Washington/New Delhi: A US court has dismissed whistle-blower harassment charges against Indian IT major Infosys filed by its employee Jack Palmer as no basis to support any of the allegations was found.
Reacting to the development, Infosys asserted that the company is built on core values and is led by integrity and transparency.
"Judgement 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 Indian IT company.
Infosys CEO and MD S D Shibulal in a conference call said, "Today's decision confirms what we have been saying from the beginning, Mr Palmer's claim of retaliation were completely unfounded. This is a company built on core values that include leadership by example, integrity and transparency."
He added that the matter was officially closed.
"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," Shibulal said.
Asked if the judgement could deter other employees to come forward as whistle-blowers, Shibulal said the company had a strong policy in place. "Whenever something is reported, we look into it," he added.
The court order boosted the market sentiment on the BSE. Infosys shares closed 2.37 percent higher. Buoyed by Infosys, benchmark index Sensex surged by 194 points.
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.
In February 2011, Palmer had filed a lawsuit in an Alabama court accusing the company of visa fraud saying he was asked by the firm to sign on documents which 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.
He had also alleged Indian workers in his team were paid substantially less than an American would have made on the same job.
After mediation efforts between Palmer and Infosys failed, the case went to trial on August 20.
Shibulal said the judge found no basis to support any of the charges that were filed by Palmer and had dismissed the case entirely.
"Palmer had materially falsified and altered several critical documents probably did not help his cause," he added.
"In the wording though, as part of what constitutes summary judgement, the judge is showing that even if hypothetically all the claims were to be true, it still isn't worth going to trial," Shibulal 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.
On the second lawsuit filed against Infosys in a California court, Shibulal said the company has completed its internal investigation.
"I think we have done our investigation and have found that the claims are totally unfounded. Our lawyers are preparing for the defence," he said.
The lawsuit, filed on August 2, by Satya Dev Tripuraneni alleges that he faced harassment and had to quit his job after he reported visa fraud by managers at Infosys.
Tripuraneni said the company fraudulently billed for workers brought from India on short-term visitor visas and also evaded taxes.
Asked if Palmer would be a part of projects, Shibulal said, "The utilisation remains low and as and when we need people, they are moved from the bench to projects."
In April this year, Infosys in a filing to the US Securities and Exchange Commission said that the US department of Homeland Security (DHS) was reviewing the company's employer eligibility verifications after it found a "significant percentage of errors in Forms I-9 of some of its employees working in the country".
Asked about an update, Shibulal said, "We have made statements in the past. There are no further updates at this point in time as in when there is an update, we will let you know."
Form I-9 is used by an employer to verify an employee's identity and establish that the worker is eligible to accept employment in the US. Every employee has to complete an I-9 form at the time of being hired.
"In the event that the DHS ultimately concludes that our Forms I-9 contained errors, the department would likely impose fines and penalties on us," Infosys had said.
The Infosys victory may deter potential copycat lawsuits against Indian companies and the mere possibility of litigation should not scare away businesses from investing in the US, Birmingham-Alabama-based attorney with Haskell Slaughter Young & Rediker, Jagdesh Kirpalani, said.
Noting that some blogs and news outlets misapprehended the litigation as a whistleblower case, he said the plaintiff's case against Infosys was not a whistleblower, or qui tam, action.
"Simply put the plaintiff's case was an employment case alleging claims founded in contract and tort. The plaintiff failed to establish that Infosys breached a contract with him.
"The plaintiff did not present any conduct on the part of Infosys that rose to the level of an intentional infliction of emotional distress. Accordingly, the court threw out the plaintiff's claims as insufficient," he said.
The judge in his 23-page opinion 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."
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 lakh per annum to Rs 90 lakh, 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.
First Published: Tuesday, August 21, 2012, 10:25