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Tata America Loses Bid to Force U.S. Employees Into Arbitration in Mumbai
National Law Journal
August 4, 2009
Foreigners working in the United States who claim they were cheated out of their tax refunds have won the right to have their employment dispute heard in American courts, defeating efforts by India's largest conglomerate to force arbitration overseas. The 9th U.S. Circuit Court of Appeals on July 31 denied a bid by Tata America International Corp. to compel arbitration and dismiss the class action that alleges Tata's non-citizen U.S. employees are required to sign over their federal and state tax refund checks to the company.
Tata America and its parent corporations, Tata Consultancy Services Ltd. and Tata Sons Ltd., have argued that the dispute should be arbitrated in India rather than here, claiming the plaintiffs had entered into written agreements to arbitrate disputes in Mumbai.
Tata also argued that its U.S.-based foreign employees had "explicitly agreed" that their employer would submit all tax returns and keep any excess taxes paid. The plaintiffs contend that requiring them to sign over any refund checks violates federal and California employment laws. The 9th Circuit found that there was no mutual agreement between the employee and employer to arbitrate legal disputes, so the claim will be litigated in the United States.