May 17, 2010 / 6:54 PM / 9 years ago

UPDATE 3-Drugmaker Novartis loses U.S. gender bias trial

* Novartis to pay $3.3 mln in compensatory damages - jury

* Punitive damages to be decided in separate hearing

* Women employees sued pharmaceuticals giant in 2004 (Adds plaintiffs’ comment, lawsuit details)

By Basil Katz

NEW YORK, May 17 (Reuters) - Pharmaceutical company Novartis AG NOVN.VX (NVS.N) engaged in a pattern of discrimination against women at one of its divisions, a U.S. jury ruled on Monday, awarding compensatory damages of $3.3 million to 12 women and soon to be determined punitive damages to a larger group.

Some 5,600 current and former employees of Novartis Pharmaceuticals Corp, a U.S. division of the Swiss company, alleged in a class-action lawsuit that they were systematically denied promotions, paid less and subjected to discrimination while working at the company.

The jury awarded compensatory damages to 12 women of the group who testified at trial. It also said Novartis should pay punitive damages to the entire class of 5,600, delivering the verdict after a six-week trial in U.S. district court in New York.

The amount of the punitive damages would be decided by the jury on Tuesday after separate arguments before presiding Judge Colleen McMahon.

Plaintiff Marjorie Salame, to whom the jury allotted $540,500, testified that after she reported being raped by a doctor during a company outing, managers started questioning her work performance and one supervisor blamed her for what happened.

Most of the women worked as sales representatives for the drugmaker. The lawsuit was filed in 2004.

In court papers, other women said complaints made to the company’s human resources division were routinely ignored, and pregnancies were often the source of discrimination.

Novartis said it was disappointed by the verdict and will consider an appeal.

“Throughout our history and, in particular, in the time frame of this lawsuit, (Novartis) has continued to be recognized for its commitment to an inclusive environment that fosters the career goals of all employees,” a company spokeswoman said.

Plaintiffs’ attorney Steven Wittels on Monday praised the verdict, saying “this jury has sent a message to Novartis —— Get your house in order! Change your culture: the ‘old boys network’ will not be tolerated.”

The plaintiffs sought up to $200 million in damages, including back pay, lost benefits and adjusted wages.

Novartis attorney Richard Schnadig said in his summation on May 10 that “this case, at bottom, is meritless; has no merit whatsoever, statistically or anecdotally.”

Other plaintiffs attorney David Sanford, in his summation the next day, said the case was about “Novartis’ culture of indifference.”

“That environment allowed discrimination to reign for years unabated, without controls, without training, without supervision, without oversight, without leadership to do the right thing, in the right way, at the right time,” Sanford said.

The case is Velez et al v Novartis Corporation, U.S. District Court for the Southern District of New York, No. 04-09194. (Reporting by Basil Katz and Grant McCool, editing by Gerald E. McCormick, Matthew Lewis and Steve Orlofsky)

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