Labor & Employment Law Daily FCA suit alleging Apple and Infosys conspired to evade immigration law by fraudulent use of B-1 visas dismissed
Friday, October 19, 2018

FCA suit alleging Apple and Infosys conspired to evade immigration law by fraudulent use of B-1 visas dismissed

By Marjorie Johnson, J.D.

An employee failed to advance his qui tam lawsuit alleging that Apple and Infosys Technologies violated the False Claims Act (FCA) by conspiring to violate immigration law by having two Indian nationals enter the United States on business B-1 visas to provide training, instead of obtaining the more expensive and numerically-capped H1-B visas. Dismissing his action with leave to amend, a federal district court in California found that the training sessions fell within the ambit of allowed business-related activities under a B-1 visa. Moreover, even if the trainers were incorrectly admitted into the country on B-1 visas, the two companies were not shown to have had the requisite scienter to commit fraud under the FCA. The allowable business activities under a B-1 visa are not well-defined, explained the court, so Apple and Infosys could not be charged with knowledge or willful blindness to the correct uses of the B-1 visa (United States ex rel. Krawitt v. Infosys Technologies Ltd., October 16, 2018, Koh, L.).

Aliens with B-1 visas to provide training. Apple and Infosys entered into a $50,000 contract whereby Infosys would provide 16 live training sessions for Apple in California. During negotiations, Infosys executives allegedly knew that the company lacked sufficient foreign nationals on H1-B visas to legally perform the training sessions. Therefore, it assigned two Indian foreign nationals holding B-1 visas to conduct the training.

Plaintiff sounds the alarm. After the employee began working as an independent contractor for Infosys in September 2014, he warned management that the two trainers lacked the necessary H1-B visas. After Apple provided Infosys with draft letters to the two trainers to enter the United States, which stated only that they would be attending meetings, the plaintiff again voiced his concerns. One his superiors then emailed other executives stating that the two trainers “needed to travel back to India, and then return to the United States in order to avoid detection and suspicion for violating United States immigration laws.”

Trainers return to India. The training sessions proceeded with the two Indian foreign nationals as trainers, but on October 16, an Apple manager expressed displeasure with the sessions. Infosys sent the two trainers back to India and the parties entered into another agreement providing for a United States-based trainer to deliver the remaining training sessions.

Infosys subsequently chose not to extend the plaintiff’s employment, allegedly as retaliation for whistleblowing on the B-1 visa issue. Though he later began working as an independent contractor for Apple, that relationship was also later terminated. He then filed the instant qui tam action against both companies and the government declined to intervene.

What qualifies as “business” for B-1 visa? A foreign national is eligible for a B-1 visa “for business” if he or she intends to leave the United States at the end of their stay, can enter a foreign country at the end of the stay, and has adequate financial arrangements to carry out their activities and then depart the United States. The Board of Immigration Appeals (BIA) has established a three-prong test for what constitutes business qualifying for a B-1 visa: (1) the alien clearly intends to maintain a foreign residence and domicile; (2) the principal place of business and the place where the profit predominantly accrues is in a foreign country; and (3) each business entry is clearly temporary in character, even if the nature of the business activity itself is not temporary and may be long continued.

Profit accrued in India. The plaintiff did not dispute that the two trainers intended to maintain their residence in India and that their entry into the United States was temporary in nature. Thus, the court turned to the second prong, and found that India was both the principal place of business and where the profit predominately accrued. In so ruling, it rejected the plaintiff’s assertion that the profit (i.e., the two trainers’ paychecks) primarily accrued in the United States because they were indirectly being paid by Apple.

Though Apple did pay Infosys $50,000 for the training sessions, this money did not go directly to the two trainers but instead went to Infosys. Moreover, the trainers were compensated “in the form of continued salary benefits,” and thus were paid in India. The training also met the standard of being “incident to international trade or commerce” since the contract between Apple and Infosys totaled more than $100 million in 2014 and thus the $50,000 allotted to provide training “pales in comparison” to the magnitude of the entirety of the contract.

No scienter. Moreover, even if the two trainers were incorrectly admitted into the United States on B-1 visas, the plaintiff failed to plausibly allege that Apple and Infosys had the requisite “scienter” to be charged with a violation of the FCA. Specifically, the FCA requires that a defendant have “actual knowledge” of a false claim or acted with “deliberate ignorance” or “reckless disregard,” and a “good-faith interpretation of a regulation” does not meet this scienter requirement.

Because the allowable business activities under a B-1 visa are not well-defined, there is ambiguity in the allowable uses of B-1 visas arising out of differences in interpretation of the relevant immigration laws and regulations, explained the court. Thus, Apple and Infosys could not be charged with knowledge or willful blindness to the correct uses of the B-1 visa since there was “no exhaustive list or case law of all permissible activities under a B-1 visa.” Indeed, there was also no clear legal guidance stating that providing training is impermissible under a B-1 visa.

The plaintiff’s allegation that he notified Infosys and Apple of the trainers’ use of B-1 visas did not show that the companies knew or were willfully blind to the alleged illegality of hiring B-1 visa holders to provide the training Significantly, it was not clear from the text of the regulation that providing training is not a legitimate commercial or professional activity under a B-1 visa. “In sum, because of the vagueness of the regulations governing B-1 visas, Apple and Infosys did not have the requisite scienter to commit fraud under the FCA.”

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