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Infosys: US court dismisses harassment case

PTI  Washington, August 21, 2012
First Published: 11:14 IST(21/8/2012) | Last Updated: 12:32 IST(21/8/2012)

A US court in Alabama has dismissed harassment charges filed against Infosys – the major Indian IT company – by one of its American employees.

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"Judgment is entered in favour of defendants Infosys Technologies Limited Incorporated and Infosys Limited and against plaintiff Jack 'Jay' Palmer, Jr, with plaintiff Palmer taking nothing by his complaint," US district judge Myron H Thompson said in his two-page ruling on Monday.

"It is further ordered that costs are taxed against plaintiff Palmer, for which execution may issue," judge Thompson said in his order dated August 20, thus bringing an end to a long drawn case against the major Indian IT company.

Finding no basis to support any of the charges filed by Palmer, the judge ordered that all other pending motions are "denied as moot" and all pending objections are overruled as moot, according to the court documents.

"Today's decision confirms what we have been saying from the beginning: Mr Palmer's claims of retaliation were completely unfounded," Infosys said in a statement.

"This is a company built on core values that include leadership by example, integrity and transparency.  Those values always have and will continue to shape the way we do business with our clients and, without exception, the way we treat our people.

We are pleased to consider this matter officially closed," Infosys said.

In a statement issued through his attorney, Palmer said he is disappointed in the court's orders, but argued that the judge's order will have no effect on the ongoing criminal investigations against Infosys.

"While Palmer and I obviously are disappointed in the results, we certainly respect judge Thompson's decision," said Kenneth J Mendelsohn, Palmer's attorney.

"It is important for the public to understand that judge Thompson did not condone Infosys' conduct. He merely concluded that "under current Alabama law, Palmer has no right to recover from Infosys," Mendelsohn argued.

Judge Thompson even stated that an argument could be made that such threats against whistleblowers, in particular, should be illegal.

The issue before the court, however, is not whether Alabama should make these alleged wrongs actionable, but whether they are, in fact, illegal under state law.

This court cannot rewrite state law, the attorney said.

"Most importantly, this decision will have no effect on the ongoing criminal investigations or other claims or charges against Infosys," Mendelsohn said.

"Infosys argues, and this court agrees, that Palmer is attempting to bootstrap a whistleblower retaliation claim into a negligence or wantonness tort. But there is no evidence that Alabama tort law recognises (arguably as an exception to the State's at-will status) an independent cause of action for negligently or wantonly failing to prevent whistleblower retaliation," the judge said in his 23-page opinion.

In fact as he donned the mantle of being a whistleblower accusing his employer Infosys of harassing him and indulging in visa fraud, the annual salary of Palmer increased from about Rs. 80 lakhs per annum to Rs. 90 lakhs, in addition to the annual bonuses.

Palmer's base salary increased from USD 145,000 in 2008 to USD 165,000 in 2012, the district judge wrote while dismissing the harassment case against Infosys.

"While Palmer believes his bonuses are inadequate, he cannot base a claim of outrage on salary diminution given the undisputed facts about his base salary," the judge wrote.

"Like many firms in our global economy, it works across borders and employs citizens from numerous countries. It often needs to obtain visas for its Indian employees to travel to the US for conferences or to work on a permanent basis," the court said, adding Infosys also employs Americans in the US.

Palmer began working for Infosys in August 2008 as a principal consultant. His starting salary was set at USD 145,008 and was eligible for bonuses per the company's incentive plan. His job as a consultant requires that he rotate on and off projects.

"While on a business trip to Infosys's corporate headquarters in March 2010, Palmer uncovered a massive visa fraud. He believes that the company manipulated the B-1 visa programme, which permits business visits, in order to send Indian employees to the US to work on a permanent basis.

In May 2010, the company asked him to write 'welcome letters' for prospective B-1 visa applicants; he thought that these letters were fraudulent and refused to participate in the scheme," the court said.

"In October 2010, after repeated requests that he participate in the visa fraud scheme, he met with the company's in-house counsel and decided to file an internal whistleblower complaint. Palmer subsequently reported these allegations to federal authorities.

As a result, Infosys is currently under investigation by the Department of Homeland Security and a federal grand jury. He has also testified before the United States Senate Subcommittee on Immigration, Refugees, and Border Security," it said.

Palmer contends that, since his visa-fraud allegations he has been the target of a retaliation campaign, which the court dismissed in its order yesterday.

Palmer alleged his bonuses have been adversely affected.

He believes the bonuses he received in June 2010 (USD 16,229), December 2010 (USD 7,251), June 2011 (USD 12,534), and December 2011 (USD 8,000) were below the rate set in his contract. Second, he submits that he has been the target of harassment.

Palmer, according to the court, alleged he has been the target of harassment.

Regarding work assignments, he was placed on projects from October 2009 to June 2010, July 2010 to October 2010, and October 2010 to April 2011; however, he has not had an assignment since April 3, 2011, and spends his days sitting at home waiting for work to come in from the company.

"He believes that the company is refusing to give him work in an attempt to force him out. Further, he complains that he has experienced many computer problems and has been shut out of the company's network," the judge said, noting he has, however, refused to hand over his company computer for examination out of fear that someone will copy his hard drive.

Dismissing Palmer's allegations, the judge argued that Alabama is an "at-will" employment state.

"The bedrock principle of Alabama employment law is that, in the absence of a contract providing otherwise, employment in this state is at-will, terminable at the will of either party. Under this doctrine, an employee may be discharged for any reason, good or bad, or even for no reason at all," is the explanation of the Alabama Supreme Court .

"And an extension of this principle and logic would be that, absent a contract providing otherwise, employee may be demoted, denied a promotion, or otherwise adversely treated for any reason, good or bad, or even for no reason at all.

The Alabama Supreme Court has, rightly or wrongly, jealously guarded this at-will status and recognised only statutory exceptions (for example, worker's compensation restrictions) and a few narrow non-statutory exceptions," Thompson wrote, giving explanation of dismissing Palmer's case.

Referring to Palmer's contention that Infosys breached its contract with him by not paying him a 30% bonus; his semiannual bonuses since June 2010 have been undervalued.

Additionally, that him being "on the bench" status contributes to his reduced bonuses, the judge said that there is no formal document, signed by Palmer and an appropriate Infosys officer or supervisor, bearing the heading "employment contract" or something comparable.

Judge Thompson said Palmer was not even entitled to the 30% as being claimed by him.

"Palmer's bonuses are governed by Infosys's incentive plan, which awards bonuses on a sliding scale from 0% to 100% of base salary," he wrote, adding Palmer is not entitled to any specific bonus amount in any year.

As such, he cannot establish his breach-of-contract claim under Alabama law.

Referring to the Palmer's allegations of electronic and telephonic threats and anti-American statements, the judge said even though these are "deeply disturbing", it is clear that the Alabama Supreme Court would not view them as "beyond all possible bounds of decency," so that it must "be regarded as atrocious and utterly intolerable in a civilized society."

Moreover, under Alabama law, because Palmer has not been terminated, a claim of outrage may only proceed to trial under the most egregious fact pattern, he wrote.

"The issue before the court, however, is not whether Alabama should make these alleged wrongs actionable, but whether they are, in fact, illegal under state law. This court cannot rewrite state law. Therefore, for the reasons given throughout this opinion, this court must conclude that, under current Alabama law, Palmer has no right to recover from Infosys," the judge concluded.


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