Sumitomo Shoji America, Inc. v. Avagliano

457 U.S. 176, 102 S. Ct. 2374, 72 L. Ed. 2d 765, 1982 U.S. LEXIS 122, 50 U.S.L.W. 4643, 29 Empl. Prac. Dec. (CCH) 32,782, 28 Fair Empl. Prac. Cas. (BNA) 1753
Supreme Court of the United States·Decided June 15, 1982·No. 80-2070·Published·Cited by 372 cases

Opinion

Chief Justice Burger

delivered the opinion of the Court.

We granted certiorari to decide whether Article VIII(l) of the Friendship, Commerce and Navigation Treaty between *178 the United States and Japan provides a defense to a Title VII employment discrimination suit against an American subsidiary of a Japanese company.

I

Petitioner, Sumitomo Shoji America, Inc., is a New York corporation and a wholly owned subsidiary of Sumitomo Shoji Kabushiki Kaisha, a Japanese general trading company or sogo shosha. 1 Respondents are past and present female secretarial employees of Sumitomo. 2 All but one of the respondents are United States citizens; that one exception is a Japanese citizen living in the United States. Respondents brought this suit as a class action claiming that Sumitomo’s alleged practice of hiring only male Japanese citizens to fill executive, managerial, and sales positions violated both 42 U. S. C. § 1981 and Title VII of the Civil Rights Act of 1964, 78 Stat. 253, as amended, 42 U. S. C. § 2000e et seq. (1976 ed. and Supp. IV). 3 Respondents sought both injunctive relief and damages.

*179 Without admitting the alleged discriminatory practice, Sumitomo moved under Rule 12(b)(6) of the Federal Rules of Civil Procedure to dismiss the complaint. Sumitomo’s motion was based on two grounds: (1) discrimination on the basis of Japanese citizenship does not violate Title VII or § 1981; and (2) Sumitomo’s practices are protected under Article VIII(l) of the Friendship, Commerce and Navigation Treaty between the United States and Japan, Apr. 2, 1953, [1953] 4 U. S. T. 2063, T. I. A. S. No. 2863. The District Court dismissed the § 1981 claim, holding that neither sex discrimination nor national origin discrimination are cognizable under that section. 473 F. Supp 506 (SDNY 1979). The court refused to dismiss the Title VII claims, however; it held that because Sumitomo is incorporated in the United States it is not covered by Article VIII(l) of the Treaty. The District Court then certified for interlocutory appeal to the Court of Appeals under 28 U. S. C. § 1292(b) the question of whether the terms of the Treaty exempted Sumitomo from the provisions of Title VII.

The Court of Appeals reversed in part. 638 F. 2d 552 (CA2 1981). The court first examined the Treaty’s language and its history and concluded that the Treaty parties intended Article VIII(l) to cover locally incorporated subsidiaries of foreign companies such as Sumitomo. The court then held that the Treaty language does not insulate Sumi-tomo’s executive employment practices from Title VII scrutiny. The court concluded that under certain conditions, Japanese citizenship could be a bona fide occupational qualification for high-level employment with a Japanese-owned domestic corporation and that Sumitomo’s practices might *180 thus fit within a statutory exception to Title VII. 4 The court remanded for further proceedings. 5

We granted certiorari, 454 U. S. 962 (1981), and we vacate and remand.

II

Interpretation of the Friendship, Commerce and Navigation Treaty between Japan and the United States must, of course, begin with the language of the Treaty itself. The clear import of treaty language controls unless “application of the words of the treaty according to their obvious meaning effects a result inconsistent with the intent or expectations of its signatories.” Maximov v. United States, 373 U. S. 49, 54 (1963). See also The Amiable Isabella, 6 Wheat. 1, 72 (1821).

*181 Article VIII(l) of the Treaty provides in pertinent part:

“[CJompanies of either Party shall be permitted to engage, within the territories of the other Party, accountants and other technical experts, executive personnel, attorneys, agents and other specialists of their choice.” (Emphasis added.) 6

*182 Clearly Article VIII(l) only applies to companies of one of the Treaty countries operating in the other country. Sumitomo contends that it is a company of Japan, and that Article VIII(l) of the Treaty grants it very broad discretion to fill its executive, managerial, and sales positions exclusively with male Japanese citizens. 7

Article VIII(l) does not define any of its terms; the definitional section of the Treaty is contained in Article XXII. Article XXII(3) provides:

“As used in the present Treaty, the term ‘companies’ means corporations, partnerships, companies and other associations, whether or not with limited liability and whether or not for pecuniary profit. Companies constituted under the applicable laws and regulations within the territories of either Party shall be deemed companies thereof and shall have their juridical status recognized within the territories of the other Party.” (Emphasis added.)

Sumitomo is “constituted under the applicable laws and regulations” of New York; based on Article XXII(3), it is a company of the United States, not a company of Japan. 8 As *183 a company of the United States operating in the United States, under the literal language of Article XXII(3) of the Treaty, Sumitomo cannot invoke the rights provided in Article VIII(l), which are available only to companies of Japan operating in the United States and to companies of the United States operating in Japan.

The Governments of Japan and the United States support this interpretation of the Treaty. Both the Ministry of Foreign Affairs of Japan and the United States Department of State agree that a United States corporation, even when wholly owned by a Japanese company, is not a company of Japan under the Treaty and is therefore not covered by Article VIII(l). The Ministry of Foreign Affairs stated its position to the American Embassy in Tokyo with reference to this case:

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Sumitomo Shoji America, Inc. v. Avagliano, 457 U.S. 176, 102 S. Ct. 2374, 72 L. Ed. 2d 765, 1982 U.S. LEXIS 122, 50 U.S.L.W. 4643, 29 Empl. Prac. Dec. (CCH) 32,782, 28 Fair Empl. Prac. Cas. (BNA) 1753 (1982).

457 U.S. 176 (Sumitomo Shoji America, Inc. v. Avagliano) — published by Counsel Stack Legal Research, free access to 12M+ legal documents.

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