Federal Judge Certifies Class in Gender Discrimination Lawsuit Against Pharmaceutical Company

In one of the largest gender discrimination class actions ever brought, female sales employees at Novartis Pharmaceuticals ("Novartis") have been given the okay to proceed as a class in their $200 million lawsuit against the company.

The named plaintiffs are 19 women who work or have worked in sales-related positions at Novartis in New York and 16 other states. Judge Gerald E. Lynch, a federal judge in Manhattan, recently gave these 19 women authority to represent a class of all women who have worked in sales-related positions at Novartis at any time since July 15, 2002. Amy Velez, et al. v. Novartis Pharmaceuticals, Novartis Corporation, and Thomas Ebeling, No. 04 Civ. 9194 (GEL)(S.D.N.Y., July 31, 2007).

According to the most recent amended complaint, "gender discrimination permeates the corporate culture" at Novartis. This "systemic gender discrimination," plaintiffs contend, includes discrimination against women in compensation, promotions, personnel evaluations and pregnancy-related matters. The lengthy complaint contains examples of the company's alleged discrimination against the 19 women. Plaintiffs also submitted to the court declarations from 87 past and present female employees and two expert reports.

Although Judge Lynch was not called upon to assess the ultimate truth and validity of the evidence at this time, he was asked to determine whether, based on the complaint, declarations and reports, the court should certify the class. In class actions, among other things, plaintiffs must demonstrate that a proposed class presents "common questions of fact or law" in order for the class to be certified. In this case, plaintiffs had to show that the alleged discrimination was, for the most part, not unique to each individual plaintiff, but instead more closely resembled a course of conduct commonly applicable to the entire class.

Judge Lynch's decision to certify the class was largely informed by the plaintiffs' declarations and expert reports, according to his 51-page opinion. The expert reports included statistical evidence suggesting that women at Novartis were given lower scores on performance evaluations and had a lower probability of promotion. They also contained statistical evidence purporting to show that female employees were paid approximately $75 per month less than their male counterparts, a discrepancy that, according to plaintiffs, would likely be larger taking into account the company's failure to promote women.

In addition to the statistical evidence, plaintiffs provided anecdotal evidence from various women claiming they were not compensated on a par with their performance and that they were passed over for promotions and excluded from training sessions.

Based on this evidence, Judge Lynch ruled that whether Novartis discriminated against women in performance evaluations, compensation and promotions were questions common to the entire class.

Commenting on the court's analysis of the evidence plaintiffs submitted, Jackson Lewis partner Stephen Munger stated, "Class counsel have used statistically significant disparities and anecdotal evidence in class race and sex promotion and pay cases for years. What is unusual in this case is that the court accepted the plaintiffs' approach." According to Mr. Munger, "The majority of the circuit courts of appeals do not believe these cases can be managed on a class-wide basis because of the individualized nature of the plaintiffs' claims. Eventually this issue will need to be decided by the Supreme Court."

Plaintiffs also submitted extensive anecdotal evidence of alleged pregnancy discrimination, with declarations from 28 employees and three plaintiffs in 14 different states all claiming to have been victims of pregnancy discrimination. Some examples of these anecdotes include:

• An employee's declaration that she was told she "did not qualify for a pay increase because [she] had not been in her territory during [her] Maternity Leave."
• An employee's declaration that her manager said to her, "First comes love, then comes marriage, then comes flex time and a baby carriage."
• An employee's declaration that she was encouraged by a manager to get an abortion.
• An employee's declaration that employees were encouraged not to get pregnant during training sessions. The declarant, pregnant at the time, alleges that a trainer looked at her and said, "Oops, too late."

Judge Lynch found the declarations "numerous enough and detailed enough to establish that a common question exists" on plaintiffs' pregnancy discrimination claim.

Finding that plaintiffs satisfied all other class certification requirements, Judge Lynch granted plaintiffs' motion for class certification. In the same opinion, he dismissed the plaintiffs' claims against Novartis Pharmaceuticals' parent company, Novartis Corporation, ruling that the plaintiffs failed to show that the two companies "function as a single enterprise."

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Employers would be wise to heed this growing trend of class actions based on alleged systemic discrimination claims. As mentioned in one of our previous updates (Ninth Circuit Affirms Certification of a Historic Class Action in Dukes v. Wal-Mart, Inc.), Title VII class action discrimination claims are on the rise and appear to be riding the coattails of the tremendous explosion of wage and hour employment class action litigation of the last five to ten years. "Effective control of these systemic-based allegations requires deliberate risk management through effective auditing, data-mining, issue identification and mitigation of these issues," says David R. Jimenez, Co-Chair of the Jackson Lewis Corporate Governance Practice Group.

Employers should also be mindful of the increase in pregnancy-related discrimination lawsuits in recent years. In addition, as we discussed in an earlier update (EEOC Issues Guidance on Workers with Caregiving Responsibilities), the Equal Employment Opportunity Commission issued new Enforcement Guidance this year addressing discrimination against caregivers. Among other things, the Guidance states that employers may violate Title VII of the Civil Rights Act of 1964 by making assumptions about pregnancy, the commitment of pregnant workers, pregnant workers' ability to perform certain physical tasks, or the effect of pregnancy on an employee's job performance.   With class actions on the rise, savvy employers should also take steps to prevent pregnancy-related discrimination claims.

Jackson Lewis attorneys can provide you with assistance on complex issues including corporate governance and class action litigation avoidance. If you would like to learn more about what your organization can do to address these and other emerging workplace law issues, please contact one of the attorneys listed above or your regular Jackson Lewis attorney.