Sumitomo Shoji America, Inc v. Avagliano case brief summary

Sumitomo Shoji America, Inc v. Avagliano (457 US 176  1982)                                 [88]

F:         Past and present female employees sue a Japanese general trading company for violations of federal statute and the Civil Rights Act, claiming that the company only hired male Japanese citizens to fill executive, managerial and sales positions. Sumitomo was able to dismiss a claim on the basis that discrimination based on citizenship did not violate the legislation, but the Court of Appeals had to deal with Treaty claims (that under the Treaty of Friendship Commerce and Navigation with Japan, the Japanese company could hire whoever it wanted).

R:         The plain language of the treaty applies to Japanese companies operating in the U.S. and U.S. companies operating in Japan. A company constituted under the laws of a nation is a company thereof.

A:        Sumitomo Shoji America, Inc. is an American company, despite it being wholly owned by a Japanese one, and therefore the treaty does not apply. Sumitomo Shoji America is constituted under the laws of New York and is therefore a U.S. company.

            Sumitomo argues that the intent of the language was to cover subsidiaries regardless of their place of incorporation  - the court disagrees.

H:        Court of Appeals reversed, and case remanded.

            • Note that a branch is part of the parent company. A subsidiary is an independent legal persona with important legal consequences (liability, taxation, etc.).

            • A way around this would be to create a solely Japanese subsidiary that would send over employees to a U.S. branch. The subsidiary would then take advantage of the treaty.