Judge Rules for Infosys in Whistleblower Case

Judge Myron H. Thompson says whistleblower Jack Palmer Jr. has not proven his claims of breach of contract and fraudulent misrepresentation against Infosys. As a result, the case will not go to trial.

On the day that whistleblower Jack "Jay" Palmer Jr.'s lawsuit against Infosys was originally scheduled to go to trial, the judge has ruled in the Indian IT service provider's favor.

In an opinion filed today, Alabama Judge Myron H. Thompson ruled that Palmer failed to prove his claims against Infosys—including breach of contract and fraudulent misrepresentation—under Alabama state law and therefore had no right to recover damages from the $6 billion outsourcing provider. The judge also ordered Palmer to pay Infosys' legal fees.

Palmer claimed he was harassed, threatened and eventually sidelined when he filed an internal whistleblower claim indicating that Infosys was misusing U.S. work visas. Specifically, the judge noted that as an at-will employment state, "absent a contract providing otherwise, [an] employee [in Alabama] may be demoted, denied a promotion, or otherwise adversely treated for any reason, good or bad, or even for no reason at all."

The summary judgment means the case will not go to trial before a jury.

Whistleblower: Infosys Violated Visa, Tax Laws

The case put a spotlight on the IT outsourcing industry's use of temporary work visas to bring foreign-born professionals to work at customer sites in the U.S. Palmer presented evidence alleging that Infosys violated visa and tax laws to increase its profit margins, specifically abusing the U.S. B-1 business visitor visa to bring the outsourcer's Indian employees to perform software development, quality assurance and testing for U.S. clients.

According to Palmer's testimony before the Senate Judiciary Subcommittee on Immigration, Refugees and Border Security last year, the B-1 visas were easier to obtain than the increasingly scrutinized H-1B worker visas. In addition, Palmer testified, B-1s did not have to be paid a prevailing wage, since visitors on a business visa are not supposed to be drawing a salary in the U.S. at all.

Palmer also reported these allegations to federal authorities. Infosys is under investigation by the Department of Homeland Security and a federal grand jury.

Judge Thompson's opinion states that Palmer's brief spent "an inordinate amount of time addressing whether Infosys engaged in visa fraud" when the case did not in fact concern whether Infosys violated American immigration law.

Threats Against Palmer "Deeply Troubling" But Not Illegal

The judge indicates that the threats Palmer reported receiving since going public with his claims against his employer—such as a note Palmer says was affixed to his computer reading "hope your journey brings you death stupid American"—were the most worrisome part of the case.

"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," Judge Thompson states in his opinion. "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."

Palmer is disappointed with the result but respects the judge's decision, says his lawyer, Kenneth J. Mendelsohn.

"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 says. "Most importantly, this decision will have no effect on the ongoing criminal investigations or other claims related to Infosys' visa violations."

Another lawsuit with similar visa fraud claims was filed by a former employee against Infosys earlier this month in California.

Palmer continues to be employed by Infosys; however, according to Mendelsohn, Palmer has not been assigned to an active project since filing his whistleblower claim.

"I remain proud that Mr. Palmer had the courage to report Infosys' crimes and stand up to Infosys in the face of limited Alabama laws protecting Infosys," Mendelsohn adds.

Infosys issued an official statement in response to the judgment, saying, in part, "Mr. Palmer's claims of retaliation were completely unfounded. 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."

Stephanie Overby is a regular contributor to CIO.com's IT Outsourcing section. Follow everything from CIO.com on Twitter @CIOonline, on Facebook, and on Google +.

Copyright © 2012 IDG Communications, Inc.

7 secrets of successful remote IT teams