Ali Boureslan v. Aramco, Arabian American Oil Company and Aramco Service Company

W. EUGENE DAVIS, Circuit Judge:

Plaintiff, a naturalized citizen of the United States, brought an employment discrimination suit — predicated upon Title VII and state law causes of action — against his employer, a United States corporation whose principal place of business is in Saudi Arabia. In his suit, plaintiff charged that while he was working in Saudi Arabia, his employer discriminated against him on the basis of his race, religion, and national origin. The employer contested plaintiffs claims of discrimination and, in addition, moved the district court to dismiss the entire action. The employer argued that the reach of Title VII does not extend to United States citizens employed abroad by United States employers and, therefore, that the district court lacked subject matter jurisdiction over plaintiffs claim. The district court agreed, granted the employer’s motion, and dismissed plaintiffs suit. On appeal, plaintiff — joined by the Equal Employment Opportunity Commission as ami-cus curiae — urges us to conclude, that Congress intended Title VII to apply extra-territorially to protect United States citizens employed by United States employers. We find, however, that the rules of statutory construction which control our review of Title VII do not permit the conclusion plaintiff urges — we cannot say that Congress, through either the language of Title VII or its legislative history, clearly expressed its intent that Title VII be applied extraterritorially. Therefore, we conclude that Title VII does not offer plaintiff an available remedy for his claimed discrimination and affirm the district court.

I.

This appeal presents a single issue: Does Title VII regulate the employment practices of businesses which, although incorporated in the United States, employ citizens *1016of the United States in foreign countries? The question reaches us as a result of the employment relationship between Ali Bour-eslan, Arabian American Oil Company (Aramco), and Aramco Services Company (ASC). In 1979, Boureslan — a naturalized United States citizen who was born in Lebanon — went to work as an engineer for ASC in Houston, Texas. ASC is a Delaware corporation with its principal place of business in Houston; ASC is a subsidiary of Aramco, licensed to do business in Texas, with its principal place of business in Dhahran, Saudi Arabia. In November 1980, Boureslan requested a transfer to Aramco. Because Aramco explores, produces, and refines oil and gas exclusively within the Kingdom of Saudi Arabia, Bour-eslan’s transfer from ASC to Aramco also meant a transfer from the United States to Saudi Arabia.

Shortly after beginning work in Saudi Arabia, Boureslan began having altercations with his supervisor. According to Boureslan, the altercations were the result of a “campaign of harassment” which the supervisor initiated — a campaign which took the form of racial, religious, and ethnic slurs and which culminated in Boures-lan's termination on June 16, 1984.

After he was fired, Boureslan first filed charges against Aramco with the Equal Employment Opportunity Commission (EEOC) in the United States and, later, instituted this suit against both Aramco and ASC in the United States District Court for the Southern District of Texas. In each case, the focus of Boureslan’s attack was the discriminatory treatment which he allegedly received while in Saudi Arabia from his Aramco supervisor. In his lawsuit, Boureslan sought relief under both Title VII of the Civil Rights Act of 1964, 42 U.S.C. §§ 2000e et seq., and state law. In response to the lawsuit, both Aramco and ASC filed answers denying liability and separately filed motions to dismiss for lack of subject matter jurisdiction. ASC stressed two reasons why Boureslan’s claims against ASC should be dismissed. First, ASC argued that, at most, only Aramco could be liable to Boureslan. since, according to ASC, Boureslan’s transfer from ASC to Aramco terminated the employment relationship between ASC and Boureslan. Second, ASC argued that Boureslan failed properly to exhaust his administrative remedies under Title VII with respect to ASC because Boureslan named only Aramco in the one grievance he filed with the EEOC.

While ASC’s grounds for dismissal challenged only the propriety of its own inclusion in Boureslan’s lawsuit, Aramco’s motion to dismiss raised a more sweeping challenge — a challenge which, if true, required a dismissal of the lawsuit against both Aramco and ASC. Aramco argued that the protections of Title VII do not extend extraterritorially and, consequently, that Title VII offers no protection to Bour-eslan for acts of discrimination which occurred in Saudia Arabia. Boureslan contested this interpretation, and argued that the clear and express terms of Title VII demonstrate Congress’ intent to protect United States citizens from employment discrimination by American employers regardless of where the discrimination occurs. In an opinion dated January 27, 1987, the district court considered carefully the question of Title VII’s geographic reach. After examining Title VII’s language and legislative history, Supreme Court cases on extraterritorial application of federal statutes, and other existing case law on the scope of Title VII, the district court concluded that Title VII does not afford extraterritorial protection. Boureslan v. Aramco, 653 F.Supp. 629, 631 (S.D.Tex.1987). Consequently, the court dismissed Boureslan’s Title VII action against Aramco and ASC for lack of subject matter jurisdiction; it also dismissed Boureslan’s state law claims for lack of pendent jurisdiction, and entered final judgment in favor of both defendants. On appeal, Boureslan asks us to find that Congress intended Title VII to be applied extraterritorially.

II.

A special set of rules of statutory interpretation are in place to assist us in determining whether Congress intended to give *1017a statute application outside this country. We first examine those rules.

In Foley Bros., Inc. v. Filardo, 336 U.S. 281, 69 S.Ct. 575, 93 L.Ed. 680 (1949), the Supreme Court considered whether a federal statute prohibiting workdays of longer than eight hours without overtime pay applied to a contract between the United States and a private contractor for work performed in a foreign country. Id. at 282, 69 S.Ct. at 576. As the Court saw it:

The canon on construction which teaches that legislation of Congress, unless a contrary intent appears, is meant to apply only within the territorial jurisdiction of the United States, is a valid approach whereby unexpressed congressional intent may be ascertained. It is based on the assumption that Congress is primarily concerned with domestic conditions. We find nothing in the Act itself, as amended, nor in the legislative history, which would lead to the belief that Congress entertained any intention other than the normal one in this case.

Id. at 285, 69 S.Ct. at 577 (citation omitted).

See also McCulloch v. Sociedad Nacional de Marineros de Honduras, 372 U.S. 10, 21-22, 83 S.Ct. 671, 677-78, 9 L.Ed.2d 547 (1963).

This court has consistently applied the presumption against extraterritoriality. In United States v. Mitchell, 553 F.2d 996 (5th Cir.1977), we refused to read extraterritorial application into the Marine Mammal Protection Act. In ruling against extraterritorial application, we noted that “the government [failed] to [show] any clear expression of congressional intent [to overcome the presumption against extraterritorial application].” In De Yoreo v. Bell Helicopter Textron, Inc., 785 F.2d 1282, 1283 (5th Cir.1986), we rejected the argument that the Age Discrimination In Employment Act (ADEA) be given extraterritorial application.

Other circuits have followed the Supreme Court in denying extraterritorial application without a clear congressional expression of intent to the contrary. For example, in Pfeiffer v. Wm. Wrigley, Jr. Co., 755 F.2d 554 (7th Cir.1985), the Seventh Circuit considered the extraterritorial application of the ADEA. After finding that the statute did not speak directly to the issue of extraterritorial application, the court applied the presumption against extraterritorial application, noting that “[t]he fear of outright collisions between domestic and foreign law — collisions both hard on the people caught in the cross-fire and a potential source of friction between the United States and foreign countries — lies behind the presumption against the extraterritorial application of federal statutes.” Id. at 557. Likewise in Cleary v. United States Lines, Inc., 728 F.2d 607 (3d Cir.1984), the Third Circuit rejected the application of the ADEA extraterritorially without “affirmative evidence of congressional intent.” See also Air Line Stewards and Stewardesses Ass’n Int’l v. Trans World Airlines, Inc., 273 F.2d 69, 70 (2d Cir.1959), cert. denied, 362 U.S. 988, 80 S.Ct. 1075, 4 L.Ed.2d 1021 (1960) (denying extraterritorial application of the Railway Labor Act (RLA)); Air Line Stewards and Stewardesses Ass’n Int’l v. Northwest Airlines, Inc., 267 F.2d 170, 178 (8th Cir.), cert. denied, 361 U.S. 901, 80 S.Ct. 208, 4 L.Ed.2d 156 (1959) (denying extraterritorial application of RLA); Air Line Dispatchers Ass’n v. National Mediation Bd., 189 F.2d 685, 690-91 (D.C.Cir.), cert. denied, 342 U.S. 849, 72 S.Ct. 77, 96 L.Ed. 641 (1951) (denying extraterritorial application of RLA); see generally Restatement (Second) of the Foreign Relations Law of the United States § 38 (1965).

Against this backdrop, we examine the language and legislative history of Title VII to determine whether Congress intended the act to have extraterritorial application.

III.

A.

Boureslan’s discrimination case is based upon § 703(a)(1) of Title VII which provides:

It shall be an unlawful employment practice for an employer to fail or refuse to hire or to discharge any individual, or otherwise discriminate against any indi*1018vidual with respect to his compensation, terms, conditions, or privileges of employment, because of such individual’s race, color, religion, sex, or national origin.

42 U.S.C. § 2000e-2(a)(1).

Extraterritorial application is not directly addressed in Title VII. Section 2000e(b) defines “employer” under the Act as including any “person employed in an industry affecting commerce.” The term “commerce” is in turn defined as “trade, traffic, commerce, transportation, transmission, or communication among the several States; or between a State and any place outside thereof.” 42 U.S.C. § 2000e(g).

Boureslan, however, relies on § 2000e-l commonly referred to as the alien exemption provision, which provides that “[t]his title shall not apply to an employer with respect to employment of aliens outside of any state.” 1 Boureslan argues that a “negative inference” should be drawn from this language that Congress intended Title VII to cover United States citizens working abroad for United States employers. Boureslan argues that the alien exemption provision has no purpose if Title VII is not applied to protect citizens extraterritorially because in the absence of this provision neither citizens nor aliens would be protected while working outside the country. Boureslan notes that one district court has accepted this argument. Bryant v. International School Servs., 502 F.Supp. 472 (D.N.J.1980), rev’d on other grounds, 675 F.2d 562 (3d Cir.1982).

But the alien exemption provision does have a purpose even if we accept the district court’s conclusion that Title VII does not protect citizens abroad. First, no one disputes that the provision excludes coverage to aliens employed outside the states. Second, in Espinoza v. Farah Mfg. Co., 414 U.S. 86, 95, 94 S.Ct. 334, 340, 38 L.Ed.2d 287 (1973), the Supreme Court attached another meaning to the provision’s domestic scope. The Court concluded that the alien exemption provision reflects a congressional intent to provide Title VII coverage to aliens employed within the United States.

Thus, we do not faee a choice between attaching appellant’s negative inference to the alien exemption provision or stripping the provision of all purpose. If we decline to give the alien exemption provision the interpretation appellant seeks, the provision still is a meaningful and useful part of the Act. Appellant has not persuaded us that the provision’s language merits an interpretation that overcomes the presumption against extraterritorial application of the Act.

Boureslan argues next that the legislative history of Title VII, when coupled with the statutory language, evidences a clear congressional intent to apply the Act extra-territorially. It is to the legislative history, therefore, that we must now turn.

B.

Before considering the particular portions of the legislative history pointed to by Boureslan, it is important that we define the role allocated to legislative history in statutory interpretation. Legislative history is relegated to a secondary source behind the language of the statute in determining congressional intent; even in its secondary role legislative history must be used “cautiously.” United States v. Smith, 795 F.2d 841 (9th Cir.1986). Courts are not free to substitute legislative history for the language of the Act and legislative history is not an adequate substitute for *1019congressional action. Piper v. Chris-Craft Indus., Inc., 430 U.S. 1, 97 S.Ct. 926, 5 L.Ed.2d 124 (1977); United States v. Devall, 704 F.2d 1513 (11th Cir.1983); Aronsen v. Crown Zellerbach, 662 F.2d 584 (9th Cir.1981), cert. denied, 459 U.S. 1200, 103 S.Ct. 1183, 75 L.Ed.2d 431 (1983). The Supreme Court has repeatedly stated that “ ‘[a]bsent a clearly expressed legislative intention to the contrary, [statutory] language must ordinarily be regarded as conclusive.’ ” Escondido Mut. Water Co. v. La Jolla Indians, 466 U.S. 765, 772, 104 S.Ct. 2105, 2110, 80 L.Ed.2d 753 (1984) (quoting North Dakota v. United States, 460 U.S. 300, 312, 103 S.Ct. 1095, 1102, 75 L.Ed.2d 77 (1983); Consumer Prod. Safety Comm’n v. GTE Sylvania, Inc., 447 U.S. 102, 100 S.Ct. 2051, 64 L.Ed.2d 766 (1980).

The EEOC in its amicus curiae brief points to three statements in the legislative history that, it argues, supports its interpretation of the Act. First, the EEOC notes that in the House report that accompanied the Act to the Senate floor, the passage of Title VII was declared necessary:

[t]o remove obstructions to the free flow of interstate and foreign commerce and to insure the complete and full enjoyment by all persons of the rights, privileges, and immunities secured and protected by the Constitution.

House Report on Civil Rights Act of 1964, H.R.Rep. No. 914, 88th Cong., 1st Sess. (1963), reported in 1964 U.S.Code Cong. & Admin.News 2391, 2402. Second, EEOC stresses a comment by Representative William McCulloch, ranking minority member of the House Judiciary Committee, in which McCulloch stated that “[a] key purpose of the bill, then, is to secure to all Americans the equal protection of the laws of the United States and of the several states.” Id., reprinted in 1964 U.S.Cong. Code & Admin.News at 2488. EEOC also points out that the minority report states that “[t]he rights of citizenship mean little if an individual is unable to gain the economic wherewithall to enjoy or properly use them.” Id. at 2516. The EEOC argues that these general policy statements reflect a strong intent by Congress to combat employment discrimination on all fronts without any geographic limits. Thus, the EEOC asserts that the omission of any mention of extraterritorial application supports, rather than detracts, from their position.2

These references to Title VII’s legislative history fall far short of the clear expression of congressional intent required to overcome the presumption against extraterritorial application. The statements, carefully taken from a voluminous legislative history, are no more specific than the statutory language itself. To rely on such general policy statements would effectively adopt a presumption in favor of extraterritorial application. This is particularly true when the legislative history contains numerous statements that arguably favor geographic limits for Title VII.

For example, the Act’s language and legislative history make repeated references to the “United States,” “states,” and procedures relating to state proceedings without parallel references to foreign countries. 42 U.S.C. 2000e(i) defines “state” to include the states and other areas under United States jurisdiction, with no reference to foreign countries. References in the legislative history highlight concerns about employment discrimination problems in the states, Senator Hubert Humphrey, 110 Cong.Rec. 6550 (1964); the effect of Title VII on southern states versus other states, Senator Richard Russell, 110 Cong.Rec. 14301 (1964); and deferral to state employment laws, Congressman Emanuel Celler, 110 Cong.Rec. 1521 (1964).

*1020Moreover, Congress deleted reference to “foreign commerce” and “foreign nations” from earlier House versions of Title VII.3 While these references and deletions are not conclusive legislative support, they are certainly as persuasive as policy statements in the legislative history offered by the EEOC.

EEOC also points to a reference to the alien exemption provision contained in a house report rendered in connection with H.R. 405, a concurrent attempt to fashion equal employment legislation during the 88th Congress’ first session in 1963. This report was placed in the record in the hearings for H.R. 7152, which ultimately became the Civil Rights Act of 1963. The report stated,

In section 4 of the Act, limited exception is provided for employers with respect to employment of aliens outside of any state, and also, to any religious corporations, associations, or societies. The intent of the first exemption is to remove conflicts of law which might otherwise exist between the United States and a foreign nation in the employment of aliens outside the United States by an American enterprise.

Civil Rights: Hearings on H.R. 7152, as amended by Subcommittee No. 5 before the House Committee on the Judiciary, 88th Cong., 1st Sess. 2303 (1963). EEOC urges us to interpret this language to reflect an intent that, but for the alien exemption provision, Title VII protects all persons employed overseas by American employers.

However, this brief reference sheds little additional light on the issue. Whether it points to the provision’s bare language or to this snippet of legislative history, EEOC still must argue a negative inference. That is, EEOC argues that Congress spoke by not speaking. This silence will not reverse the presumption that this legislation applies only to employees employed in the United States.4

Finally, Boureslan and the EEOC advance a number of policy arguments in favor of the extraterritorial application of Title VII. These arguments go to the inequity of denying Americans employed abroad protections to which they are entitled in the United States. Although these arguments have obvious appeal, we cannot ignore strong countervailing policy arguments against the application of Title VII abroad. The religious and social customs practiced in many countries are wholly at odds with those of this country. Requiring American employers to comply with Title VII in such a country could well leave American corporations the difficult choice of either refusing to employ United States citizens in the country or discontinuing business. Given the serious, potentially de-visive policy considerations for and against application of the Act outside the country, the paucity of reference to such an application either in the Act itself or the debates in Congress is a compelling argument that Congress did not turn its attention to this possibility. It is not for this court to decide this policy issue for the legislative branch.

While the judicial function in construing legislation is not a mechanical process from which judgment is excluded, it is nevertheless very different from the legislative function. Construction is not *1021legislation and must avoid “that retrospective expansion of meaning which properly deserves the stigma of judicial legislation.” To blur the distinctive functions of the legislative and the judicial processes is not conductive to responsible legislation.

Addison v. Holly Hill Fruit Prods. Co., 322 U.S. 607, 618, 64 S.Ct. 1215, 1221, 88 L.Ed. 1488 (1944) (citation omitted).

IV.

The presumption against extraterritorial application establishes a high hurdle for appellant’s arguments to overcome. Neither the statute’s bare language nor the sparce indirect language on the subject in the legislative history persuade us that he has cleared this hurdle.

AFFIRMED.

. Eight years after the enactment of Title VII, Congress added the following language to extend protection of the Act to federal employees, and included the alien exemption language:

All personnel actions affecting employees or applicants for employment (except with regard to aliens employed outside the limits of the United States) in military departments ..., in executive agencies ..., in the United States Postal Service and the Postal Rate Commission, in those units of the government of the District of Columbia having positions in the competitive service, and in those units of the legislative and judicial branches of the Federal Government having positions in the competitive service, and in the Library of Congress shall be made free from any discrimination based on race, color, religion, sex, or national origin, (emphasis added).

42 U.S.C. § 2000e-16(a).

. In Espinoza, 414 U.S. at 94, 94 S.Ct. at 339, the Court noted that the EEOC’s interpretation of Title VII is generally entitled to deference. However, such interpretations are not controlling on the courts. Because this is a jurisdictional issue with little or no statutory language or legislative history, and one in which the EEOC has developed no particular expertise, we give the EEOC's interpretation less deference than usual. This is particularly appropriate given the traditional presumption against extraterritoriality. See General Electric Co. v. Gilbert, 429 U.S. 125, 141-42, 97 S.Ct. 401, 410-11, 50 L.Ed.2d 343 (1976); Skidmore v. Swift & Co., 323 U.S. 134, 140, 65 S.Ct. 161, 164, 89 L.Ed. 124 (1944).

. These deletions are reflected in an annotated copy of the House bill that Senator Dirksen inserted into the Congressional Record on June 5, 1964, in anticipation of debate on the Senate’s substitute bill. Senator Everett Dirksen, 110 Cong.Rec. 12811-817 (1964).

. The colloborative nature of the way in which H.R. 405 found its way into H.R. 7152 further dilutes the report’s impact. The General Subcommittee on Labor voted on June 20, 1963, to report H.R. 405 to the full Committee on Education and Labor. On July 31, 1963, Subcommittee No. 5 of the House Committee on the Judiciary placed this report in the record of hearings on H.R. 7152. the administration's civil rights bill. Subcommittee No. 5 substituted H.R. 405 for the equal employment title originally proposed in H.R. 7152, and reported H.R. 7152 favorably to the full judiciary committee. The full committee retained the alien exemption provision when it reported the title on Nov. 20, 1963. Ultimately, Congress enacted H.R. 7152 as the Civil Rights Act of 1963. In short, EEOC looks for a clear expression of intention in a negative inference arising from one paragraph of a report rendered by members of a House subcommittee that did not participate in voting the bill out of the Judiciary Committee and sending it to the full House.