In case of alleged whistleblower discrimination by
Japanese employer doing business in United States, Ninth Circuit finds that
U.S.–Japan Treaty of Friendship, Commerce and Navigation does not preempt state
employment laws, unless latter conflict with limited Treaty right to
discriminate in favor of hiring Japanese citizens
Plaintiffs Martin Ventress, a flight engineer, and Jack
Crawford, a commercial pilot, complained of an incident in which JAL required a
seriously ill pilot to fly in violation of American and Japanese aviation laws.
Ventress and Crawford were employed by Hawaii Aviation Contract Services, Inc.
(HACS) to perform services for Japan Airlines and its subsidiaryJalways Co., Ltd. (collectively “JAL”). Crawford suffered
harassment from superiors after expressing concern about the incident. Ventress
was likewise harassed after reporting the incident to JAL, HACS and aviation
regulators. Plaintiffs sued Japan Airlines and others Defendants in California
federal court seeking damages for Defendants’ violation of California’s whistle
blower statute, wrongful termination in violation of the public policy
protecting whistle blowers and emotional distress. The district court granted
Defendants’ motion to transfer the case to the district of Hawaii.
The District Court of Hawaii gave Defendants judgment on the
pleadings on the ground that the Friendship, Commerce, and Navigation Treaty,
U.S.‑Japan, in force, October 30, 1953; 4 U.S.T. 2063; T.I.A.S. 2863; 206
U.N.T.S. 143 (FCN Treaty) preempted all of the Plaintiffs’ claims. When
Plaintiffs appealed, however, The U.S. Court of Appeals for the Ninth Circuit
reversed the lower court’s decision. The Ninth Circuit ruled that the FCN
Treaty does not preempt state employment laws.
The court noted that the Treaty’s language conferring on
Japan the right to engage specialists “of their choice”, grants “only the
limited right to discriminate in favor of their fellow citizens.” [Slip op. 8].
Thus, the Treaty does not conflict with State whistleblower protection laws.
The Ninth Circuit further found that the purpose of the “of
their choice” clause of the FCN Treaty was to “ensure the foreign company’s
ability to control its overseas investments without interference from local‑hiring
quotas. The legislative history of the post‑war treaties suggests that both
parties deemed the right to utilize the services of their own nationals in
managerial, technical, and confidential capacities to be critical.” [Slip op.
5]
“Given the purpose and history of the FCN treaties, our
sister circuits have consistently held that foreign employers do not enjoy
immunity from domestic employment laws that do not interfere with the
employers’ ability to hire their fellow citizens.” [Slip op. 6]
“We hold that the district court erred [in ruling] that JAL
has a treaty right to ignore domestic employment law even for personnel
decisions that involved only non‑Japanese citizens. ... California’s whistle‑blower
protection laws in no way conflict with JAL’s limited treaty right to
discriminate in favor of Japanese citizens. In the absence of conflict, there
can be no preemption.” [Slip op. 6‑7]
Citation: Ventress v. Japan Airlines, 2007 WL
1192010; No. 04‑17353 (9th Cir. April 24, 2007).
*** Mr. Kenneth Todd Wallace is an attorney and founding partner of the law firm. He has nearly 20 years of experience in the legal and business professions with established excellence in trial advocacy, negotiation, strategic and initiative planning, government relations, mergers and acquisitions, and team building. See http://www.walmey.com/
