Federal Civil Rights Acts Don't Ban Discrimination Based on Country of Incorporation

So a federal judge holds in a case brought by an Israeli corporation.

|

From today's decision by Judge Lewis J. Liman (S.D.N.Y.) in Bibliotechnical Athenaeum v. American University of Beirut:

BA is an Israeli corporation with its principal place of business in New York, New York. It claims that its "primary purpose is to fight against anti-Israeli discrimination."  AUB is an accredited university located in Beirut, Lebanon.  It has a New York office where it "regularly holds activities," and it is chartered by the New York Board of Regents and accredited by the Middle States Commission on Higher Education.

The lawsuit grows out of a "virtual career fair" AUB held for its students in late 2019. … In late 2019, BA signed up for AUB's career services portal in order to recruit a paid intern as well as to participate in the virtual career fair…. After BA stated to AUB that it was an Israeli corporation, AUB locked it out of the computer system and refused to communicate further regarding participation in the virtual career fair, denying BA access to that fair.

BA originally brought suit under Title VI of the Civil Rights Act of 1964, 42 U.S.C. § 2000d ("Title VI"), as well as under New York State and New York City human rights laws. In its March 19, 2021 Opinion and Order, the Court dismissed BA's complaint without prejudice. The Court held that the complaint failed to allege facts supporting Plaintiff's claim that AUB engaged in discrimination on the basis of BA's national origin. It reasoned that BA's choice to incorporate in Israel did not alone establish a national origin for purposes of Title VI: "The country in which a company chooses to incorporate is not, and is not alleged to be, a function or an indication either of the national origin of its constituents or of its mission."

Addressing Plaintiff's argument that it necessarily had an Israeli national origin because it was engaged in the "fight against anti-Israeli discrimination," the Court concluded that the assumption was offensive: "To embrace the notion that only a corporation whose identity is based on Israeli national origin can be a supporter in the fight against anti-Israeli discrimination is to embrace the very national origin stereotyping that the federal anti-discrimination laws were intended to prevent."

The Court concluded that BA did not have a cognizable claim under Title VI because there was "no well-pled allegation that the denial [of BA's access to AUB's job fair] was based on national origin as opposed to BA's country of incorporation," which is not a protected characteristic under Title VI. As a result, the Court did not address Defendant's argument that the complaint alleged extraterritorial conduct outside the reach of Title VI….

The Amended Complaint does not add any further factual detail about Plaintiff's corporate identity, its business activities, its owner, director, officers, employees, or other constituents. It simply alleges, as the original complaint alleged, that BA "is an Israeli corporation with a principal place of business in the State of New York, County of New York." that it is "duly authorized by the State of New York and maintains its principal office in Manhattan," and that is "primary purpose is to fight against ani-Israeli discrimination,"  Plaintiff merely substitutes his defective Title VI claim with a new claim—for violation of 42 U.S.C. § 1981 ("Section 1981"), which is "derived from both Section 1 of the Civil Rights Act of 1866 … and Section 16 of the Voting Rights Act of 1870." …

Section 1981 provides, in relevant 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, and shall be subject to like punishment, pains, penalties, taxes, licenses, and exactions of every kind, and to no other."

"The statute, as amended by the Civil Rights Act of 1991, prohibits both public and private actors from discriminating on the basis of race or alienage in the making and enforcement of contracts, including employment contracts." Moreover, as the Court noted in its prior Opinion and Order, the Second Circuit has held that a corporation may bring a claim under federal antidiscrimination law where it was the victim of discrimination based on an imputed identity deriving from the identities of its constituent shareholders, directors, officers, or employees, or based on its mission and activities. This principle applies equally to claims brought under Title VI and Section 1981. Indeed, Hudson Valley Freedom Theater, Inc. v. Heimbach, the Second Circuit case that first articulated this principle, addressed claims brought under Section 1981.

Although Plaintiff has not identified any case in which a corporate plaintiff has sued under Section 1981 based on an imputed alienage identity, there is no reason that the same logic applied in Hudson Valley and its progeny to claims based on imputed racial identity should not equally apply to imputed alienage identity. Under Hudson Valley, if a small business or any United States corporation were denied the opportunity to make or enforce a contract because its owners, directors, and employees were non-citizens, it would be entitled to the same protection under Section 1981 as if the discrimination were leveled directly at those owners, directors, and employees.

Plaintiff's claim here fails, however, because it has not in fact alleged discrimination based on any imputed identity. Liberally construed, it at most alleges discrimination based on BA's state of incorporation. The Court is aware of no authority that supports the proposition that such discrimination is legally actionable under Section 1981.

Indeed, the precedent supporting the right of corporations to sue for discrimination establish that such right derives, ultimately, from discrimination based on characteristics possessed by individuals—where, for example, a corporation is discriminated against because of the racial identity of its shareholders or directors. As the Court previously observed, there are many reasons why a corporation may choose to incorporate outside the United States—an offshore location may afford better tax treatment, liability protection, or advantageous trade treatment. The choice of a corporation's country of incorporation says nothing necessarily about its mission or the identity of its constituents. Like Plaintiff's original complaint, the Amended Complaint does not contain facts necessary to establish that BA has acquired an identity protected by the federal anti-discrimination law….

{As stated in the Court's prior Opinion and Order, this case does not implicate federal anti-boycotting law. [The plaintiff didn't plead such a claim in its Complaint. -EV]}

The court declined to consider the state and local antiboycott law and antidiscrimination law claims, leaving them to state courts.

NEXT: The 2020 Harlan Institute-Ashbrook Virtual Supreme Court Championship Round

Editor's Note: We invite comments and request that they be civil and on-topic. We do not moderate or assume any responsibility for comments, which are owned by the readers who post them. Comments do not represent the views of Reason.com or Reason Foundation. We reserve the right to delete any comment for any reason at any time. Report abuses.

  1. If corporations are persons, then they have both a birthplace *and* a residence, just like a natural person has.

    Ignoring the birthplace issue, would it be permissible to discriminate against a natural person who was an Israeli resident?

    While this is usually comingled with “national origin”, say it wasn’t.
    (And the “national origin” of a Russian Jew who fled the Soviets and moved to Israel would still be Russia, as that is where the person originated, i.e. was born.)

    So an Israeli *resident* (who wasn’t born there) is discriminated against — this is legal? As long as the *legal resident* of Israel is also legally present in the US, it’s permissible to discriminate?

    The judge is wrong here — unless he wishes to argue that the 14th Amendment doesn’t give corporations “personhood” and that might not be a bad decision…

    1. Legal “personhood” does require a place of residence (which, for a corporation, is plausibly their state of incorporation) but it does not require a place of birth. You have an interesting hypothetical about discrimination on the basis of national origin against a Russian Jew now living in Israel. But that hypothetical has nothing to do with corporations.

    2. “Ignoring the birthplace issue, would it be permissible to discriminate against a natural person who was an Israeli resident?”

      Why would it not be?
      Suppose you called up your local Pizza Hut and ordered a large pepperoni pizza, then demanded that they deliver it to you in Tel Aviv. Are you under the misapprehension that they can’t just laugh at you and then hang up?

  2. So we have an Israeli company try to enroll in a career fair in Lebanon.

    Even if they have the better of the textual argument, there shouldn’t be any jurisdiction here in US courts. I dont understand why US governs in the first place, and if it does thats a problem.

    Yeah, they have a new York office. So what? The bulk of their students, I presume, are in Lebanon. The university is there. Lebanese law ought to control. I am somewhat uncomfortable with the US trying to assert sovereignty in everything with issues that don’t concern it.

    1. I don’t think you have the facts correctly. The career fair was not “in Lebanon.” It was online, and invited many students from NY and the rest of the U.S. From the opinion:

      The career fair was advertised as “a great opportunity [for employers] to attract the best AUB students and professional alumni wherever they are around the world,” and AUB touted “[t]he event [as] offer[ing] amazing features such as a virtual booth, CV search, direct chat with candidates, webinars, posting vacancies and interviewing all from the comfort of [employers’] office[s] without the cost and hassle of travel.” Id. ¶ 11. In addition, AUB offers normal career services to potential employers, including American employers, who wish to recruit AUB
      students to perform services in Lebanon, New York, or elsewhere. Id. ¶ 14

      So the career fair was very much directed to the U.S., U.S. employers and U.S. students looking for employment.

      Suppose the university was from a country that permitted racial discrimination. (Think South Africa before it changed). They want to hold an online career fair, but no blacks are allowed to participate. On the same facts, I think it is plain that U.S. anti-discrimination law would apply.

      1. Ah, that makes more sense then.

    2. ” I am somewhat uncomfortable with the US trying to assert sovereignty in everything with issues that don’t concern it.”

      To the extent that they operate (in any way) in the United States, the United States has an interest in what they do and how they do it. Defendant can avoid jurisdiction in NY by the simple expedient of not operating here.

  3. Its obviously a US owned company which is trying to grift and does not care at all about “ani-Israeli [sic] discrimination,”

  4. Sounds like the court was not-so-subtly providing direction on how to legally skirt national origin discrimination law. Kind of like discriminating against a person because of too much experience, or a bad social fit, …

  5. How many times does it need to be said Israel is not a person?

    1. The Nazis started by dehumanizing them, too.

Please to post comments