Buchanan v. Tata Consultancy Servs., Ltd.

BRIAN BUCHANAN, ET AL., Plaintiffs, v. TATA CONSULTANCY SERVICES, LTD, Defendant.

CASE NO. 15-cv-01696-YGR

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA

July 23, 2018

ORDER GRANTING MOTION TO BIFURCATE PLAINTIFF CLAIMS AND PRECLUDE BUCHANAN FROM USING THE PATTERN AND PRACTICE METHOD OF PROOF; GRANTING MOTION TO COMPEL ARBITRATION; DENYING MOTION TO DECERTIFY CLASS

Re: Dkt. Nos. 330, 331, 335, 368, 369

Plaintiffs Brian Buchanan, Christopher Slaight, Seyed Amir Masoudi, and Nobel Mandili¹ bring this class action against defendant Tata Consultancy Services, Ltd. ("TCS") for discrimination in employment practices. (Dkt. No. 246, Fourth Amended Complaint ("4AC").) Plaintiffs bring causes of action for disparate treatment under Title VII of the Civil Rights Act of 1964, 42 U.S.C. 2000e, et seq., and the Civil Rights Act of 1866, 42 U.S.C. 1981. (Id. ¶ 5.) Plaintiffs allege that TCS discriminated against them in their hiring, employment, and/or termination practices based on race and national origin. (Id. ¶¶ 1-5.) Specifically, plaintiffs claim that TCS maintains a pattern and practice of intentional discrimination in its United States workforce whereby TCS treats persons who are South Asian² or of Indian national origin³ more favorably than those who are not South Asian or of Indian national origin. (Id.)

Now before the Court are TCS's motions for (i) bifurcation of plaintiff Buchanan's claims from those of the class (Dkt. No. 330); and (ii) compulsion of arbitration of certain class members' claims (Dkt. No. 331); and (iii) decertification of the class (Dkt. No. 335). Also before the Court are plaintiffs' motions for (i) approval of class notice and form (Dkt. No. 368); (ii) partial judgment on the pleadings regarding TCS's affirmative defenses (Dkt. No. 369)⁴; and (iii) invalidation of release agreements⁵ (Dkt. No. 371). Having carefully reviewed the papers submitted and oral arguments at the hearing held on July 17, 2018, and for the reasons set forth more fully below, the Court ORDERS as follows:⁶

1. Defendant's motion to bifurcate the claims of plaintiff Buchanan from those of the other plaintiffs and the class is GRANTED.

2. Defendant's motion to compel arbitration of certain class members' claims is GRANTED.

3. Defendant's motion for decertification of the class is DENIED as framed, but the Court MODIFIES AND LIMITS the definition of the class as follows:

All individuals who are not of South Asian race or Indian national origin who were employed by [TCS] in the United States, were subject to a policy or practice of benching and allocation, were placed in an unallocated status and were terminated between April 14, 2011 and [December 27, 2017].⁷

I. BACKGROUND

A. TCS's Business and Workforce Composition

TCS is a foreign company headquartered in Mumbai, India, with approximately 29,900 employees in the United States. (Dkt. No. 252, Answer to Fourth Amended Complaint ("Answer") ¶ 12.) TCS contracts with clients to provide consulting, technology, and outsourcing services. (Dkt. No. 141, Declaration of Umesh Kumar ("Kumar Decl.") ¶ 3.) When TCS secures a consulting contract it allocates or hires individuals to serve the client onsite. (Dkt. No. 115-3, Ex. 3, Deposition of Balaji Ganapathy ("Ganapathy Dep.") at 29:3-6, 31:20-32:5; Ex. 4, Deposition of Umesh Kumar ("Kumar Dep.") at 38:7-39:14.) TCS staffs such client projects with a combination of (i) "visa-ready" individuals currently working for TCS overseas, (ii) individuals working for TCS in the United States which are not currently allocated to a client, and (iii) individuals not currently working for TCS in any capacity ("Local Hires"). (See Kumar Dep. at 38:7-39:14.) During the class period,⁸ foreign visa workers (referred to herein as "Deputees" or "Expats") represented between 75% and 89% of TCS's workforce in the United States. (Declaration of G. Edward Anderson ("Anderson Decl.") ¶ 14; Kumar Dep. at 82:17-83:4.) The vast majority of such Expats were South Asian. (See Anderson Decl. ¶ 14; Dkt. No. 115-3, Exs. 19, 20.)

TCS's business managers are responsible for determining the staffing needs for each TCS client. (Kumar Decl. ¶ 5.) The staffing process begins when a business manager initiates a staffing request for an open position (the "Request") which identifies the job's location, start date, responsibilities, and skills and experience required. (Kumar Decl. ¶ 10.) The Request is then transmitted to TCS's Resource Management Group ("RMG") which is responsible for helping business managers identify qualified internal candidates. (Id.)

If a business manager determines that no internal candidates in the United States or overseas match the Request, TCS seeks to fill the position with a Local Hire. (Dkt. No. 133, Declaration of Shyam Chinnari ("Chinnari Decl.") ¶ 4.) TCS's Talent Acquisition Group("TAG") assists business managers in identifying, recruiting, and onboarding Local Hires. (Id.) The TAG relies partly on third-party vendors (also known as "headhunters") who similarly work to target and attract qualified applicants. (Id. ¶¶ 5-7; Declaration of Brian Andrillo ("Andrillo Decl.") ¶ 3.)⁹ After consulting with third-party vendors, the TAG screens and forwards qualifying resumes to business managers who have ultimate authority to hire non-technical employees. (Chinnari Decl. ¶¶ 5-7.) For positions that require technical skills, clients often are involved in the interview and selection process. (Chinnari Decl. ¶ 10.)

When a TCS employee is not assigned to a client that employee is placed on "unallocated" or "benched" status. (Kumar Decl. ¶ 19; see also Dkt. No. 115, Ex. 7 (TCS044201-4203 at 4202); Ex. 9 (TCS044201-4203 at 4202).) The Resource Management Group ("RMG") assists benched employees in identifying open client projects for which they are qualified and to which they can apply. (Kumar Dep. at 27:13-28:21 (discussing TCS038103-8110 at 8105).) Employees receive their regular salary while benched, but those that remain benched for a prolonged period of time are proposed for termination. (Kumar Dep. 15:3-15; Dkt. No. 115, Ex. 7 (TCS055851-5854 at 5853).)

Plaintiffs rely on internal documents in arguing that TCS maintains a pattern and practice of favoring visa-ready individuals and benched expats who are predominantly South Asian when assigning individuals to open client projects. For example, plaintiffs point to documents showing that business managers are instructed to "map associates with unutilized visas and work permits for onsite opportunities" in the United States. (Dkt. No. 115, Ex. 8 (TCS007391-452 at 425).) TCS documents also indicate that TCS issued and implemented a "[l]eadership directive [] to utilize every visa to the maximum extent." (Id., Ex. 12 (TCS057815); see also Ex. 13 (TCS137485-7487 at 7485).) Plaintiffs argue that such policies result in fewer work opportunities for non-South Asian employees and thus a greater number of involuntary terminations because employees who are unable to obtain onsite client opportunities remain unallocated and areultimately terminated. Plaintiffs further argue that TCS uses third-party recruiters to identify and attract South Asian Local Hires.

In addition to documentary evidence, plaintiffs also highlight the demographic composition and involuntary termination rates of TCS's workforce in the United States. Plaintiffs offer the expert opinion of Dr. David Neumark to show that defendant's U.S. workforce was between 72.32% and 78.91% South Asian during the class period, compared to 12.50% of the computer systems design and related services industry as a whole. (Dkt. No. 115, Ex. 1 (Expert Report of David Neumark ("Neumark Rpt") ¶¶ 6, 9, 14; Tbl. 1).) Further, Dr. Neumark opines that the involuntary termination rate for benched non-South Asian employees is 10.6% as compared to less than 1% for benched South Asian employees. (Dkt. No. 196, Supplemental Expert Report of David Neumark ("Neumark Supp. Rpt."), Tbl. 2.) According to Dr. Neumark, the likelihood of obtaining such skewed results by chance is less than 1 in 1 billion. (Id. ¶ 7; Neumark Rpt. ¶¶ 6, 9, 14; Tbl. 1.)

B. Plaintiff Buchanan

With respect to plaintiff Buchanan, Southern California Edison ("SCE") employed him as an IT professional from 1986 until February 2015. (4AC ¶¶ 32, 38.) SCE informed Buchanan in July 2014 that he and approximately 400 coworkers would be terminated and replaced by TCS employees. (Id. ¶ 36.) Buchanan agreed to remain in his position with SCE until early 2015 to train the incoming TCS employees. (Id.) Buchanan was discharged by SCE in February 2015 when TCS assumed primary responsibility for SCE's IT needs. (Id. ¶ 43.) In the interim, Buchanan attended a job fair organized by SCE for its employees awaiting termination, at which he met with a TCS hiring manager to express his interest in a position with TCS. (Id. ¶ 40.) Plaintiffs allege that the TCS recruitment representatives acted in a dismissive manner which discouraged Buchanan from inquiring about other employment opportunities, and TCS made no further contact with Buchanan regarding his application despite Buchanan's extensive qualifications and experience. (Id.) TCS hired only five of the twenty-eight members of plaintiff Buchanan's team at SCE, three of whom were South Asian. (Id. ¶ 41.) Plaintiff alleges that TCS replaced him and the remaining members of his team with South Asian workers who had inferiorexperience and qualifications. (Id. ¶¶ 41-42.)

C. Class Allegations

Plaintiffs bring this class action pursuant to Federal Rule of Civil Procedure 23(a), (b)(2), (b)(3), and (c)(4), seeking injunctive, declaratory, equitable, and monetary relief for TCS's alleged "systematic pattern and practice of discrimination against non-South Asian and non-Indian individuals in the United States." (Id. ¶ 74.) Plaintiffs bring this action on behalf of the following class:

All individuals who are not of South Asian race or Indian national origin who were employed

...