In a ruling that highlights a debate over Japanese employment practices in the United States, a federal judge has ruled that a Japanese-owned company violated civil rights laws when it laid off most of its American managers in 1986 but kept all its Japanese managers. He ordered that three of the fired Americans be paid $2.5 million plus expenses.
Consumer electronics distributor Quasar Co. of Franklin Park, Ill., let go 57 of its 80 American managers in the cutback, made in the face of heavy financial losses. But it retained all nine Japanese managers who had been assigned there by Quasar's Japanese parent, Matsushita Electric Industrial Co.
Quasar spokesman John Monaco said the company would appeal and that the judge had made "substantial errors in both law and in fact." He declined to discuss the case further. But according to the judge's decision, handed down last Friday, the company argued in court that ability to speak Japanese to people at the parent company was a requirement for the jobs held by Quasar's Japanese managers.
The ruling comes at a time that Quasar's parent, Matsushita, is anxious to build a positive image in the United States following its $7.5 billion deal to purchase Hollywood filmmaker MCA Corp.
Formerly American-owned, Quasar was bought by Matsushita in 1974 and functions today as a distribution arm for products produced by the parent.
The plaintiffs sued on grounds of discrimination by age and national origin in 1987. A federal jury in 1988 found that Quasar violated age discrimination laws by targeting older employees in the layoffs.
In the latest decision, handling the nationality issue, Judge James H. Alesia of the U.S. District Court for the Northern District of Illinois ruled that Quasar had discriminated against the plaintiffs due to their nationality, violating the Civil Rights Act of 1964.
"Quasar accomplished its discrimination by reserving certain of its managerial positions for employees of Japanese national origin," the judge wrote. He also faulted Quasar for giving Japanese employees raises when Americans were being laid off.
Alesia dismissed Quasar's explanation that Japanese language ability was a requirement, saying Americans had successfully served in various marketing, financial and managerial positions without speaking Japanese.
He also said that the layoffs had been discussed at a meeting attended only by Quasar's Japanese managers.
In a telephone interview, one of the plaintiffs, F. William Schulz, said he had worked for the company for 30 years before being laid off. "There were a lot of people let go, that's true," Schulz said, "but not one Japanese was let go."
The ruling comes amid growing debate in the United States about whether Japanese companies are importing business practices that are common to Japan but may conflict with U.S. law or custom.
At home, large Japanese firms often view hiring as selection of a new family member, who will stay for life. In return for the man's total commitment -- very few women are hired into lifetime jobs, on the grounds they will probably leave to have children -- the companies offer job security. Sharing of a language, values and experience are viewed as key to corporate success.
Japanese companies donate relatively little to charities at home. By custom, a company's main job is to produce good products and take care of its employees. Worrying over the local hospital or school is the job of government agencies.
Coming to the United States, Japanese find that much of what they have learned in Japan does not apply here. "The clash of systems is really the problem," says Kanji Haitani, a Japanese professor of economics at Memphis State University.
American community groups have faulted Japanese companies for making relatively small donations to local charities. Black groups have accused them of favoring whites in their hiring. And federal officials are probing whether Japanese companies' practice at home of forming cooperative groups known as keiretsu is being extended to the United States in violation of U.S. antitrust laws.
Critics contend that many Japanese firms routinely refuse to put Americans in positions of authority when setting up in this country, justifying it by claiming Americans cannot really fit in due to lack of understanding of Japanese corporate culture and their inability to speak Japanese. Over the years, some companies have been hit by lawsuits from Americans alleging they had encountered illegal "glass ceilings" in efforts to gain promotion.
Japanese companies "really believe they have a unique managerial system that works for them and they don't think that Americans are easily acclimated to it," said Douglas Woodward of the University of South Carolina, co-author of "The New Competitors: How Foreign Investment Is Changing the U.S. Economy."
"They really see that as a competitive advantage that they have and why give it up?
"Over the very long run they're beginning to accept American managers," said Woodward, but he added that the change would likely be slow.
Japanese corporate spokesmen generally concede that their companies could be more open to foreigners and say they are working to change it.
Since 1989, Japan's largest corporate organization of large blue chip companies, the Keidanren, has encouraged members to adapt U.S. ways more closely, take part in community affairs and strive for "good corporate citizenship."