Bhaya v. Westinghouse Elec. Corp., Civ. A. No. 84-5381.

• Decision Date: 22 March 1989
• Docket Number: Civ. A. No. 84-5381.
• Parties: Lal R. BHAYA, Richard Carner, William J. Haessler, Henry A. Parzick, and Earle Williams v. WESTINGHOUSE ELECTRIC CORPORATION.
• Court: U.S. District Court — Eastern District of Pennsylvania

709 F. Supp. 600

Lal R. BHAYA, Richard Carner, William J. Haessler, Henry A. Parzick, and Earle Williams v. WESTINGHOUSE ELECTRIC CORPORATION.

Civ. A. No. 84-5381.

United States District Court, E.D. Pennsylvania.

March 22, 1989.

Alan B. Epstein, Philadelphia, Pa., for plaintiffs.

Dona S. Kahn, Philadelphia, Pa., for defendant.

OPINION

JOSEPH S. LORD, III, Senior District Judge.

In November 1985, a jury found that defendant's decision to lay off plaintiffs in December 1982 while retaining certain younger employees was the product of willful discrimination based on age, in violation of the Age Discrimination in Employment Act, 29 U.S.C. § 623(a) ("ADEA"). Defendant moved for judgment n.o.v. or a new trial. I granted judgment n.o.v. and did not reach the new trial motion. The Court of Appeals for the Third Circuit reversed, 832 F.2d 258, and now has remanded the case for me to consider the defendant's new trial motion. Bhaya v. Westinghouse, 832 F.2d 258 (3d Cir.1987), cert. denied, ___ U.S. ___, 109 S.Ct. 782, 102 L.Ed.2d 774 (1989).

Defendant claims a new trial is warranted for numerous reasons. I will discuss only those two grounds which are meritorious. One concerns purported hearsay; the other concerns evidence that defendant laid off other employees after plaintiffs. For the reasons which follow, I will grant defendant's motion for a new trial.

I. Standard of Review

A motion for a new trial on the basis of alleged trial error requires two inquiries: whether an error was in fact made; and whether that error was so prejudicial that refusal to grant a new trial would be "inconsistent with substantial justice." Fed.R.Civ.P. 61. With respect to an evidentiary error, the test under the second inquiry is that a new trial must be granted unless "it is highly probable that the erroneous ruling did not affect the objecting party's substantial rights." McQueeney v. Wilmington Trust Co., 779 F.2d 916, 928 (3d Cir.1985); cf. Fed.R.Evid. 103(a).

II. Purported Hearsay

Defendant contends that I erroneously admitted out-of-court statements by an unidentified person. While one of the plaintiffs, Henry Parzick, was being questioned by his attorney, the following exchange took place:

Q: What else occurred on that day ...?

A: One point of interest after the meeting, I did speak to Mr. Kinlin. We just chatted, and he informed me that at a meeting that he attended —

Q: Can you explain who that gentleman is?

. . . . .

A: He was my immediate supervisor.

. . . . .

Q: What did he tell to you?

A: He told —

MS. KAHN defendant's attorney: Objection, Your Honor. If he's going to tell us what was told third-hand to this person, it's hearsay.

. . . . .

THE COURT: Sustained objection on basis that no foundation for hearsay exception had been established.

Q: Can you please tell us what Mr. Kinlin said to you in the context of your employment at Westinghouse on that particular day subsequent to his initial meeting with you?

A: Mr. Kinlin told me that at a meeting that management held at which he was present, a discussion was held regarding our termination.

MS. KAHN: Objection, Your Honor.

THE COURT: No, overruled.

A: Somebody in that meeting brought up the point that they might be violating —

MS. KAHN: Objection.

A: — the labor laws of their contract.

MS. KAHN: Objection, Your Honor. ...

....

THE COURT: I overrule the objection.

Q: Mr. Parzick ... please tell us again what Mr. Kinlin told you.

A: Yes. This meeting, it was an executive meeting, the statement was made —

THE COURT: Wait a minute. You know, with your familiarity with the company — you have been with them how long?

A: Forty years less two months or so.

THE COURT: Do you know what an executive meeting is?

A: Yes. People, all the people attending on management level or above.

THE COURT: Okay, all right.

Q: In keeping with that, sir, can you again tell me exactly what Mr. Kinlin said, to the best of your recollection?

A: A statement was made that maybe we shouldn't be eliminating this group. Maybe we're doing something illegal or against the contract, and Mr. Nick Kulokoski, who was the personnel manager of the division, said, let's give it a try. What do we have to lose?

MS. KAHN: Objection, Your Honor.

THE COURT: Overruled.

A: That's the basis of — that's exactly what I was told.

N.T. Day 1:96-103. (Emphases added)

Defendant renews its objection that Parzick's testimony about what the unidentified person allegedly said (emphasized above) at the reported management meeting was inadmissible. Defendant maintains that Parzick's testimony contained double hearsay which was inadmissible under Fed.R.Evid. 805 because at least one, if not both, of the parts of the combined statements did not conform with any exception to the hearsay rule, Fed.R.Evid. 801(d)(2)(D) in particular.

The first question is whether Kinlin, had he been the witness rather than Parzick, could have testified about what the unidentified person allegedly said. Defendant contends that this case is indistinguishable from Carden v. Westinghouse, 850 F.2d 996 (3d Cir.1988). In Carden, another employment discrimination case, the district court permitted the plaintiff to testify, in an effort to show why he had been dismissed, that his immediate supervisor had told him "they wanted a younger person for the job." The district court concluded that the statement was an admission under Fed.R.Evid. 801(d)(2)(D). The Third Circuit held that to be reversible error, because plaintiff had not established who the unidentified "they" were who had told the supervisor they wanted a younger employee. Without knowing who "they" were, it could not be established that "they" were speaking about a matter within the scope of their employment. Id. at 1002.

The declaration at issue in Carden must be distinguished because the declaration here, "maybe we shouldn't be eliminating this group. Maybe we're doing something illegal or against the contract" was not, at least on its face, offered for the truth of the matter asserted: that the layoffs were illegal.¹ Rather, the unidentified person's declaration was offered to set the stage for Kulokoski's reported response "let's give it a try. What have we got to lose." Kulokoski's response, to which defendant has not objected, was offered to show defendant's corporate state of mind: that management recklessly disregarded the possibility that the layoffs violated ADEA. Of course, without the unidentified person's statement, Kulokoski's response would be meaningless. In short, the declaration here was what has been termed an utterance offered to show its effect on the hearer, and such utterances are not hearsay no matter who makes them. J. Weinstein and M. Berger, Weinstein's Evidence, ¶ 801(c); E. Cleary, Ed. McCormick on Evidence, § 249.

As McCormick notes, however, utterances such as this one often have a hearsay aspect. Here, the jury might have jumped to the conclusion that because the unidentified person suggested the layoffs might be illegal, they were illegal. Unfortunately, I did not instruct the jury to confine their consideration of the declaration within proper boundaries.

The unidentified person's declaration created another, even more serious problem. While the declarant suggested the layoffs might be "illegal," he never said what law he thought they might violate. In particular, he never mentioned age discrimination or ADEA. The jury could only speculate about whether the declarant and Kulokoski and whoever else attended the management meeting were conscious of the possibility that the layoffs violated ADEA. Defendant's managers might just as well have been concerned that by laying off plaintiffs, defendant would violate its collective bargaining agreement, and associated laws — "the labor laws of their contract" — rather than ADEA. The legality of the layoffs under the collective bargaining agreement or, for example, the National Labor Relations Act, was immaterial to plaintiffs' case. Likewise, Kulokoski's reported response gave no clue of what sort of illegality he was prepared to risk.

The unknown person's declaration, therefore, probably was irrelevant. If it was relevant, it was less probative than it was misleading and unfairly prejudicial. The jury probably was left with the impression that defendant's managers were a lawless bunch. That may have been true, but since there was no evidence that the managers were heedless of their duties under ADEA, their lawlessness was irrelevant.² I am convinced that the unidentified person's declaration should have been excluded under Fed.R.Evid. 403, if not Fed.R. Evid. 402. In the alternative, if it were admissible, it should have been accompanied by a cautionary instruction. It is quite possible that unknown declarant's statement affected defendant's substantial rights. Therefore, a new trial must be granted.

Defendant also contends that the unidentified person's statement should have been excluded because Kinlin, when recounting the discussion to Parzick, was not speaking of a matter within the scope of his (Kinlin's) employment. See Fed.R. Evid. 801(d)(2)(D). For the sake of completeness, I will explain why this aspect of defendant's objection is without merit. Parzick testified, before the disputed testimony was admitted, that Kinlin was plaintiffs' immediate supervisor. Kinlin's supervisory status carries with it the inference that it was within the scope of Kinlin's duties to talk to Parzick about the circumstances surrounding plaintiffs' layoff. Precisely the same foundation existed in Carden. 850 F.2d at 1001. The district court held that foundation to be adequate to satisfy Fed.R.Evid. 801(d)(2)(D), and the Court of Appeals for the Third Circuit said nothing later which suggests that the district court's holding was incorrect in that respect. (The appellate court found the other part of the double hearsay statement infirm.) Id.

Parzick also testified that Kinlin attended a meeting during which Parzick and two...