Settlement conference scheduled in challenge of AG Conway contract

John O'Brien Jun. 12, 2012, 7:00am


FRANKFORT, Ky. (Legal Newsline) - A federal magistrate judge has scheduled a settlement conference in Merck & Co.'s challenge of Kentucky Attorney General Jack Conway's contract with private attorneys, but it won't be for several months.

In an order entered May 21, Magistrate Judge Edward Atkins scheduled the settlement conference for Nov. 7. Before that, the two sides will meet Aug. 15 to discuss the progress of discovery and remaining deadlines.

Merck is challenging the contingency fee contract Conway entered into with private attorneys to sue Merck over the anti-inflammatory drug Vioxx. That case is before a state court.

Currently pending in Merck's challenge is Conway's motion to dismiss. Filed April 10, it says the Younger doctrine initially prevented federal courts with interfering with state criminal proceedings and now extends to state civil litigation.

"The AG's motion should first be denied because the instant suit does not pose any threat of direct interference with state-court proceedings," Merck's response says.

"Simply put: the relief sought by Merck is an injunction barring 'the AG from pursuing his lawsuit against Merck with contingency-fee counsel.' Merck is not asking the court to enjoin the AG from suit it at all."

Merck adds that Conway never defined how its suit would "grossly interfere" with Kentucky's efforts to punish the company.

"The AG's argument, even if accurate, does not demonstrate sufficient interference to implicate abstention," Merck's response says. "As noted above, a federal court is compelled to abstain only where federal action would 'unduly interfere' with a state proceeding.

"Moreover, the law is clear that undue interference only occurs when the federal action would bar the parallel state action..."

In September 2009, Conway filed a lawsuit against Merck over alleged violations of the state's Consumer Protection Act.

The drugmaker was charged with violating the law by marketing their anti-inflammatory drug Vioxx without revealing all the facts.

The suit, Commonwealth ex rel. Conway v. Merck & Co. Inc., alleged that in May 1999 Merck began an aggressive and deceptive promotional campaign of the drug directed at both consumers and health care professionals, without mentioning warnings of increased risk of cardiovascular events listed as a side effect.

Conway alleged that Merck was aware of the dangers through internal studies that were not disclosed to the FDA or the public.

The lawsuit also accused Merck of engaging in an elaborate scheme to create or publish scholarly articles under fake or ghost authors in order to drum up support for Vioxx.

In 2004, Merck admitted that Vioxx caused serious side effects and pulled the product from the market.

A year after filing his case, Conway hired Garmer & Prather, a plaintiffs firm in Lexington, Ky.

Merck alleges that, in entering into such a contract with private lawyers, Conway has granted them a stake in the outcome of the lawsuit.

The company also alleges that Conway's outside counsel has since assumed the lead role in the prosecution of the suit and has "made or influenced myriad decisions about the prosecution, large and small."

Conway says the company's gripes should be heard in state court now, after the March 20 remand of his case. He says the Younger v. Harris abstention doctrine requires it.

"As initially developed, the Younger doctrine limited the power of the federal courts to interfere with state criminal proceedings," Conway wrote.

"Subsequently, however, the court applied Younger to civil cases in state courts by extending the doctrine to civil litigation where the state government is a party - exactly the situation currently underway in Merck I. When vital state interests are implicated in the ongoing state judicial proceeding, as they are in Merck I, federal courts should abstain unless exceptional circumstances exist."

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