Californians for Population Stabilization v. Hewlett-Packard Co., HEWLETT-PACKARD

• Court: California Court of Appeals
• Writing for the Court: MIHARA; ELIA, Acting P.J., and WUNDERLICH
• Citation: 67 Cal.Rptr.2d 621,58 Cal.App.4th 273
• Parties: , 97 Cal. Daily Op. Serv. 7647, 97 Daily Journal D.A.R. 12,328 CALIFORNIANS FOR POPULATION STABILIZATION, Plaintiff and Appellant, v.COMPANY, Defendant and Respondent. CALIFORNIANS FOR POPULATION STABILIZATION, Plaintiff and Appellant, v. TATA SONS LIMITED, et al., Defendants and Respondents. CALIFORNIANS FOR POPULATION STABILIZATION, Plaintiff and Respondent, v. TATA SONS LIMITED, et al., Defendants and Appellants.
• Decision Date: 25 September 1997
• Docket Number: HEWLETT-PACKARD,Nos. H013638,H014028 and H014384

Page 621

67 Cal.Rptr.2d 621 58 Cal.App.4th 273, 97 Cal. Daily Op. Serv. 7647, 97 Daily Journal D.A.R. 12,328 CALIFORNIANS FOR POPULATION STABILIZATION, Plaintiff and Appellant,
v.
HEWLETT-PACKARD COMPANY, Defendant and Respondent.
CALIFORNIANS FOR POPULATION STABILIZATION, Plaintiff and Appellant,
v.
TATA SONS LIMITED, et al., Defendants and Respondents.
CALIFORNIANS FOR POPULATION STABILIZATION, Plaintiff and Respondent,
v.
TATA SONS LIMITED, et al., Defendants and Appellants. Nos. H013638, H014028 and H014384. Court of Appeal, Sixth District, California. Sept. 25, 1997.
As Modified Oct. 21, 1997.
Review Denied Jan. 21, 1998. ^*

Page 624

[58 Cal.App.4th 278] Mary T. Dumont, Michael J. Lowy, Palo Alto, James Danaher, Jr., Santa Cruz, Kathleen S. Rogers, San Francisco, William L. Stern, Severson & Werson, San Francisco, for Respondent Californians for Population Stabilization.

Paul L. Bressan, Cynthia S. Papsdorf, Kelley, Drye & Warren, Los Angeles, Patricia M. Lucas, Fenwick & West, Palo Alto, for Appellant Tata Sons Limited.

Gibson, Dunn & Crutcher, Dennis A. Gladwell and Susan B. Burr, Irvine, for Hewlett-Packard Company.

MIHARA, Associate Justice.

Plaintiff Californians for Population Stabilization (CAPS) appeals from judgments in favor of defendants Tata Sons Limited and its division Tata Consultancy Services (collectively Tata) and Hewlett-Packard [58 Cal.App.4th 279] Company (H-P). Tata appeals from an order denying its motion for attorney's fees. ¹ For the reasons stated below, we affirm both judgments and the post-judgment order.

PROCEDURAL HISTORY

On October 4, 1993, CAPS filed a complaint for a preliminary and permanent injunction under BUSINESS AND PROFESSIONS CODE SECTION 17200². The first cause of action alleged Tata had committed acts of unfair competition by engaging in statutorily prohibited conduct and unfair practices. The second cause of action alleged that H-P was aware of Tata's unlawful and unfair business practices and was liable for conspiring with Tata to violate California law.

After three amended complaints were filed, H-P's motion for summary judgment was granted by the court. The court found TATA had failed to raise a triable issue of material fact as to H-P's knowledge of or participation in the alleged unlawful practices. The remaining action proceeded to a nonjury trial, after which the court rendered a 30-page statement of decision. Judgment was entered in favor of Tata, but the company's motion for attorney's fees was denied. Notices of appeal were timely filed.

On December 6, 1995, CAPS moved to dismiss Tata's appeal from the order denying its motion for attorney's fees on the grounds that Tata had failed to comply with section 17209. In response, Tata moved to dismiss CAPS' underlying appeal for violation of the same statute. This court deferred consideration of both motions. Thereafter, this court granted a request by the California District Attorneys Association for leave to file an amicus curiae brief.

FACTS ³

Based in India, Tata employs approximately 4,000 computer engineers who work in India and around the world. The company has 35 offices [58 Cal.App.4th 280] worldwide, 10 of which are in the United States. Tata provides extensive training to its newly recruited computer engineers which lasts for 12 to 18 months, depending on the individual trainee.

Commencing in October 1989, Tata entered into contracts to supply software engineers, systems analysts, and computer programmers to assist on projects of and/or design and develop software for companies in California. These included H-P, Oracle Corporation, IBM and American President Lines.

If Tata is awarded a California contract, it identifies possible candidates to fill the project from its employees. Some of the work

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done by Tata computer engineers is done in California at the client's site. Tata refers to these overseas assignments as "deputations." The U.S. deputations are for terms of up to two years. One of Tata's clients, H-P, reserved the right to approve any consultant proposed by Tata.

Tata pays its deputed workers both salary and expenses while they work in California, in addition to the salary and benefits the company continues to provide to them in India. The current Indian salary component paid to workers on deputation ranges up to 170,000 rupees per year, or $5,600 per year at current exchange rates. The difference between the remuneration received by Tata employees while in India versus the United States is that Tata pays workers on deputation a cash housing and living allowance to make up for the higher cost of living in the United States.

Prior to 1993, some Tata workers came to the United States by way of "B-1" visas. Federal law concerning B-1 visas prohibited Tata from paying a United States salary to those workers during their deputations. During those deputations, Tata continued to pay those workers on B-1 visas the same Indian salary and benefits they would have received if they continued to work in India. In addition, the B-1 deputees were paid an amount in cash that Tata believed would compensate for housing and general living expenses. Deputees now receive H-1B visas.

Tata computer engineers currently on deputation in California receive total gross compensation of between $28,500 and $38,500. They continue to receive their Indian salary of 85,000 to 170,000 rupees per year, which is among the highest salaries paid by comparable Indian companies to employees with similar backgrounds and experience. In addition to their Indian [58 Cal.App.4th 281] salary and benefits, ⁴ Tata pays the computer engineers in California additional compensation in the net amount of $1,800 to $2,200 per month, exclusive of taxes. Tata also pays on behalf of the computer engineers, state and federal income taxes on the U.S. compensation, FICA (Federal Insurance Contributions Act), FUTA (Federal Unemployment Tax Act), and unemployment tax, the total of which is equivalent to 30 percent or more of the net compensation.

Tata customarily charges its clients $5,000 per month, or $60,000 per year, for each employee. These same clients pay on the average up to $110,000 per year, inclusive of salary and benefits, for comparable non-Tata programmers.

After a Tata employee agrees to go on an overseas deputation, he or she is required to sign documents in India. The first document is the "Deputation Letter," which confirms, among other things, the amount of compensation he or she will receive. The second is the deputation agreement, which memorializes the employee's commitment to complete the project to which he or she is assigned and to return to India to work for Tata for the applicable post-deputation period. In addition, the employee signs the affidavit and undertaking that is provided to the U.S. Consul with the visa application, and the nonimmigration agreement. The nonimmigration agreement states that the employee will neither seek permanent immigration status nor accept employment with another employer.

Prior to March 1991, and thereafter, the deputation agreement provided for liquidated damages, expressed in rupees, in the event of certain breaches including the following: 1) the employee quits before the end of the term of the U.S. deputation; 2) the employee fails to return to work for Tata in India, for the "compulsory employment" period of double the term of the U.S. deputation, up to a maximum of two years; 3) Tata terminates the deputation before the completion of the project; 4) Tata terminates the employee during the post-deputation "compulsory employment" period in India; 5) the employee works for a Tata competitor anywhere in the world; or 6) the employee changes sponsoring employers.

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In March 1991, Tata expanded the liquidated damages clause in the deputation agreement. It provides that if the breach occurs while the employee is in the United States, Tata may recover from the employee $30,000 [58 Cal.App.4th 282] in liquidated damages as well as a "debt" in the amount of salary and allowances paid, and interest on the liquidated sums of nine percent per year. The amount of the "debt" Tata recovers is determined in an Indian arbitration proceeding.

The Tata employees are also required to sign an estoppel certificate and nonimmigration covenant that contains the following language: "I shall not accept any employment of assignment with any Tata Consultancy Services client who has been introduced to me during the deputation or any employment by any competitor of Tata Consultancy Services or any other employer in the U.S.A. If I violate this agreement, Tata Consultancy Services is entitled to recover liquidated damages in the sum of $30,000 and seek injunctive relief in a court of law."

The parties stipulated that "[i]f Indian Law were to apply to the employment relationships, contractual provisions, acts and practices complained of by CAPS, they would be lawful under Indian law."

Despite these written agreements, approximately 30 computer engineers have abandoned their California deputation projects before completion. Because of the substantial adverse impact of these breaches on the particular projects (particularly with respect to "time to market" constraints), the affected Tata clients--H-P, Oracle and IBM--complained to Tata in writing and during meetings with Tata representatives. They threatened to take future business away from Tata unless the company could do something to prevent these abandonments. Tata in fact lost business from H-P and Oracle as a result of the Tata computer engineers abandoning their projects.

On various occasions, Tata representatives met with representatives of H-P to explore solutions to the problem. Among other things, they discussed litigation Tata had commenced to enforce the $30,000 liquidated damages provision against the breaching engineers.

Based on these facts, and others to be addressed in our discussion, the trial...