Help

BI’s Article search uses Boolean search capabilities. If you are not familiar with these principles, here are some quick tips.

To search specifically for more than one word, put the search term in quotation marks. For example, “workers compensation”. This will limit your search to that combination of words.

To search for a combination of terms, use quotations and the & symbol. For example, “hurricane” & “loss”.

Login Register Subscribe

'Breathtaking' Novartis award a wake-up call

Gender discrimination verdict points up need to enforce policies

Reprints

NEW YORK—A record jury verdict against pharmaceutical giant Novartis A.G. over gender discrimination charges underscores employers' duties and is likely to spur additional gender bias lawsuits, legal experts say.

Last week, a New York jury said Basel, Switzerland-based Novartis should pay $250 million in punitive damages for discriminating against thousands of female sales representatives over pay, promotion and pregnancy.

Lawyers for the approximately 5,600 employees covered by the 2004 class action lawsuit said it was the largest U.S. gender discrimination case ever to yield a jury verdict.

The jury of five women and four men previously found that the company's U.S. division, East Hanover, N.J.-based Novartis Pharmaceuticals Corp., engaged in a pattern of discrimination against women who worked for the company between 2002 and 2007.

The jury also awarded $3.37 million in compensatory damages to 12 women who were named plaintiffs in the case and who testified at trial. Compensatory damages for the remainder of the class will be determined separately and could be determined by a court-appointed special master.

Legal experts said Novartis could pay as much as $1 billion overall, once compensatory damages are calculated for the remainder of the class.

The size of the award is “breathtaking” said Mike Delikat, partner at Orrick, Herrington & Sutcliffe L.L.P. in New York, and chair of its employment law practice group. “Companies really need to sit up and look at their potential exposures in this area,” he said.

The ruling signals a “new day” for employers, said William Martucci, Washington-based partner with Shook, Hardy & Bacon L.L.P. and global employment practice leader. “It's no longer enough just to have solid compensation and promotion policies in place,” he said. “You have to enforce them, and you have to respond aggressively if complaints or allegations of discrimination are made,” he said.

Although several of Novartis' witnesses claimed during the trial that the company had a “zero-tolerance policy” of discrimination, those witnesses each admitted that the company's managers were never terminated or demoted, even when complaints of discrimination were substantiated by its own human resources department, David Sanford, partner with Sanford Wittels & Heisler L.L.P. in Washington, and a lawyer for the women, said in a statement.

Legal experts also said they expect to see additional class action lawsuits filed in the wake of the ruling, as well as more individual claims of gender and race discrimination.

While class action discrimination suits are not uncommon, very few actually result in a finding of liability. Those that have been successful have seen significantly lower awards, Mr. Delikat said.

“This certainly gives plaintiffs lawyers the motivation they need to bring suits forward, and I think they will be seeking higher damages,” Mr. Delikat said.

The Novartis verdict comes after a recent federal appeals court ruling that said a 2001 gender-discrimination case against Wal-Mart Stores Inc. could move forward as a class action suit, a decision some legal experts said “opened the door” for large gender bias class action lawsuits to move forward.

Now with Novartis, “there will be a tidal wave of reaction to come from the plaintiffs bar to bring similar cases,” said Mr. Martucci.

In a statement, Novartis said it “strongly disputes” the claims of discrimination. It did not respond to a request for comment on plans to appeal.

Legal experts said an appeal is likely given the size of the award and the proportionality of punitive to compensatory damages.