Wall Street Journal, May 20, 2010 – More on the ‘Game Changing’ Novartis Verdict

Posted May 20th, 2010.

Novartis got absolutely slammed earlier Wednesday when a jury ruled it should pay $250 million in punitive damages arising out of sex-discrimination charges. The award represented 2.6 percent of the company’s $9.5 billion in revenues.

$250 million. How bad is that? Consider this: the punitive damages over the Exxon Valdez crash, when all was said and done, were only a little more than twice that. Also consider this: that just two months ago, Sanofi-Aventis settled a sex-discrimination class-action for $15 million, chump change when compared with the Novartis ruling.

But what about going forward? Are other lawyers and companies sitting up and taking notice?

It seems that way. We checked in with Mike Delikat, the chair of Orrick’s employment law practice on the broader impact the ruling might have.

Delikat referred to a “perfect storm of events” — the Obama administration’s interest in shrinking the pay disparities among certain groups, the recent Wal-Mart class-action ruling, and now the Novartis punitives ruling.

“It should clearly cause the employer community to sit up and look at its potential exposure in this area,” said Delikat. “You’re going to see more class-actions filed, and more individual claims of gender and race discrimination. It could be a bonanza.”

Delikat said that the Novartis ruling was a “game changer,” in that it provided a new arrow for plaintiffs lawyers to tuck into their quivers. “How many employers are going to be willing to take a case now that we have a case like this on the books?” he asked. “The case is going to encourage even more defendants to settle — and pay a lot more than they used to.”

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