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Corporate Aug 21, 2012

Infosys wins ‘visa case’ in US court, but faces criminal probe

By Uttara Choudhury

New York: Infosys dodged a bullet by winning a big legal case in America. Alabama federal Judge Myron Thompson on Monday threw out the harassment and retaliation lawsuit against Infosys brought by its employee Jay Palmer. In his ruling, the US judge cited technicalities in Palmer's lawsuit challenging Infosys' visa use.

Thompson found Palmer's case against Infosys had no legal legs because some of the claims brought by Palmer against Infosys, especially those related to threats, aren't covered by Alabama state law. The judge found no basis to support the charges filed by Palmer and dismissed the case entirely, entering a summary judgment in favour of Infosys. The judge further ordered costs against Palmer.

"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 released in the US after learning of the decision.

In the Jay Palmer case, Infosys won on a technicality, and still faces a criminal investigation. Reuters

"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 added.

In his lawsuit, Palmer claimed he was harassed at work, sidelined and received death threats for refusing to be in cahoots with an alleged Infosys scheme that flouted US immigration laws by bringing in engineers from Bangalore on business visitor (B-1) visas, for onsite client projects in the US that actually required H-1B work visas that are rather more difficult (and more expensive) to get.

The Palmer case, which had been scheduled to go to trial on 20 August, was later postponed until 17 September. But in Monday's ruling, the judge said that whistleblower Palmer failed to prove his claims of breach of contract and fraudulent misrepresentation against Infosys. As a result, the case will not go to trial.

Infosys had earlier filed a motion for summary judgment and requested that the case be dismissed.

Threats not illegal under Alabama law

Ultimately, Judge Thompson threw out the case, saying that no Alabama state laws were broken. The judge was explicit that threats against Palmer were "deeply troubling," but not illegal.

"Without question, the alleged electronic and telephonic threats are deeply troubling. Indeed, an argument could be made that such threats against whistleblowers, in particular, should be illegal," wrote Thompson.

But he added that "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."

"Consequently, this court must conclude that, under current Alabama law, Palmer has no right to recover from Infosys," wrote Thompson.

Decision has no impact on criminal investigation

This judgement doesn't, however, let Infosys entirely off the hook. The decision in the Palmer case will have no effect on the ongoing criminal investigation against Infosys. Palmer's civil lawsuit filed last year against Infosys has already spawned a criminal investigation by US authorities into the visa practices of the Indian software giant.

Earlier this month, Senator Charles Grassley, the ranking Republican on the Senate Judiciary Committee, wrote to US Attorney-General Eric Holder, Secretary of State Hillary Clinton and Secretary of Homeland Security Janet Napolitano to inquire about the status of the government's investigation against Infosys in the Palmer case.

A second lawsuit was filed last month against Infosys by a former employee alleging retaliation from Infosys for blowing the whistle on visa practices. Satya Dev Tripuraneni, who worked as an accounts manager at the California office of Infosys, filed the lawsuit in the US District Court for the Northern District of California on 2 August.

"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," Palmer's lawyer Kenneth J Mendelsohn told Firstpost.

Given that outsourcing has become a political hot potato during a US election year, most Indian outsourcing companies have stepped up hiring in the US, tying up with local universities to groom potential computer engineers. Last month, Infosys said it would hire 2,000 engineers in the US this year.

Infosys shares edged up 0.21 percent on Monday to close at $42.67 on the technology-heavy Nasdaq stock market.

by Uttara Choudhury

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