Drug Maker Novartis to Pay $250 Million in Punitive Damages


A federal jury in Manhattan has ruled that pharmaceutical giant Novartis must pay punitive damages—to the tune of $250 million—to thousands of sales representatives against whom it discriminated on the basis of gender. The plaintiffs in the case had sought between $190 million and $285 million.

The lawsuit was brought by 12 female employees who had alleged that Novartis engaged in discrimination against them between 2002 and 2007. They said that they were passed over for promotions, subjected to hostile remarks and fired because of pregnancies.

The jury, which was composed of five women and four men, had returned a verdict several weeks ago that required the company to pay $3.36 million in compensatory damages, and had ticked the box for punitive damages on the verdict form, indicating that it would ask Novartis to pay more in the future. The trial lasted for five weeks, with four additional days of deliberation on the part of the jury.

Compensatory damages for pain, suffering and loss of enjoyment were split into shares that ranged from $50,000 to nearly $600,000. One former sales representative, Holly J. Waters, had been terminated from her position when she was seven months pregnant; she received $476,000 in compensation.

This award sets the stage for numerous additional claims by female sales employees—approximately 5,600 employees who will ask the court for individual damages. A court-appointed special master will decide their cases on an individual basis, while Judge Colleen McMahon of United States District Court will determine a lump sum, to be distributed among plaintiffs, to cover back pay, lost benefits and adjusted wages.

In 2009, Novartis had sales of $44.3 billion. The company is based in Basel, Switzerland, but the lawsuit involved only the United States subsidiary, the Novartis Pharmaceuticals Corporation.

The drug company has consistently been named to Working Mother magazine’s annual list of the 100 best companies for women. A spokesperson for the magazine said that its award was based on different criteria than those brought to light in the court case, and included policies that Novartis had to support working mothers, such as flex time or telecommuting and paid maternity leave.

According to the financial Web site Bloomberg News, this is the largest-ever employment discrimination verdict, and the second-largest verdict to be handed down to date in 2010.


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