A trial last year against Novartis Pharmaceuticals Corp. featured shocking stories of sex discrimination against female sales representatives. One said her manager told her to get an abortion. Another claimed she was blamed for being raped during a work event.
But it was the cross-examination of Dr. Finis Welch, a key expert for Novartis, that tilted the trial toward the class in Velez v. Novartis Pharmaceuticals Corp., according to Katherine Kimpel and David Sanford, partners at Washington’s Sanford Wittels & Heisler, the lead plaintiffs’ lawyers.
Welch’s statistical analysis of hourly pay rates at Novartis seemed to show that women weren’t paid less than men. On cross-examination, Kimpel picked apart his conclusions, noting that he had counted the pay of women on maternity leave — making it appear they got paid higher hourly rates than men because they continued to draw a salary while not working a single hour during that time.
“It was something the jury was able to follow along with, because the math was something we were able to bring down to a straightforward format,” she said. “It really discredited him, and by virtue of discrediting him, a big part of Novartis’ case.”
In May, a federal jury in New York awarded the plaintiffs $253 million in the largest employment discrimination case ever to go to trial. The verdict ranked No. 7 on NLJ affiliate VerdictSearch’s list of the Top 100 Verdicts of 2010, although the case ultimately settled for $152.5 million, including attorney fees, plus reforms in company policy.
The case was closely watched by the employment bar, particularly given an increased focus on systemic gender discrimination cases by the Equal Employment Opportunity Commission and the plaintiffs’ bar, said Victoria Chavey, a partner in the Hartford, Conn., office of Jackson Lewis, a firm that represents employers in workplace law issues. “The plaintiffs’ bar will be looking to gender and other discrimination class actions more frequently than they have before,” she said. “I expect that plaintiffs’ lawyers will raise the verdict and the result in the Novartis case in their efforts to get larger settlements in similar kinds of cases.”
The case against Novartis was first filed in 2004 in the U.S. District Court for the Southern District of New York. In 2007, it reached a major milestone when a class of 5,600 women was certified. To prove the case for certification, Sanford said, the plaintiffs’ lawyers presented statistical evidence and the depositions of more than 70 women.
“Part of what was important and what came through the depositions and expert discovery was that, although it was a nationwide class, the policies and procedures giving rise to discrimination were consistent,” Kimpel said.
On Oct. 20, U.S. District Judge Colleen McMahon denied Novartis’ motion for partial summary judgment.
Hoping to recover punitive damages, Kimpel emphasized during her opening statement that Novartis knew about sex discrimination for years and had done nothing about it, she said.
“One of the things that’s most challenging in presenting a case like this to the jury is figuring out a way to make the fact that it is a class problem come to life,” Kimpel said. “In hearing those stories from the women, the jury could put names and faces to know not only what it was like for individual women testifying, but what those statistics meant in flesh-and-blood terms for the women who worked for the company and their families.”
Plaintiffs’ lawyers put a parade of class members on the stand. They purposely picked people based on their geographic backgrounds and their personal stories. One class member, Marjorie Salame, told how in 2002 she was cornered by one of the physicians attending an evening company-sponsored event, NLJ affiliate The American Lawyer reported last May. Before she could escape, the doctor raped her, she said. She reported the assault to her manager and the human resources department. At first, the manager was sympathetic. Eventually, the manager and her boss ended up blaming her for being raped. A sales rep whose career previously had been thriving, Salame was given unfavorable performance evaluations and told that the rape was “a distraction.” She was never considered for a management job.
Novartis fought back by putting on the stand about half a dozen women who had positive experiences at Novartis. “Several members of the class voluntarily testified on the company’s behalf about their positive work experiences and the corporate culture they observed to be very supportive of women,” Novartis said in a press release in response to the verdict. Novartis said it had been recognized for 10 years in a row by Working Mother magazine as one of the top 100 companies for working mothers. Richard Schnadig, a shareholder in the Chicago office of Vedder Price and lead counsel for Novartis Pharmaceuticals Corp., the U.S. unit of Novartis A.G., declined to comment for this article.
Sanford praised his opposing counsel. “Part of that job was getting women to tell a different story — a story of professional growth, promotional opportunity and fair pay,” he said.
Following a trial that stretched beyond a month, the jury found that Novartis had discriminated against 12 women in pay, promotional opportunities and pregnancy-related issues. They awarded $3.36 million to the women and added $250 million in punitive damages against Novartis. Sanford had asked for a range of $190 million to $285 million, based on Novartis’ U.S. revenues, estimated at $9.5 billion.
“Once we saw the jury had come to the same conclusion we had — that what happened at Novartis was so wrong, and the women we represented had been seriously harmed — their decision to award punitive damages was a natural extension of that conclusion,” Kimpel said.
To distribute the award, each class member needed to attend a hearing before McMahon to establish her claim. Given the size of the class, and a $300,000 cap on individual claims, the total amount of damages was estimated at $1 billion, Sanford said.
“That process would’ve proceeded over the course of a couple of years. It would’ve been very difficult for the parties, very expensive, and would’ve taken up further precious resources,” he said.
Furthermore, Sanford anticipated — correctly as it turned out — that the U.S. Supreme Court would take up the class-certification issue in Wal-Mart Stores Inc. v. Dukes. With a class of 1.5 million, it is the largest sex discrimination case in history.
Settlement talks ensued, and on July 14 Novartis agreed to pay $152.5 million to put the case to rest. The company pledged to implement reforms valued at $22.5 million, including improvements to its sexual-harassment policy and its complaint process. McMahon also approved more than $38 million in attorney fees.
At the time, Joe Jimenez, chief executive of Novartis A.G., issued a statement: “While we believe that there was not systemic discrimination at NPC, the trial revealed that some of our associates had experiences influenced by managerial behavior inconsistent with our values. As a company we are now even more strongly resolved to ensure that all our employees act and behave in accordance with our corporate values.”
The settlement, which was finally approved on Nov. 30, includes an expanded class of more than 6,000 sales reps from 2002 to 2010.
Amanda Bronstad can be contacted at email@example.com.