Approval Seen for Novartis Gender-Discrimination Pact

Posted November 9th, 2010.

As it appeared in the Wall Street Journal


NEW YORK—A federal judge said Friday that she will likely approve a $175 million settlement of a closely watched gender-discrimination lawsuit involving Novartis AG’s U.S. unit and its female sales force.

At a hearing Friday, U.S. District Judge Colleen McMahon in Manhattan said she expects to issue an opinion next week approving the settlement with Novartis Pharmaceuticals Corp., calling the pact “extraordinary.”

“I truly believe Novartis is on the verge of becoming the company it said it was, but the jury plainly believed it was not,” the judge said.

The judge said one issue that she was still debating concerned additional payments that would go to plaintiffs who didn’t testify at trial as part of the settlement.

Under the agreement, the U.S. unit would pay about $152.5 million to a group of current and former female employees. The class includes about 6,200 women.

Six women opted out of the settlement, said David Sanford, a lawyer for the plaintiffs.

“It is the rare settlement where economic damages are compensated in full,” the judge said.

As part of the settlement, Novartis Pharmaceuticals also agreed to implement a series of improvements over a three-year period, including revising its sexual-harassment policies and training and hiring an external specialist to identify and remedy gender disparities at the company. The program is estimated to be valued at $22.5 million.

The settlement was originally announced in July. It followed a jury verdict in May in which jurors found that Novartis Pharmaceuticals discriminated against its female employees by giving them lower salaries and fewer chances for promotion.

The jury awarded $250 million in punitive damages to a class of current and former female sales representatives, as well as $3.37 million in compensatory damages to 12 women who had sued the company in 2004.

The settlement, which came after about two months of negotiations, resolved the case for a much lower amount.

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