Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

Tuesday, May 26, 2009

Supreme Court Grants Cert in "Inquiry Notice" Statute of Limitations Case

The Supreme Court accepted cert in a securities fraud action from the Third Circuit today, In re Merck & Co. Securities Deriv. & ERISA Litig., 543 F.3d 150 (3d Cir. 2008).  In the action the plaintiffs charge that the drug manufacturer made misstatements about the safety and commercial viability of Vioxx.  The district court had dismissed the complaint, holding that the plaintiffs were put on inquiry notice more than two years before filing the complaint, but the Third Circuit (2-1) reversed.  The question presented is:

 Did Third Circuit err in holding, in accord with Ninth Circuit but in contrast to nine other courts of appeals, that under "inquiry notice" standard applicable to federal securities fraud claims, the statute of limitations does not begin to run until investor receives evidence of scienter without benefit of any investigation?

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