SECURITIES SUITS CONCERNING PRODUCT LIABILITY ON THE RISE, REPORT SAYS

Federal securities class action lawsuits involving product liability claims, such as those filed against Merck and Pfizer, may represent a growing trend in the class action field, according to a new report.

In the past, most federal securities suits have been sparked by misrepresentation directly related to a company's financial performance. However, there is a growing trend in which securities class actions are prompted by product liability issues, including drug safety, according to a report released by the Stanford Law School Securities Class Action Clearinghouse in cooperation with Cornerstone Research.

"Typically, a class action securities fraud lawsuit arises from allegations that the issuer lied about its financial performance," Joseph Grundfest, Stanford Law School professor and former commissioner of the SEC said in a statement on the 2004 study. "[In 2004], however, allegations relating to insurance industry sales practices ... and concerns about the safety of Cox-2 inhibitors marketed by Merck and by Pfizer triggered some of the year's largest lawsuits."

Merck was hit with a federal securities class action lawsuit shortly after announcing the withdrawal of Vioxx (rofecoxib).