Novartis to pay millions for sex discrimination

Novartis said it would appeal against the verdict Keystone

Basel-based pharmaceutical company Novartis has been fined $250 million (SFr289 million) in punitive damages after a New York jury found it guilty of sex discrimination.

The damages are to be divided between about 5,600 women employees of the Novartis Pharmaceuticals Corporation, a United States affiliate of the Novartis group, covered by the 2004 class action lawsuit.

Another $3.36 million in compensatory damages was awarded to 12 former sales reps who testified on behalf of others in the joint suit.

On Monday, the same jury ruled that Novartis Pharmaceuticals had engaged in a pattern of discrimination against women who worked for the company between 2002 and 2007.

In separate proceedings, all 5,600 members of the class action will be able to give evidence to a magistrate judge about their own situation, to be awarded compensatory damages for their pain and suffering.

Each can receive up to $300,000 in a process that could add hundreds of millions of dollars to the damages in the case.

After the decision came on Wednesday, Novartis said in a statement that it was disappointed by the verdict, adding that it “strongly disputes” claims of past discrimination of women in its sales force.

“For more than ten years the company has developed and implemented policies setting high standards with regards to diversity and inclusion for the development of our employees,” said Andy Wyss, president of Novartis Pharmaceuticals in the statement.

“Since 2007 our diversity and inclusion programs and activities have even further increased and become an essential part of our culture and way of working,” the statement said.

“Clear message”

Lawyers representing the female plaintiffs said the verdict sent a clear message to Novartis that gender discrimination would not be tolerated.

“This is a great day for women across America, a great day for women at Novartis who from 2002 have suffered discrimination systemically,” David Sanford, one of the lawyers representing the women, told swissinfo.ch.

“That’s why we were in trial for six weeks. The jury got it and now we trust that Novartis gets it too.”

He said the award – which he believed was the largest ever from a jury in a gender-discrimination case – was meant to punish the company for its past actions and to deter it and others from continuing to discriminate against female employees in the future.

Sanford said the judge will also be asked to order “sweeping changes” to the company’s pay and promotion system, its pregnancy policy, its system of performance reviews and its human resources department.

The judge hearing the case had instructed jurors to consider their award in light of the “offensiveness of Novartis’ behaviour, the nature and extent of the harm done, the length of time the class endured the behaviour, the extent to which Novartis knew about the discrimination and how they reacted once they were on notice.”

The judge also said the amount should reflect Novartis’ financial condition in order to act as a deterrent.

Sanford had asked for $285 million, on the basis that the company should pay two to three per cent of its $9.5 billion revenue for 2009.

“Victory for working mothers”

“I feel like it’s a huge victory for working mothers in all industries,” said Holly Waters, one of the 12 plaintiffs in the case, after Wednesday’s verdict.

“I am so excited that this day has finally come,” Waters told swissinfo.ch.

During the trial, Waters, characterised by lawyers as a high-performing employee, testified she was threatened by her manager that she would be fired if she took another sick day due to morning sickness during pregnancy. After giving birth and before taking paid maternity leave, she was fired.

Several of the witnesses brought by Novartis claimed that the company had “zero tolerance” for discrimination.

But they also admitted that managers who were found to have breached the guidelines had not had their contracts terminated, or even been demoted.

Novartis lawyer Richard Schnadig urged the jury not to react emotionally. “The company is taking everything you said to heart and is going to change. Be fair to us,” he urged.

The jury had found on Monday after a six-week trial that Novartis discriminated against women workers after hearing evidence of its practices in the areas of pay, promotions, and pregnancy-related matters. After the verdict the company said it would appeal.

Karin Kamp in New York, swissinfo.ch

The lawsuit

The suit was originally filed in 2004 by former and current women employees.

In a 2007 ruling a federal judge in New York granted class-action status to the case. While the judge ruled the suit against Novartis Pharmaceuticals could proceed, they dismissed the plaintiffs’ claims against Novartis Corporation.

One of the witnesses, Marjorie Salome, to whom the jury allotted $540,000, testified that after she reported being raped by a doctor during a company outing, managers started questioning her work performance and one supervisor blamed her for what happened.

In court papers, other women said complaints made to the company’s human resources division were routinely ignored and pregnancies were often the source of discrimination.

A lawyer for the plaintiffs, Steven Wittels, praised the verdict, saying “this jury had sent a message to Novartis. Get your house in order! Change your culture: the ‘old boys’ network’ will not be tolerated.”

Novartis lawyer Richard Schnadig said in his summing up of the case on May 10 “this case, at bottom, is meritless: has no merit whatsoever, statistically or anecdotally”.