# Opposition Brief — Papaila v. Uniden America Corp.

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Opposition Brief
- **Published:** January 1, 1995
- **Citation:** 516 U.S. 868

## Text

<a Supreme Court, U.S.
| st £ D

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

WILSON - Eres PRINTING Co., INC. - 789-0096 - WASHINGTON, D.C. 20001

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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)?

(i)

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ii
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
a cepuettndtiansnneseapepensinesoes
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

11

A.

iv

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

A.

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,

14

14

16

16

20

v

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

vi
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).

2

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

3

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.

4

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

5

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).

7

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.

9

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:

10

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

11

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.

12

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

13

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

14

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.

15

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).

16

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:

17

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.

18

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.

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.

20

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.

21

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.

7

22

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-

23

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

24

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

26

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.

27

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.,

28

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.

29

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

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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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40386002_1574%3A2. Public record. Not legal advice.