Lawsuit: U.S. Managers Violated Americans’ Civil Rights by Hiring H-1B Workers

Journalists use Internet facilities sanctioned by the authorities, amid strict communications restrictions during a lockdown at a hotel in Srinagar on October 3, 2019. - Journalists in Indian-administered Kashmir protested on October 3 a two-month old "communications blackout" that they said is making their jobs virtually impossible. (Photo by Tauseef …
TAUSEEF MUSTAFA/AFP via Getty Images

A group of Americans will present evidence in June to a second jury that their employer deliberately discriminated against them by hiring Indian H-1B workers — even though the Indians cost more money.

The Americans persuaded their first jury in a June 2019 trial against Molina Healthcare Inc. — but the judge quickly declared a mistrial before the jury could announce its verdict, said James Otto, the California lawyer who helped to win the case.

The judge “said that the evidence was too prejudicial — 0f course it is; we won!” Otto said, adding, “I didn’t know whether to cry or laugh when he said it — it was so stupid. No matter how much this judge tried to stop us, he couldn’t stop us.”

After the imposed mistrial decision, “We must retry the whole case,” Otto told Breitbart News, adding, “I will file some pleadings to remove Judge [Michael] Kim and reinstate the verdict.”

The case began in 2009 when California-based Molina Healthcare Inc. began sending extra work to Indian H-1B visa workers who were imported and employed by Cognizant Technology Solutions, an Indian-run outsourcing firm, according to the lawsuit. Molina operates Medicaid and Medicare programs for multiple states, including Florida.

In 2010, Molina fired 40 Americans while claiming they were cutting costs. That statement was a fraud, which allowed the American employees to sue even though the normal statute of limitations had expired, Otto said.

Otto has already won four lawsuits against the company. He declined to provide details about the lawsuits, citing non-disclosure deals.

The June 22 trial will cover claims from 18 fired Americans, who are asking for $4 million each plus reinstatement, back pay, and court costs. The lead plaintiff is Jonathan Beasley, and he is accompanied by 17 other Americans, including Irina Masharova, Ann Rahtouni, Marcelo Pineda, Tsung-Hsien Shen, Tim Luk, Partha Choudry, and Tim Nguyen.

The group is aided by evidence from Josephine Wittenberg, a human resources (HR) manager. She frequently met with John Molina, the chief financial officer at Molina Healthcare, and Amir Desai, the Indian-born chief information officer.

A 2011 legal deposition by Wittenberg said company officials lied to the U.S. workers about the reasons for their firing:

Desai made false statements of fact to the 40 terminated U.S. workers, including the DEFENDANTS, at the mass layoff on January 14, 2010.

I discovered that MOLINA DID NOT “need to cut cost across the board.” Based on my observations and discussions with other managers, there was no other “cost cutting measures” taken. In fact, there were no “financial losses” as MOLINA made more in 2009 than it did in 2008. There were facts that DESAI knew at the time of his speaking but did not tell the 40 terminated U.S. workers, including the DEFENDANTS.

After the mass layoff of January 14, 2010, I learned that MOLINA did not cut labor costs in the IT [Information Technology] department, but increased labor costs by hiring more IT workers. The Indian employees and contractors could not do the job due to lack of experience and expertise. Eugina Serpik, a Manager for MOLINA in the IT Department, complained to me and to Ms. Sood, and to her manager, Carol Smith, that she could not complete her tasks because competent staff-members had been replaced with incompetent personnel who could not possibly do the job. This situation was so serious that Molina provided [manager] Ms. Serpik with additional money to resolve the situation.

A second deposition was provided by Laura Onufrock, who worked as a security and budget manager for Molina’s IT department. She alleged:

In 2006, DESAI informed MOLINA’s Upper Management, including me, that he preferred to only hire Indians from India. I watched and observed how the national origin make up of the IT Department changed from evenly mixed in 2006 to over 95 percent Indian in 2010.

DESAI would always bring in a Indian H1B contractor supplied by Cognizant before he would look for a U.S. worker. I closely followed this practice (practically an obsession with DESAI) because it actually increased MOLINA’s cost of labor and inflated the IT Department’s budget and the capital budget, both actual and projected.

I told DESAI and MOLINA’s upper management in 2007, 2008, 2009 and 2010 that the cost of H1B contractors, at least from Cognizant was 144% higher than the present U.S. workers, including managers and benefits. The actual [budget] numbers showed that on average MOLINA paid $50 per hour to U.S. workers, salary and benefits figured in, versus the cost of labor of the H1B contractors was $72 per hour.

MOLINA’s upper management insisted on hiring Indians at any cost or expense regardless of the fact that the U.S. workers were less expensive, more experience and knew the business systems. This practice was seen in many departments including accounting, claims and the help desk.

In 2010, after the mass lay off of U.S. workers, the IT Department labor costs skyrocketed out of control. It exceeded the labor budget by over $5.5 million dollars in the first quarter due to the hiring of so many full time [Indian] employees to replace the fired U.S. workers.

The claims in the lawsuit match the personal reports from many other Americans who have lost jobs and careers to the one million Indian visa workers imported by U.S. managers — and it directly contradicts many claims made by business groups.

Molina and Cognizant did not respond to multiple requests by Breitbart News.

Business groups claim the H-1B workers are needed to fill empty jobs — but at Molina, the imported workers allegedly replaced employed and skilled Americans.

Business groups say that outsourcing saves money — but it busted the budget at Molina.

Business activists also say the imported Indians are skilled graduates, but Molina’s Indians reportedly included “incompetent personnel who could not possibly do the job.”

Business groups also claim that U.S. executives follow the law, but at Molina, Otto’s lawsuit says that top executives knew they were discriminating against Americans.

In 2017, amid Otto’s lawsuits, Molina’s board fired CEO Mario Molina and the Chief Financial Officer, John Molina.

Molina is largely owned by investment firms. Wall Street investors — including both wealthy individuals and retirement funds — usually pressure CEOs to cut costs and maximize profits to spike their stock values.

The Los Angeles Business Journal reported in March that Molina had laid off another 240 Americans in 2019, as it hired an Indian company, Infosys Solutions, to run its computer department in Long Beach, California. Infosys is one of the leading Indian-managed, Indian-owned outsourcing firms. The report said:

The latest round of Molina layoffs comes on the heels of a robust year for the insurance giant, which reported net income of $707 million in 2018 based on revenue of $18.9 billion, compared with a $512 million loss in 2017 on revenue of $19.9 billion.

Molina sold its Molina Medicaid Solutions business to DXC Technology Co. DXC is a U.S.-managed, investor-owned India-outsourcing firm.

Molina’s price-to-earnings (P/E) ratio is 12.17, which means that every dollar cut from expenses can add roughly $12 to its stock value. The company’s stock is worth roughly $8.7 billion on Wall Street, after rising from roughly $14 per share in 2011, up to $140 in 2020.

Otto says he hopes to find other Molina employees for additional lawsuits.

Other lawyers can follow his footsteps, he said, to bring lawsuits against the many West Coast companies who have discriminated against Americans by hiring large numbers of Indians. The potential targets include many elite Silicon Valley companies who have hired so many Indian visa workers that few American graduates remain employed in the research centers that once produced innovative products that created the Silicon Valley boom.

Kotchen & Low is a D.C.-based firm that has filed several discrimination lawsuits against outsourcing companies. Jay Palmer, a U.S. software professional whose job has transferred to Indian workers, is helping Indian-born workers fight against their Indian employers in U.S. courts.

Molina is a healthcare company, so the Indian workers are imported to keep the computers humming as customers pay their bills and make Medicare and Medicaid claims, and as its stockholders count their gains.

The company now employs about 1,500 Indians contractors and few American software experts, said Otto, reflecting the managers’ preference for compliant Indians that is widely shared by many other healthcare companies in Connecticut, New Jersey, Texas, and other states.

But this reliance on compliant outsourced Indian workers comes at a huge price. That price is the loss of competitiveness caused by the lack of American experts who are able and willing to argue with their managers in offices governed by a professional culture of respect for expertise, say multiple U.S. professionals who work with the U.S. technology companies.

The H-1B contractors are a narcotic for complacent executives and empire-building HR managers, one 30-year veteran of the sector told Breitbart News.

HR managers personally prefer a stable workforce and predictable hiring patterns, he said. The H-1B program is a perfect match because it allows HR managers to deliver employees to company managers via a full-service subcontractor, which is usually an Indian H-1B company. “One of the quotes that I heard was from an HR person. She said, ‘Thank God because now we won’t have to treat these tech bastards like rock stars anymore.’”

American companies now employ — directly or indirectly — roughly one million Indian contract workers — including roughly 650,000 Indian H-1B workers.

Most of the hiring subcontractors are also run by Indian managers, said the veteran, who — like everyone else — hides his identity to avoid retaliation by Indian recruiters and managers. Those Indian managers profit from importing compliant Indians, so they prefer to sideline ambitious and innovative Americans — and they face few objections from complacent American HR managers, he said.

In effect, many U.S. software jobs are sold by Indians to Indians, via a semi-hidden marketplace of nepotism and kickbacks, say U.S. and Indian professionals. “Indians hire Indians,” according to numerous professionals who refuse to talk on the record.

The Indians hired via the H-1B process are trained to be compliant because they know they can get green cards for themselves and their children if they just follow orders, he said. They also know that they can be sent back to India at any moment if they break the hierarchical rules set by India’s workplace culture. “It’s indentured servitude,” the industry veteran said.

Throughout Silicon Valley, American-style professionalism has been discarded in favor of India’s ethnic and caste politics, said another experienced technology professional who worked for Indian managers in Indian-majority offices:

God help you if you make the mistake of questioning somebody[‘s work], but if you do start to question somebody, every [Indian] rallies around them, and fixes the issue [to hide the mistake from other departments]. So it’s like, it’s fucking unbelievable. It’s the most frustrating thing.

“I saw this over and over,” he said, adding, “I was pro-H-1B when it first started, but then it got to a point. … You get mistreated a few times and you realize, ‘Hey, these guys!’ You’ve got to protect yourself.”

Yet American executives prefer the placid workforces provided by the Indian subcontractors, the 30-year veteran said:

Innovation, true innovation, is chaotic. If you go back and read Tom Peters’ book on chaos and excellence and things like that, you kind of get the idea that chaos reigns supreme at a truly innovative company. Chaos is completely uncontrollable by the management and HR. It’s uncontrollable. Okay. They hate it. They want to do anything they can to get rid of true boundary-pushing iconoclastic behavior because it’s dangerous [to their careers].  

The managers’ preference for compliant Indian labor has inflicted huge harm to American professionals. A November 2019 article in American Affairs titled “The Real Class War” describes the impact of managers’ disregard:

The Valley has never been particularly fertile for the salaried professionals and “engineers” hired by these companies, who even now generally make less than their counterparts on Wall Street or in big law. Kindergarten playroom office spaces and other exaggerated perks often serve to distract employees from this harsh reality. The median salary for U.S. IT workers, who frequently must live in high-priced urban areas, is only $81,000. Moreover, increasing numbers of engineers, even at the most prestigious companies, are hired on temporary contracts. When the artificial growth model stalls, employees can expect mass layoffs, “anti-hierarchy” propaganda notwithstanding. Companies like Uber and WeWork are the most prominent cases recently, but employees at many oft-hyped tech companies report surprisingly high anxiety about job security: more than 70 percent of Tesla, eBay, and Snapchat employees said they were afraid of being laid off, according to one survey released this year.

In October 2019, the Mercury News reported from Silicon Valley:

Uber has doubled the number of government approvals it has received to hire foreign workers through the controversial H-1B visa this year, while laying off hundreds of skilled employees, state and federal data show.

The San Francisco ride-hailing giant revealed in a California employment-department filing this month that it is laying off nearly 400 workers at its offices in the city and in Palo Alto. The filing showed software engineers at the firm were the hardest hit, with more than 125 people cut loose.

Meanwhile, Uber this year received federal government approval for 299 new H-1B visas — work permits intended for jobs requiring specialized skills — compared with 152 in 2018 and 158 in 2017, according to data from U.S. Citizenship and Immigration Services. It is unclear whether Uber plans to use all those visas or when new H-1B workers might be brought on. The visas typically cost thousands of dollars each to obtain.

This combination of complacent American managers and compliant Indian workers suppresses disruptive innovation at many American companies, the 30-year veteran told Breitbart News in mid-February:

[The H-1B workforce] has become part of the American business culture, and it’s wrong, and it’s wrong right from the beginning. It’s done more than just economic damage to this country — we’ve lost our competitive innovative advantage because of it. Guarantee that’s happening.

The bill is now coming due.

Silicon Valley CEOs are losing their fundamental competition against Chinese companies, said a February 27 article by Eric Schmidt, one of the former Silicon Valley chieftains who served as CEO of Google while the sector discarded its American workforce.

The Valley needs a bailout from Washington, DC, he wrote in the New York Times — without noting the CEOs’ role in destroying innovation:

Important trends are not in our favor. America’s lead in artificial intelligence, for example, is precarious. A.I. will open new frontiers in everything from biotechnology to banking, and it is also a Defense Department priority. Leading the world in A.I. is essential to growing our economy and protecting our security. A recent study considering more than 100 metrics finds that the United States is well ahead of China today but will fall behind in five to 10 years. China also has almost twice as many supercomputers and about 15 times as many deployed 5G base stations as the United States. If current trends continue, China’s overall investments in research and development are expected to surpass those of the United States within 10 years, around the same time its economy is projected to become larger than ours.

The lawsuit

Otto’s lawsuit includes many details about Molina’s policy of discarding Americans in favor of Indians:

This is a wrongful termination and retaliation case that arises out of the violation of Plaintiffs civil rights.

… 

The complaint alleges causes of action that include wrongful termination, national origin discrimination, retaliation, violation of Labor Code section 1102.5, as well as intentional infliction of emotional distress and violation of the Unfair Business Practices Act.

Supriya Sood the former Senior Vice-President of Human Resources who investigated and found illegal discrimination in the IT department. Ms. Sood was fired for her part in the investigation and Molina settled her legal action.

Josephine Wittenberg, the former Director of Human Resources who investigated and found illegal discrimination in the IT department. Ms. Wittenberg was fired for her part in the investigation and Molina settled her legal action.

Stuart Zwicke, former Construction Project Manger who oversaw all functions of IT as they related to various projects throughout the U.S. Mr. Zwicke was told by Amir Deasi that Molina preferred to import Indian nationals rather than employee U.S. workers. He was fired for protesting the discrimination and Molina settled his legal action;

Cognizant and Molina’s plan to illegally discriminate against the Plaintiffs was more than two years in the making. In early 2008, Desai began pitching the conspiracy plan to the Chief Operating Officer, Terry Bayer, and Chief Executive Officer, Mario Molina, to convert IT into a department that would be staffed by Cognizant employees and contractors from India. Cognizant’s business model is to bring in IT contractors from India.

Desai told Onufrock that, “We have obligations to Cognizant. These aren’t this isn’t going to change.” Desai routinely hired Cognizant contractors, who were all Indian, to fill IT positions before he would look for a non-Indian, thus, increasing Molina’s cost of labor and inflating IT’s budget, both actual and projected. Onufrock observed how the national origin makeup of IT changed from being diverse in 2006 to being over 95% Indian in 2010.

For example, Plaintiff Villanueva, an IT manager, testified that in 2009 he was routinely instructed by his superior, Nitin Gotmare, an Indian IT director, to inflate the estimated hours required for IT projects for 2010, so that IT could get approval to hire more contractors.

the termination was not necessary as there were hundreds of IT jobs available that needed to be filled in 2010 and Molina had planned extensive amounts of projects for IT. For example, just the HIM project, alone, opened over 1,120 new jobs. This caused Molina to add at least 44 new employee positions and 108 new contractors immediately after terminating the Plaintiffs in 2010. In 2011, Molina added another 60 employee positions and a whopping 315 contractors. All of these new positions were filled by Indian individuals which was Desai’s intent all along.

In late 2010, Ms. Sood and Josephine Wittenberg, a Director of HR, conducted an investigation into claims that Desai discriminated against the Plaintiffs and others in IT.  Ms. Sood had already been having ongoing discussions with Desai about the lack of diversity within his IT department since 2008. Ms. Sood learned that the contractors being provided through Cognizant were not the highest qualified people to be doing the job.

The HR investigation determined that the great majority of promotions on a company-wide basis were going to employees of Indian national origin or ancestry, to the exclusion of the non-Indian employees; there was an unequal level of action or discipline taken in the event of errors by the Indian employees as opposed to the non-Indian employees; Molina had a preference for hiring Indian employees and contractors over non-Indian employees; Molina was terminating non-Indian, employees, either citizens or residents, and replacing them with employees and contractors of Indian national origin or ancestry, a lot of whom held H1B visas; many employees and contractors were speaking Indian dialects in meetings, which excluded the non-Indian employees from participating. Desai expressed a preference for hiring individuals of Indian national origin or ancestry who were also under 40 years of age and male.

The HR investigation concluded that there was a hostile work environment in IT in part because management did not hide its preference for Indian employees and contractors. The HR investigation found that Molina engaged in national origin/ancestry discrimination. Ms. Sood was concerned that Molina was taking part in illegal activity relative to its preference for Indian employees and contractors over everyone else.  Ms. Sood notified Molina 4 or 5 times that it was not in compliance with labor laws and requested Molina to comply with employment obligations, including issues of national origin discrimination.

 

 

.

Please let us know if you're having issues with commenting.