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November 10, 1992


The opinion of the court was delivered by: D. LOWELL JENSEN

 This case requires the Court to examine factual and legal issues stemming from allegations of reverse discrimination. On May 27, 1992, this Court heard defendant's motion for summary judgment. Cynthia E. Gitt of Epstein, Becker & Green appeared for defendant Philippine Airlines, Inc. Lawrence Ball and Louis A. Highman appeared for plaintiffs Fred Lemnitzer and Ken Green. Having considered the papers submitted, the arguments of counsel, the applicable law, and the entire record herein, the Court GRANTS defendant's motion for the following reasons.


 This is an action brought by two former employees of defendant Philippine Airlines, Inc. ("PAL") alleging wrongful termination on the basis of age and national origin in violation of Title VII, 42 U.S.C. §§ 2000e et seq. *fn1" ("Title VII"); the California Fair Employment and Housing Act ("FEHA"); and the Age Discrimination in Employment Act ("ADEA"), 29 U.S.C. § 626; and other pendent state claims. Both plaintiffs are U.S. citizens who are not of Filipino national origin. *fn2"

 Defendant is a foreign corporation, headquartered in Manila, and a subsidiary of the Republic of the Philippines. PAL provides cargo and passenger service between the United States and the Philippines, using airports in Los Angeles, San Francisco, and Honolulu ("line cities") for departures and arrivals en route to or from Manila. PAL is prohibited from transporting passengers between U.S. cities.

 Since September 1987, Rodolfo Llora, Regional Vice President for the Americas, has overseen U.S. operations from the regional office of San Francisco. Mr. Llora, in turn, has reported to the Senior Vice President for Marketing and the Vice President of Marketing in Manila, who in 1988 were Jose Maria Estrada and Rene Ocampo, respectively. Prior to the summer of 1988, PAL also maintained district sales offices in fourteen cities in North America: Miami; Washington, D.C.; New York; Toronto; Chicago; Detroit; Dallas; Houston; San Diego; Los Angeles; San Francisco; Seattle; Honolulu; and Vancouver, British Columbia. Each office was headed by a district and/or area sales manager. In addition to the district sales offices, there were certain marketing functions performed on behalf of all districts by managers in San Francisco. One such function was the Tours and Charters department.

 PAL frequently filled certain sales and other key management positions with persons hired or trained in the Philippines, who were expected to return to the Philippines or go to any international destination to which they were assigned, and who were deemed "loyal" to the interests of PAL. This policy translated into a practice of preserving key managerial positions for persons who were citizens of the Philippines and/or participants in a group of managers who rotate from the Philippines to various positions around the world [hereinafter referred to as "expatriates"]. However, over the years PAL has also appointed U.S. citizens of Filipino origin and U.S. citizens of non-Filipino origin to such key positions.

 Plaintiff Fred Lemnitzer ("Lemnitzer") began work for PAL on or about April 21, 1969 and worked continuously for PAL until his termination effective September 30, 1988. He held various management positions during that time and his last position was that of Tours and Charters manager in San Francisco.

 Plaintiff Ken Green ("Green") worked continuously for PAL from on or about April 19, 1976 until his termination on September 30, 1988. He held management positions throughout this time. Green transferred from the Washington, D.C. office to the Detroit office in July 1988.

 On or about August 8, 1988, PAL announced that it was closing all of its district sales offices in the United States outside of California and Hawaii due to financial losses stemming from PAL's U.S. operations and that it would be abolishing several other positions throughout its U.S. operations. Llora, under the direction of Estrada and Ocampo, was directed to eliminate unnecessary costs to cut the losses. This cost reduction involved terminating 114 PAL employees, including the plaintiffs. PAL informed Lemnitzer in June 1988 that it would be abolishing the position of Tours and Charters manager, as well as the Tours and Charter department. Green was notified in August 1988 that his position would be terminated effective September 30, 1988. Many of the expatriates whose positions were abolished were reassigned to posts outside the United States.

 Plaintiffs filed this action on August 8, 1990, alleging the following causes of action: (1) national origin discrimination in violation of Title VII; (2) age discrimination in violation of the ADEA; (3) national origin discrimination in violation of the FEHA; (4) age discrimination in violation of the FEHA; (5) wrongful termination in breach of employment contract; (6) wrongful termination based on national origin discrimination in violation of the California Constitution; and (7) wrongful termination in violation of California public policy.

 In a previous Order, this Court granted partial summary judgment for the defendant and ruled that the Air Transport Agreement ("ATA"), which was negotiated by the United States and the Republic of the Philippines and which governs the respective rights of PAL and U.S. carriers to operate in the other's country, "permits PAL to prefer its citizens at key positions . . . without implicating the national origin provisions of Title VII." Aug. 23, 1991 Order, at 18-19. Thus, defendant's preference for its own citizens did not violate either Title VII or the FEHA. Nor did defendant's decision to assign employees to positions outside the United States support plaintiffs' Title VII or FEHA theories. Id. at 19.

 PAL now moves for summary judgment on all causes of action. Plaintiffs concede that summary judgment should be granted on their age discrimination claims. Plaintiffs' Opposition ...

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