United States ex rel. Billington v. HCL Techs.

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UNITED STATES OF AMERICA, ex rel. RALPH BILLINGTON, MICHAEL ACEVES, and SHARON DORMAN v. HCL TECHNOLOGIES LTD. and HCL AMERICA, INC.

Civ. No. 3:19CV01185(SALM)

United States District Court, D. Connecticut

July 28, 2022

RULING ON MOTION TO DISMISS [Doc. #52]

HON SARAH A. L. MERRIAM UNITED STATES DISTRICT JUDGE

Plaintiffs-relators Ralph Billington (“Billington”), Michael Aceves (“Aceves”), and Sharon Dorman (“Dorman”) (collectively “plaintiffs”)^[1] filed this qui tam action on August 1, 2019 [Doc. #1], and have since filed four amended complaints. See Docs. #7, #8, #19, #48. Plaintiffs now proceed pursuant to the Fourth Amended Complaint (“4th AC”), which asserts a single count for violation of the False Claims Act, 31 U.S.C §§3729-3733 (“FCA”) against defendants HCL Technologies Ltd. and HCL America, inc. (collectively “defendants” or “HCL”).^[2] See generally Doc. #48.^[3] Plaintiffs allege that defendants have engaged in “widespread fraud against the United States in applying for and securing work visas[,]” so that defendants “can import and employ cheap labor (primarily from India) in the U.S. and avoid having to employ higher priced Americans.” Id. at 1, ¶1. In relevant part, plaintiffs contend that defendants have violated the FCA by: (1) submitting fraudulent visa applications; (2) defrauding the government out of tax revenue by underpaying its H-1B visa workers; and (3) applying for less expensive visas for positions and work for which more expensive visa applications are required. See generally Doc. #48.

Defendants have filed a motion seeking to dismiss the 4th AC, along with a supporting memorandum. See Docs. #52, #53. Plaintiffs have filed a memorandum in opposition to defendants' motion to dismiss, see Doc. #57, to which defendants have filed a reply. See Doc. #63.

For the reasons stated below, defendants' Motion to Dismiss [Doc #52] is GRANTED.

I. FACTUAL BACKGROUND

For purposes of deciding the motion to dismiss, the Court presumes the following factual allegations from the 4th AC [Doc. #48] to be true.

Plaintiffs are former employees of HCL. See Doc. #48 at 3, ¶7. HCL provides information technology (“IT”) services to other American companies in lieu of those companies maintaining inhouse IT personnel. See id. at 4-5, ¶¶16-17. “HCL's work for corporate clients is project-based, meaning a client will contract with HCL to perform specific tasks or projects, and HCL's employees are staffed to a client for a particular project position.” Doc. #48 at 5, ¶17.

HCL employs primarily Indian citizens in the United States for whom HCL has obtained visas. See id. at 5, ¶19. In the IT sector, Indian citizens earn less salary than American citizens, and are therefore less expensive to employ. See id. By employing people “willing to work for less, [HCL] can better compete for corporate clients and reap larger profits.” Id. at 5, ¶18.

“HCL applies for and secures three types of visas for its foreign workforce: H1-B, L-1, and B-1 visas.” Id. at 6, ¶21. Because the differences between these visas are meaningful to the claims in this case, the Court briefly describes each type of visa, as alleged in the 4th AC.

A. H1-B Visas

H-1B visas are intended to bring foreign workers to the United States to perform services in specialty occupations when there are insufficient workers in the U.S. to perform a specific job. As part of each H-1B visa application, the petitioner must establish that an actual job at a specific location is available for the person for whom the company seeks the visa. H-1B visa petitions cannot be filed for speculative or future work.

Id. at 6, ¶22 (citations omitted). When applying for an H1-B visa, the petitioner must submit a Labor Condition Application (“LCA”) describing the foreign worker's “intended occupation and employment location[,]” and an attestation that: “(a) the job for which a visa is sought actually exists and (b) that [the employer] will pay the visa holder a ‘prevailing wage[,]'” that is “at least as much as [the employer] pays American workers for the same work in the same geography[.]” Doc. #48 at 6-7, ¶23. “H1-B visa holders may work in the United States for a maximum initial stay of three years, followed by another three year extension, and then on a year-to-year basis for those visa holders seeking permanent U.S. residency.” Id. at 8-9, ¶28.

The United States “issues only 65,000 H1-B visas each year (plus an additional 20,000 for individuals with graduate degrees from American universities).” Id. at 8, ¶26. The United States awards these visas through an “extremely competitive[]” “lottery process[.]” Id.

The cost of an H1-B visa application is “$2,460 per application.” Id. at 9, ¶28 (footnote omitted).

B. L-1 Visas

“L-1 visas are intended for a substantially narrower range of work and workers than H1-B visas.” Id. at 9, ¶29. There are two types of L-1 visas, the L-1A and L-1B visas, which are reserved for “management-level employees[]” and “subject matter experts[,]” respectively. Id. Detailed documentation must be provided in support of an L-1 visa. See Doc. #48 at 9, ¶30. “L-1 visa holders may work in the United States for a maximum initial stay of three years, which may be extended” for a limited period depending on whether the visa is an L-1A or L-1B. Id. at 10, ¶31.

There is no limit on the number of L-1 visas issued each year. See id. The cost of an L-1 visa application is “$1,460 per application[.]” Id.

C. B-1 Visas

“The B-1 visa is a short-term visitor visa that allows a foreign national to temporarily enter the United states for” certain business purposes. Doc. #48 at 10, ¶32. B-1 visa holders are prohibited “from perform[ing] skilled or unskilled labor while in the United States.” Id. B-1 visas cost just “$160 per application[.]” Id. at 11, ¶34.

D. The Alleged Fraudulent Scheme

HCL risks losing business if it does not “have staff available to fulfill the client's service needs.” Id. at 14-15, ¶58. Given the realities of the United States visa system, and the “pressures” to maintain its business, plaintiffs allege that “HCL has elected to engage in a vast visa fraud scheme to create a cheap foreign workforce to whom visas have been issued by the U.S. government when the purported jobs or work against which the visas were issued do not in fact exist.” Doc. #48 at 15, ¶59. Plaintiffs allege that this

scheme includes three types of fraud: (i) failing to pay H-1B visa recipients required salaries (thereby saving on employee costs and reducing federal taxes paid); (ii) falsification of jobs and work for which visas are sought; and (iii) applying for L-1 visas for work for which an H-1B visa is required and B-1 visas for work for which an H-1B or L-1 visa is required (thereby reducing the amount paid to the federal government in visa application filing fees).

Id. at 17, ¶64.

1. Underpayment of H1-B Workers

Plaintiffs allege that HCL falsifies prevailing wage applications for H1-B visa applications. See generally Doc. #48 at ¶¶65-78.

“[T]o obtain an H1-B visa, HCL must certify to the government that, once an H1-B visa holder is in the United States, HCL will pay the employee at least as much as it pays local hires performing the same work in the same geography.” Id. at 18, ¶65. Despite that certification, HCL pays its H1-B visa workers up to seventy percent less than it would pay an American hire. See id. at 19-20, ¶69. “[W]hile HCL knows that it underpays its H1-B visa workers in violation of U.S. visa laws, this practice is the norm within HCL.” Id. at 22, ¶73.

“HCL's underpayment of its H1-B visa workers has deprived the U.S. government of significant tax revenue[]” because “by failing to pay its H1-B employees the required prevailing wage, HCL has reduced the amount of federal payroll tax it otherwise would have been required to pay the federal government.” Doc. #48 at 38, ¶112.

2. Falsification of Jobs and Work

Plaintiffs next allege that HCL “falsifies jobs (and work) for which visas are sought[,]” in order “to maximize the number of visas it applies for and secures, including H1-B and L-1 visas.” Id. at 24, ¶79. Plaintiffs allege that HCL identifies “[f]ake jobs and duties ... in LCAs posted at client sites and in applications and materials submitted to the government as evidence that the jobs for which visas are sought actually exist in the U.S.” Id. (footnote omitted). Accordingly, after arrival in the United States, “H1-B visa holders often perform roles that do not match the job listed on their LCA and visa petition, given that the jobs for which visas were sought did not actually exist.” Id. at 25, ¶81.

“HCL's practice of creating ‘visa ready' workers by fraudulently obtaining visas has deprived the government of its interest in the fraudulently-obtained visas and its interest in controlling the distribution of such visas according to law.” Id. at 39, ¶114.

3. Applying for L-1 and B-1 Visas instead of H1-B Visas

The last theory of fraud alleged by plaintiffs is that, “as part of its ‘visa ready' visa process and to reduce visa application fees, HCL fraudulently seeks L-1 and B-1 visas for employees who ultimately perform work for which H1-B visas are required.” Doc. #48 at 30, ¶94.

Plaintiffs allege that “HCL is well aware of the costsavings associated with applying for L-1 visas in lieu of H1-B visas.” Id. at 31, ¶98. Plaintiffs allege that HCL “is well aware that this practice is illegal.” Id. at 34, ¶102. Nevertheless, “HCL misuses B-1 visas to evade the requirements, costs, limitations, scrutiny, and inconvenience of the H1-B and L-1 visa programs[,]” and to “increase[] its profits[.]” Id. at 35, ¶¶104-05.

“HCL has improperly applied for thousands” of L-1 and B-1 visas in lieu of H1-B visas, which has deprived...