Sumitomo Shoji America, Inc. v. Avagliano, 457 U.S. 176 (1982)

Sumitomo Shoji America, Inc. v. Avagliano

No. 80-2070

Argued April 26, 1982
Decided June 15, 1982 *
457 U.S. 176

CERTIORARI TO THE UNITED STATES COURT OF APPEALS FOR

THE SECOND CIRCUIT

Syllabus

Petitioner Sumitomo Shoji America, Inc., 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 "[c]ompanies 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.

Held: Sumitomo is not a company of Japan, and thus is not covered by Art. VIII(1) of the Treaty. Pp. 180-189.

(a) Under Art. XXII(3)’s literal language, Sumitomo is a company of the United States, since it was "constituted under the applicable laws and regulations" of New York. As a company of the United States, it cannot invoke the rights provided in Art. VIII(1), which are available only to companies of Japan operating in the United States and to companies of the United States operating in Japan. Where both parties to the Treaty agree with this meaning and such interpretation follows from the clear Treaty language, deference will be given to it, absent extraordinarily strong contrary evidence. Pp. 180-185.

(b) Adherence to the Treaty language does not overlook the Treaty’s purpose, since the primary purpose of the corporation provisions was to give corporations of each signatory legal status in the territory of the other party and to allow them to conduct business in the other country on a comparable basis with domestic firms. Pp. 185-189.

638 F.2d 552, vacated and remanded.

BURGER, C.J., delivered the opinion for a unanimous Court.