In a key ruling in favor of Infosys employee and whistleblower Jay Palmer, a federal judge has denied Infosys' motion to compel arbitration in Palmer�s visa and tax fraud lawsuit against the company. That means Infosys� hopes to have the case heard behind closed doors have been dashed.
Palmer�s attorney, Kenny Mendelsohn, informed me last night that U.S. District Court Judge Myron H. Thompson yesterday denied the motion, which Infosys filed in March (see my post, ). Infosys had argued that Palmer had signed an agreement under which any disputes between him and the company would be settled by arbitration. In my April post, I noted that Infosys was going to have a tough time getting Judge Thompson to buy that argument. Here�s an excerpt from that post:
In his objection to the arbitration motion filed to Federal District Court Judge Myron Thompson on [April 12], Kenny Mendelsohn, the attorney representing Palmer in the case, brought some information to light that Infosys no doubt would have preferred be kept under wraps. It turns out that Infosys� arbitration argument has already been stricken down by a judge in a previous case of an Infosys employee filing a lawsuit against the company.
That was the case brought last summer by Promila Awasthi, a U.S. citizen of Indian descent who worked for Infosys in California. � Infosys filed a motion to compel arbitration in that case, arguing that as a condition of employment, Awasthi had signed an arbitration agreement in which she acknowledged that any claims or disputes against Infosys �shall be subject to binding arbitration.� Unfortunately for Infosys, court documents show that the Superior Court of Alameda County, Calif., denied the motion, finding that the �arbitration agreement is not enforceable as it is unconscionable.� That�s a legal term that simply means �unfair� or �one-sided.�
Equally unfortunate for Infosys, that�s the very same arbitration agreement that Palmer was compelled to sign in 2008 as an eleventh-hour addendum to his employment negotiations and processing, and on which Infosys is basing its arbitration argument in his case.
Indeed, Judge Thompson denied Infosys� motion for the same reason. Here�s an excerpt of his finding yesterday:
Because the parties did not �clearly and unmistakably� agree to arbitration arbitrability, this court must decide Palmer�s unconscionability challenge.� Under California law, �[u]nconscionability analysis begins with an inquiry into whether the contract is one of adhesion.� � A contract of adhesion is another term for a �standardized contract, which, imposed and drafted by the party of superior bargaining strength, relegates to the subscribing party only the opportunity to adhere to the contract or reject it. � Here it is clear that the arbitration agreement is a contract of adhesion. The arbitration provisions, included within a larger employment contract, are boilerplate and drafted by the party with superior bargaining power, the employer. Similarly, the contract is procedurally unconscionable. The employment agreement begins: �As a condition of my employment with Infosys...I agree to the following.� � Indeed, �few employees are in a position to refuse a job because of an arbitration requirement.� ... This type of ��oppression� ... due to unequal bargaining power� suffices for a finding of procedural unconscionability.�
It�s a major blow for Infosys, and a huge victory for Palmer. More importantly, it�s a victory for the cause of justice. Now Infosys is forced to try to get Palmer to settle the case, or to have all of its dirty laundry aired in open court.