Sumitomo Shoji America, Inc v. Avagliano Avagliano v. Sumitomo Shoji America, Inc

• Citation: 72 L.Ed.2d 765,102 S.Ct. 2374,457 U.S. 176
• Decision Date: 15 June 1982
• Docket Number: Nos. 80-2070,81-24,s. 80-2070
• Parties: SUMITOMO SHOJI AMERICA, INC., Petitioner v. Lisa M. AVAGLIANO et al. Lisa M. AVAGLIANO, et al., Petitioners v. SUMITOMO SHOJI AMERICA, INC
• Court: United States Supreme Court

457 U.S. 176

102 S.Ct. 2374

72 L.Ed.2d 765

SUMITOMO SHOJI AMERICA, INC., Petitioner

v Lisa M. AVAGLIANO et al.

Lisa M. AVAGLIANO, et al., Petitioners

v. SUMITOMO SHOJI AMERICA, INC.

Nos. 80-2070, 81-24.

Argued April 26, 1982.

Decided June 15, 1982.

Syllabus

Petitioner Sumitomo Shoji America, Inc., is a New York corporation and a wholly owned subsidiary of a Japanese general trading company. Past and present female secretarial employees of Sumitomo, who, with one exception, are United States citizens, brought a class action in Federal District Court against Sumitomo, claiming that its alleged practice of hiring only male Japanese citizens to fill executive, managerial, and sales positions violated Title VII of the Civil Rights Act of 1964. Sumitomo moved to dismiss the complaint on the ground that its practices were protected under Art. VIII(1) of the Friendship, Commerce and Navigation Treaty between the United States and Japan. Article VIII(1) provides that the "companies 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." Article XXII(3) of the Treaty defines "companies" as "[c]ompanies constituted under the applicable laws and regulations within the territories of either Party." The District Court refused to dismiss, holding that because Sumitomo was incorporated in the United States, it was not covered by Art. VIII(1), but the court then certified for interlocutory appeal to the Court of Appeals the question whether the terms of the Treaty exempted Sumitomo from Title VII's provisions. The Court of Appeals reversed in part, holding that Art. VIII(1) was intended to cover locally incorporated subsidiaries of foreign companies but that the Treaty language did not insulate Sumitomo's employment practices from Title VII scrutiny.

Held: Sumitomo is not a company of Japan and thus is not covered by Art. VIII(1) of the Treaty. Pp. 180-189.

(a) Under Art. XXII(3)'s literal language, Sumitomo is a company of the United States, since it was "constituted under the applicable laws and regulations" of New York. As a company of the United States, it cannot invoke the rights provided in Art. VIII(1), which are available only to companies of Japan operating in the United States and to compa- nies of the United States operating in Japan. Where both parties to the Treaty agree with this meaning and such interpretation follows from the clear Treaty language, deference will be given to it, absent extraordinarily strong contrary evidence. Pp. 180-185.

(b) Adherence to the Treaty language does not overlook the Treaty's purpose, since the primary purpose of the corporation provisions was to give corporations of each signatory legal status in the territory of the other party and to allow them to conduct business in the other country on a comparable basis with domestic firms. Pp. 185-189.

2d Cir., 638 F.2d 552, vacated and remanded.

Abram Chayes, Washington, D. C., for Sumitomo Shoji America, Inc.

Lewis M. Steel, New York City, for Avagliano, et al.

Lawrence G. Wallace, Washington, D. C., for the United States as amicus curiae by special leave of Court.

Chief Justice BURGER delivered the opinion of the Court.

We granted certiorari to decide whether Article VIII(1) of the Friendship, Commerce and Navigation Treaty between 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.

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(1) 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 (S.D.N.Y.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(1) 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 (C.A.2 1981). The court first examined the Treaty's language and its history and concluded that the Treaty parties intended Article VIII(1) to cover locally incorporated subsidiaries of foreign companies such as Sumitomo. The court then held that the Treaty language does not insulate Sumitomo'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 thus fit within a statutory exception to Title VII.⁴ The court remanded for further proceedings.⁵

We granted certiorari, 454 U.S. 962, 102 S.Ct. 501, 70 L.Ed.2d 377 (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, 83 S.Ct. 1054, 1057, 10 L.Ed.2d 184 (1963). See also The Amiable Isabella, 6 Wheat. (10 U.S.) 1, 72, 5 L.Ed. 191 (1821).

Article VIII(1) of the Treaty provides in pertinent part:

"[C]ompanies 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

Clearly Article VIII(1) 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(1) of the Treaty grants it very broad discretion to fill its executive, managerial, and sales positions exclusively with male Japanese citizens.⁷

Article VIII(1) 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 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(1), 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(1). The Ministry of Foreign Affairs stated its position to the American Embassy in Tokyo with reference to this case:

"The Ministry of Foreign Affairs, as the Office of [the Government of Japan] responsible for the interpretation of the [Friendship, Commerce and Navigation] Treaty, reiterates its view concerning the application of Article 8, Paragraph 1 of the Treaty: For the purpose of the Treaty, companies constituted under the applicable laws . . . of either Party shall be deemed companies thereof and, therefore, a subsidiary of a Japanese company which is incorporated under the laws of New York is not covered by Article 8 Paragraph 1 when it operates in the United States." ⁹

The United States Department of State also maintains that Article VIII(1) rights do not apply to locally incorporated subsidiaries.¹⁰ Although not conclusive, the meaning attributed to treaty provisions by the Government agencies charged with their negotiation and enforcement is entitled to great weight. Kolovrat v. Oregon, 366 U.S. 187, 194, 81 S.Ct. 922, 926, 6 L.Ed.2d 218 (1961).¹¹

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