Novartis Should Pay $285 Million in Punitives, Bias Lawyer Tells Court

Novartis AG’s U.S. pharmaceuticals unit should pay $190 million to $285 million in punitive damages on top of the $3.4 million awarded to a dozen women in a gender bias verdict, a plaintiffs’ lawyer said in court.

A nine-member panel found in favor of female employees of Novartis Pharmaceuticals, a U.S. unit of Europe’s second-largest drugmaker, following a monthlong trial in Manhattan federal court. The jurors’ $3.4 million award to the women for lost pay and other damages yesterday came in the first stage of deliberations. The second stage, over punitive damages, ended today without a verdict.

Jurors in the class-action lawsuit ruled yesterday that the company discriminated against women in terms of pay, promotions and pregnancy. David Sanford, a lawyer for the women, today asked them to award punitive damages that would force the Basel, Switzerland-based company to pay from 2 to 3 percent of its value, which both sides stipulated to be $9.5 billion.

“Novartis has been involved in systemic discrimination since 2002,” Sanford, a lawyer for the women, said after yesterday’s verdict. “The verdict supports the claims of 5,600 women.” Novartis has a 14,000-member U.S. workforce, the lawyers said.

The drugmaker said yesterday it will appeal the verdict. Pam McKinlay, a spokeswoman for Novartis, said today the company didn’t have any further statement about the punitive damages request.

Other Women

Sanford said other women who weren’t directly involved in the case may now come forward and also seek compensatory damages. He said there may be a legal presumption in their favor should they do so.

Sanford told jurors in his closing arguments 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, jurors are required to consider the nature and length of the 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 that the company sought to advance the careers of women and took 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.

Male Manager

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.

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-09194, U.S. District Court, Southern District of New York (Manhattan).

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

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