March 17 (Bloomberg) -- Merck & Co. need not defend a lawsuit in which the company is accused of defrauding millions of users of its painkiller Vioxx, a New Jersey judge ruled, dealing a “death knell” to class-action claims by consumers.

Consumers who sued didn’t meet the legal requirements for such a group claim under the New Jersey Consumer Fraud Act, Superior Court Judge Carol Higbee said today in Atlantic City. “Problems with individualized issues of proof would be unmanageable,” such as how much each consumer paid for the drug and everyone’s reason for taking it, she said.

“There may not be an alternative, superior form of resolution for these claims, considering the small size of the damages alleged for each member of the class,” Higbee ruled. “This decision may indeed be a death knell to the claims of most individual consumers. However, the court cannot find that a class action is a superior form of resolution, either.”

Lawyers sought to recoup the cost of the drug for all consumers outside California who bought Vioxx from June 1999, when it went on the market, to October 2004, when Merck withdrew it over safety concerns. Consumers also sought punitive damages.

Merck agreed in 2007 to pay $4.85 billion to resolve lawsuits by people claiming Vioxx caused heart attacks and strokes. The consumer case was aimed at recovering money for economic losses, not personal injuries.

“We are pleased that the court agreed this was not an appropriate case to proceed as a class action,” Ted Mayer, a Merck attorney at Hughes, Hubbard & Reed, said in a statement.

Earlier Merck Victory

Merck, based in Whitehouse Station, New Jersey, also won a ruling in 2007 from the New Jersey Supreme Court, which refused to certify a national class-action lawsuit over claims it misled health insurers about the safety of Vioxx.

Plaintiffs claimed Merck knew of the drug’s cardiovascular risks and failed to disclose them, Higbee said today in an 18- page opinion. They also sought to prove that Merck trained its sales force to avoid answering questions about the risks, and that its advertising campaign misled consumers.

Higbee said a class-action would be an appropriate way to show whether Merck defrauded consumers by orchestrating a campaign to misrepresent the cardiovascular risks.

Still, she dismissed the case saying the plaintiffs couldn’t show a “causal nexus” between Merck’s unlawful conduct and the “ascertainable loss” of what consumers paid for the drug.

That failure “creates an insurmountable barrier to class action,” she ruled.

Differences in Patients

The decision on whether to prescribe a drug is based on “a host of individualized factors,” such as a patient’s health risks and whether other drugs were effective, Higbee wrote.

“An individualized determination would be required for each plaintiff to determine if the concealment of the CV risk information had a causal relationship on the decision” to take the drug, she ruled. Such factors “differ from consumer to consumer,” forcing a jury to weigh “facts applicable to each plaintiff,” she said.

The ruling disappointed plaintiffs, Jeffrey Kodroff, a Philadelphia-based lawyer for former Vioxx users, said in a phone interview.

“We’re going to consider all our options as to what our next step should be,” Kodroff said.

The case is Kleinman v. Merck & Co., L-3954-04, Superior Court of New Jersey, Atlantic County (Atlantic City).

To contact the reporters on this story: David Voreacos in Newark, New Jersey, at dvoreacos@bloomberg.net; Jef Feeley in Wilmington at jfeeley@bloomberg.net.

Last Updated: March 17, 2009 17:12 EDT