A recent New Jersey Law Journal story, “Merck Shareholders’ Suit Over Vytorin Settles for No Damages, $5.1M in Fees,” reports that settlement of a shareholders derivative suit over Merck & Co.’s alleged suppression of an unfavorable clinical study of its cholesterol drug Vytorin has won a federal judge’s approval.  No shareholder objected to the deal and District Judge Dennis Cavanaugh in Newark signed off on it after a hearing, finding it “fair, adequate, reasonable and proper, and in the best interests of the class and the shareholders.”

The settlement pays no money damages but Merck agrees to adopt reforms valued at $50 to $75 million and to pay $5.1 million in legal fees and costs for the four-year litigation to plaintiffs’ lawyers Scott & Scott, of Colchester, Conn.  The suit, Plymouth County Contributory Retirement System v. Hassen, concerned the results of a Vytorin clinical trial that was completed by Schering Plough Corp., the drug’s original maker, which merged with Merck in 2008.  The action included claims of breach of fiduciary duty, gross mismanagement, waste of corporate assets and unjust enrichment.

Cavanaugh gave the settlement preliminary approval in January.  After notice to shareholders produced no objections, he granted final approval, finding most of the factors set out in Girsh v. Jepson (3d Cir. 1975) – including complexity, expense and duration of the case, class reaction and risk of litigation – weighed in favor of the settlement and none weighed against it.  The motion for $5.1 million in fees, filed Feb 21, was also granted based on factors like the skill of the lawyers, the time spent and fee awards in similar cases.  The request was less than the $6.1 million lodestar and thus “presumptively reasonable,” said Cavanaugh.

The efforts expended by Scott & Scott included reviewing more than 7 million pages of documents and taking or attending about 40 depositions.