through the fund didn’t give Kminek all the answers she was looking for, but it did give her some measure of closure through a relatively simple administrative process that resulted in a compensation payment after a relatively short time. But after going through the process, Kminek knows she will never get the information she really wanted about the events that led to her daughter’s death, and she wonders what would have happened if victims and their families had banded together and sued the airlines and government bodies.
“The lawsuits serve a purpose in that you don’t get changes made or the discovery done without them,” Kminek says. “Look at the tobacco lawsuits. If that was not done, I don’t think a lot of that information would be out there. None of us were doing this for the money. We were doing it for the discovery. But none of us will get the answers.”