Last November, the US Supreme Court heard arguments for Wyeth v. Levine, a crucial preemption case which will decide whether federal law preempts a state law tort action challenging the FDA labeling of the Wyeth drug Phenergan, known to cause gangrene when improperly administered. The Court’s decision, while presumably made in private only days later, has yet to officially materialize.
But wait! Wyeth is about to be acquired by uncle drug giant Pfizer.
On Feb. 4, Wyeth’s lawyer before the Court, Seth Waxman of Wilmer Cutler Pickering Hale and Dorr sent a letter to the clerk of the Supreme Court informing the Court of the pending transaction. But Waxman told the Court that because of pending stockholder approvals and other matters, the transaction will not be completed until July 31 at the earliest—weeks after the end of the Court term, by which time its decision would have been released. As a result, Waxman said he does not believe the pending takeover “warrants amendment of the corporate disclosure statement” submitted by Wyeth when Wyeth petitioned the Court last year. That disclosure statement is ordinarily the way justices are informed about parent companies and subidiaries that lets them know if recusal is required. –Tony Mauro, Legal Times.
Because Chief Justice John Roberts owns Pfizer stock, he usually recuses himself in any case involving Pfizer. The outcome of Levine will likely affect the value of Wyeth, and in turn, the value of Pfizer. And yet, Roberts heard arguments in Wyeth v. Levine before talk of a Pfizer merger had even begun. Will he recuse, potentially creating a 4-4 split on a case that may very well have gone 5-4 to the drug companies? Or will he rule in favor of Wyeth—and accordingly, Pfizer—in so doing knowingly strengthening the future of his own stock?