Novartis Unit Loses U.S. Jury Verdict in Female Workers' Sex-Bias Lawsuit

A Novartis AG pharmaceuticals unit discriminated against female sales representatives in the U.S. and must pay $3.4 million to a dozen women plus punitive damages to be decided, a federal jury found.

The jury in Manhattan federal court reached its decision yesterday after a monthlong trial of a class-action lawsuit on claims of discrimination against women at Novartis Pharmaceuticals, a U.S. unit of Europe’s second-largest drugmaker. The nine jurors’ award to the women for lost pay and other damages came in the first stage of deliberations. The panel will decide on the amount of punitive damages.

The women are part of the Basel, Switzerland-based company’s 14,000-member workforce in the U.S. They’ve said they’re seeking about $200 million in punitive damages. Jurors found that Novartis discriminated against women over pay and promotion and because they got pregnant.

“Novartis has been involved in systemic discrimination since 2002,” David Sanford, a lawyer for the women, said in an interview after the verdict. “The verdict supports the claims of 5,600 women.”

Novartis said in a statement that it is disappointed in the verdict and plans to appeal.

“We believe the plaintiffs’ claims were unfounded,” the company said, adding that it has been “recognized for its commitment to an inclusive environment.”

‘Boys’ Club’

Sanford told jurors in his closing arguments May 10 that Novartis “tolerated a culture of gender discrimination in pay, and promotion, tolerated a culture of sexism, a boys’ club atmosphere.”

In weighing punitive damages, the jurors will consider the nature and length of Novartis’s conduct, the extent of harm it caused, the company’s actions after learning of allegations of bias, and the amount required to deter future discrimination.

Richard Schnadig, a lawyer for Novartis, told jurors at the end of the trial that the “fair, decent, responsive company” sought to advance the careers of women and took firm steps against mistreatment.

Katherine M. Kimpel, another plaintiffs’ lawyer, called women and expert witnesses to testify that there was systemic bias at Novartis. The women said the company denied them equal opportunities and subjected them to a hostile work environment, especially after they became pregnant.

Women’s Testimony

One woman testified she was told by a male manager to get an abortion. Another said she was excluded from professional and social gatherings, including outings on which male colleagues took doctors to strip clubs, Kimpel said in her closing argument.

“District managers control virtually everything that happens to a sales representative,” Kimpel said. The majority of them are men, she said.

The women covered by the case are sales representatives and entry-level managers who worked for the company since 2002.

Schnadig said Novartis has detailed policies barring discrimination, and that it promoted females into management positions through its “Women in Leadership” program.

He told jurors that women and men are paid and promoted equally, after taking tenure and experience into account, and that the company fired a manager about whom women complained.

The lead plaintiff is Amy Velez, who was hired by Novartis in 1997 as a sales representative in Washington. She worked at the company until 2004, the year the suit was filed.

The case is Velez v. Novartis Corp., 04-cv-9194, U.S. District Court, Southern District of New York (Manhattan).

To contact the reporters on this story: David Glovin in New York federal court at dglovin@bloomberg.net; Patricia Hurtado in New York federal court at pathurtado@bloomberg.net.

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