Supreme Court Rejects Novartis Petition

Move Has Enormous Ramifications for Pharmaceutical Industry

According to this article from Pharmalot.com, the U.S. Supreme Court issued a decision called a denial of certiorari to Novartis Pharmaceuticals. The ramifications could ultimately transform the way in which drug makers around the country treat and pay their salespeople. Novartis and another major drug maker, Schering Corp, sought to appeal a July 2010 ruling from the Second Circuit that found in favor of their pharmaceutical sales reps, who claimed that the drug makers had unfairly denied them overtime pay in violation of the Fair Labor Standard Act (FLSA).

According to the article: The decision against Novartis and Schering–Plough was made by the Second Circuit, which presides over territory where other lawsuits have been filed against Pfizer, GlaxoSmithKline, Abbott Laboratories and Bristol–Myers Squibb. As a result, the Supreme Court decision suggests that the sales reps will likely win their cases in these jurisdictions.

The plaintiffs reacted to the news with jubilation. The number of past and current sales reps for Novartis alone is estimated to be 2,500. According to the FLSA, outside salespeople are not entitled to overtime pay (above and beyond 40 hours a week worked) unless an exemption to the FLSA applies. So what might constitute an exemption? According to the article, exemptions might apply if an employees primary duty is to obtain orders or contracts… and [he or she] regularly does so away from the employers place of business.

Novartis, Schering Corp, and other pharmaceutical giants made the case that their sales reps are outside laborers, since they sell directly to physicians. But the Second Circuit rejected this argument and others that the defendants proposed. The U.S. Department of Labor threw its weight behind the salespeople in 2009, filing an amicus brief with the Second Circuit that urged the court to side with the reps' position.


Tip Sheet: Tim and Nina Zagats' Guide to Restaurant Class ActionsAm Law Daily Article Highlights Kirschenbaum's Achievements

This December 16th article from The Am Law Daily highlights the profound influence 31-year-old attorney D. Maimon Kirschenbaum has had on the New York City restaurant industry. Kirschenbaum, who is only five years out of law school, has already became a name partner at Joseph & Kirschenbaum and has earned special attention for his work suing high profile restaurants for wage and hour violations and inappropriate tip sharing. Caroline Richmond, a partner at Fox Rothschild, who has gone up against Kirschenbaum in 10 relevant cases, expressed her awe at his meteoric assent: "I have not seen anybody rise as quickly as Kirschenbaum as far as building a practice and a name for himself."

Kirschenbaum's targets have included Mario Batali, Jean-Georges Vongerichten, Drew Nieporent, Keith McNally, and Masaharu Morimoto. The Kirschenbaum-led suits against large restaurants for bad practices have led to a polarized, spirited debate among foodies and New York City restaurant critics. Tim and Nina Zagat, authors of the renowned eponymous restaurant guide, wrote a New York Times Op-Ed piece last Tuesday attacking the "scourge plaguing the city's finer eateries… A bevy of class action lawsuits in which restaurant servers claim they are being shortchanged in various ways by management."

Despite the backlash from critics, Kirschenbaum has held his own - even against big firms like Fox Rothschild, Littler Mendelson, and Proskauer Rose. His philosophical approach is simple: "For the most part, the restaurants don't work on the same budget as Citibank, and they are not really interested in hiring 300 lawyers to work on a case… basically if there were cases against restaurants for withholding of tips, we brought them as long as the claims were good."