Koehler v. Infosys Technologies Ltd.

Citations: 107 F. Supp. 3d 940; 2015 U.S. Dist. LEXIS 60907; 127 Fair Empl. Prac. Cas. (BNA) 93; 2015 WL 2168886Docket: Case No. 13-cv-885-pp

Court: District Court, E.D. Wisconsin; May 8, 2015; Federal District Court

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A putative class action has been brought against Infosys Technologies Limited, Inc. (ITL) and its subsidiary, Infosys Public Services, Inc. (IPS), alleging race and national origin discrimination in violation of Title VII of the Civil Rights Act of 1964 and 42 U.S.C. § 1981. The plaintiffs, all Caucasian individuals, claim that ITL and IPS engaged in discriminatory hiring and employment practices that adversely affected them based on their race and national origin. The court evaluated the defendants’ motion to dismiss the second amended complaint and found that it sufficiently stated claims for disparate treatment and disparate impact under Title VII, as well as for disparate treatment under § 1981.

However, the court dismissed the plaintiffs' § 1981 claims related to national origin discrimination, as the plaintiffs conceded that such claims are not supported by the statute. Additionally, the court dismissed claims against IPS from plaintiffs Koehler and Parker, who had neither been employed by nor applied to IPS. The complaint alleges a systematic effort by ITL since 2011 to replace non-South Asian employees with South Asian employees, exemplified by the experiences of plaintiff Gregory Handloser, who faced discriminatory practices such as unrealistic performance goals and wrongful termination. Similarly, Layla Bolten's experiences with IPS are cited as reflective of discriminatory hiring, compensation, and promotion practices against non-South Asians. The court denied the motion to dismiss the class allegations, allowing for discovery to proceed.

Bolten was hired by IPS as a Test Analyst instead of the promised position of Test Lead Analyst, which had higher pay and responsibilities. She claims to have repeatedly requested a promotion to Test Lead but was instead informed of ongoing promotions for South Asian workers, who were hired despite lacking software testing experience. Similarly, Brenda Koehler, a Caucasian American, alleges that she was passed over for a position with ITL in favor of a South Asian candidate, despite her qualifications. Kelly Parker claims her contract was terminated in favor of a South Asian worker whom she had trained. 

The complaint asserts a pattern of racial discrimination by ITL, citing instances where South Asian executives encouraged the recruitment of Indian candidates and dismissed complaints regarding the rejection of qualified American applicants. An ITL hiring manager allegedly acknowledged discrimination, stating a preference for Indian workers due to their perceived work ethic and flexibility. 

The plaintiffs contend that ITL systematically sets visa quotas for South Asian workers to meet growth targets for U.S. operations, thereby limiting opportunities for qualified U.S. workers. The defendants counter that the plaintiffs challenge the use of federal visa programs and argue that the plaintiffs have not established a basis for disparate treatment due to a lack of clear definitions of racial and national origin groups. They assert that the plaintiffs cannot demonstrate that adverse employment actions were taken based on their membership in identifiable groups. Additionally, the defendants argue that discrimination based on national origin is not actionable under Section 1981 and assert that the plaintiffs have not shown membership in a racially distinct group.

Defendants contend that plaintiffs' disparate impact claims are deficient due to inadequate specificity regarding the source of the alleged impact and failure to identify a specific policy or practice affecting a protected class member. Under Federal Rule of Civil Procedure 8, a complaint must provide a concise statement of jurisdiction and the claim, demonstrating entitlement to relief. For a claim to survive a motion to dismiss per Rule 12(b)(6), it must present enough factual detail for the court to infer the defendant's liability, as established in Bell Atlantic Corp. v. Twombly and Ashcroft v. Iqbal. The standard requires allegations to be plausible rather than merely conceivable, as articulated in Carlson v. CSX Transportation. Plaintiffs are not required to prove their claims at this stage; they only need to allege sufficient facts. Title VII does not impose a heightened pleading standard, and simple allegations of discrimination, such as being denied a job due to race, suffice. The Seventh Circuit has consistently upheld this standard, reaffirming that once a plaintiff identifies the basis of discrimination, no additional critical information is necessary. The complaint presents plausible claims for race and national origin discrimination under Title VII and race discrimination under Section 1981, both of which prohibit discrimination in various employment contexts, including hiring and discharge.

Title VII and Section 1981 prohibit reverse discrimination against white employees, as established in Everett v. Cook County. Title VII explicitly addresses discrimination based on national origin, unlike Section 1981, which does not include this basis but recognizes discrimination based on ancestry or ethnic characteristics as actionable. The Supreme Court in St. Francis College v. Al-Khazraji clarified that Section 1981 protects identifiable classes from intentional discrimination due to ancestry or ethnic traits, defining race broadly to include these categories. The Seventh Circuit affirmed this interpretation, leading to the conclusion that the plaintiffs’ claims under Count II pertain to race discrimination based on their ancestry rather than national origin.

At this point in litigation, the court favors the plaintiffs' allegations, interpreting them as claims of race discrimination, where race, nationality, and ethnicity are acknowledged as related but distinct concepts. The court emphasizes that the plaintiffs, all Caucasians of American origin, allege discrimination compared to South Asians, asserting that Caucasian and South Asian races are separate. The defendants challenge the plaintiffs’ claims for failing to define a distinct racial group, but the court finds the allegations sufficient to assert intentional discrimination. The plaintiffs attribute adverse employment actions directly to their race, aligning with legal standards from similar cases, and the court accepts additional allegations that enhance the plausibility of the claims.

Plaintiffs present several key allegations supporting their claims of race discrimination in employment, including positive work evaluations, the hiring of South Asian employees in place of the plaintiffs, executive directives to prioritize hiring Indians over Americans, and statements suggesting encouragement of discriminatory practices. The court recognizes that race discrimination claims under Title VII and 1981 are valid and will not dismiss these claims despite the defendants' objections. 

Defendants argue that plaintiffs Koehler and Parker cannot bring a Title VII claim against IPS since they did not apply for positions there; the plaintiffs concede this point, leading to the dismissal of their claims against IPS, while their claims against ITL remain active. Koehler and Parker assert that ITL's employment practices, including setting visa quotas and recruiting individuals primarily from South Asian backgrounds, create a disparate impact on race and national origin, violating Title VII. They claim this results in a skewed employee demographic at ITL's U.S. offices, with significantly higher proportions of Asian employees compared to Caucasians, despite varying local population demographics.

Furthermore, plaintiffs allege that ITL falsely certified efforts to recruit U.S. workers prior to seeking visas for foreign employees. Defendants counter that Koehler and Parker's claims are limited to ITL since they did not seek employment with IPS, and they argue that the plaintiffs have not clearly identified the specific employment practices being challenged, framing their allegations as a critique of ITL's use of visa programs.

Koehler and Parker allege that the defendants engaged in a discriminatory employment practice by systematically setting visa quotas for South Asian workers to fill positions in their U.S. offices, which disproportionately affected them based on race or national origin. They argue that the significant disparity in the defendants' racial demographics suggests a preference for hiring individuals of South Asian descent, specifically from India, Bangladesh, and Nepal. The court finds these allegations sufficiently detailed to constitute a specific employment practice under Title VII, despite the defendants' claim, citing Zhang v. Honeywell International, that the plaintiffs cannot challenge visa practices under Title VII or § 1981. The court clarifies that the Zhang case does not preclude allegations about the misuse of visa programs leading to discrimination under Title VII. 

The court also assesses the plausibility of class allegations under Federal Rule of Civil Procedure 23(c). Although the plaintiffs have not yet filed a motion to certify a class action and no discovery has occurred, the defendants can challenge the class allegations at this stage. The burden rests on the defendants to demonstrate that the plaintiffs have not pleaded plausible class allegations based on the complaint. The plaintiffs assert that the defendants' corporate practices foster discrimination against those not of South Asian descent in hiring, retention, and promotion, supporting the plausibility of their claims.

Plaintiffs allege adverse employment actions due to the defendants' corporate practices of intentionally discriminating against non-South Asians or employing practices that disproportionately affect them. The court finds the plaintiffs’ class allegations sufficient to potentially support a class action following discovery, denying the defendants' motion to dismiss these allegations. The court also determines that the plaintiffs adequately state claims for disparate treatment and impact based on race and national origin under Title VII, and for disparate treatment based on race under Section 1981. However, claims for disparate treatment under Section 1981 based on national origin are not permitted, and plaintiffs Koehler and Parker lack standing to assert claims against IPS since they did not work for or apply to IPS. The court partially grants the defendants' motion to dismiss related claims while denying it regarding the remaining allegations. The defendants argue that the plaintiffs abandoned their national origin claim under Section 1981; however, the court interprets the claim as one of race discrimination based on ancestry or ethnicity. The court cites relevant case law confirming that discrimination within the same racial group is actionable. The defendants also contend that Koehler and Parker lack standing for a disparate impact claim, but the court holds that their allegations of injury from the practice cited are sufficient to survive dismissal, noting that such factual disputes are not resolvable at this stage.