Merck headquarters in New Jersey. Photo: Shutterstock

A federal judge in New Jersey has granted preliminary approval to a $6.2 million settlement of an Equal Pay Act suit filed on behalf of female drug sales representatives at Merck & Co.

The settlement agreement resolves claims that Merck's compensation policy created incentives to discriminate against women in sales representative jobs by decreasing salaries of colleagues and managers of women who take maternity leave.

The settlement was reached after a full-day mediation session before Mark Rudy of Rudy, Exelrod, Zieff & Lowe in San Francisco.

U.S. District Judge Michael Shipp, sitting in Trenton, on July 19 certified the class of plaintiffs, certified an Equal Pay Act collective action and set a hearing on final approval for at 11 a.m. Dec. 3. Class members are to be be eligible for monetary awards in amounts determined by the number of weeks they worked and the number of weeks worked by all class members.

The settlement applies to women who worked in certain sales representative positions for Merck or its animal health division, Intervet, between Dec. 8, 2010, and Oct. 1, 2018. The settlement also provides up to $3 million in legal fees and litigation costs to class counsel,  Sanford Heisler Sharp of New York. The firm is expected to apply for expenses of $700,000 and fees of no more than $2.3 million, even though their lodestar exceeds $11 million, according to documents.

Filed in 2013, the suit claimed Merck's pay formula ties sales representatives' compensation to the success of others selling the same product and fails to adjust sales goals to account for representatives on maternity leave. Consequently, managers are discouraged from hiring and promoting women, the suit claimed.

Class representative Kelli Smith initiated the case with her claim that she was demoted after taking a six-month maternity leave. She began working as a sales representative for the company in 2004 and says she was viewed as a top performer until 2010, when she took her maternity leave. When she returned, Smith had a new supervisor, Ed Veltre, who she claims gave her a lower evaluation, subjected her to a hostile work environment and demoted her because she had taken maternity leave.

Merck and the plaintiffs counsel issued a joint statement: “After years of extensive litigation in a proposed discrimination class action, Merck and the plaintiffs reached a mutually acceptable settlement to resolve all remaining disputes. The court made no determination on the merits of this case, but to avoid continued expense and the uncertainty associated with litigation, the parties reached a fair and reasonable settlement. This settlement should not in any way be construed as an admission of liability or wrongdoing.”

In 2016, Sanford Heisler and Merck clashed over what the drugmaker claimed were misleading statements from the plaintiff lawyers aimed at increasing the number of plaintiffs. Sanford Heisler agreed not to issue any further communications to potential opt-in plaintiffs after the drugmaker sought a cease-and-desist order over disputed statements by the firm.

Sanford Heisler has brought a number of gender discrimination suits against drug companies and law firms in recent years.

In 2018 it reached a confidential settlement in a suit against Proskauer Rose by Connie Bertram, who had been head of its labor and employment practice. Also in 2018, Sanford Heisler reached a $2 million settlement on behalf of three female partners at Washington, D.C.'s Chadbourne & Parke, which by then had merged into Norton Rose Fulbright. And in 2010, Sanford Heisler won a $250 million gender discrimination verdict in the Southern District of New York against Novartis Pharmaceuticals. The case settled six months later for $175 million.