Subramanian v. Tata Consultancy Services Limited

Background

Senthil Kumar Subramanian worked for Tata Consultancy Services Limited (TCS) for more than 16 years. TCS terminated his employment in April 2017. Before that, Subramanian reported conduct he believed involved the misappropriation of a customer’s trade secrets. He later reported that he believed an incident at TCS’s Bloomington, Minnesota, office was retaliatory. TCS investigated his reports, found no evidence of unlawful conduct, and terminated him within an hour after closing the investigation.

Subramanian’s amended complaint asserted claims for wrongful termination and retaliation, violation of the Family and Medical Leave Act, and violation of the Racketeer Influenced and Corrupt Organizations Act (RICO). His RICO claim alleged that the defendants participated in schemes involving theft of customers’ trade secrets, theft of employees’ tax refunds, fraudulent termination of employees, and use of a false reason for terminating Subramanian.

The defendants moved to dismiss Count 3, arguing that Subramanian lacked standing or, alternatively, failed to state a RICO claim. Subramanian also appealed Magistrate Judge Becky R. Thorson’s order denying without prejudice his request to file a second amended complaint. The magistrate judge had found that the defendants would be prejudiced if the amendment request were decided before the defendants’ motion to dismiss.

RICO Standing

The court first considered Article III standing, meaning the constitutional requirement that a plaintiff have a real, personal injury that was caused by the defendant and could be remedied by the court. The court held that Subramanian satisfied this requirement. His alleged losses of employment, income, benefits, and tax refunds were concrete and personal, were alleged to be connected to the defendants’ conduct, and could be addressed through the monetary relief he sought.

The court then considered statutory standing, meaning whether RICO gives this particular plaintiff the right to sue for the alleged injury. A civil RICO plaintiff must allege a concrete financial loss to business or property that was directly caused by conduct constituting a RICO violation.

The court held that the alleged theft of customers’ trade secrets could not support Subramanian’s RICO claim because any resulting injury would belong to the customers, not Subramanian. The alleged tax-refund scheme also could not support the claim because it had been addressed in an earlier class action that Subramanian joined and that resulted in a settlement releasing the relevant claims.

The alleged fraudulent termination of other employees could not establish standing because Subramanian did not allege that he suffered a financial loss from those terminations. The court also held that terminating Subramanian in retaliation for reporting racketeering activity was not itself a RICO predicate act. Finally, the court held that the alleged use of a false reason to terminate Subramanian did not constitute mail or wire fraud as pleaded: the complaint did not allege that Subramanian had a property interest in continued employment or that the defendants used material falsehoods to cheat him out of property.

Because Subramanian had not alleged a RICO predicate act that proximately caused him a concrete financial loss, the court concluded that he lacked statutory standing. The court did not address the defendants’ alternative argument that the complaint failed to state a RICO claim.

Motion to Dismiss and Appeal

The court granted the defendants’ motion to dismiss, and Count 3 of the amended complaint was dismissed without prejudice. The court explained that the record did not establish that it would be impossible for Subramanian to plead an adequate RICO claim, leaving him an opportunity to seek leave to amend.

The court reviewed the magistrate judge’s nondispositive order under a highly deferential standard. It held that the order denying Subramanian’s motion to amend without prejudice was neither clearly erroneous nor contrary to law. The court noted Subramanian’s previous amendment, his failure to respond to the motion to dismiss, his filing of another amended complaint without the required permission, and the resulting delays and additional proceedings. The magistrate judge’s August 6, 2018 order was affirmed.