Novartis gender discrimination verdict: Guilty as charged

The Novartis gender discrimination trial has concluded, and damages have been awarded to the plaintiffs. Novartis must pay $3.4 million in compensatory damages and $250 million in punitive damages.

Highlights of the trial’s testimony included the behavior of one manager, Brian Aiello, who asked female sales reps to sit on his lap while he showed them pornography. Novartis took years to respond to complaints about this manager and testified, in its defense, that “every company has a few jerks.”

One of the lawyers for the plaintiffs made this comment on the verdict:

This jury learned that Novartis is not somewhere you would want your wife, your mother, your sister or your daughter to work. Novartis expected its female employees to do more than just go out and market its drugs — Novartis has a corporate culture that expects female representatives to be available and amenable to sexual advances from the doctors they call on. Time and time again, Novartis looked the other way when female representatives complained about inappropriate doctors. And then, to add insult to injury, Novartis paid those same women less, wouldn’t promote them into management, and punished them if they got pregnant. Novartis refused to treat its female employees as the competent and hard-working professionals that they were and are.

A human resources department from hell

The trial included testimony from a highly successful Novartis sales rep who was on the verge of breaking into management. Three men were involved in what appeared to be an arranged rape: The sales rep’s boss, his best friend (a top prescribing doctor), and a buddy of the friend (the rapist). DailyFinance summarizes the sales rep’s testimony:

The rape allegedly occurred after a Novartis golfing event that Salame [the sales rep] had hosted for two doctors. Following the game, Salame’s car keys were missing — she suspects her boss’s friend took them from her purse — and when his buddy offered her a ride, instead of taking her home, he took her to a remote location and attacked her. Although her supervisor was initially supportive, Salame said, that later changed. Within a few weeks, she was being interviewed by a human resources executive and her supervisor in a hotel lobby.

The plaintiff described that public meeting in her testimony:

Having to discuss the details of the night of that assault was extremely difficult. So I looked down. And Mr. Robinson [the HR exec] asked me if that was it when I finished. And then he told me to look him in the eyes. And he got up in my face and pointed in my face and told me, “Look me in the eyes when I’m talking to you so I can see that you can hear what I’m saying to you.”

And then he started to tell me how I should have had another set of keys. That my phone was low on battery that night, I should have went to a landline. Asking me how much I had to drink. Telling me how I needed to take accountability for what happened that night.

There are more outrageous details on how this employee was treated — including the sales rep’s boss lying to police after the rapist called and confessed — but the upshot was that her career at Novartis came to a complete end.

For more background details on the Novartis gender discrimination case, see Gender and racial discrimination at a Pharma giant.

Fines for fraud are the cost of doing business

The Wall Street Journal headline for this story was: “Novartis’ Hit from US Discrimination Suit Looks Manageable.” The message: It’s OK to harass employees as long as it doesn’t affect sales. From Novartis’ point of view, its reputation hasn’t been harmed because the issue was not product safety.

An investment analyst commented:

The amount asked by the plaintiff lawyer is lower than feared. Since Novartis will appeal the decision, this figure could even be lower in the end. Also, the reputational damage may be lower than feared as this case is centering on sales staff and not on a drug-related issue.

Novartis’ stock price was up following news of the trial’s verdict.

Pharmaceutical companies are too large, financially, to be threatened by fines. They consider the payment of monetary damages a cost of doing business. Lewis Morris, Inspector General of the US Dept. of Health and Human Services, has discussed a policy called the “responsible corporate official doctrine.” Individual executives who are in a position of authority and are responsible for preventing fraud may be held accountable. That would certainly be a step forward.

The FDA has also expressed its intent to hold executives in the pharmaceutical and food industries accountable.

Financial considerations no longer motivate ethical behavior. It’s become very clear that this is the world we live it. It’s offensive and depressing.

Resources:

Photo source: Women over 40 Health

Bryan Cave et al., FDA puts teeth to its promise to target executives with misdemeanor charges, Lexology, April 29, 2010

Ed Silvenman, Feds Consider Banning Execs for Fraud, Pharmalot, April 20, 2010

Jim Edwards, HR Hell at Novartis: Alleged Rape Victim Threatened With “Disciplinary Action”, Bnet, April 28, 2010

Abigail Field, Legal Briefing: Rape Testimony Devastating in Novartis Sex Discrimination Case, Daily Finance, April 30, 2010

Goran Mijuk, Novartis’ Hit From US Discrimination Suit Looks Manageable, Wall Street Journal, May 19, 2010

David Glovin and Patricia Hurtado, Novartis Must Pay $250 Million in Gender Bias Lawsuit (Update4), BusinessWeek, May 19, 2010

PR Newswire, Female Sales Reps Win Case Against Novartis In Largest Gender Discrimination Case to Go to Verdict, Forbes, May 17, 2010

Larry Neumeister, NY Jury Finds Novartis Discriminated Against Women, ABC News, May 17, 2010

Kathryn Glass, Jury Finds Novartis Guilty of Gender Discrimination, Fox Business, May 17, 2010

Charles Carter, David E. Rovella, Novartis Must Pay Punitive Damages in Sex-Bias Case (Update1), San Francisco Chronicle, May 17, 2010