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Nasdaq-listed iGate is set to be sued by Araceli Roiz, the employee who earlier this week sent the company a legal notice alleging sexual harassment by its CEO, Phaneesh Murthy. iGate subsequently sacked Murthy on Tuesday.
Aiman-Smith & Marcy, the law firm representing Roiz, said it was contemplating legal action against Murthy, as well as iGate, which is liable for any action of its CEO during his stint in the company. “On behalf of Ms Roiz, we are contemplating next steps, which will certainly include court action against Mr Murthy and iGate,” the California-based law firm said in a press statement late last night.
. Read Aiman-Smith & Marcy press release (Full Text)
The statement said Roiz, who joined the company in May 2010 in the investor relations department, was reporting to Murthy on a day-to-day basis, since her “nominal supervisor” Sujit Sircar, CFO of iGate, was based in India. Murthy established a personal relationship with Roiz under the pretext of business necessity. After she became pregnant with his child, Murthy forced her to go for an abortion and even attempted to throw her out of the job, to keep his relationship a secret.
Raising questions if iGate did enough to contain his “predatory actions towards female employees”, knowing his past record (at Infosys, where he was sued twice for sexual harassment), the law firm said the employer was liable for the conduct of its CEO, under the California law.
“Under California law, because Mr Murthy was an officer and director of iGate, his actions were the actions of iGate, and iGate, too, is liable for the acts of Mr Murthy,” it said.
Interestingly, Aiman-Smith & Marcy is the same law firm that previously represented Reka Maximovitch and Jennifer Griffith in sexual harassment lawsuits against Murthy, when he was employed with Infosys. Subsequently, Infosys settled the lawsuit filed by Maximovitch out of the court for a hefty $3 million in 2003. The second lawsuit, filed by Griffith, was directly settled by Murthy, paying the litigant $800,000.
| OPTIONS BEFORE IGATE |
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With Roiz’s lawyers saying they will go ahead with legal proceedings against iGate, the options before the company are contesting the case or settling it out of court. According to industry experts, the first option may unnecessarily drag the management’s attention and resources. Besides, the compensation claimed in such lawsuits are usually hefty. |
In 2003, Infosys had settled the case against Murthy out of court. According to its then chairman N R Narayana Murthy, the allegations were serious and the compensation demanded was in multiples of what had been settled. Given that, industry insiders say iGate, too, might try for an out-of-court settlement.
In a statement issued on Thursday, iGate said the company was committed to complying with the legal process for a logical conclusion of the matter. The company said it learnt of the relationship only when Murthy disclosed it to the board three weeks back.
“Immediately after being informed of the relationship, iGate board acted quickly and sought to ascertain the facts, protect shareholder value and ensure we identified and completed all appropriate actions,” the company added.
Murthy, in a press statement issued on Thursday, said he did not want to comment, since the matter was heading to court. “There are always two sides to the truth and now that the matter is definitely heading to court, I can’t comment any more,” the statement added.
Soon after he was sacked from iGate, Murthy had said the sexual harassment allegation levelled by Roiz was a “case of extortion” and he would contest it “vigorously” if the matter moved to court.
Here is the point by point allegation made by Murthy during his interaction with media persons on Tuesday and the clarification given by the law firm:
As to the timing of Murthy’s disclosure of his relationship to the board: When Roiz refused to have an abortion, Murthy attempted to get her to leave the company and keep their relationship a secret. It was not until after Roiz refused to do so and informed him that she would be seeking legal representation and her lawyers contacted Murthy’s counsel that he reluctantly informed the board of the relationship, just before the Board would have learned all this on its own from other sources.
On Murthy saying the relationship with Roiz lasted just for few months: Murthy’s statement is a lie - Murthy began pursuing Roiz shortly after her employment began in 2010.
On Murthy’s comments that Roiz or her attorneys are engaging in 'extortion’: Murthy’s comments are defamatory and a despicable attempt to 'blame the victim’, who only wants to somehow continue her career and support her child. Murthy has, astonishingly, attempted to gain sympathy based on his own prior bad actions.
Roiz selected the law firm, Aiman-Smith & Marcy, based upon the firm’s excellent reputation as vigorous advocates for victims of employment discrimination and its prior success in getting compensation for some of Murthy’s previous victims
On iGate’s press statement which says Murthy had not violated its sexual harassment policy: Under California law, the employer is liable for the conduct of its CEO. We do not believe a full, impartial, investigation can possibly result in this conclusion, but we note that, according to iGate, its investigation is continuing. We hope that iGate will take appropriate responsibility in this matter and that it can be concluded on that basis.
