Schrand v. Federal Pacific Elec. Co.

• Decision Date: 05 July 1988
• Docket Number: 87-3005,Nos. 86-4158,s. 86-4158
• Parties: 47 Fair Empl.Prac.Cas. 273, 47 Empl. Prac. Dec. P 38,114, 25 Fed. R. Evid. Serv. 1366 Carl SCHRAND, Plaintiff-Appellee, Cross-Appellant, v. FEDERAL PACIFIC ELECTRIC COMPANY, Reliance Electric Company, Defendants-Appellants, Cross-Appellees.
• Court: U.S. Court of Appeals — Sixth Circuit

Page 152

851 F.2d 152

47 Fair Empl.Prac.Cas. 273,

47 Empl. Prac. Dec. P 38,114,

25 Fed. R. Evid. Serv. 1366

Carl SCHRAND, Plaintiff-Appellee, Cross-Appellant, v. FEDERAL PACIFIC ELECTRIC COMPANY, Reliance Electric Company Defendants-Appellants, Cross-Appellees.

Nos. 86-4158, 87-3005.

United States Court of Appeals, Sixth Circuit.

Argued Feb. 1, 1988.

Decided July 5, 1988.

Stephen C. Fitch (argued), Guy R. Humphrey, Szolosi & Fitch, Columbus, Ohio, for defendants-appellants, cross-appellees.

Bonnie K. Beaman (argued), Parks, Little & Beaman, Brooks C. Parks, Dayton, Ohio, for plaintiff-appellee, cross-appellant.

Before LIVELY, JONES and MILBURN, Circuit Judges.

LIVELY, Circuit Judge.

This is an appeal from a judgment awarding damages to a former employee of the defendant Federal Pacific Electric Company under the Age Discrimination in Employment Act (ADEA), 29 U.S.C. Sec. 621 et seq. ¹ After approximately 17 years as an employee of Federal Pacific, the plaintiff, Carl Schrand, was terminated in 1983 at age 62. A jury awarded Schrand $41,326 and found that Federal Pacific acted willfully in terminating him. On this basis the district court awarded "liquidated damages," as provided by the Act, doubling the award to $82,652. The district court denied Schrand's request for reinstatement and "front pay," and took under advisement his motion for attorney fees. Both sides have appealed.

Federal Pacific has raised three issues on appeal and Schrand has raised one in his cross-appeal. However, we have determined that the district court committed reversible error in admitting testimony of two former Federal Pacific employees regarding the circumstances of their termination. Accordingly, we will deal with other issues raised by the parties only to the extent required to give guidance for a new trial.

I.

Schrand was employed by Federal Pacific in 1966 as a field sales engineer. Although he was named Branch Manager of the Dayton, Ohio office in 1968, he assumed no additional duties. His job was to call on electrical distributors, consulting engineers, electrical contractors and others for the purpose of selling Federal Pacific products to customers and prospects or having them designate these products for their construction projects. The Dayton office never had more than three sales engineers, and during most of his time there Schrand and a secretary were the only employees in the office. In June 1983 Schrand and the secretary began sharing space with the local office of Reliance Electric.

In September 1983 William Pierce, the Southern Division Manager of Federal Pacific, advised Schrand that the company had decided to close the Dayton office and cover the Dayton accounts out of the Cincinnati office. Shortly thereafter, Pierce notified Schrand that he would be permanently terminated on October 31, 1983. A twenty-six year old sales engineer in the Cincinnati office was directed to cover the Dayton accounts. This individual began dividing his time between the Cincinnati and Dayton offices, but in January 1984 he began working out of the Dayton office full time. However, in August 1984 Federal Pacific terminated both the replacement sales engineer and the secretary, and closed the Dayton office permanently.

Pierce testified that he was directed in mid-1983 to reduce sales expenses in his division and that he and Robert McCormick, the Ohio Valley Regional Manager, decided that the Dayton office should be closed. Both Pierce and McCormick testified that Schrand's age played no part in this decision. There was also testimony that Federal Pacific suffered a serious loss of business after experiencing problems with a major product in 1979. After earning $43,000,000 before taxes in 1978, and $16,000,000 in 1979, Federal Pacific lost money every year between 1980 and 1986. Between 1979 and the end of 1984 the number of Federal Pacific employees in the United States declined by approximately one-third.

II.

Federal Pacific filed a motion for judgment notwithstanding the verdict (JNOV) on the issues of liability and willfulness. We first address the motion as it pertains to the issue of liability under the Act and will deal with the issue of liquidated damages for willful violation of the Act in Part IV below.

The district court held that the defendants were not entitled to judgment as a matter of law and denied the motion for a JNOV. The court noted that Federal Pacific maintained that Schrand was terminated solely for economic reasons and that age was not a factor. The court concluded, however, that there was sufficient evidence for reasonable minds to conclude that Federal Pacific's actions were motivated by age discrimination. The court noted evidence that Schrand was the oldest salesman in the division, that in the later years he was consistently the second most successful salesman in the region, that the Dayton office did not close when the plaintiff was terminated, and that the vice-president for sales kept a profile on the retirement base of the company and a chart of the age of its sales employees.

In reviewing a district court's denial of a motion for JNOV, we must view the evidence in the light most favorable to the party opposing the motion, and draw from the evidence all reasonable inferences in that party's favor. Chappell v. GTE Products Corp., 803 F.2d 261, 265 (6th Cir.1986), cert. denied, --- U.S. ----, 107 S.Ct. 1375, 94 L.Ed.2d 690 (1987), and cases cited therein. Thus, we do not "weigh the evidence pass on the credibility of witnesses, or substitute [our] judgment for that of the jury." Id. Applying this standard of review, we find that the district court properly denied Federal Pacific's motion. The evidence of a violation was not overwhelming, and Federal Pacific articulated a non-discriminatory reason for Schrand's termination. Nevertheless, there was admissible evidence from which an inference could reasonably be drawn that age was "a factor" in the decision to discharge Schrand. Id. at 266 (Plaintiff has "only to show that age was 'a,' and not 'the,' determining factor in the employer's personnel decision.").

III.

A.

At a pretrial conference Federal Pacific's counsel advised the district court that he objected to the proposed introduction of testimony by two former sales employees of Federal Pacific, from other divisions and regions, concerning the circumstances surrounding their terminations. After denying Federal Pacific's motion in limine the district court permitted Robert Owens and Thomas Dolan to testify. Federal Pacific renewed its objections when these witnesses were called at trial, and made a motion for a mistrial after their testimony was received. Both Owens and Dolan testified that when they were terminated they were told that it was in part because they were too old.

Robert Owens was a field sales engineer, the same position that Schrand held, from 1967 to 1982, when he was terminated at age 59. Owens worked in Federal Pacific's Albuquerque, New Mexico sales office from 1977 to 1982. He testified that the regional manager who notified him that he was terminated said that "because of lack of progress they were going to close the Albuquerque office." That office was closed about a year after he was fired, and after his termination the office's accounts were handled by a younger employee. Owens testified that when he requested an opportunity to transfer, the regional manager said that he could not do so because "there was none available and I was too old."

Thomas Dolan worked in Federal Pacific's Newark, New Jersey office as vice-president for industrial relations. He testified that the company had personnel policies that he helped establish. Under one policy marginal and poor performers were terminated first when a reduction was necessary. After these employees were eliminated the policy directed that further terminations be based on seniority with the more senior employees being retained. Dolan was terminated in 1983 at age 54. He testified that his direct supervisor, the general manager, and "the top operating officer at Federal Pacific," advised him of his termination. Dolan stated that when he asked why a scheduled relocation had been rescinded he was told, "It costs too much money, your wife works, and you're too old."

Federal Pacific cross-examined Dolan and called as witnesses the officials who notified Owens and Dolan of their terminations. Both testified that the terminations were made as part of a reduction in force brought about by adverse business conditions, and both denied telling the employees that age was a factor and denied that age was in fact a consideration.

B.

Federal Pacific objected on several grounds to the testimony by Owens and Dolan that they were told they were terminated because they were too old: (1) that it was inadmissible hearsay; (2) that it was irrelevant; and (3) that the danger of unfair prejudice far outweighed any probative value the evidence might have. The district court did not rule on the hearsay objection, but found the testimony "highly relevant." We disagree.

Relevant evidence is defined in Fed.R.Evid. 401 as "evidence having any tendency to make the existence of any fact that is of consequence to the determination of the action more probable or less probable than it would be without the evidence." Rule 402 provides that evidence which is not relevant is inadmissible. Rule 403 provides that evidence, although relevant, "may be excluded if its probative value is substantially outweighed by the danger of unfair prejudice, confusion of the issues, or misleading the jury...."

In Chappell v. GTE Products Corp. this court upheld the district court's exclusion of statements by an employer's agents which purportedly showed an age bias in the company's personnel practices. We found the comments "too abstract, in addition to being irrelevant and prejudicial, to support a finding of age discrimination," citing Haskell v. Kaman...