Female Employees Seek $285 Million in Damages from Novartis in Bias Case

May 19, 2010

Current and former female employees of drugmaker Novartis AG want up to $285 million in punitive damages after winning a ruling that a U.S. division of the company engaged in a pattern of discrimination, a lawyer for the women said Tuesday.

The jury in U.S. District Court in New York Monday found Novartis Pharmaceuticals Corp. had systematically denied promotions, paid less and subjected to discrimination 5,600 women represented as plaintiffs in a 2004 class action lawsuit.

An attorney for the women argued in court that the jury should award the women between $190 million and $285 million in punitive damages, which is about 2 to 3 percent of the company’s $9.5 billion 2009 revenue.

“Justice demands that you punish Novartis for its conduct,” attorney David Sanford told the 9-member jury. He called for an end of Novartis “padding its profits by systematically underpaying its female employees.”

“How much money does it take for Novartis to wake up?” said Sanford, who asked the jury to impose a sum sufficiently high to act as a deterrent to other companies.

The jury ruled that Novartis should pay punitive damages to the entire class. Presiding Judge Colleen McMahon will determine back pay, lost benefits and adjusted wages.

The jury ended deliberations on Tuesday without reaching a decision yet on punitive damages. It will continue its deliberations on Wednesday.

In their ruling on Monday, the jury awarded $3.3 million in compensatory damages to 12 of the women who testified at the 6-week long trial.

The jury’s award to the 12 women opens the door for the 5,588 other women in the class who can now also apply for compensatory damages. The damages will likely be determined on an individual basis by a court-appointed special master, said Katherine Kimpel, a lawyer for the plaintiffs.

Novartis attorney Richard Schnadig admitted on Tuesday the jury had chastised the company with the “sweeping nature” of its verdict, but argued that it “has already received a message.”

Schnadig told the jury that not all of the 5,600 plaintiffs agreed with the lawsuit and the company was already pushing ahead with changes.

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.

The case is Velez et al v Novartis Corporation, U.S. District Court for the Southern District of New York, No. 04-09194.

(Reporting by Basil Katz and Grant McCool; Editing by Richard Chang, Bernard Orr)

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