A constitutional dilemma: the conflict of the Title VII alien exemption clause with the Civil Rights Act of 1991.

AuthorPinney, Marcus
  1. INTRODUCTION II. BACKGROUND OF CURRENT LAW A. The Aramco Decision 1. The Presumption against Extraterritoriality 2. Congress Responds to ARAMCO B. The Courts' Interpretation of the Civil Rights Act of 1991 1. Iwata v. Stryker Corp 2. Shekoyan v. Sibley Int'l Co. 3. Gantchar v. United Airlines 4. No Case Has Considered the Conflict Between the Alien Exemption Clause and the Constitution III. THE ALIEN EXEMPTION CLAUSE, AS ENFORCED, IS AN UNCONSTITUTIONAL DENIAL OF EQUAL PROTECTION A. STATE CLASSIFICATIONS ON THE BASIS OF ALIENAGE ARE SUBJECT TO STRICT SCRUTINY B. ACTIONS BY THE FEDERAL GOVERNMENT THAT CLASSIFY PEOPLE BASED ON ALIENAGE ARE ALSO SUBJECT TO STRICT SCRUTINY C. APPLYING STRICT SCRUTINY TO THE ALIEN EXEMPTION CLAUSE 1. Strict Scrutiny Applied to the Alien Exemption Clause Would Invalidate the Clause D. A COURT MUST INTERPRET A STATUTE IN A WAY THAT AVOIDS A CONSTITUTIONAL QUESTION IV. THE IMPACT ON THE APPLICATION OF TITLE VII'S ALIEN EXEMPTION CLAUSE A. IF THE ALIEN EXEMPTION CLAUSE IS SIMPLY AMBIGUOUS, COURTS WILL HAVE TO DETERMINE WHICH ALIENS ARE EXCLUDED FROM COVERAGE B. IF THE ALIEN EXEMPTION CLAUSE IS UNCONSTITUTIONAL, THE COURTS SHOULD APPLY A CONFLICT OF LAWS ANALYSIS TO DETERMINE COVERAGE 1. The Federal Choice of Law Rule 2. Application of the Choice of Law Rule V. CONCLUSION I. INTRODUCTION

    Global commerce began on a small scale in the fifteenth and sixteenth centuries, and, since the early nineteenth century, the world's economies have been highly integrated. (1) Today, several factors allow the world's economies to benefit from a new dimension of globalization. (2) First, the removal of trade restrictions has greatly influenced companies' decisions to expand trade to other countries. (3) Over the last fifty years, the global economy has seen an increase in multilateral and regional agreements that have stimulated global trade. (4) The second factor increasing the incentives to globalize is the privatization first seen in the 1990s. (5) Privatization drives globalization by creating aggressive competition in domestic markets. (6) In turn, competition drives local industries to search the world for new markets and cheaper materials. (7) Finally, recent internet-related technologies drive globalization by boosting efficiency and growth. (8) These technologies catalyze rapid industrialization of developing regions by increasing information and improving access to markets. (9) What would have taken fifty to one-hundred years is now possible in five years or less, thanks to today's superior technology. (10) This increase in globalization raises many interesting legal issues.

    The numerous U.S. companies operating internationally initiate much litigation about which U.S. laws apply outside the United States. (11) Notably, part of this litigation addresses the employer-employee relationship. (12) To complicate the issue, there is a presumption that the "legislation of Congress, unless a contrary intent appears, is meant to apply only within the territorial jurisdiction of the United States." (13) Thus, debate over extraterritorial application of U.S. law persists.

    One important area in the international application of U.S. law is the development of Title VII protection for workers outside of the United States. (14) In the early 1990s, the Supreme Court held that Title VII does not apply to workers outside of the United States. (15) Congress quickly enacted the Civil Rights Act of 1991 "to respond to recent decisions of the Supreme Court by expanding the scope of relevant civil rights statutes in order to provide adequate protection to victims of discrimination", (16) The Act extends Title VII coverage to U.S. citizens working for U.S. companies outside of the United States. (17)

    This Comment reviews the conflict between the Civil Rights Act of 1991 and the Title VII provision that denies aliens coverage under the alien exemption clause. (18) This Comment demonstrates that alienage is a suspect classification under equal protection jurisprudence, and that any law that classifies people by alienage is subject to strict judicial scrutiny. Part II of this Comment examines the background of the current conflict, including the presumption against extraterritoriality, the Civil Rights Act of 1991, and subsequent cases that apply the Act. Part III argues that the current interpretation of the alien exemption clause creates an unconstitutional denial of equal protection, or, in the alternative, that the clause is ambiguous. Finally, Part IV of this Comment addresses the implications of finding the alien exemption clause either unconstitutional or ambiguous. This Comment proposes a resolution to the conflict between Title VII and the alien exemption clause based on existing equal protection jurisprudence.

  2. BACKGROUND OF CURRENT LAW

    1. The Aramco Decision

      On March 26, 1991, the Supreme Court announced its decision in EEOC v. Arabian American Oil Co., (ARAMCO) in which the Court held that Title VII does not apply outside of the United States. (19) In ARAMCO, the petitioner, Boureslan, claimed that ARAMCO harassed and wrongfully discharged him based on his race, religion, and national origin. (20) Boureslan, of Lebanese decent, was a naturalized citizen of the United States. (21) In 1979, Boureslan began working for an ARAMCO subsidiary in Houston, Texas; one year later, ARAMCO transferred him to Saudi Arabia, where he remained until his 1984 discharge. (22) ARAMCO argued that Title VII did not extend to U.S. citizens working outside the country for U.S. employers. (23) ARAMCO prevailed in the District Court, and the Fifth Circuit affirmed. (24)

      1. The Presumption against Extraterritoriality

        In ARAMCO, the Supreme Court began its analysis by noting that Congress has the authority to enforce its laws outside the United States. (25) The Court, however, held that Title VII does not apply extraterritorially to regulate the employment practices of U.S. employers who employ U.S. citizens abroad. (26) The Court reasoned that, while Congress has the authority to enforce its laws beyond the territorial boundaries of the United States, there is a presumption against extraterritoriality. (27) Therefore, unless there is "the affirmative intention of the Congress clearly expressed," (28) the Court will presume that a law is "primarily concerned with domestic conditions." (29)

        The ARAMCO Court's expression of the presumption against extraterritoriality was not a new principle. (30) The first significant use of this presumption occurred in American Banana Co. v. United Fruit Co., when the Supreme Court held that the Sherman Antitrust Act did not extraterritorially regulate the fruit company's alleged acts in Costa Rica. (31) The Supreme Court explained that to hold otherwise would not only be "unjust, but would be an interference with the authority of another sovereign, contrary to the comity of nations, which the other state concerned justly might resent." (32) The Court further held that "[a]ll legislation is prima facie territorial." (33)

        The ARAMCO Court rejected Boureslan's contention that "the language of Title VII evinces a clearly expressed intent on behalf of Congress to legislate extraterritorially." (34) First, Boureslan argued that the statute's definitions of the jurisdictional terms "employer" and "commerce" included U.S. firms employing U.S. citizens outside of the United States. (35) Boureslan also argued that the Title VII alien exemption clause (36) implies that Congress intended to protect U.S. citizens working outside the United States. (37) Finally, Boureslan argued that the Court "should defer to the EEOC's consistently held position that Title VII applies abroad" to the actions of domestic companies. (88) The Court rejected the arguments, stating: "[W]hile not totally lacking in probative value, [the evidence falls] short of demonstrating the affirmative congressional intent required to extend the protections of Title VII beyond our territorial borders." (39)

      2. Congress Responds to ARAMCO

        In November 1991, less than one year after the ARAMCO decision, Congress overturned ARAMCO by enacting the Civil Rights Act of 1991. (40) Congress expanded Title VII protection to include U.S. citizens who work abroad for U.S. companies. (41) Congress accomplished this new protection by expanding the definition of employee to state: "With respect to employment in a foreign country, [the term employee] includes an individual who is a citizen of the United States." (42) The amendment to Title VII also included a test to determine whether a foreign employer would be covered by the statute and an exemption for actions taken in compliance with foreign laws. (43)

    2. The Courts' Interpretation of the Civil Rights Act of 1991

      Courts interpret the changes made by the Civil Rights Act of 1991 to "establish that Title VII applies abroad only when (1) the employee is a citizen of the United States and (2) the corporation is controlled by an American employer." (44) The following cases illustrate this interpretation.

      1. Iwata v. Stryker Corp. (45)

        In Iwata, a former employee sued U.S.-based Stryker Corporation and its Japanese subsidiary, Matsumoto. (46) Stryker hired Iwata in the United States to serve as Chairman and President of Matsumoto in Japan, requiring Iwata to relocate. (47) While working for Matsumoto, Iwata made several trips to the United States. (48) After little more than a year, Stryker discharged Iwata from the company. (49) Iwata, a Japanese citizen, claimed discrimination based on race, national origin, and age. (50)

        The Iwata Court dismissed Iwata's claims for lack of subject matter jurisdiction over the case. (51) The Court reasoned that the Title VII alien exemption clause prevented Iwata from being covered. (52) The Court explained that Congress could have extended coverage to include foreign nationals in the Civil Rights Act of 1991, but declined to do so. (53) The court also held that...

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