NOVARTIS LOSES CLASS ACTION SEX DISCRIMINATION CASE

by Art Gutman Ph.D., Professor, Florida Institute of Technology

On May 17, 2010, a jury awarded nearly 3.4 million dollars to 12 named female plaintiffs in Velez v. Novartis Corp. There was a 5-week trial in front of District Court Judge Colleen McMahon of the Southern District of New York. The jury deliberated for four days. The 12 named plaintiffs are slated to receive between $50,000 and $598,000 each for lost wages and compensatory damages from the 3.4 million dollar award. But that was just an appetizer. The entrée in this case occurred two days later, when the jury awarded 250 million dollars in punitive damages for a class of 5,600 current or former female sales representatives employed between 2002 and 2007. An estimated class size of 5,600 women will now have the opportunity to opt for damages in front of a special master. The facts of this case are summarized here on the Law.Com website.

This case drew a lot of attention because it is the second largest class action sex discrimination case after Dukes v. Wal-Mart. It is now the largest class action sex discrimination lawsuit to reach a jury trial. The charges were discrimination in promotion, pay , and pregnancy discrimination by female sales representatives. Novartis indicated that it would appeal the ruling.

With the Novartis ruling in the books, attention now turns to Dukes v. Wal-Mart. As we reported in a recent Alert, the 9th Circuit supported a class size of approximately 500,000 women in its en banc ruling on April 26, 2010. It doesn’t take a degree in mathematics to infer that if the punitive damages for 5,600 claimants amounts to 250 million dollars, that the potential award for 500,000 claimants is potentially more than 200 billion dollars.

One gets the feeling that somewhere down the line, the Supreme Court will likely rule in both the Novartis and Wal-Mart cases. If not, we may be close to some precedent setting settlements. We will remain on alert and keep you informed as developments occur in both cases.

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