Six months ago, when Novartis agreed to a $99 million settlement in a wage-and-hour class action, the company’s decision raised the question of why Novartis didn’t let the litigation play out long enough for the U.S. Supreme Court to issue a pending ruling in another case that could wipe out the plaintiffs’ claims in one blow? Now the Supreme Court has finally issued its ruling, finding that pharma sales reps in a parallel case against GlaxoSmithKline aren’t entitled to overtime under the federal Fair Labor Standards Act.
Southern District Judge Paul Crotty didn’t grant final approval of the settlement and close the case until May 31—less than three weeks before the Supreme Court’s June 18 ruling in Christopher v. SmithKline Beecham (NYLJ, June 19) that drug company sales representatives fall under an FLSA exemption for “outside salesmen” and can’t sue for overtime pay. The parties technically have 30 days to appeal Crotty’s order. But Novartis said in an e-mailed statement that the high court’s ruling “will not affect” the settlement and that the deal would stand.
“Novartis Pharmaceuticals Corporation is pleased with the U.S. Supreme Court’s ruling in the GSK Wage and Hour lawsuit which validates the decades-long industry practice of classifying sales representatives as exempt from overtime laws,” the company said. “Our litigation had been ongoing for nearly six years, and we continue to believe that the settlement was in the best interest of our employees and the company.”
A Novartis spokeswoman declined to comment on the timing of the settlement. Novartis’s lawyers at Cravath, Swaine & Moore and Kaye Scholer didn’t respond to requests for comment.
Class counsel in the Novartis case at Sanford Wittels & Heisler apparently got their settlement approved in the nick of time, and will get to keep the $30 million in attorney fees and costs that Crotty approved last month. Sanford Wittels also brought the case against GSK that the Supreme Court just threw out.
This week, meanwhile, Sanford Wittels conceded that the Supreme Court’s ruling spelled the end of a third big wage-and-hour case that the firm brought on behalf of pharma sales reps—this one against Novo Nordisk. Sanford Wittels and lawyers for Novo at Morgan Lewis & Bockius filed a joint stipulation of dismissal with prejudice, acknowledging that the $70 million proposed class action couldn’t survive Christopher. Southern District Judge Alvin Hellerstein ordered the case dismissed on June 25.
Sanford Wittels lawyers David Sanford, Jeremy Heisler, and Katherine Kimpel did not respond to request for comment on whether the Supreme Court’s ruling would impact other cases brought by the firm.
@|David Bario, a reporter for The Litigation Daily,an affiliate of the New York Law Journal, can be contacted at email@example.com.