Opposition Brief — Papaila v. Uniden America Corp.

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AUG 30 1995

IN THE

Supreme Court of the United States

OCTOBER TERM, 1995

THEODORE S. PAPAILA,

Petitioner,

Vv.

UNIDEN AMERICA CORPORATION,

Respondent.

On Petition for a Writ of Certiorari to the

United States Court of Appeals

for the Fifth Circuit

BRIEF IN OPPOSITION

RICHARD M. KOBDISH *

REBECCA A, SINGER

R. S. GHIO

FULBRIGHT & JAWORSKI L.L.P.

2200 Ross Avenue, Suite 2800

Dallas, Texas 75201

(214) 855-8000

Counsel for Respondent

* Counsel of Record

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QUESTIONS PRESENTED

- May Respondent, an American subsidiary of a Jap-

anese corporation, invoke the rights of its Japanese

parent corporation under the 1953 Treaty of Friend-

ship, Commerce and Navigation between the United

State and Japan (“FCN Treaty”) with respect to the

parent corporation’s placement of, and personnel de-

cisions regarding, Japanese nationals ( “expatriates” )

sent to the subsidiary to manage the parents’ assets in-

vested in the United States?

. Notwithstanding the FCN Treaty, may a United States

citizen who is an employee of such a subsidiary assert

an action under Title VII of the Civil Rights Act of

1964 alleging discriminatory conduct in the placement

and treatment of Japanese expatriates sent to the

United States by the Japanese parent corporation to

manage its investments in this country?

. Is there any conflict among the Circuit Courts of

Appeals with respect to the Fifth Circuit’s decision

below that the FCN Treaty acts as a limited bar to

certain actions under Title VII?

. Is the decision of the Fifth Circuit below consistent

with this Court’s decision in Sumitomo Shoji America,

Inc. v. Avagliano, 457 U.S. 176 (1982)?

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PARTIES TO THE PROCEEDINGS

Respondent, Uniden America Corporation (a wholly-

owned subsidiary of Uniden Corporation), and Petitioner,

Theodore S. Papaila (“Papaila”).

TABLE OF CONTENTS

QUESTIONS PRESENTED ...........22-2---1-.0-0-scecev-eenrseeenseees

PARTIES TO THE PROCEEDINGS .....002... 020... ---ceeeeeeee

TABLE OF AUTHORITIES . .............--------ce--eeseseeeeseeenenenees

CONSTITUTIONAL, TREATY, AND STATUTORY

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STATEMENT OF THE CASE .............2---00ccccececeeceeoceeseseees

A. The Business of Uniden America ........................

B. Uniden America’s Workforce ................--------------+«

C. The Japanese Expatriates ...................---.cccc-cceceeeeee

D. Uniden America’s Other Employees .......................

elite a RS LET EE ET

SUMMARY OF REASONS FOR DENYING THE

REASONS FOR DENYING THE WRIT .

I. THE TREATY OF FRIENDSHIP, COM-

MERCE, AND NAVIGATION GRANTS JAP-

ANESE CORPORATIONS THE RIGHT TO

ASSIGN KEY PERSONNEL OF THEIR

CHOICE TO THEIR U.S. OPERATIONS ..........

Il. THE SUPREME COURT’S DECISION IN

SUMITOMO SHOJI LEFT OPEN THE QUES-

TION OF WHETHER A SUBSIDIARY OF A

FOREIGN CORPORATION MAY ASSERT

CERTAIN TREATY RIGHTS OF ITS

Fe SL ee os ae ee

III. UNIDEN AMERICA MAY ASSERT CERTAIN

TREATY RIGHTS OF ITS JAPANESE

i , Rd cc Sileresiclitcbdedeccctticiatborenove

TABLE OF CONTENTS—Continued

The Fifth Circuit’s Decision Is Limited to

Personnel Decisions Dictated by the Parent

Compete cicdasicteiccbbehttideedlintinenatacctatntadeiociiasies

Uniden America Has Standing to Assert Its

Parent’s Treaty Rights Because the Rights

of the Parent Corporation Otherwise Will Be

NIUE <<.cxccsnsissvsrtnsanditansdidinemdeptaiaiieimnaiiatenatinas

1. The Fifth Circuit’s Decision That Uniden

America May Assert the Treaty Rights of

Its Japanese Parent Is Consistent With

the Relevant Case Law ...................-...-......

a. The Fifth Circuit’s Decision Closely

Adheres to the Seventh Circuit’s Deci-

ee 6G, Ne er OR eer ae

b. The District Courts’ Rulings in Spiess

and Goyette Do Not Mandate a Differ-

a I iiss that itcncietinmiinintialnics

2. The Fifth Circuit’s Decision Is Consistent

With the Language of the Treaty ............

8. The Fifth Circuit’s Decision Is Not in

Conflict With Decisions of Other Courts..

IV. TITLE VII AND THE FCN TREATY MAY BE

READ IN HARMONY BY EXCLUDING JAP-

ANESE EXPATRIATES AS COMPARITORS

tt hh ie | | ee ee

Papaila Acknowledges That the Treaty

Grants Immunity From Title VII Under Cer-

es cites

Papaila’s “Harmonizing” of Title VII With

the FCN Treaty Would Frustrate the Pur-

wate CE TG TEED cncnniscenmsaneimaieeninenne

. Papaila’s “Harmonizing” of Title VII and the

FCN Treaty Is Unsupported by the Case

TD cxsatihisdhetiiisapcbechaaiiiaaidadaatitinidailetiahianidedintains,

TABLE OF CONTENTS—Continued

D. The FCN Treaty and Title VII May Be Read

in Harmony by Excluding as Comparitors

Under Title VII Expatriates Who Are Under

the Control of the Parent ...................---.......-.

Page

TABLE OF AUTHORITIES

CASES Page

Avigliano v. Sumitomo Shoji America, Inc.,

sg ke YD } ere , 21, 23

Blanco v. United States, 775 F.2d 58 (2nd Cir.

|| | SER EE ee ES Pe ae 24

Castaneda v. Partida, 403 U.S. 482, 97 S.Ct. 1272

CRIPUE DP cocscarrecccccsvernpoannsccliotereaattnsatediaaiaannee 17

Espinoza v. Farah Mfg. Co., 414 U.S. 86, 94 S.Ct.

BOG TR UO) cvcrnistcrstiicsintncstnitasbaliatblacicllalesshd ies tiie ass 17

Fortino v. Quasar Co., 950 F.2d 389 (7th Cir.

RODE) scaccssesitcicisencibelineinoccieniitatiatlacdiniadltliiadahal 6, 12, 15, 17-19, 24

Goyette v. DCA Advertising, 66 Fair Empl. Prac.

Cas. (BNA) 1045 (S.D.N.Y. 1998) ...................... 20

MacNamara v. Korean Air Lines, 868 F.2d 1135

(8rd Cir. 1988), cert. denied, 498 U.S. 944

CRIP . ccciersesrcocenttonmccsagpudiiiniasssidumaiiaammamenetl 27

Papaila v. Uniden America Corp., 51 F.8d 54 (5th

Cir. DODGY sdetindicicbicisntiichntticitnsdaicdtbial toatl 6, 7, 12, 24, 27-28

Papaila v. Uniden America Corp., 840 F.Supp. 440

CER, Tei I tie cn csetaeteieieiteichenee ited ioe 6

Posados v. National City Bank, 296 U.S. 497, 56

Ts By, emilee LE I ed 24

Powers v. Ohio, 499 U.S. 400, 111 S.Ct. 1864

§) ) ) PEE) Gon MEMEO Me: VN eae, 8 a aewe 15

Spiess v. C. Itoh & Co. (America), Inc., 648 F.2d

SO. Cs Cie, BEE ecccereneeninieiitieie es. 26

Spiess v. C. Itoh & Co., Inc., 725 F.2d 970 (5th

Cir. 1984), cert. denied, 469 U.S. 829 (1984).... 19-20

Starrett v. Iberia Airlines of nes: 756 F.Supp.

292 (S.D.Tex. 1989) . — 19

Sumitomo Shoji America, Ine. v. Avagliano, ‘457

U.S. 176, 102 S.Ct. 2874 (1982) ...9, 10-12, 18, 20, 22, 29

Wickes v. Olympic Airways, 745 F.2d 363 (6th Cir.

SETTEET | acticiscinonin-cnpnahninreinistiieianetessatealiantaceacna a eile 10

STATUTES

1958 Treaty of Friendship, Commerce, and Navi-

See, BB GED scicciectcnesicenchithictantenuhstiieabic 1, 2, 8-10

Title VII of the Civil Rights Act of 1964, 42 U.S.C.

ef ee 2

In THE

Supreme Court of the United States

OcToBer TERM, 1995

No. 95-171

THEODORE S. PAPAILA,

- Petitioner,

UNIDEN AMERICA CORPORATION,

Respondent.

On Petition for a Writ of Certiorari to the

United States Court of Appeals

for the Fifth Circuit

BRIEF IN OPPOSITION

CONSTITUTIONAL, TREATY, AND

STATUTORY PROVISIONS

Article VII(1) of the Treaty of Friendship, Commerce,

and Navigation between the United States and Japan,

April 2, 1953 (hereinafter “FCN Treaty” or “the

Treaty”), provides, in relevant part:

Nationals and companies of either Party .. . shall

be permitted within [the] territories [of the other

Party): (a) to establish and maintain branches,

agencies, Offices, factories, and other establishments

appropriate to their conduct of business; (b) to or-

ganize companies under the general company laws

of such other Party, and to acquire majority interests

in companies of such other Party; and (c) to control

and manage enterprises which they have established

or acquired.

4 U.S.T. 2063, art. VII(1).

Article VIII(1) of the FCN Treaty further provides in

relevant part:

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 spe-

cialists of their choice.

4 U.S.T. 2063, art. VIII(1) (emphasis added).

Title VII of the Civil Rights Act of 1964, 42 U.S.C.

§ 2000e, et seq., provides that it is unlawful for an

employer:

(1) to fail or refuse to hire or to discharge any

individual, or otherwise to discriminate against any

individual with respect to his compensation, terms,

conditions, or privileges of employment, because of

such individual’s race, color, religion, sex, or na-

tional origin; or

(2) to limit, segregate, or classify his employees or

applicants for employment in any way which would

deprive or tend to deprive any individual of employ-

ment opportunities or otherwise adversely affect his

Status as an employee, because of such individual's

race, color, religion, sex, or national origin.

42 U.S.C. § 2000¢-2.

STATEMENT OF THE CASE

A. The Business of Uniden America

Uniden America is incorporated in the State of Indiana,

and has its offices and principal place of business located

in Tarrant County, Texas. Uniden Corporation (“Uniden

Japan”), the parent of Uniden America, has its head-

quarters in Tokyo, Japan. Uniden Japan is engaged in

the business of designing, manufacturing and selling a

variety of electronic equipment including radio commu-

nication devices (“C.B.” transceivers, etc.), radio applica-

tions (i.e., pagers, radar detectors, two-way radios, and

SENG aha cic tena ee eenaemmeeemen

scanners), telephone equipment (cordless, mobile, cellular

and portable telephones), and satellite broadcast receiving

equipment. Uniden Japan’s primary manufacturing facili-

ties are located at subsidiaries in the Philippines and in

China. Uniden Japan has approximately 9,000 employees

world-wide and, in addition to Uniden America, has many

other subsidiaries located in various countries throughout

the world. Vol. II at 298-99; Vol. IV at 782."

B. Uniden America’s Workforce

As found by the District Court, and undisputed by

Papaila:

Uniden [America] has approximately 400 employees

of which sixteen are on temporary work assignments

sent to Uniden [America] by Uniden Japan. Such

[temporary] employees are all Japanese citizens who

have been sent by Uniden Japan in order to protect

its interests in its subsidiary. The parties refer to

such Japanese citizens as Japanese expatriates.

Uniden [America] does not dispute that such em-

ployees were treated differently than American em-

ployees, and the only basis for Papaila’s claims of

race and national origin discrimination is the prefer-

ential treatment given to Japanese expatriates. The

Japanese expatriates were sent to Uniden [America]

on temporary work assignments by Uniden Japan.

The remainder of Uniden [America’s] employees, in-

cluding six of Japanese origin, were under the direct

control of Uniden [America]. The six Uniden [Amer-

ica] employees of Japanese origin were treated ex-

actly the same as all of Uniden [America’s] em-

ployees and [they] do not receive the same treatment

as the Japanese expatriates.

Vol. [TV at 783-84. Thus, less than five percent of the

employees working at Uniden America’s Texas headquar-

ters are Japanese expatriates, whom Papaila alleges re-

1 Citations to the original record on appeal shall first refer to

the volume, and then to the page or pages in that volume.

ceived preferential treatment on the basis of race and

national origin. Stated differently, almost ninety-six per-

cent (96%) of Uniden America’s workforce consists of

persons, including six employees of Japanese “race” and

national origin, who were treated no more favorably than

Papaila in connection with the issues raised by the Peti-

tion for Writ of Certiorari (“Petition”).

C. The Japanese Expatriates

Papaila previously has admitted that the Japanese ex-

patriates whom he alleges enjoyed more favorable treat-

ment all occupy (or occupied) managerial positions, all

were hired in Japan by Uniden Japan, and all were

assigned by the parent to Uniden America. Papaila’s

Brief to the Fifth Circuit (“Papaila’s Brief’) at 5. More-

over, prior to the beginning of their temporary overseas

assignments, all Japanese expatriates received extensive

business training from the parent company. The mission

of these Japanese expatriates, regardless of the Uniden

Japan subsidiary or the country to which they are as-

signed, is to manage Uniden Japan’s shareholder interests

and to provide skills essential to the business of the sub-

sidiary. Vol. II at 298-301. Papaila repeatedly has ad-

mitted that al! of the personnel actions or policies which

he alleges discriminated in favor of the Japanese expatri-

ates, and against him as well as all other employees of

Uniden America who were not Japanese expatriates, were

established or committed by the parent company, Uniden

Japan, and not by Uniden America.”

* Several times in his Petition, Papaila vacillates from alleging

that Uniden America discriminated in favor of its “Japanese em-

ployees,” to stating that the “Japanese expatriates” were the bene-

ficiaries of favored treatment. Compare, e.g., Petition at 3, 19 with

5, 18. Of course, there is a highly significant difference between

these two groups. Papaila’s persistent inconsistency is inexplicable,

because at no time in this proceeding has he alleged that the six

Uniden America employees who are of Japanese race and national

origin, but who are not expatriates, were treated better than he.

Clearly, then, the list cf persons Papaila contends were the victims

The salaries of Uniden America’s Japarese expatriates

are carried on a separate Uniden America payroll ac-

count. Uniden Japan makes all personnel-related deci-

sions involving Japanese expatriates. Furthermore, Uniden

Japan hires, fires, transfers, promotes, and discharges the

Japanese expatriates assigned to Uniden America. Such

assignments are temporary, typically from four to five

years, at the end of which the Japanese expatriate is

brought back to the parent in Japan or assigned to an-

other foreign subsidiary. Uniden Japan alone evaluates

the performance of the Japanese expatriates. It also

unilateraliy sets their salary and benefit structure (which

is different from the salary and benefit structure of other

Uniden America employees), and maintains their per-

sonnel files. Vol. II at 300-01; Vol. III at 708-09, 714,

716, 718, 720, 723-24.

D. Uniden America’s Other Employees

In contrast to the Japanese expatriates, all other

Uniden America employees are under the direction and

control of Uniden America, and their wages, benefits, etc.

are set by Uniden America management. Significantly,

this includes six employees of Uniden America who, al-

though of Japanese “race” and national origin, were hired

by Uniden America in the United States, just like all

other U.S. employees. As stated above, these six people

of Japanese “race” and national origin are treated ex-

actly the same as all of Uniden America’s non-Japanese

citizen employees. Vol. II at 300, 302; Vol. III at 716,

7203

of race and national origin “discrimination” includes the six

Uniden America employees of Japanese “race” and national origin,

who happen not to be expatriates. Papaila’s Brief at 4-6; Vol. III

at 677-78; see also Vol. II at 302-03.

3 Papaila incorrectly asserts that Uniden America has “at no

time below . . . raise[d} citizenship as the distinction in the treat-

ment of its expatriate employees.” Petition at 6. Papaila made

E. Proceedings Below

Papaila’s characterization of the decisions of the courts

below is imaginative, but inaccurate. On May 19, 1993,

Papaila filed this lawsuit in the Northern District of

Texas, alleging various types of discrimination including,

inter alia, the Title VII claims he continues to pursue

herein. On December 3, 1993, Uniden America moved

for partial summary judgment, and on January 10, 1994,

the District Court granted said motion.

Contrary to the representations made by Papaila, the

District Court did not hold that Uniden America was

“entitled to assert all treaty rights of its parent corpora-

tion.” Petition at 3. Rather, the District Court con-

cluded, consistent with the decision in Fortino v. Quasar

Co., 950 F.2d 389 (7th Cir. 1991), only that:

[A] judgment forbidding the American subsidiary

from giving preferential treatment to the expatriate

executives sent by its parent to work for the sub-

sidiary 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 its American business in pref-

erence to employing United States citizens.

Papaila, 840 F. Supp. at 446. The question of whether

the subsidiary was entitled to assert all of the treaty

this same argument to the Fifth Circuit, and Uniden America

pointed out there, as here, that the assertion was “absolutely in-

credible.” As explained to the Fifth Circuit, Uniden America

raised the issue of citizenship three times in its Motion for Sum-

mary Judgment, siz times in its Brief in Support thereof, twice

in the Pretrial Order, and at least once in the hearing on Uniden

America’s Motion for Summary Judgment. Uniden America’s

Brief to the Fifth Circuit (“Uniden’s Brief’) at 6 n.7. Thus,

___Uniden has raised the citizenship distinction as a central issue

both before the District Court as well as the Fifth Circuit, as

evidenced by the fact that both courts discussed citizenship in

reaching their decisions. Papaila v. Uniden America Corp., 51 F.3d

54, 56 n.2 (5th Cir. 1995); Papaila v. Uniden America Corp., 840

F. Supp. 440, 447 (N.D. Tex. 1994).

rights was not before the District Court; rather, the only

issue was whether the treaty provisions would protect the

subsidiary from Title VII liability where decisions, such

as the placement and treatment of key managerial per-

sonnel, are dictated by the parent company.

As discussed more fully herein, the Fifth Circuit deci-

sion also is much narrower than suggested by Papaila.

The Fifth Circuit expressly limited its holding to the

specific facts before it:

Since UAC [Uniden America] did not itself cause

any of the discriminatory conduct, we hold that UAC

may invoke its parent’s Treaty rights, at least with

respect to those employment decisions dictated by

the parent.

Papaila, 51 F.3d at 56 (emphasis added). Thus, both

courts below held only that Uniden America could assert

the treaty rights of its Japanese parent with respect to

personnel decisions dictated by the parent which involve

its expatriate personnel. As a result, Papaila’s foreboding

statements regarding the breadth of the Fifth Circuit deci-

sion are unfounded.

SUMMARY OF REASONS FOR DENYING THE WRIT

In order to construct an argument that the decision of

the Fifth Circuit merits review by this Court, which it

does not, Papaila makes two fundamental errors. First,

he entirely mischaracterizes the nature and scope of the

decision of the court below. Second, based upon this

unduly expansive reading of the decision of the court

below, Papaila creates out of whole cloth a supposed

“conflict” among the Circuit Courts of Appeals where

none in fact exists. When the decisions of the Fifth Cir-

cuit and the other Circuit Courts are read in accordance

with their plain language, it becomes abundantly clear

that a writ of certiorari is unnecessary.

Papaila, “a white United States citizen of American na-

tional origin” (Vol. IV at 782), essentially asserts in this

case that he was the victim of “reverse” race and national

origin discrimination. That is, Papaila claims that had he

been a Japanese expatriate, he would not have been fired

for failing to “make” his sales quota,* but instead would

have been given a demotion or transfer, as Japanese

expatriates allegedly were. See Papaila’s Brief at 5-6.

Uniden America contends, and the Fifth Circuit agreed,

that the District Court was correct in granting summary

judgment on these issues because the “discrimination” of

which Papaila complains, even if true, expressly is allowed

by the FCN Treaty between the United States and Japan,

which confers narrow Title VII immunity for this type

of discrimination. Indeed, as demonstrated infra, where

the individuals allegedly receiving preferential treatment

are “accountants and other technical experts, executive

personnel, attorneys, agents and other specialists” (4

U.S.T. 2063, art. VIII(1)), are citizens of the country

in which the foreign parent is headquartered, and are

sent to the United States on a temporary expatriate basis,

a non-expatriate employee of the United States subsidiary

(like Papaila) cannot point to those expatriates as “com-

paritors” for purposes of race and national origin dis-

crimination.

The Fifth Circuit decision upholding Uniden America’s

arguments is correct and need not be reviewed by this

Court. First, the decision below is much narrower than

is suggested by Papaila. Rather than granting Uniden

America complete immunity in all respects from Title

VII, the Fifth Circuit held only that insofar as Uniden

America’s employment actions relating to executives and

other key expatriate personnel are directed by the parent

corporation, such decisions are protected under the provi-

sions of the FCN Treaty and therefore do not violate

Title VII. With respect to all other employment decisions

relating to non-expatriate employees, Uniden America

* At the time of his termination, Papaila was in a sales position,

after having been demoted from the position of Vice President.

Petition at 4.

still is bound by the employment laws of the United

States, including Title VII.

As a result, Papaila’s argument regarding a “conflict”

among the Circuit Courts of Appeals fails. Papaila ap-

parently attempts to create a conflict by pointing to the

Secund Circuit’s ruling in Avigliano v. Sumitomo Shoji

America, Inc., 638 F.2d 552 (2nd Cir. 1981) rev'd and

remanded, 457 U.S. 176 (1982), that the FCN Treaty

does not grant American subsidiaries of Japanese corpora-

tions complete immunity from Title VII. However, such

a ruling neither has been sought by Uniden America nor

granted by the Fifth Circuit. Furthermore, the Second

Circuit’s decision does not conflict with that of the Fifth

Circuit regarding the assertion of treaty rights by a sub-

sidiary. Because the Fifth Circuit and Second Circuit

decisions are not in conflict, a writ of certiorari would be

inappropriate.

REASONS FOR DENYING THE WRIT

I. THE TREATY OF FRIENDSHIP, COMMERCE, AND

NAVIGATION GRANTS JAPANESE CORPORA-

TIONS THE RIGHT TO ASSIGN KEY PERSONNEL

OF THEIR CHOICE TO THEIR U.S. OPERATIONS

Under the FCN Treaty between the United States and

Japan, conypanies of each country have the right to form

and oversee their investments made within the territory

of the treaty partner, either directly through branch of-

fices or indirectly under the general corporate laws of the

other party. 4 U.S.T. 2063, art. VII(1). Pursuant to

this provision, Uniden Japan formed Uniden America.

To ensure that companies of each party to the FCN

Treaty are able to protect their investments in the terri-

tory of the other party, the FCN Treaty further provides

that companies of each party have the right to assign

certain key personnel to their operations in the host

country. Thus, Article VIII(1) of the FCN Treaty pro-

vides in relevant part:

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.

4. U.S.T. 2063, art. VIII(1) (emphasis added).

Consequently, the FCN Treaty allows a company head-

quartered in the territory of one party to favor its own

citizens in filling management positions within the host

country, without running afoul of local laws such as

Title VII's prohibition against national origin and race

discrimination. As the Sixth Circuit found with respect

to a similar treaty between the United States and Greece:

[Companies of either party are permitted to dis-

criminate in favor of their own nationals or citizens

for certain high level positions, but not to discrim-

inate against others in the labor force of the host

country on any other basis. The words “of their

choice” merely reflect the intent of both the United

States and Greece to give the other’s companies the

freedom to fill designated critical positions without

interference of local laws and regulations.

Wickes v. Olympic Airways, 745 F.2d 363, 367 (6th

Cir. 1984) (emphasis added).* Thus, the holding in

Wickes,* like that of every other Circuit Court of Appeals

* This reciprocal treaty provision which allows the placement

of a treaty country’s citizens in executive positions appears in a

number of FCN treaties between the United States and foreign

countries. Sumitomo Shoji America, Inc. v. Avagliano, 457 U.S.

176, 181 n.6, 102 S.Ct. 2374, 2377 n.6 ( 1982). As this Court ex-

pressly has recognized, the reciprocal provision in the Treaty be-

tween the United States and Japan was included at the insistence

of the United States, which sought to protect its interests in mak-

ing certain that American companies could assign American citizens

to executive positions in their overseas operations without violating

foreign laws. Id.

* Although in Wickes the employer charged with discrimination

was a Greek corporation, not a subsidiary organized and existing

which has addressed the issue of the scope of protection

granted by the Treaty, fully supports the decision of the

Fifth Circuit.”

Importantly, Papaila cites no authority to the contrary.

Instead, he ignores all of the case law on this issue and

cites law review articles four decades old for the general

proposition that the FCN Treaty was not intended to act

as an exception to Title VII. Significantly, however, the

federal courts consistently have recognized that the Treaty

does create such an exception. What Papaila requests of

this Court is that it reverse decades of Circuit Court pre-

cedent and radically re-interpret the scope of the Treaty.

This is an invitation the Court should decline.

Il. THE SUPREME COURT’S DECISION IN SUMI-

TOMO SHOJI LEFT OPEN THE QUESTION OF

WHETHER A SUBSIDIARY OF A FOREIGN COR-

PORATION MAY ASSERT CERTAIN TREATY

RIGHTS OF ITS PARENT

In Sumitomo Shoji America, Inc. v. Avagliano, 457

U.S. 176, 102 S. Ct. 2374 (1982), the U.S. Supreme

Court held that, since Sumitomo was incorporated under

the laws of the United States, it was not a “company of

Japan,” and therefore it did not have treaty rights under

article VIII(1) of the FCN Treaty. 457 U.S. at 189.

under the laws of the United States, the case does demonstrate

(as do other cases cited infra) that when an FCN treaty applies

to a case alleging violation of United States employment discrimi-

nation laws, the treaty does create some degree of immunity under

Title VII with respect to a very narrow category of employees

(i.e., foreign citizen expatriates in job classifications covered by

the treaty).

7 Papaila argues in his Petition that while it legally is permissible

for an expatriate from a foreign country to be assigned a position

in the United States in preference to U.S. nationals (which, with-

out treaty protection, would be a per se violation of Title VII),

once here, the expatriate thereafter can in no way receive “favored”

treatment. As is demonstrated below, such a distinction cannot

withstand scrutiny, either legally or practically.

However, since the Court confined its review to the nar-

row question of whether the American subsidiary could

assert treaty rights on its own behalf as a “company of

Japan,” the Supreme Court added the following caveat:

We also express no view as whether Sumitomo may

assert any article VIII(1) rights of its parent.

457 U.S. at 189 n.19, 102 S. Ct. at 2382 n.19.

Thus, since Uniden America is incorporated under the

laws of Indiana, it cannot itself claim a right under the

FCN Treaty to assign Japanese citizens to executive aad

managerial positions at Uniden America. Here, however,

unlike in Sumitomo Shoji, Uniden America seeks to assert

the treaty rights of its parent with respect to the parent's

decisions to assign expatriates to Uniden America, and

to maintain them there, on the basis of their J apanese

citizenship.

Interestingly, Papaila argues in his Petition that the

Fifth Circuit decision below is in conflict with this

Court’s decision in Sumitomo Shoji, because it would

grant U.S. subsidiaries “absolute standing” under the

FCN Treaty. Petition at 8. As shall be demonstrated

herein, Papaila is incorrect. The Fifth Circuit did not

rule, and Uniden America never has contended, that

Uniden America could assert all of the treaty rights of its

Japanese parent. Rather, the court below simply ruled

that a U.S. subsidiary “may assert the Treaty rights of

the parent, ‘at least to the extent necessary to prevent the

treaty from being set at naught.” Papaila, 51 F.3d at

55 (emphasis added) (quoting Fortino, 940 F.2d at

393). The court further held that in order to fulfill the

purpose of the Treaty, a subsidiary should be able to

invoke its parent’s rights “with respect to those employ-

ment decisions dictated by the parent.” /d. at 56. The

court below went no further.

Thus, with respect to the sixteen expatriate em-

ployees whose assignment and terms of employment are

dictated by the parent corporation, Uniden America may

assert the treaty rights of Uniden Japan. However, with

respect to the balance (96% ) of Uniden America’s work-

force, the U.S. subsidiary must fully comply with U.S.

and local laws, including Title VII. This is a funda-

mentally different result from that proscribed by the Su-

preme Court in Sumitomo Shoji, and thus there is no

conflict between the two decisions.

III. UNIDEN AMERICA MAY ASSERT CERTAIN

TREATY RIGHTS OF ITS JAPANESE PARENT

As stated above, the facts in this case show, and

Papaila concedes, that none of the conduct or policies

which allegedly discriminate on the basis of race or na-

tional origin were the creation of Uniden America.

Rather, all were dictated by the parent company, Uniden

Japan. Uniden America had no say whatsoever in these

policies or personnel decisions. Furthermore, it is undis-

puted that each of the Japanese expatriates sent to Uniden

America by the parent were Japanese citizens and were

“accountants and other technical experts, executive per-

sonnel, attorneys, agents and other specialists.” Uniden

Japan, whose standing under the FCN Treaty is unchal-

lenged, chose to send these individuals to the United

States in order to oversee and protect its investment

assets. Papaila contends that these individuals were given

preferential treatment, as compared to him.

These contentions and undisputed facts bring into sharp

focus the issue that was not reached in Sumitomo Shoji,

i.e., whether a United States subsidiary which is not a

“company of Japan,” can assert certain treaty rights of

a parent which is such a company. Uniden America con-

tends that since it was not the agent of causation for

any of the alleged discriminatory events or policies, Uni-

den America must be able to invoke the FCN Treaty

rights of its parent—at least with respect to those

employment-related matters over which Uniden America

had no control—or else the FCN Treaty would have no

meaning in the modern business world.

A. The Fifth Circuit’s Decision Is Limited to Personnel

Decisions Dictated by the Parent Corporation

In a fundamental misstatement of the holding of the

court below, Papaila argues in his Petition that Uniden

America “does not have standing to assert [the FCN

Treaty] as an absolute bar to Title VII.” Petition at 8

(emphasis added).* However, this was not the decision

of the Fifth Circuit, which expressly limited its holding

to personnel decisions mandated by the parent corporation

regarding expatriate employees. This limited holding is

ignored by Papaila, who instead attacks his own rhetoric.

B. Uniden America Has Standing to Assert Its Par-

ent’s Treaty Rights Because the Rights of the

Parent Corporation Otherwise Will Be Impaired

Papaila argues in his Petition that Uniden America

lacks standing to assert the rights of its parent because:

(a) a litigant should not be allowed “to base a claim or

a defense on the rights of a person not before the Court;”

and (b) “there has been no impairment of rights” of

Uniden Japan. Petition at 9. Neither of these arguments

is correct.

®Papaila makes similarly broad and inaccurate statements

throughout his Petition regarding the holding of the court below.

Papaila mistakenly accuses the Fifth Circuit of holding that Uniden

America: “is entitled to assert all treaty rights of its parent cor-

poration;” can assert the FCN Treaty as “an absolute bar to the

laws of the United States;” has “absolute standing .. . to assert

all of the rights of [Uniden Japan];” and may “wholly ignore

American statutes, including Title VII.” Petition at 3, 7, 8, 16

(emphasis added). At one point Papaila even argues that the Fifth

Circuit “endorsed a right to assien treaty rights of a Japanese

parent company to its wholly owned subsidiary” and that Uniden

Japan should not be given an “unfettered right to order an Ameri-

can corporation to violate American laws.” Id. at 10, 22 (emphasis

added). Unfortunately for Papaila, there is nothing in the Fifth

Circuit’s decision to support his hyperbole.

First, Papaila’s argument ignores Powers v. Ohio, 499

U.S. 400, 111 S.Ct. 1364 (1991), which set out three

factors a litigant must meet in order to assert the rights

of third persons, each of which is met in this case: (1)

the litigant must face an “injury-in-fact” giving it a “suffi-

ciently concrete interest” in the issue (here, an adverse

verdict would subject Uniden America to the payment of

damages for the disputed policies or decisions of its par-

ent); (2) the party must have a close relationship to the

third person (Uniden America is a subsidiary of Uniden

Japan); and (3) some hindrance must exist to the third

party’s ability to protect its own interests (Uniden Amer-

ica, not Uniden Japan, carries out the business functions

at the Tarrant County, Texas headquarters). /d. at 410-

11, 111 S.Ct. at 1370-71. As the Seventh Circuit held

in Fortino, where, as here, the parent dictates the alleged

discriminatory conduct, the subsidiary must be allowed to

assert the FCN Treaty rights of the parent. Otherwise,

the FCN Treaty would be “set at naught.” 950 F.2d at

393.

Second, there undoubtedly would be an impairment of

the rights of Uniden Japan if the Fifth Circuit’s decision

were reversed. Each of the decisions challenged by

Papaila herein was made by Uniden Japan for the pur-

pose of managing expatriate employees sent to the United

States to oversee its investments. Papaila urges a reading

of Title VII and the FCN Treaty which would tie the

hands of Uniden Japan with respect to personnel deci-

sions regarding the executives, etc. of its choice whom

it desires to send to this country. Clearly, the impairment

of Uniden Japan’s treaty rights imposed by such a result

would be no less onerous than an adverse holding against

Uniden Japan itself.

The only argument put forward by Papaila to the con-

trary is that Uniden Japan, “when [itself] involved in

litigation, [is] perfectly capable of enforcing [its] own

Statutory treaty rights.” Petition at 10 (emphasis added).

This adds nothing to the Court’s inquiry. As is obvious

by the caption of this case, Uniden Japan is not, itself,

“involved” in this litigation, although it certainly has an

interest in the outcome. What Papaila suggests is that a

Japanese company can be stripped of its rights under the

FCN Treaty, just so long as a plaintiff sues its subsidiary.

Such a result is antithetical to the FCN Treaty and should

be rejected. Where employment decisions are dictated

by an entity that is protected under the Treaty, such pro-

tection should not dissolve merely because the entity acts

through its U.S. subsidiary.

1. The Fifth Circuit’s Decision That Uniden

America May Assert the Treaty Rights of Its

Japanese Parent Is Consistent With the Relevant

Case Law

Papaila attempts to discredit the substance of the Fifth

Circuit’s decision by arguing that other case law fore-

closes the Fifth Circuit’s holding. However, the decision

below is consistent with the reasoning of other circuits,

and the District Court cases cited by Papaila do not

dictate the result he advocates.

a. The Fifth Circuit’s Decision Closely Adheres

to the Seventh Circuit’s Decision in Fortino

Although Papaila previously has attempted to discredit

the recent Seventh Circuit Court of Appeals’ decision in

Fortino, his Petition hardly mentions the decision at all,

and never critiques its analysis in any depth. This reti-

cence is surprising because the Seventh Circuit clearly

rejected all of Papaila’s arguments and embraced those of

Uniden America. Thus, in Fortino, as here, the United

States subsidiary of a Japanese parent did not assert that

the FCN Treaty gave it blanket immunity from all types

of discrimination and at all levels of the organization.

Rather, the position of the employer (Quasar), like that

of Uniden America, was that:

The treaty permits discrimination on the basis of

citizenship, not of national origin; Title VII forbids

discrimination on the basis of national origin, not of

citizenship.’ The treaty is a reminder that the two

forms of discrimination—citizenship and national

origin—must not run together, since one is permitted

by treaty and the other forbidden by statute.

Fortino, 940 F.2d at 391-92.”

As in the instant case, in Fortino the Japanese parent

sent a relatively small number of expatriates to the United

States in order to oversee its investments. Moreover, the

Japanese parent caused all of the conduct which was

alleged to be discriminatory. This included the assign-

ment of Japanese expatriates to other subsidiaries, or

back to Japan, instead of discharging them as the United

States subsidiary had done with respect to the plaintiffs.

Id. at 392. The Fortino court stated:

This was favoritism all right, but discrimination in

favor of foreign executives given a special status by

virtue of a treaty and its implementing regulations

is not equivalent to discrimination on the basis of

national origin [or race].

Id. The court went on to find:

{

*See Espinoza v. Farah Mfg. Co., 414 U.S. 86, 94 S.Ct. 884

(1978).

10 Before the Fifth Circuit, Papaila argued that because of “the

homogenous nature of Japanese society,” favored treatment of

Japanese citizens results in “preferential treatment for individuals

of Japanese national origin, effectively giving rise to discrimination

on the basis of national origin and race.” Papaila’s Brief at 19-20.

Here, however, Papaila only includes a statement of fact that the

overwhelming majority of the population of Japan are of Japanese

ethnicity. Petition at 6. However, Papaila never makes any argu-

ment regarding this homogeneity. Therefore, as such argument has

not been briefed by Papaila, it has been waived. Castaneda v.

Partida, 408 .' 3. 482, 486 n.4, 97 S.Ct. 1272, 1276 n.4 (1977);

Sup. Ct. R. 14.1(a). Regardless, Uniden America previously has

demonstrated that the distinction is of no consequence. See

Uniden’s Brief at 18 n.14.

The exercise of a treaty right may not be made the

basis for inferring a violation of Title VII... .

That right would be empty if the subsidiary could

be punished fur treating its citizen executives differ-

ently from American executives. . {If this were

the result] Title VE would be taking back from the

Japanese with one hand what the Treaty had given

them with the other.

Id. at 393.

The Fortino court noted that in Sumitomo Shoji “there

was no contention that the parent had dictated the sub-

sidiary’s discriminatory conduct... .”” As to the open

question of whether the subsidiary could assert the par-

ent’s treaty rights, Fortino found that it could, because

otherwise the FCN Treaty would be:

set at naught. A judgment that forbids Quasar to

give preferential treatment to its expatriate execu-

tives that its parent sends would have the same effect

on the parent as it would have if it ran directly

against the parent... .

Id.

In Fortino, the Seventh Circuit was greatly influenced

by the fact that, like the case with Uniden America, the

subsidiary had employees of Japanese “race” and na-

tional origin who were not expatriates, and who thus

were treated no more favorably than their U.S. subsidiary

counterparts whose ancestry originated in other parts of

11In his Petition, Papaila suggests (without supporting author-

ity) that in the briefs and oral argument in Sumitomo Shoji the

statement was made that the foreign parent controlled the ex-

patriates sent to the United States subsidiary. Petition at 24. He

then suggests that the contention implicitly was rejected by this

Court. This is a specious argument. Merely mentioning a fact in

a brief does not mean that the reviewing court considered all, or

even any, possible ramifications of that fact. Clearly, this Court in

Sumitomo Shoji did not believe that the issue of the subsidiary’s

right to invoke the parent’s treaty privileges was before it—as the

Court expressly stated. 457 U.S. at 181 n.19, 102 S.Ct. at 2382 n.19.

the world. These facts negated any inference that Quasar

made distinctions upon Title VII’s prohibited race or

national origin grounds, as opposed to distinctions based

on citizenship which clearly are permitted by the FCN

Treaty. Id.

Like in Fortino, it is clear in the instant matter that the

type of “discrimination” complained about by Papaila—

involving as it does a handful of Japanese citizen ex-

patriates sent by Uniden Japan to protect its shareholder

interests—was not a violation of Title VII. The Fifth

Circuit decision therefore was correct. See also Starrett

v. Iberia Airlines of Spain, 756 F.Supp. 292 (S.D.Tex.

1989) (“of their choice” clause in treaty limited to dis-

crimination in favor of nationals of the country of the

parent).

b. The District Courts’ Rulings in Spiess and

Goyette Do Not Mandate a Different Resuit

Papaila cites only two District Court cases to support

_ his contention that a U.S. subsidiary may not invoke

the treaty rights of its parent. Each of these cases, how-

ever, is fundamentally distinguishable from the case at

hand, and neither dictates a reversal of the Fifth Circuit.

The first case cited by Papaila is the unpublished Dis-

trict Court opinion reviewed by the court in Spiess v.

C. Itoh & Co., Inc., 725 F.2d 970 (5th Cir. 1984), cert.

denied, 469 U.S. 829 (1984).” Papaila notes that the

District Court ruled that it would not permit the Ameri-

can subsidiary of a Japanese corporation to assert the

treaty rights of its parent because such a ruling would

“accomplish indirectly what it cannot accomplish directly”

under Sumitomo Shoji. Id. at 973. What Papaila fails

to acknowledge is that, although the subsidiary argued

that the personnel decisions in question had been man-

12 The Fifth Circuit ruled that it did not have jurisdiction to

review the District Court’s decision. Jd. at 971.

dated by the parent corporation, the District Court specifi-

cally found that “(t]he hiring questioned by plaintiffs in

the instant case is that of Itoh-American {defendant].”

Id. Thus, the District Court in Spiess found that the sub-

sidiary was attempting to invoke the treaty rights of its

parent with respect to its own personnel decisions. Here

however, there is no dispute that the challenged employ-

ment practices were dictated by the parent, Uniden Japan,

not Uniden America.

The second decision cited by Papaila, Goyette v. DCA

Advertising, 66 Fair Empl. Prac. Cas. (BNA) 1045

(S.D.N.Y. 1993) also is inapplicable. There, the District

Court, relying on the Second Circuit’s decision in

Sumitomo Shoji,” held that the subsidiary could not as-

sert the treaty rights of the parent because it had not

shown that Japanese citizenship was a “bona fide occupa-

tional qualification.” Id. at 1054, Here, Uniden America

did not raise a BFOQ argument in its motion for sum-

mary judgment, and the issue therefore was not before

either the District Court or the Fifth Circuit.“

2. The Fifth Circuit’s Decision Is Consistent With

the Language of the Treaty

Papaila makes a convoluted argument in his Petition

that the “plain language of the Treaty does not indicate

an intent to permit United States subsidiaries to invoke

18 Another question left open by the Supreme Court in Sumitomo

Shoji was “whether Japanese citizenship may be a bona fide occupa-

tione] qualification [‘BFOQ’] for certain positions [with the sub-

sidiary] or as to whether a business necessity defense may be

available.” 457 U.S. at 189 n.19, 102 S.Ct. 2882 n.19.

14 Interestingly, Papaila ignores the guiding principle behind

Goyette which is that “as applied to a Japanese company enjoying

rights under Article VIII of the [FCN] Treaty, [this exception to

Title VII] must be construed in a manner that will give due weight

to the Treaty rights... .” Id. at 1054 (quoting Sumitomo Shoji,

638 F.2d at 559) (emphasis added). Thus, the court in Goyette

expressly recognized that the FCN Treaty does create an exception

to Title VII.

the Article VIII(1) rights of their parents.” Petition at

11. This argument is flawed at its inception.

First, there is no case law to support Papaila’s tortured

reading of the Treaty. In fact, the only deci::sn which

addresses the argument raised by Papaila adopts the op-

posite view. The Second Circuit opinion in Sumitomo

Shoji, often relied upon by Papaila in his Petition, rejected

the notion that “dramatic distinctions” should be drawn

between “nationals,” “companies” and “enterprises” :

It is illogical to infer that the drafters of the Treaty

intended to make such a dramatic distinction be-

tween forms of business operation or to act in such

a haphazard way.

Sumitomo Shoji, 638 F.2d at 556.” Thus, Papaila’s con-

struction of the Treaty lacks any case authority. Petition

at 12.

More significantly, even if Papaila’s construction is

correct (which it is not), for purposes of the instant case

18 The Second Circuit further explained the nonsensical results

dictated by Papaila’s interpretation of the Treaty:

[I]f we were to accept [this] view . . . a crazy-quilt pattern

would emerge. Under such a reading Japanese branches in

the United States would be guaranteed “access to the courts

of justice” (Article IV(1)), protected against “unlawful entry

or molestation” (Article VI(2)), given the right to dispose of

“property of all kinds” (Article IX(4)), allowed to obtain and

maintain “patents of invention” (Article X), permitted to

make “payments, remittances and transfers of funds or finan-

cia] instruments” (Article XII(1)), and allowed to engage in

“importation and exportation” (Article XIV(5)). Japanese

subsidiaries, on he other hand, would not be guaranteed any

of the rights con:erred on Japanese branches operating in the

United States, br would instead have to be content with na-

tional treatment n such areas as “the taking of privately

owned enterpris*; into public ownership and . . . the placing

of such enterp: ‘ses under public control” (Article VI(4) ).

Id. at 556. The Supreme Court did not address this statutory

construction issue, and thus, under Papaila’s own analysis, the

Second Circuit opinion is persuasive authority.

it is an argument that leads nowhere. The end result of

Papaila’s analysis is that a subsidiary is not, itself, granted

the protections of Article VIII of the FCN Treaty. But

once again, that issue is not before the Court! Uniden

America does not contend, and the Fifth Circuit did not

hold, that as a subsidiary it is entitled to all of the rights

enjoyed by its parent under Article VIII. What the Fifth

Circuit held, consistent with the language of the Treaty,

is that where a decision is made by an entity which is

protected under Article VIII, then that decision carries

the protection of the Treaty. Papaila simply refuses to

discern the difference between conduct dictated by the

parent and conduct initiated by the subsidiary. However,

for the former, the Treaty attaches; for the latter, it does

not.

3. The Fifth Circuit’s Decision Is Not in Conflict

With Decisions of Other Courts.

In his Petition, Papaila incorrectly asserts that there is

a conflict among the Circuits “as to the Rights of an

American Based Corporation to assert the Treaty Rights

of its Parent.” Petition at 20. Specifically, Papaila con-

tends that the Fifth and Seventh Circuits are in conflict

with the Second Circuit on this issue, which was “Argu-

ably Left Open” in the Su»reme Court’s Sumitomo Shoji

decision. Id. Papail-s aszertion is ince-:ect, and thus

cannot serve as a basis for a writ of cert’ or:.vi

First, it is not even remotely “arguable” that the

Sumitomo Shoji Court did in fact leave open the issue of

whether a U.S. subsidiary may invoke the treaty rights

of a parent. As explained supra, this Court clearly stated

that it “express[ed] no view” on this issue. Sumitomo

Shoji, 457 U.S. at 189 n.19, 102 S.Ct. at 2382 n.19.

Additionally, the Fifth, Seventh and Second Circuit

Courts are in accord as to the extent of treaty protection.

Indeed, the Second Circuit went even further and held:

We are satisfied that the Treaty’s provisions may be

invoked by a wholly-owned Japanese subsidiary in-

corporated in the United States to the same exten‘

that they may be availed of by Japanese corporatior<

or firms operating in the United States.

Sumitomo Shoji, 638 F.2d at 555-56." It was this more

expansive reading of the Tre.ty that was rejected by the

Supreme Court. For Papaila to argue that the Second

Circuit reads the scope of the Treaty more narrowly than

does the Fifth Circuit is pure nonsense.

Thus, it is clear that all of these Circuit Courts have

reached the same conclusion, /*., that the Treaty would

be frustrated unless, in the circumstances of the case at

bar, the U.S. subsidiary could assert the treaty rights of

the parent. Clearly, there is no conflict to be addressed

by a writ of certiorari.™

161t is unclear why Papaila cites the portion of the Second

Circuit’s decision in Sumitomo Shoji concerning the “freedom-

of-choice” clause of the Treaty and the BFOQ clause of Title VII.

Petition at 20-21. That discussion is completely irrelevant to the

issue regarding which Papaila asserts the Circuits are in conflict.

17Tt also is unclear whether Papaila is asserting that there is

some other conflict, as Papaila does not state what the conflict is.

Clearly there is no conflict as to the BFOQ issue, as neither the

Fifth Circuit nor the Seventh Circuit, in any way, addresses the

applicability or scope of a BFOQ analysis in their decisions. Thus,

nothing in the Seventh Circuit's Fortino or the Fifth Circuit’s

Papaila decisions conflicts with the Second Circuit’s holding in

Sumitomo Shoji that a Japanese company may make a BFOQ

showing that the Japanese naticsais are necessary to the usiness

in the United States. Sumitome Shoji, 688 F.2d at 559. There

also is no conflict with regard to the “freedom-of-choice” clause.

In Sumitomo Shoji, the Second Circuit held that that clause did

not support “Sumitomo’s broad interpretation, which carried to

its logical conclusion, would immunize a party not only from Title

VII but also from laws prohibiting employment of children, § 12

of the Fair Labor Standards Act, . . . laws granting rights to

unions . . . and the like.” 638 F.2d at 552. Thus, what the Second

Circuit held is that there is not a complete U.S. employment law

exemption for Japanese firms operating under the Treaty. /d. at

558. If the Fifth and Seventh Circuits had rendered the opposite

conclusion, i.¢., if they had found a complete exemption, there might

IV. TITLE VII AND THE FCN TREATY MAY BE

READ IN HARMONY BY EXCLUDING JAPANESE

EXPATRIATES AS COMPARITORBS UNDER TITLE

Vil

Papaila proposes a “harmonizing” interpretation of the

FCN Treaty by which a Japanese corporation would en-

joy the right to place expatriate employees with U.S.

subsidiaries, but thereafter could not provide them any

preferential treatment, including transfer back to Japan.

Such an interpretation is fundamentally inconsistent with

the balance of Papaila’s arguments in his Petition and

would frustrate the purposes of the Treaty.”

A Papaila Acknowledges That the Treaty Grants

Immunity From Title VII Under Certain Cir-

cumstances

After arguing throughout his Petition that the FCN

Treaty was not intended to, nor does it, provide any kind

of immunity from Title VII, Papaila makes a turnabout

and proposes that the Treaty be read to allow “for the

limited right of preferential placement of Japanese in-

arguably be a conflict. However, the Fifth and Seventh Circuits

did not find such; rather, both courts limited the exception to situa-

tions where the parent dictates the complained-of conduct and only

“to the extent necessary to prevent the treaty from being set at

naught.” Papaila, 51 F.3d at 55 (quoting Fortino, 950 F.2d at 393).

Thus, these decisions are not in conflict.

18 Papaila makes only a gesture towards preserving his argu-

ment, rejected below, that “where there is a conflict between the

statute and the treaty, the last in time controls.” Petition at 19.

Because Papaila has not seriously briefed this issue, suffice it to

say that Uniden America previously has explained that the widely

recognized rule is that the last-in-time analysis is not to be applied

unless Congress clearly has stated its intention to repeal the former

treaty. See Blanco v. United States, 775 F.2d 58, 61 (2nd Cir.

1985) (citing Posados v. National City Bank, 296 U.S. 497, 503,

56 S.Ct. 349, 352 (1936) (“[t]he intention of the legislation to

repeal must be clear and manifest’”)); Uniden’s Brief at 17-20.

Here, Papaila can point to no such intent, manifest or otherwise,

and therefore his last-in-time analysis collapses.

bak lene RT ee ee = ins

dividuals into delineated positions of management and

positions requiring technical expertise.” Petition at 19.

This is significant, in light of the fact that there is, and

could be, no dispute that preferential placement of per-

sons of a particular race or national origin otherwise

would constitute a per se violation of Title VII. Yet

Papaila seems unconcerned with this inconsistency in his

arguments.

B. Papaila’s “Harmonizing” of Title VII With the FCN

Treaty Would Frustrate the Purpose of the Treaty

Papaila fails to explain how his reading of the statute

and Treaty satisfies the purpose of the latter. As previ-

ously explained, the purpose of the Treaty is to provide

a means by which Japanese corporations may “control”

their investments in the United States. Papaila’s reading,

however, would eviscerate any control a Japanese parent

might have over its U.S. subsidiaries. Were Papaila’s

interpretation to be adopted, it would mean that once

Uniden Japan preferentially assigned an expatriate to

Uniden America, that expatriate would come under the

exclusive control of Uniden America. Uniden America

then would be forced to treat the expatriates identically

to all other employees in order not to run.afoul of Title

VII. The parent corporation could not make its own

decisions regarding the pay, treatment, transfer, or recall

of its expatriate employees. The result would be more

akin to Uniden America “borrowing” expatriate em-

ployees than Uniden Japan assigning such expatriates to

oversee its investments. Thus, Uniden Japan would be

denied any real benefit from such an assignment, despite

the provisions of the Treaty.

C. Papaila’s “Harmonizing” of Title VII and the FCN

Treaty Is Unsupported by the Case Law

Unfortunately for Papaila, his reading of the FCN

Treaty is unsupported by the relevant case law. The

lower courts consistently have held that when the FCN

Treaty can be applied, the Title VII immunities with

respect to expatriate employees go beyond mere place-

ment. Thus, in a portion of the Fifth Circuit’s Spiess

decision which is still good law, the court held:

considering the Treaty as a whole, the only reason-

able interpretation is that article VIII(1) means

exactly what it says: companies have a right to

decide which executives and technicians will manage

their investments in the host country, without regard

to the host country’s [employment] laws.

* * *

Thus, we hold that the article VIII(1) “of their

choice” provision permits Japanese companies to dis-

criminate in favor of their fellow citizens.

Spiess v. C. Itoh & Co. (America), Inc., 643 F.2d 353,

361-62 (5th Cir. 1981) (emphasis added).” This com-

pletely destroys Papaila’s tortured and nonsensical attempt

to hedge his bets, i.e., to argue that if Uniden America

can assert the FCN Treaty right of Uniden Japan to

“place” the expatriate, its right to “violate” Title VII

stops once the expatriate has been sent to the US.

subsidiary.

Indeed, a recent Third Circuit Court of Appeals deci-

sion squarely rejected Papaila’s argument. MacNamara

19 This was the initial decision entered by the Fifth Circuit in

the Spiess case. Among several rulings in that case was one that

a U.S. subsidiary of a foreign corporation could assert treaty rights

on its own behalf. Jd. at 363. That holding preceded this Court’s

decision in Sumitomo Shoji. For that reason, a short time after

the Spiess opinion was rendered, it was appealed to the Supreme

Court, vacated, and then remanded. 457 U.S. 1128 (1982). The

Fifth Circuit never had to address the key issue in the case at bar,

i.e., whether and under what circumstances the U.S. subsidiary

could assert the parent’s treaty rights for decisions directed by

the parent. However, there are numerous principles decided in

Spiess that in other ways fully support the Fifth Circuit’s subse-

quent decision in the instant case and remain good law, including

those which are quoted in the text above.

v. Korean Air Lines, 863 F.2d 1135 (3rd Cir. 1988),

cert. denied, 493 U.S. 944 (1989). There, as here, the

plaintiff argued that a foreign corporation’s right to “en-

gage” executives of its choice did not “subsume or incor-

porate its decision to terminate him.” MacNamara, 863

F.2d at 1141 (emphasis in original). In MacNamara,

however, the Third Circuit agreed with the lower court’s

“reasoning that the concept of engagement necessarily in-

cluded termination.” Jd.”

D. The FCN Treaty and Title VII May Be Read in

Harmony by Excluding as Comparitors Under Title

VII Expatriates Who Are Under the Control of

the Parent

As demonstrated above, the relevant case law squarely

rejects Papaila’s attempt at harmonizing the FCN Treaty

with Title VII. However, that does not mean that these

cases do not themselves harmonize the two apparently

conflicting laws, as did the Fifth Circuit decision. below.

As explained by Uniden America to the court below, there

are several means of reconciling Title VII with the

Treaty. Uniden’s Brief at 21-24. In the decision below,

the Fifth Circuit chose to harmonize the Treaty and the

statute essentially by removing as “comparitcrs” for Title

VII purposes expatriate personnel whose terms and con-

ditions of employment are set by the parent corporation.

Papaila, 51 F.3d at 56.” Thus, a US. citizen employed

20 This further undercuts Papaila’s imagined “conflict” among

the Circuit Courts. Indeed, following this Court’s decision in

Sumitomo Shoji, every Circuit Court addressing the issue has

held that the Title VII immunity under the FCN Treaties goes

beyond mere placement. This was the conclusion of the Third

(MacNamara), Fifth (Papaila), Sixth (Wickes), and Seventh

(Fortino) Circuits. In the nearly fifteen years since it was re-

versed by the Supreme Court, the Second Circuit has not returned

to this issue. Thus, there is unanimity among the Circuit Courts

with respect to this point following the Sumitomo Shoji decision

by this Court.

21 The Fifth Circuit also noted with approval the citizenship

versus national origin distinction urged by Uniden America, i.e.,

by the U.S. subsidiary of a Japanese corporation is as-

sured of equal treatment as compared to all employees

who are under the control of the subsidiary, including

employees of Japanese “race” and national origin. That

same employee may not, however, demand equal treat-

ment with expatriate employees who are under the exclu-

sive control of the parent corporation.

The conclusion reached by both the Fifth Circuit, as

well as the Seventh Circuit in Fortino, neatly harmonizes

the various strands of case law discussed herein. The pur-

poses of the FCN Treaty are not frustrated by these deci-

sions, as the parent corporation maintains its freedom to

assign expatriate employees to its U.S. subsidiaries and

to set the terms of their ciaployment. At the same time,

the U.S. subsidiary is fully bound by the laws of the

United States, including Title VII, with respect to any

decisions it makes with respect to its employees. There-

fore, the decision of the Fifth Circuit below is proper and

does not merit review by this Court.

E. The Decision Below Reflects Good Public Policy

Any attempt at harmonizing the FCN Treaty with Title

VII should be consistent with the public policy concerns

underlying the Treaty. Under Papaila’s analysis: (1)

Uniden Japan legally may assign an expatriate citizen “of

its choice” to protect the assets invested in Uniden Amer-

ica, but then could not reassign or recall that expatriate

to the home country if a non-expatriate with the same

performance record would have been discharged under the

same circumstances, and (2) Uniden Japan could not

that Title VII prohibits national origin discrimination, whereas

the Treaty allows discrimination on the basis of citieenship.

Papaila, 51 F.8d at 56 n.2. The courts in Spiess, Fortino, and

MacNamara each based their decision, in part, upon such a distinc-

tion and found that since all of the allegedly favored individuals

were citizens of the parent’s home country, Title VII’s principals

remained intact.

differentiate in favor of expatriates on the basis of induce-

ments and other benefits. If this were the case, then the

parent company’s willingness to invest its assets in the

United States could be diminished significantly. Likewise,

if Papaila’s illogical view were to prevail, foreign nations

may respond by placing similar “tit-for-tat” restrictions

upon expatriates of U.S. companies. It was precisely this

kind of jingoistic “trade war” that the FCN Treaty was

negotiated to prevent. Sumitomo Shoji, 457 U.S. at 184-

89, 102 S.Ct. at 2379-81.

CONCLUSION

An affirmance of the court below would mean only

that Papaila could not use as “comparitors” the hand-

ful of Japanese expatriates sent by Uniden Japan to

Uniden America to protect its assets. However, Papaila

still would have the right to make such comparisons with

every other Uniden America employee, including the six

employees of Japanese “race” and national origin who

are not expatriates. A reversal of the court below would

set Article VIII(1) “at naught” and, Uniden America

believes, could have serious repercussions upon interna-

tional investments and trade. Therefore, Papaila’s Peti-

tion for Writ of Certiorari should be denied.

Respectfully submitted,

RICHARD M. KoppisH *

REBECCA A. SINGER