Bloomberg Law for HR Professionals is a complete, one-stop resource, continuously updated, providing HR professionals with fast answers to a wide range of domestic and international human resources...
By Kevin P. McGowan
A federal district court in New York has granted preliminary approval to a $99 million proposed settlement of a nationwide wage and hour class action against Novartis Pharmaceuticals Corp., potentially benefiting more than 7,000 current and former sales employees, representatives for both sides announced Jan. 25 (In re Novartis Wage & Hour Litig., S.D.N.Y., No. 06-MD-1794, preliminary approval of settlement 1/25/12).
The proposed settlement, which stems from a pair of 2006 lawsuits filed under the Fair Labor Standards Act and California and New York laws, is pending before Judge Paul A. Crotty in the U.S. District Court for the Southern District of New York. Crotty granted preliminary approval Jan. 25 and has scheduled a May 31 fairness hearing.
The proposed agreement covers five subclasses of Novartis sales representatives who allege they were denied overtime pay in violation of the FLSA and state laws.
Crotty in April 2007 had certified three subclasses, including a California subclass of sales representatives working in that state from March 23, 2002, to April 7, 2007, a New York subclass of sales representatives working from March 23, 2002, to April 7, 2007, and an FLSA subclass of those working at least one day between March 23, 2003, and April 7, 2007, who had filed consents to join the FLSA collective action.
The proposed settlement would add an FLSA settlement subclass of those working as Novartis sales representatives for at least one day between Jan. 25, 2009, and Jan. 25, 2012, in certain designated states and a catch-all subclass of Novartis sales representatives who worked in designated states for varying periods beginning in 2005 and are not part of previously certified subclasses.
The U.S. Supreme Court currently is considering Christopher v. SmithKlineBeecham Corp. (U.S., No. 11-204), a separate case raising the issue of whether the FLSA's outside sales exemption exempts pharmaceutical sales representatives from overtime pay under federal law (29 HRR 1295, 12/5/11).
In February 2011, the justices had declined to review a U.S. Court of Appeals for the Second Circuit July 2010 ruling that the FLSA exemption did not apply to the Novartis sales representatives and reversing the district court's 2009 ruling for Novartis (29 HRR 234, 3/7/11; 28 HRR 746, 7/12/10; 27 HRR 76, 1/26/09).
But Novartis and the plaintiffs' attorneys Jan. 25 said they decided not to await a Supreme Court decision in SmithKlineBeecham and to settle their case now. Novartis said the proposed settlement “is in the best interest of our employees and the company.”
“We have been litigating this case for nearly six years and the company has determined that it is time to resolve these wage and hour claims,” said Andre Wyss, president of Novartis, in the parties' joint statement.
“We consistently compensate all employees in accordance with the FLSA and applicable state laws,” Wyss said. “We remain confident that sales representatives should continue to be classified as exempt from overtime because their autonomy and incentive compensation are typical of exempt employees as defined by U.S. law.”
David Sanford, the lead class counsel for the plaintiffs, said the plaintiffs settled despite confidence that the Supreme Court ultimately would find that the FLSA covers pharmaceutical sales representatives.
“While we remain confident that the Supreme Court later this year will uphold the Department of Labor's interpretation of wage and hour law, the risks of further litigation are great,” said Sanford, a partner with Sanford Wittels and Heisler in Washington, D.C.
“We are proud that over [7,000] current and former Novartis sales representatives will be able to participate in this settlement. It is a fair and equitable result and can serve as an exemplar for companies around the United States that face wage and hour litigation,”Sanford said.
Novartis and Sanford Wittels and Heisler, which also has offices in New York and San Francisco, in 2010 reached a $175 million settlement of a sex discrimination class action on behalf of female sales representatives after a jury in the U.S. District Court for the Southern District of New York had returned a $253 million verdict against Novartis (28 HRR 539, 5/24/10).
By Kevin P. McGowan
Text of the proposed settlement may be accessed at http://op.bna.com/dlrcases.nsf/r?Open=kmgn-8qus8k and text of the brief in support of the motion for preliminary approval may be accessed at http://op.bna.com/dlrcases.nsf/r?Open=kmgn-8qutl4.
All Bloomberg BNA treatises are available on standing order, which ensures you will always receive the most current edition of the book or supplement of the title you have ordered from Bloomberg BNA’s book division. As soon as a new supplement or edition is published (usually annually) for a title you’ve previously purchased and requested to be placed on standing order, we’ll ship it to you to review for 30 days without any obligation. During this period, you can either (a) honor the invoice and receive a 5% discount (in addition to any other discounts you may qualify for) off the then-current price of the update, plus shipping and handling or (b) return the book(s), in which case, your invoice will be cancelled upon receipt of the book(s). Call us for a prepaid UPS label for your return. It’s as simple and easy as that. Most importantly, standing orders mean you will never have to worry about the timeliness of the information you’re relying on. And, you may discontinue standing orders at any time by contacting us at 1.800.960.1220 or by sending an email to email@example.com.
Put me on standing order at a 5% discount off list price of all future updates, in addition to any other discounts I may quality for. (Returnable within 30 days.)
Notify me when updates are available (No standing order will be created).
This Bloomberg BNA report is available on standing order, which ensures you will all receive the latest edition. This report is updated annually and we will send you the latest edition once it has been published. By signing up for standing order you will never have to worry about the timeliness of the information you need. And, you may discontinue standing orders at any time by contacting us at 1.800.372.1033, option 5, or by sending us an email to firstname.lastname@example.org.
Put me on standing order
Notify me when new releases are available (no standing order will be created)