Securities Law | Expert Legal Commentary
June 30, 2010
Merck & Co. v. Reynolds: Statute of Limitations for Securities Fraud Begins to Run When Plaintiff Receives Evidence of Scienter
Merck & Co. v. Reynolds
By
Joel B. Ginsberg and Yuri Mikulka
The U.S. Supreme Court has held that the statute of limitations set forth in 28 U.S.C. section 1658(b)(1) begins to run once the reasonable investor/plaintiff discovers the facts constituting the elements of the violation, including scienter. In Merck & Co. v. Reynolds, ___ U.S. ____, 130 S.Ct. 1784 (2010), the U.S. Supreme Court affirmed the Third Circuit Court of Appeals’ finding that the investor class timely filed its action. The case has potentially far-reaching effects, in that it may enable plaintiffs to delay the filing of litigation in order to increase settlement value. Similarly, it introduces a level of uncertainty for potential defendants, who can no longer rely on a strict two-year limitations period.
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