Court Opinion

ID: 14716
Source: CourtListenerOpinion
Date Created: 2010-04-25 06:38:05+00
Date Added: 2024-06-11T16:46:35.570811
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UNITED STATES COURT OF APPEALS
                        FOR THE FIFTH CIRCUIT

                      ___________________________

                              No. 97-20584
                      ___________________________

                              W.G. BENNETT,

                                     Plaintiff-Appellee-Cross-Appellant,

                                     VERSUS

                      TOTAL MINATOME CORPORATION,

                                     Defendant-Appellant-Cross-Appellee.

         ___________________________________________________

            Appeals from the United States District Court
                  For the Southern District of Texas
         ___________________________________________________
                            April 29, 1998

Before DAVIS, WIENER, and PARKER, Circuit Judges.

W. EUGENE DAVIS, Circuit Judge:

     W.G.   Bennett   brought    this       employment    discrimination     suit

against his employer, Total Minatome Corporation (“TMC”).                 Bennett

alleged that TMC unlawfully discriminated against him in violation

of Title VII of the Civil Rights Act of 1964, 42 U.S.C. §§ 2000e et

seq., the Age Discrimination in Employment Act (“ADEA”), 29 U.S.C.

§§ 621 et seq., and 42 U.S.C. § 1981.            The district court entered

judgment in favor of Bennett on each of his claims.                       For the

reasons that follow, we reverse.

                                       I.

     TMC, an oil and gas company incorporated in Delaware, is the

wholly   owned   subsidiary     of   TOTAL,     S.A.     (“TOTAL”),   a    French
corporation headquartered in Paris, France.              Bennett, an American

citizen born in Mississippi, was hired as a manager by TMC on April

1, 1987, less than one month before his 51st birthday.                   Over the

next four years, Bennett was promoted twice, at age 52 and at age

54.

      For some time, TOTAL has maintained a practice of assigning

TOTAL   employees   to   TMC   on   a   temporary      basis.       These   French

“expatriates” generally occupy key executive or technical positions

at TMC, including president. Between 1987 and 1991, in response to

a decline in the oil business, TMC undertook several corporate

“restructurings.”     In May 1989, during one such restructuring, TMC

terminated three American managers over the age of 50.                   In March

1991, during another restructuring, TMC laid off approximately 15%

of its workforce, including four American managers over the age of

40 and a fifth who was six months shy of his 40th birthday.

      In July 1991, TOTAL replaced TMC’s then-president, Jean Pierre

Donnet, with another French expatriate, Jean Michel Fonck, who was

sent with the mandate to “to reorganize completely the company.”

In September 1991, as part of his reorganization efforts, Fonck

decided   to   replace   Bennett,       who   then    held    the   position      of

Production Manager, with a younger French expatriate, Jean Granger.

Bennett was transferred to the position of Manager of Acquisitions

and Divestments.    Although he had been responsible for supervising

150 employees in his former position, he did not supervise any

employees in his new position.              In his new position he had no

purchasing     authority,   whereas     in    his    former   position      he   had

                                        2
signature authority up to $150,000. His new position also required

that he occasionally perform manual tasks such as moving boxes of

documents and operating a copy machine.

     In    September   1993,   TOTAL   recalled    Granger   to   France.

Bennett’s request for reinstatement was denied, and the title of

Bennett’s former position was changed to Drilling and Production

Manager.    At TOTAL’s direction, Granger was replaced by another

younger French expatriate, Jean Louis Geyelin.           In the summer of

1996, Geyelin rotated back to France.             Pursuant to a budgetary

directive from TOTAL, TMC did not replace Geyelin and eliminated

the position.

     Bennett filed suit on September 1993, complaining that his

transfer was a demotion and that TMC continued to discriminate

against him1 on account of his age, in violation of the ADEA;

national origin, in violation of Title VII; and race, in violation

of § 1981.2   Bennett’s Title VII claim, to the extent it was based

     1
          Bennett claimed that TMC continued to discriminate
against him by, among other things, requiring him to perform manual
tasks, placing him in a smaller office, reducing the number of
employees he supervised, deleting him from distribution lists for
internal memoranda, and denying him a raise in 1992 and a bonus in
1993.   He also claimed that TMC discriminated against him in
refusing to reinstate him to his former position after Granger
rotated back to France.
     2
          Bennett claimed that TMC discriminated against him
because he was “not of French ancestry.” Racial discrimination
under § 1981 encompasses discrimination against “identifiable
classes of persons who are subjected to intentional discrimination
solely because of their ancestry or ethnic characteristics.” St.
Francis College v. Al-Khazraji, 481 U.S. 604, 613 (1987). Although
TMC argues that Bennett failed to allege membership in an
identifiable ethnic group, that is an issue we need not decide.

                                       3
on acts occurring prior to November 21, 1991,3 was tried to the

court.     His remaining claims were tried to a jury.         The court and

the jury found for Bennett on each of his claims.            On November 8,

1996, the court entered judgment awarding Bennett $152,100 in

backpay; $300,000 in compensatory damages; $970,000 in punitive

damages; and $391,722.73 in attorneys’ fees.              The court denied

TMC’s    post-trial   motion   for   judgment   as   a   matter   of   law   on

Bennett’s claims and Bennett’s motion to amend the judgment to

include an award of front pay.        Both TMC and Bennett appeal.

                                     II.

     TMC contends that Bennett’s claims are barred by Article VI of

the Convention of Establishment between the United States and

France, (the “Convention”), one of a series of commercial treaties

negotiated by the United States with a number of other countries in

the years following World War II.          See 106 Cong. Rec. 16561-63

(1960).4    Id.   Article VI of the Convention provides in pertinent

part:

     Nationals and companies of either High Contracting Party
     shall be permitted to engage, at their choice, within the
     territories of the other High Contracting Party,
     accountants and other technical experts, lawyers, and

     3
          The effective date of the Civil Rights Act of 1991.
Prior to the passage of the Act, Title VII plaintiffs could seek
only equitable relief. See, e.g., Hampton v. IRS, 913 F.2d 180,
182 (5th Cir. 1990).
     4
          The central purpose of the treaties was to encourage
investment abroad by granting companies of each signatory legal
status in the territory of the other country and by allowing them
to conduct business in the other country on a comparable basis with
domestic firms. See Sumitomo Shoji America, Inc. v. Avagliano, 457
U.S. 176, 185-88 (1982); MacNamara v. Korean Air Lines, 863 F.2d
1135, 1142-43 (3d Cir. 1988); 106 Cong. Rec. 16563 (1960).

                                      4
     personnel who by reason of their special capacities are
     essential to the functioning of the enterprise.

11 U.S.T. 2398, 2405.     TMC argues that Article VI thus permits

French companies conducting business in the United States to

discriminate in favor of French citizens in filling the positions

specified therein without running afoul of domestic laws such as

Title VII or the ADEA.

     The parties’ dispute centers on whether TMC, the wholly owned

U.S. subsidiary of a French company, may assert rights under the

Convention. In Sumitomo Shoji America, Inc. v. Avagliano, 457 U.S.
176, 189 (1982), the Supreme Court held that a wholly owned U.S.

subsidiary of a Japanese company was not covered by Article VIII(1)

of the Friendship, Commerce and Navigation Treaty between the

United States and Japan (the “Japan FCN treaty”), a provision

similar to Article VI.5   The Court, however, expressly reserved the

question of whether the U.S. subsidiary could assert any of its

parent’s rights under the treaty.     Id. at 189-90 n.19.

     In Fortino v. Quasar Co., 950 F.2d 389, 393 (7th Cir. 1991)

(Posner, J.), the Seventh Circuit concluded that a wholly owned

U.S. subsidiary of a Japanese company could assert its parent’s

rights under Article VIII(1) of the Japan FCN treaty to the extent

that the parent dictated the subsidiary’s alleged discriminatory

conduct.   In Fortino, the parent company maintained a practice of

     5
          Article VIII(1) of the Japan FCN treaty provides in
pertinent part: “[C]ompanies 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.” See Sumitomo, 457 U.S. at 181.

                                  5
assigning several of its financial and marketing executives to the

subsidiary     on   a    temporary     basis.        These    “expatriates”      were

employees of the subsidiary and were under its day-to-day control,

yet they also retained their status as employees of the parent

company.       The parent evaluated their performance, kept their

personnel records, fixed their salaries, and assisted with the

relocation of their families to the United States. The expatriates

entered the United States under “E-1" or “E-2" temporary visas,

which permitted the holder to work in the United States provided,

among other things, that the work was executive or supervisory in

character, that the worker was a Japanese citizen, and that the

worker was doing work authorized by the Japan FCN Treaty.

       The plaintiffs in Fortino were American executives discharged

by a Japanese expatriate put in charge of the subsidiary by the

parent    to   prevent     the    recurrence    of    a   massive   loss   and    who

proceeded to do so by reorganizing the company and reducing the

workforce, including management, by half.                 No Japanese expatriate

executive were terminated, although two were rotated back to Japan

and replaced by a single new expatriate.                  The court held that the

subsidiary was entitled to judgment in its favor, reasoning that

“[a]     judgment       that     forbids   [the      subsidiary]    from    giving

preferential treatment to the expatriate executives that its parent

sends 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 [the subsidiary] in

preference to employing American citizens in such posts.”                   Id. at

                                           6
393.

       In Papaila v. Uniden America Corp., 51 F.3d 54, 56 (5th Cir.

1995), following the lead of the Seventh Circuit in Fortino, we

held that a wholly owned U.S. subsidiary of a Japanese entity could

invoke its parent’s rights under Article VIII(1) of the Japan FCN

Treaty with respect to employment decisions dictated by the parent.

In Papaila, the parent company also assigned “expatriate” employees

to work for the subsidiary on a temporary basis.            The expatriates

were sent to protect the parent’s rights in the subsidiary and were

subject to transfer at the parent’s request.           The parent set the

expatriate’s salaries, wages, benefits and hours, directed that the

subsidiary maintain a separate payroll account for the expatriates,

and evaluated their job performance.          The plaintiff in Papaila

alleged that Japanese expatriates received favorable treatment in

terms of salaries, benefits, and job protection.            We affirmed the

district   court’s   grant   of   summary   judgment   in    favor   of   the

subsidiary because the parent was responsible for the alleged

discriminatory conduct.

       TMC contends that it is clear from the record that TOTAL

dictated the decision to replace Bennett with Granger, as well as

the decision not to reinstate him after Granger rotated back to

France.    Bennett, on the other hand, contends that there is no

evidence that these decisions were dictated by TOTAL.           We conclude

that the record indeed discloses that the decisions were dictated

by TOTAL and that, under Papaila, TMC may assert TOTAL’s rights

under the Article VI of the Convention.

                                    7
       Like   the   foreign      parents    in   Papaila     and    Fortino,    TOTAL

assigned      its   own    executives      to    TMC    on   a    temporary    basis.

Expatriate executives maintained their status as TOTAL employees

and could not be fired by TMC.                   Similar to what occurred in

Fortino, Fonck was put in charge of TMC by TOTAL with the mandate

to completely reorganize TMC.                  As part of his reorganization

efforts, he replaced Bennett with Granger.                       Later, Granger was

called back to France and TOTAL directed that he be replaced by

Geyelin.

       As mentioned above, TMC contends that Article VI of the

Convention permits French companies operating in the United States

to    discriminate    in    favor    of    French      citizens    in   filling    the

positions specified therein without running afoul of domestic laws

such as Title VII or the ADEA.             The Convention is patterned after

the   post-World     War    II    commercial     treaties        that   preceded   it,

including the Japan FCN Treaty and the Treaty of Friendship,

Commerce, and Navigation between the United States and Korea

(“Korea FCN treaty”).6           See 106 Cong. Rec. 16561-63 (1960).           Those

treaties each contain a provision similar to Article VI.7                      Courts

       6
          The Convention was signed on November 25, 1959. The
Japan FCN treaty and the Korea FCN treaty were signed on April 2,
1953 and November 28, 1956, respectively.
       7
          As noted above, Article VIII(1) of the Japan FCN treaty
provides in pertinent part: “[C]ompanies 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 VIII(1) of the Korea FCN treaty provides in
pertinent part: “Nationals and companies of either Party shall be
permitted to engage, within the territories of the other Party,

                                           8
have interpreted these provisions as granting foreign businesses

operating in the United States the right to discriminate in favor

of citizens of their home countries because of their citizenship.

See Papaila, 51 F.3d at 55 (interpreting similar provision in Japan

FCN treaty); MacNamara v. Korean Air Lines, 863 F.2d 1135, 1144-46

(3d Cir. 1988) (interpreting similar provision in Korea FCN treaty

and expressly rejecting argument that the treaty grants Korean

companies immunity from liability under Title VII and the ADEA

insofar as they discriminate in favor of Korean citizens in filling

certain positions specified therein).    Thus, we conclude that, at

the very least, Article VI grants French companies operating in the

United States the right to discriminate in favor of French citizens

because of their citizenship in filling the positions specified

therein.    We need not decide whether Article VI immunizes French

companies to the extent urged by TMC because the record contains no

evidence that Bennett was discriminated against on any basis other

than his citizenship.

                            III.

       As discussed above, Article VI of the Convention grants TOTAL

the right to discriminate in favor of French citizens in selecting,

among    other   things,   technical   experts   essential   to   its

functioning.8 Because we have concluded that TOTAL was responsible

accountants and other technical experts, executive personnel,
attorneys, agents and other specialists of their choice.” See
MacNamara, 863 F.2d 1135, 1138 (3d Cir. 1988).
   8
          It is undisputed that Granger and Geyelin were “technical
experts” within the meaning of the Convention.

                                   9
for the decision to replace Bennett, TMC may assert TOTAL’s rights

under Article VI.     As the court noted in Fortino, “[t]he exercise

of a treaty right may not be made the basis for inferring a

violation of Title VII.” 950 F.2d at 393.     Here, there is no

evidence that TOTAL did anything other than exercise its treaty

right to select French citizens as technical experts.

     In support of his Title VII and § 1981 claims, Bennett points

to evidence that he claims shows that “the French,” -- i.e., French

citizens -- received preferential treatment at TMC.9      He does not

point to any evidence, however, that shows that “the French” were

treated preferentially because of their national origin or race, as

opposed to their citizenship.       For example, he does not point to

any evidence that American citizens of French ancestry were shown

favoritism.   See, e.g., Fortino, 950 F.2d at 393 (no evidence of

national origin discrimination where there was no evidence of

favoritism    shown    Japanese-American    employees).      Although

citizenship and national origin may be highly correlated, they

should not be equated with one another, particularly in light of

the Convention.   See id. at 393.    By themselves, the facts on which

Bennett relies simply do not support an inference of national

origin or race discrimination.      Accordingly, we conclude that TMC

     9
          Bennett claims that the evidence adduced at trial shows
that: 1) the French received preferential treatment; 2) the French
met among themselves regardless of seniority; 3) junior French
employees knew more at TMC than senior Americans; 4) TMC required
poor evaluations of Frenchman to be adjusted; and 5) French raises
and bonuses were adjusted upward at the expense of Americans.

                                    10
is entitled to judgment on Bennett’s Title VII and § 1981 claims.10

                                    IV.

     That   leaves   us    with   Bennett’s   age     discrimination   claim.

Bennett alleged that TMC discriminated against him on the basis of

age in demoting him, denying him a raise in 1992 and a bonus in

1993, and refusing to reinstate him after his former position

became available.    We will first address Bennett’s contention that

TMC discriminated against him in demoting him and in refusing to

subsequently reinstate him.

     A   plaintiff   may    establish     a   prima    facie   case    of   age

discrimination with respect to a demotion or a failure to promote

by demonstrating that:      1) he was demoted or not promoted, as the

case may be; 2) he was qualified for the position he occupied or

sought; 3) he was within the protected class at the time of the

demotion or failure to promote; and 4) either i) the position he

occupied or sought was filled by someone outside the protected

    10
          We realize that Bennett’s Title VII and § 1981 claims are
not based solely on TMC’s decision to replace him with Granger and
its refusal to subsequently reinstate him after his former position
became available.      Bennett claimed that TMC continued to
discriminate against him after demoting him by, among other things,
requiring him to perform manual tasks, placing him in a smaller
office, and reducing the number of employees he supervised. Title
VII, however, was “`designed to address ultimate employment
decisions, not to address every decision made by employers that
arguably might have some tangential effect upon those ultimate
decisions.’” Mattern v. Eastman Kodak Co., 104 F.3d 702, 707 (5th
Cir. 1997) (citation omitted). “`Ultimate employment decisions’
include acts ‘such as hiring, granting leave, discharging,
promoting, and compensating.’” Id. (citation omitted). Most of the
conduct of which Bennett complains does not constitute an “ultimate
employment decision.” In any event, the evidence to which Bennett
points does not raise a reasonable inference of national origin or
race discrimination with respect to such conduct.

                                     11
class; ii) the position he occupied or sought was filled by someone

younger; or iii) he was otherwise demoted or not promoted because

of his age.   See Rhodes v. Guiberson Oil Tools, 75 F.3d 989, 992

(5th Cir. 1996) (en banc).     Once established, the prima facie case

raises an inference of unlawful discrimination.    Id. The burden of

production then shifts to the defendant to proffer a legitimate,

nondiscriminatory reason for the challenged employment action. Id.

at 992-93.    The plaintiff is then accorded the opportunity to

demonstrate that the defendant’s articulated rationale was merely

a pretext for discrimination.     Id. at 993.

     A jury may be able to infer discriminatory intent in an

appropriate case from substantial evidence that the employer’s

proffered reasons are false.        Id. at 994.    For example, the

evidence may strongly indicate that the employer has introduced

fabricated justifications for an employee’s discharge, and not

otherwise suggest a credible nondiscriminatory explanation.      Id.

In contrast, if the evidence put forth by the plaintiff to rebut

the employer’s reasons is not substantial, a jury cannot reasonably

infer discriminatory intent. Id. In some cases, for instance, the

fact that one of the nondiscriminatory reasons in the record has

proved highly questionable may not be sufficient to cast doubt on

the remaining reasons.   Id.   An employer is entitled to judgment in

its favor if the evidence taken as a whole would not allow a jury

to infer that the actual reason for the adverse employment action

was discriminatory.   Id.

     Our review of the record leads us to conclude that Bennett

                                   12
failed to produce substantial evidence of pretext and that the

evidence   is   otherwise   insufficient   to   support   a   reasonable

inference of age discrimination. TMC proffered several legitimate,

nondiscriminatory reasons for replacing Bennett with Granger and

for subsequently refusing to reinstate him. One reason TMC claimed

it replaced Bennett with Granger and, subsequently, Geyelin was the

ability of both men to speak French and thereby communicate more

effectively with TOTAL personnel in France.11      Rather than present

evidence to rebut this rationale, however, Bennett sought to

establish Granger’s ability to speak French as a significant factor

in the decision to replace him with Granger.       He thus queried of

Fonck:

     Q.    [Y]ou would agree that it was a motivating factor?

     A.    Yes, it was a significant factor.

And questioned Douglas Burgess, Vice President of Operations, thus:

     Q.    Now, Mr. Burgess, isn’t it true that one of the reasons
           that Mr. Granger was placed in the production manager
           position was because it was believed that he could
           communicate more effectively with the people in Paris?

     A.    I’m sure that was considered.    I don’t know that it was
           the controlling criteria.

     Q.    Well, in fact, you testified, didn’t you, that it was a
           consideration in putting Mr. Granger, a Frenchman, in the
           spot held by Mr. Bennett?

     A.    And I believe that to be the case.

    11
          The other reasons proffered by TMC were that Bennett had
insufficient offshore experience; that he lacked team-building
skills; and that he failed to run certain studies on three onshore
projects. An additional reason proffered by TMC for refusing to
subsequently reinstate Bennett was that he lacked drilling
experience.

                                  13
       Q.     Okay. In fact, when you talked to Mr. Fonck, that was
              one of the things that you and he had discussed? That’s
              what he had told you?

       A.     That’s correct.

       Q.     And you believe that being able to speak French gave Mr.
              Granger an advantage, in terms of being able to
              communicate effectively with people in Paris?

       A.     Yes.

       Q.     You felt that that was an advantage that he had over the
              American?

       A.     Yes.

       Moreover, Bennett did not produce any evidence that would have

called into question the desirability of having someone in his

position be able to communicate in French with TOTAL personnel.              In

fact, Bennett presented evidence that French workers had regular

telephone communications with personnel in France.

       Assuming arguendo that Bennett produced substantial evidence

that TMC’s other proffered reasons were pretextual, his doing so

would    nevertheless     be    insufficient   to   cast   doubt     on    TMC’s

articulated rationale that it replaced Bennett because he did not

speak       French.      This    rationale     relates     to    a   credible

nondiscriminatory       explanation    suggested    by   the    evidence    for

Bennett’s replacement and TMC’s refusal to subsequently reinstate

him:    TOTAL, through TMC, was simply exercising its right under

Article VI of the Convention to select French citizens as technical

experts.

       None of the other evidence on which Bennett relies supports a

reasonable inference of age discrimination.          First, Bennett relies

on a 1993 article in a magazine published by TOTAL in which Theirry

                                      14
Desmarest, TMC’s chairman of the board of directors, announced:

“It is our intention to continue recruitment, but at a more

moderate rate, focusing exclusively on young people.” This comment

cannot serve as evidence of age discrimination because it does not

refer in any way to Bennett’s age or the employment decisions of

which he complains.     See, e.g., Turner v. North American Rubber,

Inc., 979 F.2d 55, 59 (5th Cir. 1992) (comment by plaintiff’s

supervisor that he was sending him “three young tigers” to assist

with operations not sufficient evidence of age discrimination

because it did not refer in any way to plaintiff’s age and was not

in any way related to plaintiff’s discharge).

     Bennett also relies on evidence that during the 1989 and 1991

restructurings TMC terminated a number of managers over the age of

40 and that during the 1991 restructuring TMC promoted several

managers under the age of 40.      Bennett, however, did not present

any evidence demonstrating that the results of the restructurings

were statistically significant.     Although he attempted to elicit

such an admission from Ira Chorush, TMC’s statistical expert,

Chorush testified that he would need additional information before

he could state conclusively whether the results were statistically

significant.   Because Bennett failed to demonstrate statistical

significance, he failed to raise a reasonable inference of age

discrimination.     See Anderson v. Douglas & Lomason Co., Inc., 26
F.3d 1277, 1291-92 (5th Cir. 1994) (no inference of disparate

treatment   where    disparities   not   statistically   significant);

Ottaviani v. State Univ. of New York at New Paltz, 875 F.2d 365,

                                   15
371 (2d Cir. 1989) (“Before a deviation from a predicted outcome

can be considered probative [of discrimination], the deviation must

be ‘statistically significant.’”).

       We turn now to Bennett’s claim that TMC denied him a raise in

1992 and a bonus in 1993 because of his age.      Bennett could have

established a prima facie case of disparate treatment by showing

that    younger   managers   received   raises   and   bonuses   under

circumstances “nearly identical” to his.     See Mayberry v. Vought

Aircraft Co., 55 F.3d 1086, 1090 (5th Cir. 1995).            Bennett,

however, did not produce any evidence that the other managers who

received raises and bonuses were similarly situated to him.        Nor

did he present any other evidence that would raise an inference of

age discrimination.

       In sum, we conclude that Bennett failed to produce sufficient

evidence to raise a reasonable inference of age discrimination. We

also observe that weighing against a finding of age discrimination

is the fact that TMC hired Bennett at age 50, promoted him at age

52, and then promoted him once again at age 54.

                                  V.

       For the reasons set out above, we conclude that there is no

evidence that TOTAL did anything other than exercise its treaty

right to select French citizens as technical experts, and that the

record in this case does not support a reasonable inference of

national origin, race, or age discrimination. We therefore reverse

the judgment of the district court and render judgment in favor of

TMC.

                                  16
REVERSED and RENDERED.

                         17