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August 27, 1990


The opinion of the court was delivered by: Sifton, District Judge.


This action was originally brought by the individual plaintiffs, Oneida Adames, Mirsada Krlic, Nancy Farinola, and Lisa Poggi, to redress alleged employment discrimination on the basis of race, descent, ancestry, and ethnic characteristics by the defendant, the Mitsubishi Bank, Ltd. (the "Bank"). Plaintiffs' original cause of action was based on 42 U.S.C. § 1981, with jurisdiction predicated upon 28 U.S.C. § 1343(4). On April 29, 1989, this Court granted in part and denied in part plaintiffs' motion for certification of a class under Federal Rules of Civil Procedure 23(a) and 23(b)(2) and (3) and certified a class limited to the Bank's New York branch, consisting of all employees "with a reasonable expectation of promotion or transfer." This matter is now before the Court on defendant's motion for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure.

Since the filing of the Bank's motion, plaintiffs have filed a first amended complaint which partially responds to some of defendant's arguments in favor of summary judgment. On October 6, 1989, plaintiffs also filed a separate action against the Bank alleging claims based on race and national origin discrimination under Title VII of the Civil Rights Act of 1964, as amended, 42 U.S.C. § 2000e et seq. ("Title VII"), coupled with pendent claims of race and national origin discrimination under the New York State Human Rights Law.

The following facts are undisputed, except as noted or where they are described simply as being an allegation, claim or contention. They are primarily drawn from the affidavits and deposition transcripts presented by both sides. The Bank is a Japanese corporation with headquarters in Tokyo, Japan. In the United States, the Bank has branch offices in New York City and Chicago. Offices of the Bank in six other cities — Houston, Los Angeles, San Francisco, Columbus, Portland, Oregon, and Seattle — are referred to by the parties as "agency or representative offices" and apparently perform banking services of a more limited sort than those provided in New York and Chicago.

The Bank's United States branches, particularly in New York, engage in general commercial banking. The offices were initially established to assist the Bank's principal office in Japan to service Japanese corporations engaged in business in the United States. However, over the last ten years the Bank has also sought to provide loans to United States and other non-Japanese corporations. In order to ensure coordination worldwide of the Bank's lending standards, the Bank's head office is consulted regarding decisions whether to provide financing to companies that apply for loans in the Bank's United States offices.

The four named plaintiffs were hired by the Bank to work in its New York office. Three of the named plaintiffs are caucasian/American women; one, Oneida Adames, is of Hispanic/American origin. All four plaintiffs resigned their positions after March 1985, allegedly as a result of defendant's discriminatory practices.

Plaintiff Oneida Adames claims that she was hired to work as an analyst on October 1, 1982, but that her work was in fact that of an administrative assistant during the period of her employment. She claims she was denied promotional and transfer opportunities and that this denial prompted her resignation in July 1987. For her part, Nancy Farinola alleges that she was hired by the Bank on February 3, 1986, with the understanding that she would work as an analyst but instead worked as an administrative assistant. Because of alleged denials of promotional opportunities which she says she sought and was promised, she resigned in June 1987.

Mirsada Krlic claims to have been hired to work as an analyst in New York on August 4, 1986. Until her resignation in October 1987, she too says her work was that of an administrative assistant. During that period, she claims she was denied the promotional opportunities she requested. Finally, Lisa Poggi, employed by the Bank from September 4, 1984, until December 3, 1985, alleges that she was also hired as an analyst but was in fact employed as an administrative assistant. Although she indicated her desire for transfer or promotion, she claims she was denied such opportunities.

All four named plaintiffs have submitted affidavits alleging discrimination by the Bank. Affidavits of other employees supporting plaintiffs' contentions have also been submitted. All of the affiants claim knowledge of other individuals similarly situated who have been adversely affected by discrimination practiced by the Bank. The affiants also claim to know of no member of their class who achieved a transfer or promotion during the period of the affiants' employment.

According to defendant, the Bank's head office regularly assigns executive and managerial employees from the head office in Japan to overseas offices throughout the world on assignments of limited duration. Due to the temporary nature of their assignments, these individuals are referred to as "rotating staff." Defendant states that salaries paid to rotating staff are determined by the Bank's head office and include compensation for costs associated with living and working in a foreign country. The individuals hired locally by the Bank's offices are referred to as "local" or non-rotating staff. The Bank contends that it hires local staff for both managerial and clerical positions. However, it does not permit local staff to transfer between offices in the United States.

Plaintiffs challenge this practice, which they term the Bank's "dual staff system." Plaintiffs' theory is that, under the guise of its rotating staff system, Mitsubishi in fact practices intentional racial discrimination against persons of non-Oriental ancestry and origin and that these discriminatory practices are not justified by any business necessity or legitimate preference for Japanese citizens. Plaintiffs also contend that the system has resulted in "disparate impact upon and constitute[s] disparate treatment of, all non-Japanese persons employed by the Bank's local staff in its various U.S. Offices."

Plaintiffs have asserted that as of September 30, 1988, only 20 officer positions were allocated to local staff, as compared to 55 officer positions allocated to the rotating staff. Of the twenty officers among the local staff, plaintiffs assert that only one has involved a position higher than the first level of assistant manager. Moreover, of the top 19 positions, 18 were held by the Japanese rotating staff. While defendant has not disputed these numbers, it contends that no specific positions are allocated to the rotating staff and that theoretically a local staff member could become a general manager, the highest post at a branch office.

Plaintiffs assert that the "overhang effect" created by the large rotating staff has significantly impeded the ability of local staff at all levels to achieve promotions or salary increases. In support of this contention, plaintiffs have submitted the affidavits of Bruce McGillivray and Robert Grillo, both of whom worked in the Bank's corporate finance department between 1983 and 1988, McGillivray as a manager and commercial loan officer, Grillo as a loan administrator and then assistant manager. Despite regular requests and satisfactory performance evaluations, McGillivray never received a promotion. For his part, Grillo states that while he was promoted once he was passed over on many occasions in which openings for which he was fully qualified were filled by a Japanese employee who was less qualified. During the same period, every Japanese employee in the corporate finance department received at least one promotion, transfer or job upgrade. An exhibit submitted by plaintiffs indicates that each of the fifty-five rotating officials in the New York City branch during the period 1985 through 1987 received one or more promotions or transfers. Both affiants also recount instances of unequal treatment and responsibility between Japanese and non-Japanese personnel holding the same positions and state that, since their careers were impeded by racial and ethnic bias, they were compelled to resign.

The Bank defends its use of the rotating staff as legitimate and necessary for business purposes. Defendant asserts that, because the Bank's head office is consulted with respect to loan applications processed by the U.S. branches (both to ensure worldwide coordination and the employment of proven lending standards), it is important that significant numbers of Bank personnel be acquainted with the banking practices, laws, and customs of Japan, as well as those of the United States. According to the affidavit of Hisao Yokoyama, Chief Manager of the Bank's General Affairs Department, because of the need to service Japanese companies and coordinate the Bank's international financing transactions, "knowledge of Japanese business practices and management style, business culture and structure, business customs, and the ability to read, write and speak the Japanese language, are all essential skills for many positions at the [B]ank." However, Yokoyama states that at no time has the Bank's hiring practices been motivated by any racial or ethnic preferences.

Yokoyama's affidavit also states that the Bank's major overseas offices receive rotating staff from Japan who typically have a minimum of seven or eight years experience with the Bank and who have been recruited from elite Japanese universities. They have therefore acquired an in-depth knowledge of the Bank's banking and administrative systems and practices, as well as knowledge concerning the banking industry, regulations, and customers. The rotating staff employees assigned to the New York branch are and, at all relevant times, have been Japanese citizens, virtually all of whom have been admitted to the United States under the "treaty trader" section of the Immigration and Naturalization Act, 8 U.S.C. § 1101(a)(15)(E)(i).

Despite this historical fact, at his deposition Yokoyama averred that there is no restriction that would prevent a person of non-Japanese descent or origin from becoming a member of the rotating staff. However, it would be necessary to acquire knowledge of "Japanese culture, social structure and related Japanese institutions." Yokoyama later qualified this assertion and admitted he didn't know whether knowledge of Japanese business practices is an absolute prerequisite to joining the rotating staff and that he was not familiar with the standards when he was hired.

For his part, Mr. Imagawa (another New York branch officer) also acknowledged that he did not know what a non-Japanese person would need to do to join the rotating staff but that it would be possible if that individual were qualified. He opined that such an individual would have to be well versed in international finance, have proven management skills, and possess the ability to communicate well with Tokyo. Imagawa acknowledged that it may not be necessary to know Japanese if personnel in Tokyo understood English sufficiently. Imagawa further stated that specific positions are not designated only for Japanese personnel and that it is possible that a general manager of a U.S. branch office could be filled by a local staff member.

Defendant's assertions in this respect are contradicted by the affidavit of Patricia Gaiton, who, as manager of personnel between 1984 and her resignation in 1985, was generally responsible for personnel matters affecting the local staff in the New York office. Gaiton asserts that, between 1973, when she was hired, and 1985, the Bank repeatedly assured her that, despite the existence of the rotating staff, it planned to fill a significant number of management positions with non-Japanese personnel. However, "few steps, if any, were taken by the Bank to create growth opportunities in management for members of the Local Staff." Moreover, Gaiton asserts that all senior management positions were reserved for the rotating staff and that, because the rotating staff occupied most of the managerial positions, this created a "blocking effect" that made it extremely difficult for members of the local staff to obtain promotions.

Plaintiffs also challenge the Japanese language and skills requirements of the rotating staff as a pretext. Plaintiffs assert that, while the Bank still services many Japanese corporations doing business in the United States, the primary mission of the New York branch has become to provide primary lending for American-based and other non-Japanese corporations. Plaintiffs assert that this is a mission that requires familiarity with United States banking practices and laws, rather than Japanese customs and language.

Plaintiffs also challenge the promotion and hiring patterns within the local staff. Plaintiffs contend that promotions among local staff personnel are given predominantly to persons of Oriental origin or descent. According to Patricia Gaiton's affidavit, "[e]ven among Local Staff personnel, bias in favor of Oriental and Japanese employees existed." In support of this assertion, Gaiton refers to the fact that of the nineteen local staff who were officers in 1985, seven, or 37%, were Oriental or Japanese as against a figure of 20% for the percentage of the total staff represented by persons of Japanese and Oriental extraction. Furthermore, Gaiton asserts that in 1985, five of the seven promotions among non-clerical local staff went to employees of Oriental or Japanese race or ancestry.

The parties dispute the significance of the Bank's hiring patterns between 1985 and 1988 by pointing to slightly different time frames. Plaintiffs assert that, between March 1985 and March 1988, there were only twelve promotions involving local staff officers. Seven of these twelve promotions they say were given to employees of Japanese or Oriental ancestry. For its part, the Bank asserts that between January 1985 and September 30, 1988, seventeen local staff were promoted from clerk to officer level or to higher level officer positions. Ten of these were of non-Japanese or non-Oriental ancestry. Plaintiffs contend these figures are misleading because six of the ten non-Oriental promotions occurred on April 1, 1989, several weeks after their suit was commenced.

The Bank also seeks to show that as of January 1988, the Bank employed 112 local staff employees at the New York office. Twenty-three, or approximately 20% of these were of Japanese or Oriental ancestry. Of a total of twenty local staff officers, four, or 20%, were also of Japanese or Oriental ancestry. Plaintiffs respond that, when both local and rotating staffs are counted, all but 16 of 75 total officer positions in 1988 were still held by employees of Japanese or Oriental background. Plaintiffs further assert that the 20% of local staff that is of Japanese or Oriental ancestry is substantially disproportionate to the approximately 3% of qualified Asian and Pacific Island origin persons available in the greater New York City Standard Metropolitan Statistical Area, as calculated by the U.S. Census Bureau. Plaintiffs' Joint Affidavit also notes that as of September 30, 1988, the Bank had added a net of 32 local staff, for a total of 144.


Summary judgment may be granted if there is no genuine issue as to any material fact, and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). The moving party has the burden of demonstrating the absence of any disputed material facts, Schering Corp. v. Home Insurance Co., 712 F.2d 4, 9 (2d Cir. 1983), and the Court must resolve all ambiguities and draw all inferences in favor of the party against whom summary judgment is sought. Beacon Enterprises, Inc. v. Menzies, 715 F.2d 757, 762 (2d Cir. 1983). To defeat a motion for summary judgment, however, the opposing party may not rest upon the conclusory allegations or denials set forth in the pleadings but must set forth specific facts showing that there is no genuine issue for trial. Rule 56(e); Schering, supra, 712 F.2d at 9. If the evidence is merely colorable or is not significantly probative, summary judgment should be granted. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 251, 106 S.Ct. 2505, 2511, 91 L.Ed.2d 202 (1986).

Resolution of defendant's summary judgment motion largely depends on defining the scope of remedies provided by 42 U.S.C. § 1981. Section 1981 provides, in pertinent part:

  "All persons within the jurisdiction of the United
  States shall have the same right in every State
  and Territory to make and enforce contracts, to
  sue, be parties, give evidence, and to the full
  and equal benefit of all laws and proceedings for
  the security of persons and property as is enjoyed
  by white citizens."

Plaintiffs' ยง 1981 complaint alleges that the defendant has engaged in discrimination based on race, ancestry, and ethnic background in its (a) promotion and transfer policies, (b) administration of employee benefits and perquisites, (c) application of performance standards, and (d) use of deprecatory remarks ...

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