Opinion
96 Cv 5187 (HB), 96 Cv 8351 (HB).
October 31, 1997
Appearances: Miriam Clark, Esq., Steel, Bellman, Ritz Clark, P.C., New York, N.Y., For Plaintiffs.
Francis Carling, Esq., Collazo, Carling Mish, L.L.P., New York, N.Y. For Defendant.
ORDER AND OPINION
Plaintiffs John Shane ("Shane") and Beth Goodman ("Goodman") commenced these employment discrimination actions against defendant Tokai Bank, Ltd. ("Tokai"), their previous employer, alleging violations of Title VII of the 1964 Civil Rights Act, as amended, 42 U.S.C. § 20003 et seq, ("Title VII"), 42 U.S.C. § 1981 ("Section 1981"), as well the New York State Human Rights Law ("NY HRL"), New York Executive Law § 290 et seq., and the New York City Human Rights Law ("NYC HRL"), N.Y.C. Admin. Code § 8-107(1)(a) et seq.
These cases were consolidated by Memorandum Opinion of Magistrate Judge Grubin, dated May 15, 1997.
Plaintiff Shane alleges that the defendant failed to promote him, discriminated against him with regard to the terms and conditions of his employment and wrongfully terminated him due to his race and national origin. Goodman claims that she was discriminated against in the terms and conditions of her employment and was wrongfully terminated on account of her race, national origin and sex. Goodman also brings retaliatory discharge claims.
Defendant moves for summary judgment on all of the plaintiffs claims, except for Goodman's retaliatory discharge claims. For the reasons stated below, defendant's motion is denied.
I. Background
Tokai Bank, headquartered in Nagoya, Japan, has had an office in New York since 1965 staffed with both "home staff" employees hired in Japan and temporarily assigned to New York and employees hired locally by the New York branch. According to the plaintiffs, there was a two-tier employment system at Tokai — an upper tier consisting solely of Japanese men sent from the Tokyo office and a lower tier consisting of non-Japanese employees. Under this system, the highest management positions were reserved for Japanese nationals, and no Japanese employee was supervised by a non-Japanese. Non-Japanese staff were excluded from Japanese-staff-only meetings, as well as from other social and business dinners, purportedly because of their inability to speak Japanese. The most significant difference in treatment was that the foreign staff could not be terminated, but were part of a system of lifetime employment prevalent in Japan, whereas non-Japanese employees could be terminated. Moreover, according to plaintiffs, Japanese management at Tokai expressed a negative view of the non-Japanese workers; for example, a personnel manager at Tokai contends that he was told by several Tokai officials that he should hire Asians because they work harder than non-Asians.
Tokai admits that there was a dual system of employment at the bank, but contends that it nevertheless did not discriminate against the non-Japanese employees. Tokai argues that because home staff employees are hired in Japan, Japanese customs govern their employment relationship, including a system of lifetime employment with Tokai. In contrast, non-Japanese employees are not protected by this system of lifetime employment, but can be terminated at any time.
A. Shane's Termination
John Shane was hired by Tokai in July 1990 to work in the Capital Markets Group. He was hired to develop a computer system for off-balance sheet transactions and to establish a profitable trading team in derivative products. The computer system he devised was highly successful. In June 1991, when the systems development was nearly completed, Shane began trading derivatives products. Shane was a discretionary trader; as such, he had the sole discretion for the trading decisions in his account and received a bonus from defendant based on his trading profits. If, however, Shane experienced aggregate trading losses over an entire fiscal year, he would not receive a bonus.
The trading room in Tokai's New York office is comprised of three trading groups: the Money Market Group, the Foreign Exchange Group, and the Capital Markets Group.
For the first two fiscal years that Shane traded for Tokai (June 1991 to June 1993), Shane was highly profitable. However, during Shane's third fiscal year (June, 1993 to January, 1995), Shane's net losses totaled almost $1.8 million. In the first quarter of his fourth fiscal year, Shane's losses continued; he sustained more than $1 million in net losses. On April 13, 1995, Shane was terminated.
In contrast to his own treatment, Shane points to Hiroshi Goto ("Goto"), a Japanese employee who arrived in New York in 1994 to manage the Money Market Group. Shane alleges that Goto also suffered losses for the year ending December 28, 1994, but that Goto was not terminated or disciplined. Accordingly, Shane claims that he was terminated because of his national origin or race; had he been Japanese he would have either been allowed to continue trading or would have been transferred to a non-trading position.
B. Failure to Promote Shane
Shane alleges that he should have been promoted to the position of Manger of the Capital Market Group, but that this position was reserved for Japanese nationals only. At the time Shane was hired, the manager of the Capital Markets Groups was Mr. Kimura. When Kimura left New York in 1991, Shane was not considered for the position, which went to Mr. Morishita. Shane alleges that Morishita was unqualified for the position. When Morishita left New York to return to Tokyo in 1993, Shane again was not given the promotion; it went to another Japanese national, Mr. Shimamura. Shane contends that Shimamura was less qualified than himself for the position. C. Goodman's Employment and Termination
Beth Goodman was hired by Tokai in February 1989 to manage the Money Market Group's Corporate Desk. This desk was staffed with all women. Goodman was responsible for selling short-term investments; however, because she was not a trader, she did not have authority to quote rates. Goodman alleges that she was not given this authority because of her sex; she claims that no woman at Tokai had such authority. Goodman also contends that she was paid less than the Japanese men at the New York branch, including recently-hired trainees.
In March and April 1993, following earlier downgrades of Tokai's credit rating, Tokai's credit rating was twice further downgraded, which inhibited its ability to market its short-term investments. In October 1994, Tokai determined that the Corporate Desk would continue to operate at a loss, and decided to close the desk, thereby eliminating Goodman's position. On November 17, 1994, Goodman was notified that her employment was being terminated. Goodman argues that even though her position was eliminated, she was discriminated against based on her gender and national origin or race because her requests to transfer to another position in the bank were denied, whereas similar requests of Asian men were granted during this period. According to Goodman, there were several other positions available in the trading room for which she was qualified, and which she would have accepted, but defendant refused to consider her for these positions.
II. Discussion
A. Plaintiff Shane1. Prima Facie Case
In order to establish a prima facie case of discriminatory discharge under Title VII, Shane must show: (1) that he belongs to a protected class; (2) that he or was performing his duties satisfactorily; (3) that he was discharged; and (4) that his discharge occurred in circumstances giving rise to an inference of discrimination based on his membership in that class.
Plaintiffs also assert claims under Section 1981, the NY HRL and the NYC HRL. The elements of proof and the standards for establishing such claims are substantially the same as those under Title VII and thus will be discussed together. See Boyce v. New York City Mission Society, 963 F. Supp. 290, 295 (S.D.N.Y. 1997) (NY HRL); Hargett v. Nat'l Westminster Bank, 78 F.3d 836, 838-39 (2d Cir.), cert. denied, 117 S.Ct. 84 (1996) (Section 1981); Rudow v. New York City Comm. on Human Rights, 123 Misc.2d 709, 715 (N.Y. Cty. 1984), aff'd. 109 A.D.2d 1111 (1st Dep't),appeal denied, 66 N.Y.2d 605 (1985) (NYC HRL).
The first and third elements of Shane's prima facie case are uncontested by the defendant With respect to the second element, Tokai argues that Shane cannot prove that he was performing his job satisfactorily because in the 22 months that preceded his discharge, Shane's trades caused defendant to lose approximately $3 million. The legal standard for qualification in a prima facie case is minimal and plaintiff need only demonstrate that he possesses the basic skills for the performance of a job. Goyette v. DCA Advertising Inc., 828 F. Supp. 227, 233 (S.D.N.Y. 1993). Moreover, the fact that a plaintiff made a mistake does not establish unsatisfactory performance overall, as he could nevertheless have performed satisfactorily in the aggregate. See Thornley v. Penton Publ. Inc., 104 F.3d 26, 30 (2d Cir. 1997). Here, although Shane suffered a loss toward the end of his employment at Tokai, the net result of his trading over his entire time at Tokai was positive. Shane also developed a highly successful computer system for Tokai. Accordingly, under the minimal standard required for a prima facie case, I find that a reasonable factfinder could conclude that plaintiff was performing his duties satisfactorily.
Tokai also argues that given Shane's trading losses, Shane has failed to demonstrate the fourth clement — that the circumstances of his discharge lead to an inference of discrimination. Shane presented evidence of disparate treatment of Japanese and non-Japanese at Tokai, and also presented evidence that Japanese managers expressed negative views about non-Japanese staff. Moreover, although Shane suffered trading losses at Tokai, he nevertheless claims that was discriminated against because if a Japanese employee had suffered the trading losses he had, that employee would not have been terminated. Indeed, plaintiff claims that Goto sustained similar losses and was not terminated. I find that this evidence establishes a prima facie case of discrimination.
Tokai argues that Shane cannot show that any Japanese employee similarly situated to him was retained after sustaining comparable losses to Shane. It argues that Goto is not similarly situated to Shane, claiming that Goto's job responsibilities differed significantly from Shane, and that, in any event, the portfolio that Goto managed sustained a gain. However, whether Goto and Shane are similarly situated, as well as whether Goto sustained losses is a material issue of disputed fact, which must be decided by the jury. See Hargett v. National Westminster Bank, 78 F.3d 836, 840 (2d Cir. 1996), cert. denied, 117 S.Ct. 84 (1996); Govette, 828 F. Supp. at 234.
2. Legitimate Non-Discriminatory Reason and Pretext
Once plaintiff establishes a prima facie case, the defendant must articulate a legitimate, non-discriminatory reason for the adverse employment decision. Chertkova v. Connecticut General Life Ins., 92 F.3d 81, 87 (2d Cir. 1996). Once the defendant has shouldered this burden, the burden shifts back to plaintiff to prove that an impermissible factor motivated the employment decision. Fields v. New York State Office of Mental Retardation and Developmental Disabilities, 115 F.3d 116, 119 (2d Cir. 1997).
Tokai contends that it fired Shane because of the trading losses he suffered. According to Shane, this reason is pretextual; had he been Japanese, he would not have been terminated. As discussed above, this issue presents a material issue of disputed fact, which must be decided by the jury.
Tokai also claims that any preferential treatment of Japanese employees, including Goto, was based on their status as "home staff" employees, and not on national origin or race. Therefore, any comparison of Shane to Goto or any other Japanese national is invalid as a matter of law. Shane claims that his status as a non-home staff employee is simply pretext for national origin discrimination. Whether Tokai's differential treatment of Japanese nationals and non-Japanese employees was based on an impermissible reason, such as national origin, or on some permissible reason, places Tokai's intent squarely at issue. Where intent is at issue, summary judgment is inappropriate. Patrick v. LeFevre, 745 F.2d 153, 159 (2d Cir. 1984); see also,Chertkova, 92 F.3d at 87. Therefore, whether the disparate treatment of Shane was based on his national origin or race is an issue for the jury to decide. See, e.g., Goyette v. DCA Advertising Inc., 828 F. Supp. at 235.
Title VII prohibits discrimination on the basis of citizenship whenever it has the purpose or effect of discriminating on the basis of national origin. Sumitomo Shoji America, Inc. v. Avagliano. 457 U.S. 176, 180 n. 4 (1982) (quoting Espinoza v. Farah Manuf. Co., 414 U.S. 86, 92 (1973)).
The case of Fitzgibbon v. Sanyo Securities, 1995 WL 450269 (S.D.N.Y. July 31, 1995) is not to the contrary. There, the defendant had adopted a dual system of employment for its foreign and non-foreign employees. However, in Fitzgibbon, plaintiff did not question the adoption of this dual policy, but instead claimed that defendant was not following this policy. Fitzgibbon, 1995 WL 450269 at *4. Thus, there was no claim in that case that the dual system itself was merely pretext for national origin or racial discrimination, as is the case here.
3. Shane's Promotion Claim
In Shane's first cause of action, he alleges that he was discriminated against in violation of Title VII by Tokai's failure to promote him and by Tokai discriminating against him with regard to the terms and conditions of his employment. Tokai contends that this cause of action, to the extent that it alleges that Tokai failed to promote Shane must be dismissed as time-barred, because under Title VII, a plaintiff must file a discrimination charge with the EEOC within 300 days of the alleged unlawful practice. 42 U.S.C. § 2000e-5(e). Since Shane alleges that Tokai failed to promote him in 1991 and again in 1993, but he did not file his charge with the EEOC until July 11, 1995, well over the 300 days required, this claim is time barred.
It is well established that normal statute of limitations rules do not apply where employees are hired or refused employment or promotion pursuant to a continuous practice of discrimination.Gomes v. Avco Corp., 964 F.2d 1330, 1333 (2d Cir. 1992). Where a plaintiff alleges a series of isolated failures to promote, the continuing violation exception does not apply. Samuel v. Merrill Lynch Pierce Fenner Smith, 771 F. Supp. 47 (S.D.N.Y. 1991). However, where a plaintiff alleges that defendant maintains a discriminatory promotion policy or system, the continuing violation exception applies. See id. Here, Shane alleges that his failure to be promoted was based on Tokai's ongoing policy of reserving certain positions for the Japanese staff. Accordingly, the statute of limitations does not begin to run until the last discriminatory act, Shane's discharge in April, 1995, and Shane's failure to promote claim is not time-barred. B. Plaintiff Goodman
Shane's promotion claims under Section 1981, the NY HRL and the NYC HRL (Counts 3, 5 and 7 of his Complaint) are also not time-barred for the same reason. In addition, Shane's 1993 promotion claim is also not time-barred under these causes of action, which have a three year statute of limitations, since the 1993 failure to promote occurred less than three years before Shane's complaint was filed.
1. Prima Facie Case
The first, second and third elements of Goodman's prima facie case are uncontested by the defendant As to the fourth element, Tokai claims that Goodman cannot satisfy this element because she was never replaced in her position, nor did anyone take over her duties after she was discharged. Replacement of the plaintiff by a member of a favored class is not a requirement of the prima facie case of discrimination in a firing case, however. Chertkova v. Connecticut General Life Ins., 92 F.3d 81, 90-91 (2d Cir. 1996); Govette v. DCA Advertising Inc., 828 F. Supp. 227 (S.D.N.Y. 1993). The question is whether the discharge occurred in circumstances giving rise to an inference of discrimination, which can be satisfied in a variety of ways, including actions or remarks that reflect a discriminatory animus, or preferential treatment of employees outside of the protected class. Chertkova, 92 F.3d at 91. Goodman has presented evidence that Japanese male employees were given preferential treatment, and that Japanese management expressed unfavorable views of non-Japanese staff. She also presented evidence that Japanese men with lower titles than her received higher salaries than she did and that no woman at Tokai was given the authority to quote rates. Although defendant disputes this evidence, I find that a reasonable factfinder could conclude that Goodman was terminated under circumstances giving rise to an inference of discrimination. Goodman has therefore established a prima facie case of discrimination.
2. Legitimate, Non-Discriminatory Reason
Tokai contends that it fired Goodman because of economic reasons which forced it to close the Corporate Desk, thereby eliminating her position. Goodman argues that this reason is pretextual and that she was terminated because of national origin and sex discrimination. She claims that the pretextual nature of Tokai's justification for terminating her is demonstrated by the evidence that during this business downturn, Japanese male employees were not terminated but instead received other positions and training in New York. As discussed above, Goodman also presented evidence of disparate treatment at Tokai and of animus by management toward non-Japanese employees. This evidence taken as a whole establishes an issue of fact as to whether or not Tokai's proffered reason for Goodman's termination was pretextual, which should be decided by the jury. C. The Treaty of Friendship, Commerce Navigation
In her prayer for relief, Goodman requests damages for back pay, among other damages. Tokai contends that she is not entitled to back pay because she has failed post-discharge to use reasonable diligence to find other suitable employment. Whether Goodman's attempt to mitigate her damages was inadequate is clearly an issue of fact for the jury to decide.
Tokai claims that plaintiffs' national origin discrimination claims must be dismissed because they are barred by the 1953 Treaty of Friendship, Commerce Navigation between the United States and Japan, 4 U.S.T. 2063 (the "Treaty"). Tokai argues that even if plaintiffs can establish a prima facie case of discrimination, the Treaty erects an absolute bar to plaintiffs' discrimination claims. The Treaty provides in Article VIII(1) that:
Nationals and companies of either Party [Japan or the United States] 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. 4 U.S.T. at 2070.
The Second Circuit has held that this provision "does not exempt Japanese companies operating in the United States, . . ., from American laws prohibiting discrimination in employment."Avigliano v. Sumitomo Shoji America, Inc., 638 F.2d 552, 554 (2d Cir. 1981), vacated on other grounds, 457 U.S. 176 (1982). Rather, the Court reasoned that Article VIII(1) of the Treaty was primarily intended to exempt foreign companies from local legislation restricting the employment of non-citizens, and more generally, to facilitate a company's employment of its own nationals to the extent necessary to insure its operational success in the host country. Id. at 559.
The Court went on to find that Title VII is consistent with the Treaty, since Title VII would not preclude a company from employing Japanese nationals in positions where such employment is reasonably necessary to the successful operation of its business, or is a bona fide occupational qualification ("BFOQ"). Avigliano, 638 F.2d at 559. This means that the employment decisions would have to be justified on the basis of the unique requirements of a Japanese company doing business in the United States, including such factors as a person's (1) Japanese linguistic and cultural skills, (2) knowledge of Japanese products, (3) familiarity with the personnel and workings of the principal or parent enterprise in Japan, and (4) acceptability to those persons with whom the company or branch does business. Id. at 559.
Section 703(e) of Title VII provides that "it shall not be an unlawful employment practice for an employer to hire and employ employees, . . . on the basis of . . . national origin in those certain instances where . . . national origin is a bona fide occupational qualification reasonably necessary to the normal operation of that particular business or enterprise." 42 U.S.C. § 2000e-2(e).
Contrary to Tokai's assertion, Avigliano is still the law of this Circuit. Although the Supreme Court vacated the judgment inAvigliano, it did so on the ground that a wholly-owned subsidiary of a Japanese company was not a company of Japan so as to come within the coverage of the Treaty, and expressly declined to interpret the scope of Article VIII(1) of the Treaty. Therefore,Avigliano is still the law in this Circuit. See, e.g., Goyette v. DCA Advertising. Inc., 828 F. Supp. 227 (S.D.N.Y. 1993); Adames v. Mitsubishi Bank, Ltd., 751 F. Supp. 1548 (E.D.N.Y. 1990).
Although the Court did not rule on the issue at hand, it nevertheless validated the Second Circuit's ruling, stating that: "The purpose of the Treat[y] was not to give foreign corporations greater rights than domestic, but instead to assure them the right to conduct business on an equal basis without suffering discrimination based on their alienage." Sumitomo Shoji America. Inc. v. Avagliano, 457 U.S. 176, 187-88 (1982).
In this case, Tokai has presented no evidence that Japanese national origin is a BFOQ for employment at Tokai. Therefore, the Treaty does not entitle Tokai to implement an employment policy that discriminates based on national origin.
III. Conclusion
For the reasons stated above, defendant's motion for summary judgment is DENIED.
SO ORDERED.
JUDGMENT
The issues in the above-entitled action having been brought on for trial before the Honorable Harold Baer, United States District Judge, and a jury on October 20, 1997, and at the conclusion of the trial the jury having returned a verdict in favor of the defendant, it is,ORDERED, ADJUDGED AND DECREED: That the Complaint be and it is hereby dismissed.