An appeals court has reinstated a national origin and discrimination claim filed by a former employee of the American subsidiary of a Japanese company who claimed he was discriminated against because he was terminated during a reduction in force while Japanese workers were retained.

Todd Brown, a white American, worked for Orangeburg, New York-based Daikin America Inc., a chemical manufacturer that is a unit of Osaka, Japan-based Daikin Industries Ltd., in its new business development group from 2001 until 2009, according to Friday's ruling by the 2nd U.S. Circuit Court of Appeals in New York in Todd Brown v. Daikin America Inc., Daikin Industries Ltd.

Mr. Brown's group consisted of six employees, three of whom were white Americans and three of whom were Japanese citizens of Japanese national origin, according to the ruling.

Each of the Japanese employees in the group had previously worked for the parent company in Japan and were assigned to Daikin America for a period of years in “rotational assignments,” according to the ruling.

In 2009, as a result of a workforce reduction, Mr. Brown and one other white American in the group were terminated. The remaining white American employee was transferred out, leaving three Japanese citizens in the group.

During the same reduction in force, Daikin America also terminated employees in three other business groups. In total, seven American employees, six of whom were white and one of whom was black, lost their jobs in the workforce reduction, but no Japanese employees were terminated.

Mr. Brown filed suit against Daikin in U.S. District Court in New York charging discrimination on the basis of race or national origin, and breach of contract. The court dismissed the claims, and Mr. Brown appealed.

The 2nd Circuit reinstated the discrimination claim.

Daikin argues the Japanese rotational employees at Daikin America were not “similarly situated” to Mr. Brown and the other American employees because they were rotational employees, according to the ruling.

“Therefore, defendants argue, the companies had no duty to consider the Japanese employees for termination as part of the workforce reduction, and Brown has not provided a basis for inferring that his termination was discriminatory. We are not persuaded,” said the unanimous ruling by the three-judge appellate panel.

Both Mr. Brown and the Japanese employees in the group “are plausibly alleged to be subject to the same performance evaluation and disciplinary standards, and therefore similarly situated in their employment circumstances,” said the ruling.

“Whether there existed nonpretextual, nondiscriminatory explanations for the defendants' employment decisions … is not properly decided on a motion to dismiss for failure to state a claim,” said the appeals court, in remanding the issue to the lower court.

The appeals court did uphold the lower court's dismissal of Mr. Brown's breach of contract claim, however.

Mr. Brown alleges it was the policy of both the American subsidiary and parent company to not terminate employees for economic reasons but only “for cause.”

The court said, however, “We see no basis for concluding that the employment relationship between Brown and defendants was anything other than at will. Brown's employment was not governed by a written contract. Brown did not allege that Daikin America or (the parent company) had an express written policy limiting their rights to discharge employees,” said the court, in reaffirming dismissal of that charge.