Ventress v. Japan Airlines

• Decision Date: 24 April 2007
• Docket Number: No. 06-15904.,No. 05-15044.,No. 04-17353.,04-17353.,05-15044.,06-15904.
• Citation: 486 F.3d 1111
• Parties: Martin VENTRESS, Plaintiff-Appellant, and Jack Crawford, Plaintiff, v. JAPAN AIRLINES; Hawaii Aviation Contract Services, Inc.; Does 1-10 Inclusive; Jalways Co., Ltd., a subsidiary of Japan Airlines, Defendants-Appellees. Martin Ventress, Plaintiff, and Jack Crawford, Plaintiff-Appellant, v. Japan Airlines; Hawaii Aviation contract Services, Inc.; Does 1-10 Inclusive; Jalways Co., Ltd., a subsidiary of Japan Airlines, Defendants-Appellees. Martin Ventress, Plaintiff-Appellant, v. Hawaii Aviation Contract Services, Inc., Defendant-Appellee.
• Court: U.S. Court of Appeals — Ninth Circuit

486 F.3d 1111

Martin VENTRESS, Plaintiff-Appellant, and Jack Crawford, Plaintiff, v. JAPAN AIRLINES; Hawaii Aviation Contract Services, Inc.; Does 1-10 Inclusive; Jalways Co., Ltd., a subsidiary of Japan Airlines, Defendants-Appellees.

Martin Ventress, Plaintiff, and Jack Crawford, Plaintiff-Appellant, v. Japan Airlines; Hawaii Aviation contract Services, Inc.; Does 1-10 Inclusive; Jalways Co., Ltd., a subsidiary of Japan Airlines, Defendants-Appellees.

Martin Ventress, Plaintiff-Appellant, v. Hawaii Aviation Contract Services, Inc., Defendant-Appellee.

No. 04-17353.

No. 05-15044.

No. 06-15904.

United States Court of Appeals, Ninth Circuit.

Argued and Submitted March 9, 2007.

Filed April 24, 2007.

Martin Ventress, Pro Se, Houston, TX, for the plaintiff-appellant; Charles H. Brower, Shawn A. Luiz, Honolulu, HI, for plaintiff-appellant Crawford.

Andrew L. Pepper, Carlsmith Ball LLP, Honolulu, HI, for defendants-appellees Japan Airlines & Jalways Co., Ltd. Carl H. Osaki, Honolulu, HI, for defendant-appellee Hawaii Aviation Contract Services, Inc.

Appeal from the United States District Court for the District of Hawaii, Samuel P. King, Senior Judge, Presiding. D.C. No. CV-03-00451-SPK.

Appeal from the United States District Court for the District of Hawaii, Leslie E. Kobayashi, Magistrate Judge, Presiding. D.C. No. CV-03-00451-SPK.

Before ALFRED T. GOODWIN, ROBERT R. BEEZER, and RICHARD C. TALLMAN, Circuit Judges.

GOODWIN, Circuit Judge.

Martin Ventress, a flight engineer, and Jack Crawford, a commercial pilot (collectively, "plaintiffs"), sued Japan Airlines and other entities, making a number of claims. They appeal a judgment on the pleadings for Japan Airlines and its subsidiary Jalways Co., Ltd. (collectively, "JAL"). We have jurisdiction under 28 U.S.C. § 1291. We reverse.

Ventress separately challenges the district court's venue transfer order and an order compelling arbitration of his claims against Hawaii Aviation Contract Services, Inc. ("HACS"). We affirm the venue transfer and dismiss Ventress' appeal of the arbitration order.

BACKGROUND

JAL is a Japanese commercial air carrier based in Tokyo. HACS, a Hawaii corporation with its principal place of business in Honolulu, provides contract flight crews to JAL. Ventress and Crawford were employed by HACS to perform services for JAL flights. Plaintiffs' employment agreements with HACS contain mandatory arbitration provisions.

In December 2002, Ventress and Crawford jointly filed a complaint against JAL and HACS in the Central District of California. The complaint alleged that JAL required a seriously ill pilot to fly in June 2001, in violation of American and Japanese aviation laws as well as JAL's own operations manual. Crawford expressed his concern to a JAL official in Honolulu in July 2001. Afterward, he experienced harassment from his superiors, including repeated performance checks, questions and homework assignments. In December 2001, HACS informed Crawford that his assignment to JAL was cancelled because of unsatisfactory performance. That same month, Ventress submitted reports on the June incidents to JAL, HACS and aviation regulators. Ventress claimed repeated harassment from JAL thereafter, including demands to undergo psychiatric evaluations. Ventress has not been allowed to fly since September 2001. The complaint sought recovery for violation of California's whistle blower statute,¹ wrongful termination in violation of the public policy protecting whistle blowers² and emotional distress. All claims were brought under California law.

In July 2003, the California district court granted defendants' motion to transfer the case to the District of Hawaii. The district court explained that nearly all the events giving rise to the complaint occurred in international air space or in Hawaii, and that Hawaii was the more convenient forum for potential witnesses and for accessing HACS' personnel records. After the venue change, plaintiffs moved to amend the complaint to replace their California law claims with Hawaii law claims. A magistrate judge denied that motion, and plaintiffs appealed to the Hawaii district court.

In October 2004, the Hawaii district court granted judgment on the pleadings for JAL on the ground that all of plaintiffs' claims were preempted by the Friendship, Commerce, and Navigation Treaty, U.S.-Japan, April 2, 1953, 4 U.S.T.2063 ("Japan FCN Treaty"). The court further held that the emotional distress claims failed as a matter of California law, even if they were not preempted. The court declined to rule on plaintiffs' appeal of the denial of leave to amend, saying that the issue was mooted by its decision on treaty preemption. The court then severed the claims against HACS and entered a stipulation and order staying further proceedings pending arbitration. After Ventress and HACS disputed the applicable arbitration rules, the court entered an order compelling arbitration under the commercial rules of the American Arbitration Association ("AAA").

Ventress and Crawford filed separate appeals from the judgement for JAL. Although Ventress and Crawford were represented by the same lawyer when they filed the complaint, Ventress now proceeds pro se. Ventress alone appeals the change of venue and the order placing arbitration under AAA commercial rules.

The consolidated appeals present three questions: (1) whether the Hawaii district court erred in ruling that the Japan FCN Treaty preempted plaintiffs' claims under California's whistle blower protection laws,³ (2) whether the California district court abused its discretion in transferring the case to Hawaii, and (3) whether the interlocutory order compelling arbitration is appealable.

DISCUSSION

A. Treaty Preemption

Under Federal Rule of Civil Procedure 12(c), judgment on the pleadings is proper "when, taking all the allegations in the non-moving party's pleadings as true, the moving party is entitled to judgment as a matter of law." Fajardo v. County of Los Angeles, 179 F.3d 698, 699 (9th Cir. 1999). We review de novo a district court's grant of judgment on the pleadings. Id.

A treaty preempts inconsistent state law. United States v. Pink, 315 U.S. 203, 230-31, 62 S.Ct. 552, 86 L.Ed. 796 (1942). Federal law must also be strictly construed to avoid conflict with treaty obligations. McCulloch v. Sociedad Nacional de Marineros de Honduras, 372 U.S. 10, 21, 83 S.Ct. 671, 9 L.Ed.2d 547 (1963). The district court premised its judgment on article VIII(1) of the Japan FCN Treaty, which provides:

Nationals and 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. Moreover, such nationals and companies shall be permitted to engage accountants and other technical experts regardless of the extent to which they may have qualified for the practice of a profession within the territories of such other Party. . . .

(emphasis added). The district court reasoned that plaintiffs' claims were preempted because holding Japanese employers liable for violation of California employment law would conflict with the employers' treaty-conferred right to engage specialists "of their choice."⁴

The extent to which the Japan FCN Treaty preempts state employment law is a question of first impression in our circuit. The treaty was one among a series of friendship, commerce, and navigation ("FCN") treaties the United States concluded with trading partners after World War II. Sumitomo Shoji Am., Inc. v. Avagliano, 457 U.S. 176, 185-86, 102 S.Ct. 2374, 72 L.Ed.2d 765 (1982) ("Sumitomo II"). These treaties "define the treatment each country owes the nationals of the other; their rights to engage in business and other activities within the boundaries of the former; and the respect due them, their property and their enterprises." Herman Walker, Jr., Modern Treaties of Friendship, Commerce and Navigation, 42 Minn. L.Rev. 805, 806 (1958). "The purpose of the Treaties was not to give foreign corporations greater rights than domestic companies, but instead to assure them the right to conduct business on an equal basis without suffering discrimination based on their alienage." Sumitomo II, 457 U.S. at 187-88, 102 S.Ct. 2374. "The Treaties accomplished their purpose by granting foreign corporations `national treatment' in most respects." Id. at 188, 102 S.Ct. 2374(footnote omitted). National treatment entitles a foreign national to "carry on his chosen business under conditions of non-discrimination, and to enjoy the same legal opportunity to succeed and prosper on his merits as is allowed citizens of the country." MacNamara v. Korean Air Lines, 863 F.2d 1135, 1143 (3d Cir. 1988). Although national treatment was the "predominant standard," id., it was not extended to all areas of commercial activity. "In certain areas treaty parties are unwilling to grant full national treatment; in those areas the parties frequently grant `most-favored-nation treatment,' which means treatment no less favorable than that accorded to nationals or companies of any third country." Sumitomo II, 457 U.S. at 188 n. 18, 102 S.Ct. 2374. In addition, the treaties established certain non-contingent rules of treatment, which "gave foreign employers a certain specified protection without regard to whether the same protection was provided to host country businesses." MacNamara, 863 F.2d at 1143.

The "of their choice" clause of article VIII(1) is an example of a non-contingent rule that goes beyond assuring national treatment. Cf. at 1143-44(interpreting the same provision in the Friendship, Commerce, and Navigation Treaty, U.S.-Korea, Nov. 28, 1956, 8 U.S.T. 2217). Its purpose was to ensure the foreign company's ability to control its overseas investments without interference from local-hiring quotas. As the Sixth Circuit has explained in the context of the Greece FCN treaty:

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