Merck & Co., Inc., et al. v. Reynolds, et al.
Did the Third Circuit err in holding, in accord with the Ninth Circuit but in contrast to nine other Courts of Appeals, that under the "inquiry notice" standard applicable to federal securities fraud claims, the statute of limitations does not begin to run until an investor receives evidence of scienter without the benefit of any investigation?
The Supreme Court
held that the statute of limitations on securities fraud claims begins to run once the plaintiff discovers or reasonably would have discovered a violation - whichever comes first. The Supreme Court ruled that the FDA warning in question did not contain evidence of scienter, and that it would not have alerted a reasonably diligent plaintiff to a violation.
U.S. Chamber files amicus brief on statute of limitations on securities fraud claims
NCLC urged the Supreme Court to reverse the Third Circuit's ruling that the statute of limitations on securities fraud claims begins to run only after the plaintiff knows information specifically relating to each element of a claim, including scienter. The FDA had made public a warning about one of Merck's products, but the plaintiffs waited more than two years from the release of that letter to file suit. In its brief, NCLC argued that the statute of limitations begins to run when the plaintiff has sufficient information to alert him to the possibility of a claim.