Opinion ID: 1248926
Heading Depth: 2
Heading Rank: 2

Heading: The Stipulated Discovery Agreement

Text: As the plaintiffs note, Merck voluntarily negotiated and agreed to the scope of a document production with plaintiffs. The agreement did not result from a District Court ruling. This agreement did not restrict the manner in which plaintiffs could utilize the documents. Paragraph 5 of the June 27, 2005 discovery stipulation is particularly relevant to our discussion: Without limiting the scope of ¶ 1 above, all discovery in the Consolidated Derivative Action, except for requests for production of documents focused on the Merck Board of Directors' actions concerning VIOXX prior to Merck's voluntary withdrawal of VIOXX on September 30, 2004, shall be stayed pending the Court's ruling on the motion to dismiss the Consolidated Derivative Complaint, unless the Court enters an order permitting such discovery to proceed. The general rule that discovery may not be used to supplement demand futility allegations has no applicability in a case where the parties voluntarily agree to permit discovery to go forward on the one area that has particular import for the motion to dismiss. We recognize that the discovery stipulation was entered into shortly after the initial complaint was filed. This stipulation, though, contains no limitation on how this after-acquired information may be used. When this fact is coupled with the general policy of liberal amendment of pleading standards, we must conclude that the District Court should have considered this after-acquired information in its discussion of whether the plaintiffs may amend their complaint. The District Court erred as a matter of law in refusing to consider the discovery that resulted from the consensual stipulation. We will therefore remand this case so that the District Court may examine whether the after-acquired information discovered as a result of the stipulation affects its conclusion that amendment would have been futile. [4]