Bloomberg BNA, June 11, 2012 – Judge OKs $99 Million Overtime Settlement For More Than 7,000 Novartis Sales Reps

Posted June 11th, 2012.

As appeared in the Bloomberg BNA

By John Herzfeld

NEW YORK–A federal judge May 31 gave final approval to a $99 million settlement of a nationwide wage and hour class action on overtime claims by more than 7,000 Novartis Pharmaceuticals Corp. sales representatives (In re Novartis Wage & Hour Litig., S.D.N.Y., No. 06-MD-1794, settlement approved 5/31/12).

Judge Paul A. Crotty of U.S. District Court for the Southern District of New York approved the settlement following a fairness hearing held the same day. In January, he granted preliminary approval to the settlement, which stems from a pair of 2006 lawsuits filed under the Fair Labor Standards Act and California and New York laws (30 HRR 91, 1/30/12).

The final order and judgment allocated $70,758,500 to settlement awards for class members; $27,608,000 to attorneys’ fees; $400,000 to reimbursement of litigation fees; and $233,500 to class representatives and others involved in the case.

The $233,500 included compensatory damages and service awards ranging from $20,000 to $40,000 for each of five named plaintiffs.

In February 2011, the U.S. Supreme Court declined to review a decision by the U.S. Court of Appeals for the Second Circuit that the Novartis pharmaceutical representatives were covered by FLSA overtime protections (29 HRR 234, 3/7/11).

But a decision by the Supreme Court is pending in a separate case, Christopher v. SmithKlineBeecham Corp. (U.S., No. 11-204), raising the issue of whether the FLSA’s outside sales exemption covers pharmaceutical sales representatives (29 HRR 1295, 12/5/11). The case was argued in April, and a decision is expected by the end of the high court’s term in June (30 HRR 425, 4/23/12).

‘Keenly Aware’ of Pending Case
The sales representatives’ law firm in the Novartis case, Sanford Wittels & Heisler in Washington, D.C., pointed to the pending case as one of the reasons for settling the Novartis case.

In reaching the settlement, the law firm “was keenly aware that if the Supreme Court ruled that pharmaceutical representatives are exempt outside salespersons, the plaintiffs in the Novartis case would not be able to recover any overtime pay, notwithstanding the Second Circuit’s favorable ruling,” according to a statement on the firm’s website.

The firm also said it considered the “serious danger” that, if there were a change in administrations after the November presidential election, the Labor Department “would take the position that pharmaceutical sales representatives are exempt from overtime pay.”

Representatives of the plaintiffs and Novartis did not respond to requests for comment on the judge’s approval. In a joint statement they issued when the preliminary approval was granted, the two sides said they had decided not to await a Supreme Court decision in the SmithKlineBeecham case.

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