Lexington, VA • Saturday, November 07, 2009
Washington and Lee University School of Law Prof. Lyman Johnson filed in October an amicus brief with the U.S. Supreme Court in the case Merck & Co. v. Reynolds.
|Lyman P.Q. Johnson
The brief, which builds on arguments first made by Prof. Johnson in a 1992 Wisconsin Law Review article, was filed in conjunction with Professors Lisa Casey, Notre Dame Law School (counsel of record); James Cox, Duke Law School; and J. Robert Brown, University of Denver (DU) Sturm College of Law, on behalf of 24 law and business faculty.
The case involves a class-action lawsuit by Merck's shareholders alleging the pharmaceutical company provided misleading information about the risks of Vioxx before pulling the pain reliever from the market due to increased risks of heart attack, stroke and death. The company moved to dismiss the claim, arguing that investors had been put on "inquiry notice" more than two years before they filed suit and that the statute of limitations of the claim had expired.
Following the corporate scandals involving Enron, WorldCom, and other companies, Congress adopted a statute of limitations for Rule 10b-5, the cornerstone of federal securities fraud claims. Courts interpreting that statute have disagreed over when the statute begins to run. The parties themselves in Merck v. Reynolds argue for variations on an "inquiry notice" standard of some kind. But Prof. Johnson and his co-authors argue in their brief that the statute of limitations should not begin to run until a plaintiff has "actual" notice of the wrongdoing.
The case is scheduled for oral argument on Nov. 30 and is the second case on the Supreme Court's docket this term that involves Prof. Johnson's work. On Nov. 2, the case heard arguments in Jones v. Harris, a case involving a mutual fund management company and allegations of excessive fees. Prof. Johnson has for the last three years served as an expert witness for the plaintiffs in the case as it moved through the lower courts.
The plaintiffs in Jones v. Harris, a group of three investors, allege that mutual fund manager Harris Associates LP charged excessive advisory fees for a certain group of mutual funds and that these high rates violated the Investment Company Act, which was designed to protect investors and regulate conflicts of interest in investment companies and securities exchanges. Johnson has pointed out that no plaintiff has ever won a case under the section of the Act implicated in this case.
Lyman P.Q. Johnson is the Robert O. Bentley Professor of Law at the Washington and Lee University School of Law. Professor Johnson teaches and writes about corporate and securities law. His scholarship and expert testimony has been employed in several high profile corporate lawsuits in recent years, including the nation's largest stock options backdating case and a case brought by shareholders of the Walt Disney Company for the way their Board of Directors handled the hiring and firing of Michael Ovitz.