Novartis Will Pay $99 Million to Settle Overtime Lawsuit

A unit of Novartis AG (NOVN), the Swiss drugmaker, won a judge’s preliminary approval of a $99 million settlement in a lawsuit brought by sales representatives who claimed they were denied overtime pay, court records show.

The class-action settlement, tentatively approved yesterday by U.S. District Judge Paul Crotty in Manhattan, covers more than 7,000 current and former sales representatives, according to a statement by the company and lawyers for the workers. Crotty will hold a final approval hearing on May 31.

“We believe this settlement is in the best interest of our employees and the company,” Andre Wyss, president of Novartis Pharmaceuticals Corp., said in the statement. “We have been litigating this case for nearly six years and the company has determined that it is time to resolve these wage and hours claims.”

The settlement resolves wage-and-hour claims brought in 2006, as well as those filed more recently, according to the statement. Novartis, the No. 2 Swiss drugmaker behind Roche Holding AG (ROG), is “confident that sales representatives should continue to be exempt from overtime,” Wyss said.

High Court Case

Workers settled before the U.S. Supreme Court decides whether drugmakers must pay overtime to as many as 90,000 sales representatives. The high court will review a lower court’s conclusion that salespeople for a GlaxoSmithKline Plc (GSK) unit aren’t covered by a federal wage-and-hour law. Similar cases are pending against Johnson & Johnson (JNJ), Bristol-Myers Squibb Co. (BMY) and a unit of Merck & Co. Arguments haven’t been scheduled.

While lawyers for the Novartis workers are confident the Supreme Court will rule favorably, “the risks of litigation are great,” David Sanford, the lead lawyer for the plaintiffs, said in the statement.

“It is a fair and equitable result and can serve as an exemplar for companies around the U.S. that face wage-and-hour litigation,” said Sanford, of Sanford Wittels & Heisler LLP.

The case is In re Novartis Wage and Hour Litigation, 06-md- 01794, U.S. District Court, Southern District of New York (Manhattan).

To contact the reporters on this story: David Voreacos in Newark, New Jersey at dvoreacos@bloomberg.net; Bob Van Voris in federal court in Manhattan at rvanvoris@bloomberg.net.

To contact the editor responsible for this story: Michael Hytha at mhytha@bloomberg.net.

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