Opinion ID: 746910
Heading Depth: 2
Heading Rank: 1

Heading: Treaty of Friendship, Commerce and Navigation: United States-Korea

Text: 32 Counts I and II of Weeks' complaint allege that his replacement by S.H. Lee, a Korean citizen, was discriminatory in violation of Title VII. Taking as true the allegation that S.H. Lee replaced Weeks at SHI, we hold that SHI's actions are protected by the Treaty of Friendship, Commerce and Navigation (FCN Treaty) between the United States and the Republic of Korea. See MacNamara v. Korean Air Lines, 863 F.2d 1135 (3d Cir.1988), cert. denied, 493 U.S. 944, 110 S.Ct. 349, 107 L.Ed.2d 337 (1989); see also Wallace v. SMC Pneumatics, Inc., 103 F.3d 1394, 1401 (7th Cir.1997) (applying U.S.-Japan FCN Treaty); Papaila v. Uniden America Corp., 51 F.3d 54, 55 (5th Cir.1995), cert. denied, 516 U.S. 868, 116 S.Ct. 187, 133 L.Ed.2d 124 (1995) (same); Fortino v. Quasar Co., 950 F.2d 389 (7th Cir.1991) (same). 3 33 Article VIII(1) of the FCN Treaty between the United States and the Republic of Korea, November 28, 1956, United States-Korea, 8 U.S.T. 2217, T.I.A.S. 3947 provides: 34 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. 35 8 U.S.T. at 2223 (emphasis added). In MacNamara, the Third Circuit confirmed that the Treaty insures that foreign businesses clearly have the right to choose citizens of their own nation as executives because they are such citizens. MacNamara, 863 F.2d at 1144; see also Fortino, 950 F.2d at 393; Wickes v. Olympic Airways, 745 F.2d 363, 368 (6th Cir.1984). After analyzing the legislative history, the MacNamara court found that the target of Article VIII(1) was domestic legislation that discriminated on the basis of citizenship and ... the provision was necessary for the limited purpose of securing to foreign investors the freedom to place their own citizens in key management positions, thus facilitating their operational success in the host country. MacNamara, 863 F.2d at 1144-45. Moreover, the MacNamara court concluded that the right of a foreign business under Article VIII(1) to engage the services of its own citizens as executives was intended to include the right to engage them as replacements for existing personnel. Id. at 1141. The MacNamara court thoroughly analyzed the Treaty and its legislative history and held that application of the Treaty did not conflict with Title VII of the Civil Rights Act of 1964. Id. at 1142-47, 1147 ([T]here is no logical or pragmatic conflict between the right of foreign businesses under Article VIII(1) to engage their own citizens as managers because of their citizenship and the right of employees in the United States to be free from intentional race, age, and national origin discrimination.). We also clearly stated in Fortino, in reference to an identical treaty between the United States and Japan, that [t]he exercise of a treaty right may not be made the basis for inferring a violation of Title VII. Fortino, 950 F.2d at 393. 36 In this case, the district court granted summary judgment in favor of SHI on Counts I and II, finding that the FCN Treaty applied to protect SHI's employment decision. Weeks, 933 F.Supp. at 713-14 (citing Fortino v. Quasar Co., 950 F.2d 389 (7th Cir.1991); MacNamara v. Korean Air Lines, 863 F.2d 1135 (3d Cir.1988), cert. denied, 493 U.S. 944, 110 S.Ct. 349, 107 L.Ed.2d 337 (1989)). The district court found that S.H. Lee's status as an E-1 visa holder was strong evidence of his executive status, because E-1 visas are granted exclusively to foreign employees who perform duties of a supervisory or executive character. Id. 933 F.Supp. at 713 (quoting MacNamara, 863 F.2d at 1141-42). Weeks contended that S.H. Lee replaced him as the National Sales Manager, which the district court noted certainly is an executive position. Id. The district court therefore concluded that SHI was entitled to favor S.H. Lee over Weeks for an executive job, and granted summary judgment in favor of SHI on the employment discrimination claims. 37 In Fortino, we also agreed with MacNamara that an FCN Treaty protected both American and foreign companies against suits based on the exercise of these kind of employment decisions. Fortino discussed an FCN Treaty between the United States and Japan; however, its analysis is appropriate here since the relevant provisions of the United States-Japan FCN Treaty are identical to the United States-Korea FCN Treaty. Although the parties did not raise the FCN Treaty to the district court in Fortino, we considered its impact on the plaintiff's Title VII claims for the sake of international comity, amity, and commerce. Id. at 391. We recognized that the FCN 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. Id. at 391-92. We listed some of the benefits given to Japanese but withheld from American employees, and although we found the disparate treatment was favoritism all right, we reasoned that 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. Id. at 392. We concluded, like the Third Circuit in MacNamara, that [t]he exercise of a treaty right may not be made the basis for inferring a violation of Title VII. Id. at 393. 38 Because it is clear that Weeks' claims run smack into the United States-Korea FCN Treaty (see Wallace, 103 F.3d at 1401), the only way around the FCN Treaty is for Weeks to argue that it somehow does not apply. He does this by contending that Article VIII(1) allows for the choice of executives, and that S.H. Lee does not qualify for executive status, or, at least, there is a dispute of material fact as to whether S.H. Lee was an executive. Weeks also argues that the district court erred by relying exclusively on S.H. Lee's unsupported and unreviewed visa status to find that S.H. Lee was an executive. He contends that neither S.H. Lee's professional credentials nor his E-1 visa status make him an executive for purposes of Article VIII(1), and that Fortino and MacNamara are inapposite because, in both cases, the executive status of the foreign nationals who replaced the American plaintiffs was undisputed. Weeks further contends that the district court erred in focusing on the employment position which S.H. Lee was to assume, rather than on the factual dispute over S.H. Lee's executive job credentials both before and after he allegedly replaced Weeks. We reject all of these arguments. 39 First, as we noted above, the district court did not rely solely on S.H. Lee's E-1 visa status to determine that he was an executive for purposes of Article VIII(1). The court relieved on the visa plus the nature of the job S.H. Lee allegedly took over from Weeks. Second, the executive status of the foreign national was in issue in MacNamara. The plaintiff there offered a similar argument as to the meaning of executive for purposes of Article VIII(1) and contended that this created a material dispute of fact. MacNamara, 863 F.2d at 1141-42. The Third Circuit explained: The right secured by Article VIII(1) is the right to engage executive personnel of one's choice and ... the relevant inquiry is whether MacNamara's responsibilities were reassigned to an 'executive' within the meaning of that Article. Id. at 1141. The court found it undisputed that MacNamara's replacement, Wan Gin Chung, entered and remained in the United States pursuant to an E-1 'treaty trader' visa which is granted exclusively to foreign employees who perform duties of a supervisory or executive character, and that Mr. Chung, following the reorganization, served as sales manager for a region extending from Pennsylvania to Florida. Id. at 1141-42 (footnote omitted). The MacNamara court stated: [T]he treaty trader provisions of the Immigration and Nationality Act [the provisions authorizing the E-1 visa] were enacted to complement the FCN Treaties and ... the government's decision granting entry to Mr. Chung as an E-1 treaty trader is strong evidence of his 'executive personnel status.'  Id. at 1142 (emphasis added). Similarly, in Fortino, this Court referred to the E-1 visa as evidence tending to prove executive status. Fortino, 950 F.2d at 392 (The propriety of Matsushita's assigning its own executives to Quasar is further confirmed by the issuance of E-1 and E-2 visas to the Japanese expatriate executives.). Clearly, neither the MacNamara court, the Fortino court, nor the district court here, used E-1 visa status as conclusive evidence of executive-status; rather, each court considered the E-1 visa status as some or strong evidence. 40 In support of his contention that Mr. Chung should not be considered an executive for purposes of Article VIII(1), MacNamara argued that even if Chung could be considered an executive, it was by virtue of his responsibilities other than, or in addition to, those received by MacNamara because MacNamara's job did not entail executive duties. MacNamara, 863 F.2d at 1142. The court rejected this: 41 [T]he suggested approach of fragmenting the responsibilities of a chosen executive and second-guessing whether they are sufficiently executive is inappropriate. The focus must be on the overall responsibility of the chosen executive. In a situation of this kind, if a foreign business decides that the responsibilities of the individual replaced are such that they require the attention of a foreign national executive, that is sufficient. 42 Id. (footnote omitted). Although it is true that MacNamara did refer to Mr. Chung's responsibilities, it is also clear that the court did not focus exclusively or even primarily on them. We think it clear that the Third Circuit considered both the fact that Mr. Chung entered the United States on an E-1 visa and that he took over a job that, by virtue of its geographic expansiveness, necessarily had an executive character. The court did not delve into the background of Mr. Chung to determine whether he qualified as an executive before issuance of the visa, nor did the court independently investigate the reasons why the State Department issued Mr. Chung an E-1 visa. As to S.H. Lee, we likewise will not conduct either investigation; engaging in these investigations would frustrate the intent behind FCN treaties, which we have no authority or desire to do. 4 43 Like the MacNamara court, we find that S.H. Lee's E-1 visa is strong evidence of his executive status. Moreover, if a sales manager for a region covering Pennsylvania to Florida was an executive, surely a sales manager for the entire country is an executive. We will not fragment either Weeks' or S.H. Lee's job responsibilities in order to determine whether they are executive by design. Rather, we are convinced that S.H. Lee's status is sufficiently executive in character to come within the ambit of the plain language of Article VIII(1). SHI's replacement of Weeks by S.H. Lee involved SHI's decision to engage an executive of its choice and is therefore protected by the FCN Treaty. 44 Finally, Weeks argues that even if Article VIII(1) permitted SHI to hire S.H. Lee in place of Weeks, summary judgment was only properly granted as to his claim of disparate treatment under Title VII, and not as to his claims of disparate impact. Weeks is incorrect. MacNamara addressed both disparate treatment and disparate impact, and held that disparate impact liability may not be imposed because Article VIII(1) and Title VII conflicted. 863 F.2d at 1148. MacNamara discussed how disparate impact cases usually focus on statistical evidence of disproportional effects. But, when dealing with countries such as Korea where the population is largely homogenous, the statistical disparity between otherwise qualified non-citizens of a particular race and national origin, and citizens of the foreign country's race and national origin is likely to be substantial. Id. That would create a problem in disparate impact cases because, for a foreign company from a country like Korea with a largely homogenous population, merely exercising its rights under the FCN Treaty could result in a Title VII violation. Therefore, the MacNamara court concluded that disparate impact liability under Title VII (and under the ADEA) based on a foreign employer's practice of engaging its own nationals could not be reconciled with Article VIII(1). Accordingly, the court held that disparate impact liability could not be imposed. Id. 45 In Fortino, we also found that when dealing with a country which has a homogenous population, such as Japan, using the correlation between citizenship and national origin to infer national-origin discrimination from a treaty-sanctioned preference for Japanese citizens who are also of Japanese origin would nullify the Treaty. Fortino, 950 F.2d at 392-93. This is true whether the correlation is used to prove intentional discrimination ... or to establish a disparate impact that the employer must justify on nondiscriminatory grounds. Id. at 393. Therefore, Article VIII(1) of the U.S.-Korea FCN Treaty protects SHI's decision to replace Weeks, an American citizen, with S.H. Lee, a Korean citizen, from claims of both disparate treatment and disparate impact under Title VII. We affirm the district court's grant of summary judgment in favor of SHI on Counts I and II.