Tata International Suffers Setback in U.S. Court

By Rob Sanchez, Senior Writing Fellow

A lawsuit in the U.S. District court of California reveals a glimpse of indentured servitude in India, and how their discriminatory culture of worker exploitation is being imported into our own country.

The story begins with an Indian named Gopi Vedachalam who agreed to work for Tata Consultancy (TCS) 1997. His indentured contract was paid for by his father for Rs 50,000 (rupees), or about $1,100 U.S.  Tata was paid the money as a condition of employment so Vedachalam was made liable for anything that Tata deems as a failure to fulfill the contract. Indentured contracts of this type are quite common in India.

After about 3 years working in India Vedachalam came to the United States by using an L-1 visa. Tata agreed to file for Vedachalam’s visa as long as he agreed to be subject to a $30,000 charge for liquidated damages if he was charged with breach of contract while in the U.S. He would also be responsible to repay Tata’s litigation and attorney fees if there was a legal disagreement.

“Liquidated damages” are used in the U.S. in much the same way as an indentured contract in India — large monetary penalties are used to shackle the worker to an employer by making him liable for monetary damages.

Vedachalam signed a document that said he agreed to work long hours without compensation in the U.S. If Vedachalam didn’t meet expectations he would be subject to all penalties mentioned above. The agreement also states that all legal disputes will be settled by the Indian court system, not in the USA.

By the time Vedachalam arrived in the U.S. he was yoked to the grinding stone.

Tata prefers Indian courts to handle lawsuits because India condones indentured servitude and would be very unlikely to help Vedachalam in any kind of labor dispute. There is one major catch — newer documents were found that said legal disputes will be settled in the U.S. — not India. When Vedachalam tired of being ripped off by Tata and decided that being a "slave boy" wasn’t in his best interests, he took the dispute to the U.S. courts instead of India.

Vedachalam was supposed to be paid a salary of $74,000 a year, but he alleges that in 2004-2005 he didn’t receive that much. In addition to being ripped off on his wages, he said that Tata pocketed about $25,000 of state and local taxes that belonged to him.

Vedachalam’s complaint against Tata boils down to two major items:

1) Breach of contract because Tata didn’t pay what it promised.

2) Thievery because Tata pocketed tax refunds that were due to him. In all likelihood Vedachalam didn’t actually owe taxes because international “living allowance” trade rules allow these foreign workers to avoid taxes. Tata was simply pocketing the cash at Vedachalam’s expense. 

Not surprisingly Tata refused to pay back the Rs 50,000 indenture fee. That didn’t go over too well with the Federal District Court in California who determined that Vedachalam completed his 2 year indentured contract in India so he was not subject to the penalty. Unless Tata can reverse this decision they will have to repay Vedachalam’s father. This court decision could have international law and trade implications over jurisdictions which are interesting to ponder.

Just recently the U.S. Federal Court in California gave Tata some major bad news — they ruled that the arbitration case with Vedachalam is subject to U.S. law so the lawsuit will take place in the U.S. not in India.

The bad news for Tata doesn’t stop there!

Vedachalam’s initial complaint has morphed into a huge class action lawsuit against Tata. H-1B and L-1 visa holders are filing lawsuits to get tax money that they claimed was ripped off by Tata. Tata tried to head this lawsuit off by asking for a motion to dismiss the case. U.S. District Court Judge Vaughn Walker refused to go along with Tata’s transparent effort at moving the case to India. Big bummer for Tata! U.S. courts aren’t nearly as friendly to tax fraud and indentured slavery as the Indian courts. Tata’s odds of winning just went down a notch! Perhaps finally some of the H-1B and L-1 visa holders that have been exploited by Tata will get their just due.

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Rob Sanchez is a Senior Writing Fellow for Californians for Population Stabilization (CAPS) and author of the “Job Destruction Newsletter.” He can be reached at [email protected] or [email protected].