Novartis Pharmaceutical Wage & Hour Class Action – $99 Million Settlement

Case Description

Case Type: Wage & Hour

Company: Novartis

Contrary to misinformation that has been circulating around the Internet, the Settlement is final and not in jeopardy. On May 31, 2012, the Court finally approved the $99 M settlement and entered a final judgment in the case. The appeals period has ended and there were no appeals filed.

The Claims Administrator mailed the individual awards to Class Members on October 26, 2012. Checks were sent by certified U.S. Mail with a return receipt requested. Please allow two weeks from the date of mailing to receive your check.

Individuals concerned about receipt of their checks can call Rust Consulting at 1-877-251-1448 to verify their mailing addresses.

Each class member’s recovery was calculated by a formula that accounts for (a) tenure; (b) whether the individual’s total annual compensation risked a highly-compensated employee defense; (c) the statute of limitations that would apply based on applicable state or federal law; and (d) in what capacity the individual is a member of the Settlement Class. The purpose of this formula was to distribute the Settlement Fund in a manner that is the most equitable based on the various factors that would affect a Settlement Class Member’s recovery if the Parties proceeded to litigation. Please also remember that it is a violation of the Settlement Agreement to discuss the specific amounts you receive as a class member. Talking about your individual settlement amount or the individual settlement amounts of others may jeopardize your recovery.

If you have additional questions about the Settlement, please contact us at [email protected] Please note, however, that we are not able to walk any individuals through the calculation of their individual awards.

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The law firm of Sanford Heisler Sharp and Novartis Pharmaceuticals Corporation (”Novartis”) have reached a $99 million settlement to resolve a nationwide wage and hour class action originally brought by Sanford Heisler in the Southern District of New York on March 23, 2006 on behalf of current and former Novartis sales representatives. In their class and collective action lawsuit, thousands of Novartis sales representatives claim they are owed overtime pay under state and federal labor laws because they work more than 40 hours during a work week.

On July 6, 2010, the United States Court of Appeals for the Second Circuit agreed with the Novartis sales representatives, confirming that Novartis should pay overtime to its sales representatives.

In February 2011, the United States Supreme Court refused Novartis’ application to review the Second Circuit’s decision, allowing that decision to stand.

Following the Supreme Court’s denial of review, counsel for Novartis and Sanford Heisler engaged in extensive negotiations to explore settlement of the plaintiffs’ overtime class action. In January 2012, the parties’ discussions were successful and they reached a $99 million settlement to resolve the suit.

Sanford Heisler Sharp was the first law firm in the United States to bring a class action suit alleging wage and hour violations on behalf of pharmaceutical representatives against a pharmaceutical company. Since this suit against Novartis was filed in March 2006, numerous other firms around the country have brought similar suits against other pharmaceutical companies. The majority of federal and state courts have ruled against plaintiffs in those actions. Sanford Heisler is the only firm to win on both the administrative and outside sales exemptions at the federal appellate level.

The settlement was reached against the background of a looming United States Supreme Court decision on whether pharmaceutical sales representatives are entitled to overtime pay. Although the Supreme Court declined in February 2011 to review the Second Circuit’s ruling in Novartis that the pharmaceutical representatives were entitled to overtime pay, the high court changed course in November 2011. On November 28, the United States Supreme Court agreed to decide whether the outside sales exemption applies to pharmaceutical sales representatives in Christopher, et al. v. SmithKlineBeecham Corp., No. 11-204. Resolution of the matter is expected in the Summer of 2012. In reaching the $99 million settlement, Sanford Heisler was keenly aware that if the Supreme Court ruled that pharmaceutical representatives are exempt outside salespersons, the plaintiffs in the Novartis case would not be able to recover any overtime pay, notwithstanding the Second Circuit’s  favorable ruling.

There were additional risks that Sanford Heisler Sharp took into account when negotiating the settlement. For example, if the upcoming presidential elections produce a change in administration, there is a serious danger that the United States Department of Labor would take the position that pharmaceutical sales representatives are exempt from overtime pay. There is also the risk that this Court would not certify a class including Novartis sales representatives from April 2007 to the present in light of Novartis’ representation that it has changed the duties of sales representatives and has reduced the hours that sales representatives work each week; the risk that this Court or others would apply the fluctuating work week method of calculating overtime pay, thereby greatly reducing damages; and the risk that the “highly compensated employee” exemption would apply, thereby excluding thousands of employees from the class.

On January 25, 2012, Judge Crotty in the United States District Court for the Southern District of New York preliminarily approved the $99 million settlement as fair and adequate.

Under the Settlement Agreement, five subclasses of Novartis’s current and former sales representatives may be entitled to recover overtime benefits. These classes consist of three previous subclasses certified by Judge Crotty in February 2007: (1) “California Settlement Sub Class I” consisting of sales representatives who worked for Novartis for at least one day during the period March 23, 2002 through April 7, 2007 and who did not timely opt out of the Civil Action in 2007; (2) the “New York Settlement Sub Class I” consisting of Novartis representatives who worked in the State of New York for at least one day during the period March 23, 2000 through April 7, 2007 and who did not timely opt-out of the Civil Action in 2007; and (3) the “FLSA Settlement Sub Class I” consisting of Novartis sales representatives who worked in that position for at least one day during the period March 23, 2003 through April 7, 2007 and who filed a consent to join form in the Civil Action in April 2007 and June 2008.

In addition to these three previously certified classes, the Settlement covers two additional classes. The “FLSA Settlement Sub Class II” (4) is comprised of persons who worked for Novartis in the position of sales representative for at least one day during the period January 25, 2009 through January 25, 2012 in certain designated states, and who timely opt-into the settlement by submitting an opt-in and release form and who are not members of any of the three classes certified in 2007. The “Remaining States Settlement Sub Class” (5) consists of Novartis sales representatives who worked in that position in certain designated states during varied periods beginning in 2005 and who are not part of the three previously-certified classes.

On February 24, 2012, notices were mailed that provide a more detailed explanation of the settlement benefits and a description of who is entitled to receive settlement benefits.

If you are a current or former Novartis pharmaceutical sales representative interested in learning more, please contact us at [email protected] and provide a phone number at which best to reach you. If you are a current or former pharmaceutical sales representative for another pharmaceutical company interested in finding out whether you, too, might be owed overtime, please contact us for more information.