Law School Case Brief
Sumitomo Shoji Am. v. Avagliano - 457 U.S. 176, 102 S. Ct. 2374 (1982)
Although not conclusive, the meaning attributed to treaty provisions by the Government agencies charged with their negotiation and enforcement is entitled to great weight.
Petitioner Sumitomo Shoji America, Inc. (“Sumitomo”) is a New York corporation and a wholly owned subsidiary of a Japanese general trading company. Past and present female secretarial employees of Sumitomo, who, with one exception, are United States citizens, brought a class action in federal District Court against Sumitomo, claiming that its alleged practice of hiring only male Japanese citizens to fill executive, managerial, and sales positions violated Title VII of the Civil Rights Act of 1964. Sumitomo moved to dismiss the complaint on the ground that its practices were protected under Art. VIII(1) of the Friendship, Commerce and Navigation Treaty between the United States and Japan. Article VIII(1) provides that the "companies of either Party shall be permitted to engage, within the territories of the other Party, accountants and other technical experts, executive personnel, attorneys, agents and other specialists of their choice." Article XXII(3) of the Treaty defines "companies" as "[companies] constituted under the applicable laws and regulations within the territories of either Party." The District Court refused to dismiss, holding that because Sumitomo was incorporated in the United States, it was not covered by Art. VIII(1), but the court then certified for interlocutory appeal to the Court of Appeals the question whether the terms of the Treaty exempted Sumitomo from Title VII's provisions. The Court of Appeals reversed in part, holding that Art. VIII(1) was intended to cover locally incorporated subsidiaries of foreign companies but that the Treaty language did not insulate Sumitomo's employment practices from Title VII scrutiny.
Was Sumitomo subject to the exceptions of the Friendship, Commerce, and Navigation Treaty between the United States and Japan?
The Supreme Court of the United States vacated and remanded decision that Sumitomo might be exempt under the Friendship, Commerce, and Navigation Treaty between United States and Japan. Based on Treaty art. XXII(3), petitioner was a company of the United States, not a company of Japan. As a company of the United States operating in the United States, under the literal language of the Treaty, petitioner could not invoke the rights provided in Treaty art. VIII(1), which were available only to companies of Japan operating in the United States and to companies of the United States operating in Japan. Local subsidiaries were considered for purposes of the Treaty to be companies of the country in which they were incorporated.
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