Opinion
No. 96-2057.
Heard April 7, 1997.
Decided September 3, 1997.
James W. Nagle, with whom Wilfred J. Benoit, Jr., Anthony M. Feeherry and Goodwin, Procter Hoar LLP were on brief for appellant.
Stephen S. Ostrach and Cynthia L. Amara, New England Legal Foundation, on brief for Associated Industries of Massachusetts, amicus curiae.
David G. Hanrahan, with whom Ross D. Ginsberg and Gilman, McLaughlin Hanrahan, LLP were on brief for appellee.
Appeal from the United States District Court for the District of Massachusetts, [Hon. W. Arthur Garrity, Jr., Senior U.S. District Judge].
Before Torruella, Chief Judge, Bownes, Senior Circuit Judge, and Stahl, Circuit Judge.
John Michael Kelley ("Kelley") brought suit against Airborne Freight Corporation d/b/a Airborne Express ("Airborne") alleging violations of the Age Discrimination in Employment Act of 1967, 29 U.S.C. §(s) 621 et seq. ("ADEA"), and its state law counterpart, Mass. Gen. Laws ch. 151B ("ch. 151B"). In April 1996, a jury returned a verdict in Kelley's favor, awarding back pay of $253,442.08, emotional distress damages of $250,000 under chapter 151B, section 9, and a $1,000,000 front pay award. On June 11, 1996, the district court ruled that reinstatement would be impracticable and ordered Airborne to pay the front pay award. The court also imposed a discretionary multiplier of 2.25 to back pay, front pay, and emotional distress damages under ch. 151B, Section(s) 9, and approved attorney's fees in Kelley's favor of $190,000.
Airborne filed three post-trial motions: a motion for judgment as a matter of law, a motion for a new trial, and a motion for remittitur. The first two motions were denied and the third was denied in part and granted in part — leading to a reduction in damages for emotional distress from $250,000 to $150,000. The final judgment was entered on August 14, 1996, in the amount of $3,136,858.
Airborne now claims a variety of errors requiring reversal and remand. The decisive issue for our purposes is the district court's failure to instruct the jury regarding the business judgment defense. We agree that this was error compelling remand. We also take up some of the Airborne's other claims on appeal — in particular, a host of evidentiary issues — in order to provide guidance to the district court. Certain objections, however, need not be reached at this time and we leave them to be addressed on remand, at which time the trial court will be in a better position to rule on them than we are in today. These include objections relating to damages, front pay, reinstatement, and jury instructions.
I. Background
On appeal, we examine the facts, consistent with record support, in the light most favorable to the verdict-winner. See Cumpiano v. Banco Santander Puerto Rico, 902 F.2d 148, 151 (1st Cir. 1990). We conclude that the jury could have found the following.
Airborne, which is engaged in the delivery of time sensitive packages, is divided into two divisions — sales and field services. For all relevant times, the Executive Vice President for Field Services was Raymond T. Van Bruwaene ("Van Bruwaene"), who reported directly to Robert Brazier ("Brazier"), the President and Chief Operating Officer of Airborne. The company also has a Human Resources Division, directed at all relevant times by Richard Goodwin ("Goodwin"). Van Bruwaene had three Area Vice Presidents working below him, including William Simpson ("Simpson"). Kelley was one of five Regional Field Services Managers ("RFSMs") working under Simpson. Kelley managed the Northeast Region, which consisted of the New England states and much of New York. He took over the Northeast region in July 1987, at which time it was having significant problems.
In November 1988, Kelley and James Guiod ("Guiod"), the Regional Sales Manager for the Northeast Region, received a "Top Gun" award from Brazier. The award was for "superior performance in achieving the highest percentage increase in revenue and shipments for third quarter 1988 over the previous quarter." Letter from Brazier to Guiod and Kelley, dated November 10, 1988.
In June 1990, a performance review carried out by Simpson stated that "[t]he area's [sic] where there are problems are over shadowing the better area's [sic]." The review rated Kelley as outstanding in the areas of productivity, profits, and staffing and development, but rated him poorly in service performance, cost control, and progress toward improvement and leadership/management skills. In the leadership/management skills category, the report stated that Kelley had displayed a sexist attitude, had sexual harassment complaints filed against him, and made sexual comments and jokes around employees.
Kelley testified that the evaluation was the first time he heard about the sexual harassment complaint and that upon learning of the complaint he spoke with Simpson and denied the allegation. Kelley testified that Simpson told him "if nothing like this is alleged within the next six months to the next review period, that he would do everything within his power to insure that it's expunged from my record." Joint App. at 621.
In November 1990, Simpson evaluated Kelley's performance again, noting that "there has been remarkable progress made in the Northeast Region toward all areas of your responsibility." Performance Appraisal for John M. Kelley, dated November 28, 1990.
In April 1991, Kelley received a ribald e-mail from one of his District Field Service Managers regarding a complaint by several male employees who had asked to be allowed to use the women's restroom at the Buffalo facility. Kelley forwarded the message to other managers and executives in an apparent attempt at humor. In reaction, Simpson admonished Kelley for his poor judgment.
Another performance review was conducted in October 1991. In that review, Simpson gave Kelley a "superior" overall rating. During the year prior to this review, Kelley and Guiod received two more "Top Gun" awards. Kelley's performance review in December 1992 was also positive. The evaluation stated that "service is at an all time high in the region." John M. Kelley Performance Appraisal, December 7, 1992. Both Van Bruwaene and Goodwin testified that if a person was to be discharged within ninety days, one would expect to see some indication in the performance reviews.
During this period, Airborne received complaints from some of Kelley's customers. Simpson testified that Kelley's failure to respond to customer needs was a recurring problem. For example, one problem occurred shortly after the December 1992 evaluation. Kelley's brother-in-law, Robert Cox, was the District Manager for the Region's North Shore Station. Cox's station had performed poorly for some time. In one incident, contrary to instructions Simpson had given to all RFSMs, including Kelley, no supervisor had accompanied the Airborne driver for the first seven days that pickups were made for a new major national customer. There were problems with the pickups and the customer stopped using Airborne as a result.
In the summer of 1992, Simpson, Goodwin, Van Bruwaene, Kelley and others attended a meeting regarding a reduction in force ("RIF"). At that meeting, Goodwin stated that age would be a criteria in the RIF decisions, and Simpson commented that it would be an opportunity to get rid of some of the older, mediocre managers.
The decision to terminate Kelley was made by Simpson. Goodwin agreed to help write a termination letter on March 12, 1993. The letter was delivered to Kelley on March 24, 1993.
II. Business Judgment
Airborne argues that the court erred in failing to provide the jury with a business judgment instruction.
Under the familiar standard set forth in McDonnell Douglas Corp. v. Green, 411 U.S. 792, 802 (1973), an ADEA plaintiff must first establish a prima facie case of discrimination. Once this is done, the burden of production shifts to the defendant, who must offer a non-discriminatory reason for its actions. Once a non-discriminatory motive has been offered, the burden-shifting effect of the prima facie case is dispelled and the plaintiff must prove that the articulated reasons are pretextual. Texas Dep't of Community Affairs v. Burdine, 450 U.S. 248, 252-56 (1981); Menard v. First Sec. Services Corp., 848 F.2d 281, 287 (1st Cir. 1988).
When assessing a plaintiff's claim of pretext, we have stated that the jury should focus on the motivation of the employer, and not its business judgment.
While an employer's judgment or course of action may seem poor or erroneous to outsiders, the relevant question is simply whether the given reason was a pretext for illegal discrimination. The employer's stated legitimate reason must be reasonably articulated and nondiscriminatory, but does not have to be a reason that the judge or jurors would act on or approve . . . . An employer is entitled to make his own policy and business judgments, and may, for example, fire an adequate employee if his reason is to hire one who will be even better, as long as this is not a pretext for discrimination. The reasonableness of the employer's reasons may of course be probative of whether they are pretexts. The more idiosyncratic or questionable the employer's reasons, the easier it will be to expose it as a pretext, if indeed it is one. The jury must understand that its focus is to be on the employer's motivation, however, and not on its business judgment.
Loeb v. Textron, 600 F.2d 1003, 1012 n. 6 (1st Cir. 1979); see also Hebert v. Mohawk Rubber Co., 872 F.2d 1104, 1114 (1st Cir. 1989) ("[W]e are reminded that in this Circuit [the employer's] motivation in firing [the employee], not his business judgment, are [sic] at issue."); Menard 848 F.2d at 287 ("The issue in this ADEA action, however, is not whether [the employer] made a wise decision . . . . The issue is whether First Security fired Menard because of his age."); Gray v. New England Tel. Tel. Co., 792 F.2d 251, 255 (1st Cir. 1986) ("It is not enough for the plaintiff to show that the employer made an unwise business decision, or an unnecessary personnel move."). We have also stated, albeit in dicta, that "the court should . . . explain [to the jury] that an employer is entitled to make its own subjective business judgments, however misguided they may appear to the jury, and to fire an employee for any reason that is not discriminatory." Loeb, 600 F.2d at 1019.
At least one of our sister circuits requires that the trial judge give a business judgment instruction when requested by the defendant. See Stemmons v. Missouri Dep't. of Corrections, 82 F.3d 817, 819 (8th Cir. 1996) ("[T]he district court must offer [a business judgment instruction] whenever it is proffered by the defendant."); Walker v. AT T Technologies, 995 F.2d 846, 849 (8th Cir. 1993) (the trial court has the obligation to give an appropriate instruction on business judgment, though not with the exact wording of the proposed instruction).
The instruction sought by Airborne is, in part: Mr. Kelly must show more than that Airborne made an unwise business decision, an unnecessary personnel move, or acted arbitrarily. The law does not stop Airborne from discharging an employee for any reason (fair or unfair) or for no reason at all, so long as the reason to discharge him does not stem from his age. Good faith errors in an employees [sic] business judgment are not, standing alone, evidence of age discrimination.
Defendant's Request for Jury Instructions, at 6. The request for a business judgment instruction was renewed after the jury was charged without such an instruction.
The instructions given by the court include neither the instruction requested by the defendant nor any equivalent instruction. To meet the requirements of Loeb, it must be clear to the jury that it is the employer's motivation, rather than its business judgment, that is at issue. We find, therefore, that the district court erred in failing to give a business judgment instruction in this case. We add that, in order to satisfy the requirement of a business judgment instruction, it is not necessary to give the precise instruction sought by the defendant in this case. The language from Loeb, quoted above, for example, would suffice for a business judgment instruction.
Nor can this error be dismissed as harmless. The jury was presented with considerable evidence of conduct by Airborne that might be considered unfair, but that does not suggest discrimination on the basis of age. For example, there was evidence that Kelley was fired only four months after a superior evaluation, that he had been employed for nineteen years, and that he was fired without progressive discipline. Furthermore, the evidence of age discrimination was indirect and far from overwhelming. In such a situation, failure to give a business judgment instruction cannot be termed harmless error. Stemmons, 82 F.3d at 821.
The error is not saved by the fact that the jury expressly found age to be a determinative factor in the decision to discharge Kelley. Such a finding was necessarily predicated on a determination that Airborne's stated reasons for discharging Kelley were pretextual — a finding that may have been affected by the failure to give a business judgment instruction.
Appellee cites Rowlett v. Anheuser-Busch, 832 F.2d 194, 204 (1st Cir. 1987), in support of his claim that the jury's finding of age discrimination demonstrates that it did not base its verdict on its evaluation of Airborne's business judgment. In Rowlett, however, the court did issue a business judgment instruction. The claim on appeal was that the instructions confused the jury and thereby took its attention away from the issue — intentional race discrimination. Under those circumstances, we found that an express finding of purposeful racial discrimination demonstrated that the jury had not been so confused as to rule based on an incorrect standard. The instant case is quite different. The failure to give a business judgment instruction may have altered the jury's evaluation of Airborne's stated reasons for firing Kelley, thereby making a finding of age discrimination more likely. The jury's conclusion that age discrimination was present does not contradict the claim that the jury may have substituted its own business judgment in place of Airborne's.
We find, therefore, that the trial court's failure to give a business judgment instruction was reversible error.
III. Evidentiary Claims
Appellant presents myriad evidentiary claims, which we review in order to give guidance to the district court on remand. We review evidentiary questions for abuse of discretion. See Cohen v. Brown University, 101 F.3d 155, 168 (1st Cir. 1996), cert. denied, 117 S.Ct. 1469 (1997).
Among the evidentiary challenges are attacks upon several rulings that excluded evidence on hearsay grounds. These items included customer complaints received by Simpson, Brazier, and Guiod, as well as district sales manager complaints received by Simpson. Kelley argues that these statements were properly excluded as hearsay. Airborne responds that these statements were admissible because they were offered to show Simpson's state of mind, and not to show the truth of the matter asserted. That is, Airborne argues that the complaints were relevant to demonstrate that Simpson and Guiod were aware of the complaints when they decided to fire Kelley. Although it is conceivable that the evidence was for a purpose other than the truth of the matter, and Airborne's argument is, therefore, plausible, Airborne must show more in order to overcome our deferent standard of review. This, it has failed to do. Airborne has offered no convincing evidence that the ruling went beyond the considerable discretion afforded the district court. Accordingly, we find no abuse of discretion.
Appellee argues that appellant's claims on this evidence were not preserved. We need not resolve the issue, however, because regardless of how we would rule on it, appellant cannot prevail on the merits of its claims.
Appellant next objects to the introduction of certain e-mail reports sent by Guiod to Simpson (the "leading edge reports"). These were ruled inadmissible under Federal Rule of Evidence 403. We again review for abuse of discretion. "Only rarely — and in extraordinarily compelling circumstances — will [this court], from the vista of a cold appellate record, reverse a district court's on-the-spot judgment concerning the relative weighing of probative value and unfair effect." Freeman v. Package Machinery Co., 865 F.2d 1331, 1340 (1st Cir. 1988). The reports contained information regarding service failures on certain accounts in Kelley's region. Concluding that the reports were "too clear an opportunity for Guiod to bury Kelley," Joint App. at 1612, the district court excluded the reports. We have no serious doubt that these reports would have prejudiced Kelley. The reports indicated problems in the region that the jury would likely attribute to Kelley. To the extent that the reports reflected mismanagement by Kelley, they were probative of a non-pretextual reason for his dismissal. There is some doubt, however, as to the accuracy of the reports. Moreover, their relevance is undercut by the lack of certainty as to whether Simpson ever read them prior to the dismissal. The question, therefore, involved balancing the probativeness of these reports against the risk that the jury would conclude that the reports explained Kelley's dismissal and would not adequately consider the possibility of discrimination. Such questions are squarely within the province of the trial court, and we see nothing in the record or the briefs on appeal to indicate that the court abused its discretion.
We reach a similar conclusion regarding the admission of Airborne's Employee Relations Guidelines for Disciplinary Action. Their admission was within the trial court's discretion. Kelley sought the admission of the guidelines in order to demonstrate that Airborne had not followed its own disciplinary procedures. Airborne argues that the guidelines are prejudicial because they suggest a contract to which they must adhere. The failure to follow standard procedures may be relevant to the pretext question and, therefore, we defer to the district court's judgment regarding the relevance and usefulness of admitting the guidelines. Although there may be some validity to Airborne's view, we do not find the admission of the guidelines to rise to the level of abuse of discretion.
Airborne also makes a related claim that it should have been allowed to present testimony regarding the applicability of these guidelines to Kelley. More precisely, Airborne suggests that the guidelines often were not followed, and that it should have been allowed to present testimony to this effect. We disagree. The district court prevented Airborne from introducing evidence regarding the failure to follow the guidelines in cases involving employees who were not similarly situated to Kelley. As Judge Garrity explained, "[t]he only issue is whether [the guidelines] were applicable to [Kelley]. So, if you want to talk about the applicability of the guidelines to regional managers, that's one thing; but when you start talking about employees to whom there's no issue, I think it's time not properly spent." Joint App. at 956-57. As this quote indicates, Airborned was free to introduce evidence as to the use of guidelines in cases involving similarly situated managers. Our review of the record, therefore, reveals no abuse of discretion on the part of the district court.
Airborne next objects to the admission of evidence regarding age-based comments made in the summer of 1992. During a meeting regarding a reduction in force, Goodwin stated that age would be one of the factors considered in selecting employees for termination. Simpson commented that it "was a good time to get rid of some of the older, mediocre managers." Joint App. at 782. Airborne argues that these comments should have been excluded under Federal Rule of Evidence 403 on the grounds that the probative value was outweighed by the prejudicial effect. Airborne argues that the statements were temporally remote, that the statements were not directed toward Kelley, and that Goodwin did not participate in the decision to terminate Kelley.
This court addressed a similar question in Conway v. Electro Switch Corp., 825 F.2d 593 (1st Cir. 1987). In that case, we upheld the admission of sex-based comments in a sex discrimination case, even though the speakers played no role in the decision to termination of the plaintiff and the comments were made long before plaintiff left the company. We concluded that "evidence of a corporate state-of-mind or a discriminatory atmosphere is not rendered irrelevant by its failure to coincide precisely with the particular actors or time frame involved in the specific events that generated a claim of discriminatory treatment." Id. at 597. As in Conway, we are aware that "the relationship between the evidence offered . . . and the alleged discriminatory employment actions might , in some cases, be too attenuated to support a trial judge's finding that such evidence is irrelevant." Id. at 598. The evidence here, however, had a direct bearing on the age discrimination issue and one of the speakers was the person who decided to fire Kelley. Thus, we find no abuse of discretion.
One comment was made eight months prior to the departure of the plaintiff and the other was made ten to twenty-two months before she left.
Airborne also appears to challenge the exclusion of testimony regarding sexist remarks made by Kelley on the grounds that the company was not aware of such remarks at the time Kelley was fired. It is established that "an employer cannot avoid liability in a discrimination case by exploiting a weakness in an employee's credentials or performance that was not known to the employer at the time of the adverse judgment." Perkins v. Brigham Women's Hosp., 78 F.3d 747, 751 (1st Cir. 1996). Airborne also makes the related claim that Kelley's former secretary, Audrey Kivley, should not have been able to testify to the effect that Kelley was a "perfect gentlemen." Although Airborne was not allowed to present evidence regarding certain allegedly sexist behavior, there was evidence that which the jury might have interpreted as signs of a sexist attitude. For example, Simpson testified that Kelley threw an object down the front of a woman's dress during a recruiting trip. It was within the court's discretion to allow Kivley to testify in order to rebut such evidence.
Airborne's final evidentiary claim is that the trial court erred in admitting two e-mails sent by Van Bruwaene to Goodwin, speculating that Kelley's discharge could "end up a messy termination." Joint App. at 2371. Airborne concedes that, although it raised this issue in its motion in limine, it failed to raise a contemporaneous objection. Under these circumstances, we review only for plain error. Freeman v. Package Machinery Co., 865 F.2d 1331, 1336 (1st Cir. 1988). We reverse only if there was error that "resulted in a miscarriage of justice or seriously affected the fairness, integrity or public reputation of the judicial proceedings." Coastal Fuels of Puerto Rico, Inc. v. Caribbean Petroleum Corp., 79 F.3d 182, 189 (1st Cir.) (quotation marks omitted), cert. denied, ___ U.S. ___, 117 S.Ct. 294 (1996). The plain error standard affords reversal "only in exceptional cases or under peculiar circumstances to prevent a clear miscarriage of justice." United States v. Griffin, 818 F.2d 97, 100 (1st Cir. 1987).
Even if there was error here, it does not rise to the level of plain error. The admission of these e-mails is not "so shocking that [it] seriously affect[ed] the fundamental fairness and basic integrity of the proceedings below."
IV. Conclusion
For the reasons stated herein, we reverse the district court verdict and remand to the district court for further proceedings consistent with this opinion.