Sex Discrimination Jury Weighing Bid for $285 Million In Punitive Damages Against Novartis

NEW YORK—A federal jury in a nationwide class action sex discrimination lawsuit against Novartis Pharmaceuticals Corp. deliberated through the day May 18 on punitive damages in the case, after plaintiffs’ counsel had sought an amount of up to $285 million (Velez v. Novartis Pharms. Corp., S.D.N.Y., No. 04 Civ. 9194, jury deliberations 5/18/10).

The jury in U.S. District Court for the Southern District of New York had returned a verdict for the plaintiffs May 17, finding the U.S. subsidiary of Swiss-based Novartis Corp. liable for sex discrimination in pay, promotions, and pregnancy leave. It also awarded $3.4 million in damages to 12 testifying plaintiffs (94 DLR A-1, 5/18/10).

The class action covers some 5,600 female sales representatives who worked for Novartis between 2002 and 2007.

Having indicated in its verdict the intention to award punitive damages, the jury received its charge from Judge Colleen McMahon May 18 after brief arguments by the parties on the amount of damages. The U.S. subsidiary had $9.5 billion in revenue in 2009.

Up to 3 Percent Sought

Plaintiffs’ counsel David Sanford of the Washington law firm Sanford Heisler LLP sought punitive damages of between 2 percent and 3 percent of that figure, or $190 million to $285 million. “You need to send a message of deterrence, so other corporations like Novartis will sit up and take notice,” he told the jury. “Justice demands that you should punish Novartis for its conduct.”

Reviewing plaintiffs’ evidence presented in the case, Sanford charged that the company had “looked the other way” when confronted with managerial misconduct, treated discrimination as “one big joke, a laughing matter to be shared over a beer,” and maintained that women were not better represented in management because they had not shown desire or willingness to advance.

He further claimed that female sales reps were “encouraged to seduce” doctors to gain their business, that pregnant women on leave were “sandbagged and blindsided” with “concocted stories and manufactured lies” to undercut their careers, and that the company sought to blame female employees for not using a “broken” complaint system that had failed to protect anonymity. Further, he asserted, Novartis had “padded its profits by systematically underpaying” women. “The nature and extent of the harm run deep,” Sanford said. “The issues in this case are deeply personal. Pregnancy and childbearing should be among the most enjoyable moments of life.”

Although Novartis could afford to “beef up” its human resources department and introduce reforms to end discrimination, he charged, “they did nothing—they didn’t even try.”

Company Disappointed

Appearing for Novartis, defense attorney Richard H. Schnadig of the Chicago law firm Vedder Price said, despite disappointment with the “sweeping” verdict, “the company has already received a message from you.” He continued: “The company understands that it is your collective judgment that we erred, notwithstanding what I argued [in summations] and what I believe.”

Schnadig argued that having a class of 5,600 female employees “does not mean that 5,600 women are complaining about discrimination” and that many of them, including the witnesses who testified for the defense, “were very happy” with their experience.

Further, he argued, the judge will set remedies for back pay and other economic damages. “The plaintiff class is far from bereft of remedies” without the punitive award, he suggested.

Novartis, rather than failing to act on evidence of discrimination, “did institute significant changes,” Schnadig told the jury of five women and four men. “It has made tremendous efforts on behalf of women. It is going to change. The company has taken to heart what you’ve said.” He asked the jury to show “restraint, good judgment, and a sense of fair play” in setting a “modest penalty on top of the penalty you’ve already given us.”

The jury went into its deliberations in the late morning but had not returned with a punitive damages verdict by the close of the day and will continue May 19.

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