Vive le Vioxx Lawsuit

Just when Merck (NYSE: MRK) thought it was finally done with lawsuits pertaining to Vioxx, it's gotten pulled back in. A three-judge panel from the 3rd Circuit Court of Appeals voted 2-1 to reinstate a dismissed shareholders class action lawsuit.

The shareholders are rightly ticked off that the value of their shares plummeted after Merck pulled Vioxx off the market in 2004, and they want to be compensated for what they -- or at least their lawyers -- believe were inaccurate disclosures that the company made to shareholders.

Merck was originally able to get the suit thrown out because the statute of limitations had run out, but the appeals court judges disagreed. If Merck can't persuade  the full appeals court or the Supreme Court to overturn the panel's decision, it'll go back to the lower court and argue the many other reasons it has for why the lawsuit shouldn't continue.

While some shareholder lawsuits -- like Tyco Electronics' (NYSE: TEL) $2.86 billion settlement -- cost companies serious bucks, most lawsuits over failed drugs tend to be frivolous, in my opinion. Drugs fail and have side effects -- sometimes both -- but that doesn't mean that investors should be wasting companies' money with lawsuits.

From Dendreon (Nasdaq: DNDN), which is still waiting for approval, to ImClone Systems (Nasdaq: IMCL) and Alkermes (Nasdaq: ALKS), which eventually gained approval for Erbitux and Risperdal Consta, respectively, it seems inevitable that a drug company will get sued by shareholders after a drug fails.

Of course, it's possible that Merck's management did something wrong, like withholding information from investors and patients, but considering the company's excellent win-loss ratio in court against patients and their families, I'm willing to bet that Merck wins this case, too.

More Foolishness:

• Barr has some lawyers worth keeping.
• J&J would rather forget this lawsuit.
• Sometimes companies with lawsuits make for good pickings.