K S Badrinarayanan:BL:21 Aug 2012
Infosys has informed the BSE that a US judge dismissed a harassment case filed by its employee Jack Palmer.
The Infosys stock surged 2.5 per cent to Rs 2,410.25 on the BSE.
According to the information available on the BSE, the US District Judge Myron H. Thompson found no basis to support any of the charges filed by Palmer under Alabama state law and dismissed the case entirely.
This has come as a great relief to Infosys, as the verdict came at a time when the company is also facing a Grand Jury investigation in the US over alleged misuse of B1 visas.
Reacting to the development, Infosys said: “Today's decision confirms what we have been saying from the beginning. Palmer’s claims of retaliation were completely unfounded. This is a company built on core values that include leadership by example, integrity and transparency. We are pleased to consider this matter officially closed.’’
Infosys had filed for a motion of summary judgment as it believes the facts of the case are clear and there is no need for a trial, the company said, while moving the US court.
In February 2011, Palmer filed a lawsuit in an Alabama court accusing the company of visa fraud saying that he was asked by the firm to sign on documents that said workers were heading to the US to have meetings rather than to work there, which he claimed was done to “creatively” overcome H1-B visa caps.
According to Wells Fargo: "This decision is a short-term positive given that lack of a trial and the resulting potential for negative press coverage, in our view. However, the issue remains unresolved, as we note that a Grand Jury Investigation of Infy's visa usage is still outstanding and a second whistle-blower alleging similar visa misuse and retaliation by the company also remains.''
PTI reports
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.
Threats against whistle-blowers
Judge Thompson even stated that an argument could be made that such threats against whistle-blowers, 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 whistle-blower retaliation claim into a negligence or wantonness tort.
Alabama tort law
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 whistle-blower retaliation,” the judge said in his 23-page opinion.
In fact as he donned the mantle of being a whistle-blower accusing his employer Infosys of harassing him and indulging in visa fraud, the annual salary of Palmer increased from about Rs 80 lakh per annum to Rs 90 lakh, in addition to the annual bonuses.
Hike in Palmer's base salary
Palmer’s base salary increased from $145,000 in 2008 to $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 that 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 $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 whistle-blower 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.
Retaliation campaign
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 ($16,229), December 2010 ($7,251), June 2011 ($12,534), and December 2011 ($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.
Palmer's allegations
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.
Breach of contract
Referring to Palmer’s contention that Infosys breached its contract with him by not paying him a 30 per cent 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 per cent as being claimed by him.
“Palmer’s bonuses are governed by Infosys’s incentive plan, which awards bonuses on a sliding scale from 0 per cent to 100 per cent 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.
Electronic, telephonic threats
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 civilised 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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