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What Was Novartis Thinking? Rape Claim in Discrimination Suit May Seal the Company's Legal Fate

It will be a miracle if Novartis (NVS) beats the sex discrimination case filed against it by its own female pharmaceutical sales reps -- at least now that a New York federal jury has heard that management allegedly withheld information from the police after a female employee was raped at a work event.

The testimony also raises questions about the wisdom of the company's decision to go to trial instead of settle the case. At Sanofi-Aventis (SNY), a similar case was settled recently for just $15 million -- a tiny sum for a company Novartis's size. The Sanofi case featured much less spectacular allegations. When making legal decisions, managers sometimes let themselves be guided solely by the advice of their counsel, based on the legal technicalities before them. But lawyers -- particularly outside counsel -- are service vendors just like office equipment suppliers and advertising agencies. It's the clients job to listen to their information and then apply judgment -- not to reflexively do what's being "advised."

In this case, current Novartis sales rep Marjorie Salame claims she attended a company golf event. A doctor gave her a ride home afterward and raped her, she claims. Although the incident was reported to the police it was not prosecuted. Salame claims she was then placed in a remedial program for substandard employees and lectured about "responsibility" by her boss. The day before, the court heard that one Novartis executive withheld details of the incident from the police (subscription required). According to Law 360:

Joseph Simmons, a Novartis district manager, stopped short Monday of admitting that he lied during the police investigation into the alleged assault of the sales employee he supervised, Marjorie Salame.
However, he admitted that he never told the police about a contrite phone call he received from the alleged assailant, who attended the golfing event and is a longtime friend of a paid consultant for Novartis.
The doctor didn't admit that he had raped Salame, but did apologize for his behavior to Simmons.

Even though the rape allegation is not clear cut -- emails from Salame show she later called her supervisor "nothing but supportive, understanding and protective" -- that doesn't mean it was smart for the company to contest them in court. Management should have weighed the value of negative publicity they will receive if and when the verdict goes against them.