Bennett v. Total Minatome Corp., 97-20584

• Decision Date: 29 April 1998
• Docket Number: No. 97-20584,97-20584
• Citation: 138 F.3d 1053
• Parties: 76 Fair Empl.Prac.Cas. (BNA) 1392, 73 Empl. Prac. Dec. P 45,396 W.G. BENNETT, Plaintiff-Appellee-Cross-Appellant, v. TOTAL MINATOME CORPORATION, Defendant-Appellant-Cross-Appellee.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 1053

138 F.3d 1053

76 Fair Empl.Prac.Cas. (BNA) 1392,

73 Empl. Prac. Dec. P 45,396

W.G. BENNETT, Plaintiff-Appellee-Cross-Appellant, v. TOTAL MINATOME CORPORATION, Defendant-Appellant-Cross-Appellee.

No. 97-20584.

United States Court of Appeals,

Fifth Circuit.

April 29, 1998.

Rehearing Denied May 28, 1998.

Gregory M. Cokinos, Robert Anthony Plessala, Cokinos, Bosien & Young, Houston, TX, for Bennett.

Stephen W. Smith, Fulbright & Jaworski, Houston, TX, for Total Minatome Corp.

Appeals from the United States District Court for the Southern District of Texas.

Before DAVIS, WIENER and PARKER, Circuit Judges.

W. EUGENE DAVIS, Circuit Judge:

W.G. Bennett brought this employment discrimination suit against his employer, Total Minatome Corporation ("TMC"). Bennett alleged that TMC unlawfully discriminated against him in violation of Title VII of the Civil Rights Act of 1964, 42 U.S.C. §§ 2000e et seq., the Age Discrimination in Employment Act ("ADEA"), 29 U.S.C. §§ 621 et seq., and 42 U.S.C. § 1981. The district court entered judgment in favor of Bennett on each of his claims. For the reasons that follow, we reverse.

I.

TMC, an oil and gas company incorporated in Delaware, is the wholly owned subsidiary of TOTAL, S.A. ("TOTAL"), a French corporation headquartered in Paris, France. Bennett, an American citizen born in Mississippi, was hired as a manager by TMC on April 1, 1987, less than one month before his 51st birthday. Over the next four years, Bennett was promoted twice, at age 52 and at age 54.

For some time, TOTAL has maintained a practice of assigning TOTAL employees to TMC on a temporary basis. These French "expatriates" generally occupy key executive or technical positions at TMC, including president. Between 1987 and 1991, in response to a decline in the oil business, TMC undertook several corporate "restructurings." In May 1989, during one such restructuring, TMC terminated three American managers over the age of 50. In March 1991, during another restructuring, TMC laid off approximately 15% of its workforce, including four American managers over the age of 40 and a fifth who was six months shy of his 40th birthday.

In July 1991, TOTAL replaced TMC's then-president, Jean Pierre Donnet, with another French expatriate, Jean Michel Fonck, who was sent with the mandate "to reorganize completely the company." In September 1991, as part of his reorganization efforts, Fonck decided to replace Bennett, who then held the position of Production Manager, with a younger French expatriate, Jean Granger. Bennett was transferred to the position of Manager of Acquisitions and Divestments. Although he had been responsible for supervising 150 employees in his former position, he did not supervise any employees in his new position. In his new position he had no purchasing authority, whereas in his former position he had signature authority up to $150,000. His new position also required that he occasionally perform manual tasks such as moving boxes of documents and operating a copy machine.

In September 1993, TOTAL recalled Granger to France. Bennett's request for reinstatement was denied, and the title of Bennett's former position was changed to Drilling and Production Manager. At TOTAL's direction, Granger was replaced by another younger French expatriate, Jean Louis Geyelin. In the summer of 1996, Geyelin rotated back to France. Pursuant to a budgetary directive from TOTAL, TMC did not replace Geyelin and eliminated the position.

Bennett filed suit in September 1993, complaining that his transfer was a demotion and that TMC continued to discriminate against him ¹ on account of his age, in violation of the ADEA; national origin, in violation of Title VII; and race, in violation of § 1981. ² Bennett's Title VII claim, to the extent it was based on acts occurring prior to November 21, 1991, ³ was tried to the court. His remaining claims were tried to a jury. The court and the jury found for Bennett on each of his claims. On November 8, 1996, the court entered judgment awarding Bennett $152,100 in backpay; $300,000 in compensatory damages; $970,000 in punitive damages; and $391,722.73 in attorneys' fees. The court denied TMC's post-trial motion for judgment as a matter of law on Bennett's claims and Bennett's motion to amend the judgment to include an award of front pay. Both TMC and Bennett appeal.

II.

TMC contends that Bennett's claims are barred by Article VI of the Convention of Establishment between the United States and France, (the "Convention"), one of a series of commercial treaties negotiated by the United States with a number of other countries in the years following World War II. See 106 Cong. Rec. 16561-63 (1960). ⁴ Id. Article VI of the Convention provides in pertinent part:

Nationals and companies of either High Contracting Party shall be permitted to engage, at their choice, within the territories of the other High Contracting Party, accountants and other technical experts, lawyers, and personnel who by reason of their special capacities are essential to the functioning of the enterprise.

11 U.S.T. 2398, 2405. TMC argues that Article VI thus permits French companies conducting business in the United States to discriminate in favor of French citizens in filling the positions specified therein without running afoul of domestic laws such as Title VII or the ADEA.

The parties' dispute centers on whether TMC, the wholly owned U.S. subsidiary of a French company, may assert rights under the Convention. In Sumitomo Shoji America, Inc. v. Avagliano, 457 U.S. 176, 189, 102 S.Ct. 2374, 2381-82, 72 L.Ed.2d 765 (1982), the Supreme Court held that a wholly owned U.S. subsidiary of a Japanese company was not covered by Article VIII(1) of the Friendship, Commerce and Navigation Treaty between the United States and Japan (the "Japan FCN treaty"), a provision similar to Article VI. ⁵ The Court, however, expressly reserved the question of whether the U.S. subsidiary could assert any of its parent's rights under the treaty. Id. at 189-90 n. 19, 102 S.Ct. at 2381-82 n. 19.

In Fortino v. Quasar Co., 950 F.2d 389, 393 (7th Cir.1991) (Posner, J.), the Seventh Circuit concluded that a wholly owned U.S. subsidiary of a Japanese company could assert its parent's rights under Article VIII(1) of the Japan FCN treaty to the extent that the parent dictated the subsidiary's alleged discriminatory conduct. In Fortino, the parent company maintained a practice of assigning several of its financial and marketing executives to the subsidiary on a temporary basis. These "expatriates" were employees of the subsidiary and were under its day-to-day control, yet they also retained their status as employees of the parent company. The parent evaluated their performance, kept their personnel records, fixed their salaries, and assisted with the relocation of their families to the United States. The expatriates entered the United States under "E-1" or "E-2" temporary visas, which permitted the holder to work in the United States provided, among other things, that the work was executive or supervisory in character, that the worker was a Japanese citizen, and that the worker was doing work authorized by the Japan FCN Treaty.

The plaintiffs in Fortino were American executives discharged by a Japanese expatriate put in charge of the subsidiary by the parent to prevent the recurrence of a massive loss and who proceeded to do so by reorganizing the company and reducing the workforce, including management, by half. No Japanese expatriate executives were terminated, although two were rotated back to Japan and replaced by a single new expatriate. The court held that the subsidiary was entitled to judgment in its favor, reasoning that "[a] judgment that forbids [the subsidiary] from giving preferential treatment to the expatriate executives that its parent sends would have the same effect on the parent as it would have if it ran directly against the parent: it would prevent [the parent] from sending its own executives to manage [the subsidiary] in preference to employing American citizens in such posts." Id. at 393.

In Papaila v. Uniden America Corp., 51 F.3d 54, 56 (5th Cir.1995), following the lead of the Seventh Circuit in Fortino, we held that a wholly owned U.S. subsidiary of a Japanese entity could invoke its parent's rights under Article VIII(1) of the Japan FCN Treaty with respect to employment decisions dictated by the parent. In Papaila, the parent company also assigned "expatriate" employees to work for the subsidiary on a temporary basis. The expatriates were sent to protect the parent's rights in the subsidiary and were subject to transfer at the parent's request. The parent set the expatriate's salaries, wages, benefits and hours, directed that the subsidiary maintain a separate payroll account for the expatriates, and evaluated their job performance. The plaintiff in Papaila alleged that Japanese expatriates received favorable treatment in terms of salaries, benefits, and job protection. We affirmed the district court's grant of summary judgment in favor of the subsidiary because the parent was responsible for the alleged discriminatory conduct.

TMC contends that it is clear from the record that TOTAL dictated the decision to replace Bennett with Granger, as well as the decision not to reinstate him after Granger rotated back to France. Bennett, on the other hand, contends that there is no evidence that these decisions were dictated by TOTAL. We conclude that the record indeed discloses that the decisions were dictated by TOTAL and that, under Papaila, TMC may assert TOTAL's rights under Article VI of the Convention.

Like the foreign parents in Papaila and Fortino, TOTAL assigned its own executives to TMC on a temporary basis. Expatriate executives maintained their status as TOTAL employees and could not be fired by TMC. Similar to what occurred in Fortino, Fonck was put in charge of TMC by TOTAL with the mandate to...