The stakes in workplace class action litigation just got higher. A class of female sales representatives at Novartis have agreed to accept a settlement of $175 million to resolve their sex discrimination class action in Velez v. Novartis Pharmaceuticals Corp., Case No. 04-9194 (S.D.N.Y.). As such, it is one of the 10 Largest EPL Settlements. On July 14, 2010, the court granted preliminary approval of the settlement. It covers a nationwide class of female current and former sales employees who asserted claims of systemic gender discrimination in pay, promotions, and pregnancy leave. The company will pay up to $152.5 million in back pay and compensatory damages and an additional $22.5 million to fund programmatic relief for company-wide equal employment opportunity improvements, training, and enhanced bias complaint processes for its sales staff. The settlement follows in the wake of a record $253.3 million verdict on May 19, 2010. The verdict represented the culmination of one of the largest class action discrimination cases to go to trial and resulted in a jury finding that Novartis had discriminated against thousands of female sales representatives over pay, promotion, and pregnancy. The jury awarded about $3.3 million in compensatory damages to just 12 of the class of over 6,500 women, and $250 million in punitive damages. The remaining class members can apply for damages now, which will likely be determined by a special master. This NY Times story has details on the trial verdict. The settlement followed quickly after Novartis filed an appeal of the verdict.
We see multiple implications from the verdict and settlement. Plaintiffs’ lawyers are sure to trumpet the verdict in settlement negotiations in seeking to drive higher settlement demands. The obvious theme is “Do you want to be the next Novartis?” Employees thinking of suing their companies will read about the verdict and experience a re-calibration of their litigation expectations – as in “I want that kind of money too!”