Jan 25 (Reuters) - Novartis Pharmaceuticals Corp has
agreed to pay $99 million to settle a lawsuit by current and
former sales representatives who claimed they were denied
overtime pay despite working more than 40 hours per week.
The settlement resolves a 2006 lawsuit covering about 7,700
plaintiffs who have worked for Novartis Pharmaceuticals, an
affiliate of Switzerland-based Novartis AG, the law firm for the
The settlement follows a July 2010 ruling by the 2nd U.S.
Circuit Court of Appeals in New York that the workers qualified
for overtime under the federal Fair Labor Standards Act.
The U.S. Supreme Court is likely to address the same issue
after another federal appeals court said similarly situated
workers at a unit of Britain's GlaxoSmithKline Plc were not
entitled to overtime pay.
Andre Wyss, president of Novartis Pharmaceuticals, in a
statement said that while the company believes it pays workers
in accordance with applicable federal and state laws, "it is
time to resolve these wage and hour claims."
U.S. District Judge Paul Crotty in Manhattan on Tuesday
granted preliminary approval to the $99 million settlement, a
sum that includes attorneys fees of as much as 30 percent, court
A hearing to grant final approval is scheduled for May 31.
Novartis Pharmaceuticals is based in East Hanover, New
The Supreme Court agreed in November to review a decision by
the 9th U.S. Circuit Court of Appeals in California that
classified the Glaxo sales representatives as "outside sales"
personnel exempt from the FLSA overtime pay requirement.
If the Supreme Court upholds that February 2011 decision, in
the case Christopher v. SmithKline Beecham Corp, it would mean
that no overtime pay was owed.
"The risks of further litigation are great," David Sanford,
a partner at Sanford Wittels & Heisler representing the Novartis
plaintiffs, said in an interview.
"If the Supreme Court rules that the outside sales exemption
applies, then all of this litigation is over," he added.
Novartis declined to elaborate on the settlement.
The Novartis plaintiffs include various sales
representatives who worked for the company between 2002 and
2007, and from Jan. 25, 2009, to the present.
Sanford said payouts will vary based on length of employment
and compensation, and on how many plaintiffs choose to take part
in the settlement.
His firm also reached a $175 million settlement with
Novartis in July 2010 to resolve claims of bias against 5,600
The case is In re: Novartis Wage & Hour Litigation, U.S.
District Court, Southern District of New York, No. 06-md-01794.
For Novtaris: Aaron Gelb, Richard Schnadig, Sara Kagay and
Thomas Abram of Vedder, Price, Amber Solano, Robert Wenzel and
Thomas Kovacich of Atkinson, Andelson, Loya, Ruud and Romo,
Daniel Woods and Tomothy Rusche of White & Case, Darin McAtee of
Cravath, Swaine & Moore, Linda Shostak and Marian Waldmann of
Morrison & Foerster and Ronald Ackerman of Ronald P Ackerman Law
(Reporting by Jonathan Stempel; Additional reporting by James
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