Petition for Writ of Certiorari — Westinghouse Electric Corp. v. Ryder

No.

“97 1070 DEC 29 1997

OFFICE OF THE CLERK

IN THE

SUPREME COURT OF THE UNITED STATES

October Term, 1997

WESTINGHOUSE ELECTRIC CORPORATION,

Petitioner,

JOHN M. RYDER,

Respondent.

PETITION FOR A WRIT OF C™RTIORARI TO THE

UNITED STATES COURT OF APPEALS FOR THE

THIRD CIRCUIT

PETITION FOR WRIT OF CERTIORARI

Henry W. Ewalt

Vice President and Associate

General Counsel Litigation

Westinghouse Electric Corp.

Gateway Center

11 Stanwix Street

Pittsburgh, PA 15222

(412) 642-4025

Glen D. Nager

Jones, Day, Reevis, & Poge

1450 G Street, N.W.

Washington, DC 20005

(202) 879-3939

Jerome J. Shestack

(Counsel of Record)

Joseph C. Crawford

Jonathan D. Wetchler

Elizabeth J. Vrato

Linda B. Hollinshead

Wolf, Block, Schorr

and Solis-Cohen LLP

Twelfth Floor Packard Building

15th and Chestnut Streets

Philadelphia, PA 19102-2678

(215) 977-2000

Cuunsel for Petitioner

PACKARD PRESS® / APPELLATE DIVISION, 1617 JFK BOULEVARD, PHILA, PA. 19103 (215) 563-9000

————

QUESTIONS PRESENTED

Predicate To Question 1

Plaintiff’s job was eliminated in April 1993, and he

brought this action alleging age discrimination. At trial, plain-

tiff sought to introduce a memorandum containing a para-

phrased summary of a meeting held more than a year after

plaintiff's job was eliminated. That meeting was attended by

unidentified managers from various divisions and functions

located in different areas of the country and by the new CEO

of Westinghouse, who was hired months after plaintiff's job

was eliminated. The memorandum was drafted about two

months after the meeting and contained statements plaintiff

argued could be interpreted as displaying an age discrimina-

tory corporate culture. However, the memorandum makes no

direct or indirect reference to plaintiff, plaintiff's job or loca-

tion, the person who decided to eliminate plaintiff’s job, the

decision to lay off plaintiff or of any other nexus to the plain-

tiff. Defendant objected to the admission of the memorandum

on FR.E. 401 and 403 grounds, but the trial court admitted it.

The record shows no evidence that the district court per-

formed the required balancing under F.R.E. 403 between any

relevance the memorandum might have and the prejudicial

impact it would have upon Westinghouse. Plaintiff then used

it in cross examination and argued at length to the jury that

the memorandum displayed the ageist “tone” and “atmo-

sphere” in which the decision to eliminate the job was made

and that the asserted discriminatory comments “infiltrate[d]”

the thought process of the decision maker. The court of

appeals affirmed the admissibility of the memorandum.

QUESTION 1

Did the court of appeals err as a matter of law in holding

that a memorandum containing prejudicial remarks purport-

ing to show discriminatory managerial attitudes was admis-

sible without requiring any nexus linking the remarks to the

plaintiff or the elimination of his position?

i

Predicate to Question 2

Jury instructions in an age discrimination case require

specific explanation as to where the burden lies, when it shifts,

and the distinctions between a pretextual reason for the

alleged discrimination and proof of actual discrimination.

In stating the law to the jury, the lower court erroneously

instructed that disbelief of the employer's stated reasons for

the challenged employment decision (pretext) is by definition

unlawful discrimination. The trial court never corrected that

instruction to reflect accurately the law that the jury could dis-

believe the reasons given by the employer without finding age

discrimination and in favor of the plaintiff. Later in the

instructions, the trial court did instruct the jury correctly that

the burden was on the plaintiff to prove age discrimination.

Having given the conficting instructions, the trial judge

gave no curative instruction and left it to the jury to determine

which instruction of law was correct. The court of appeals held

the instruction on the law of pretext to be erroneous and did

not consider it to be harmless error, but concluded that the

jury charge “as a whole” was correct and therefore was not

erroneous.

QUESTION 2

Where the trial judge erroneously instructs a jury on a

key element of the law and then later instructs the jury cor-

rectly, but does not issue a curative instruction or identify

which statement of the law was correct, is remand required as

the majority of circuits hold?

ne

LIST OF PARTIES

Plaintiff Jchn M. Ryder was an adult citizen of the

Commonwealth of Pennsylvania. At the time of trial, defen-

dant Westinghouse Electric Corporation was a company with

its principal place of business in Pittsburgh, Pennsylvania. It

has since changed its name to CBS Corporation, a Pennsylva-

nia corporation, with its principal place Of business in New

York, New York.

ill

TABLE OF CONTENTS

Page

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PEPER Re MEU EE oo vse iccdenawececctaussbaus 2

“YR Sy ig ee yo FS. aa ae 2

REASONS FOR GRANTING THE WRIT............ 9

I. The circuits’ conflicting decisions on admis-

sibility of “stray remarks” purporting to show

discriminatory attitudes or corporate culture,

which lack any nexus to the employment action

but have unfair prejudicial impact, requires

OI KS ik 05s Re eae 9

II. All circuit courts should be mandated to

remand — as a majority of circuits do — where

conflicting jury instructions on the same key

legal point make it impossible to determine if

the jury based its verdict on the correct or erro-

ey SUE ho ek ck risen es Ceo eueks 16

see | RN ey ee re re 21

/

:

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;

4

TABLE OF AUTHORITIES

Cases: Page

Blossom v. CSX Transport, Inc., 13 F.3d 1477 (11th Cir.

SOEs sk bxcnasebeee Uranciermcieeel eee 18

Brewer v. Quaker State Oil Ref. Corp., 72 F.3d 326 (3d

Gl. CUE 64 oak cs ees bs en eee 11

Conway v. Electro Switch Corp., 825 F.2d 593 (1st Cir.

DU ck kis akc eee dee ee 10

Cooley v. Carmike Cinemas, Inc., 25 F.3d 1325 (6th Cir.

ROOD a vce cacevsbh eens eine eee eee 11

Daubert v. Merrel Dow Pharms., Inc., 509 U.S. 579

CRUE 64ds sb avkiws Oh ltaneske ee 13

Ezold v. Wolf, Block, Schorr and Solis-Cohen, 983 F.2d

ae Cae Re ES fh Cente ineek ee eer ee 12

Fortino v. Quasar Co., 950 F.2d 389 (7th Cir. 1991)..... 9,11

Francis v. Franklin, 471 U.S. 307 (1985) .......... 17, 18, 20

General Elec. Co., et al. v. Joiner, USS. , 1997

U.S. LEXIS 7503 (December 15, 1997) ............ 13

Houston v. Herring, 562 F.2d 347 (Sth Cir. 1977) ........ 18

Jamesbury Corp. v. Litton Indus. Prod., 756 F.2d 1556

Ps WA ND Gs 4 cs ow es eed eee 18

McDonnell Douglas Corp. v. Green, 411 U.S. 792

PRE & on bas eee eek oe eee 12

McLaurin v. Fischer, 768 F.2d 98 (6th Cir. 1985) ...... 10, 11

Mercer v. Theriot, 377 U.S. 152 (1964) ................. 20

Moreau v. Pennsylvania R.R. Co., 166 F.2d 543 (3rd Cir.

| RE ED St apd h ee Cath ARR eB Ie Fata As 17

O’Connor v. Consol. Coin Caterers Corp., 56 F.3d 542

(4th Cir. 1995), rev’d on other grounds,

A? Sh BO ECs ong ee aan acaweus peek eae. 10

TABLE OF AUTHORITIES — (Continued)

Cases: Page

O-So Detroit, Inc. v. Home Ins. Co., 973 F.2d 498 (6th Cir.

SOE 5 64.0:5 456 So aae ws wa NE Ree ee eee 17

Parker v. Randolph, 442 U.S. 62 (1979) ................ 16

Ryder v. Westinghouse Elec. Corp., 128 F.3d 128 (3d Cir.

BOOTS 5 ob ve che skid seelaken ee eteee ere 6, 7,17

Seitzer v. Chesley, 512 F.2d 1030 (9th Cir. 1975) ......... 19

Sessoms v. Union Sav. & Trust Co., 338 F.2d 752 (6th Cir.

DOOD 6 cissiienevuhs cutaneweie sete eee es 17

Smalley v. Duluth, W. & Pac. Ry., 940 F.2d 296 (8th Cir.

SOOED ces cccueéecnesanndesk nanan eee 18

Spartanburg County Sch. Dist. v. Nat’l Gypsum Co., 805

Eats Ga Ol Ga, RG 6c overs Uacweuskehad eves 18

Thornley v. Penton Publ’g, Inc., 104 F.3d 26 (2d Cir.

SGT) odccescecdeaensses ntee cepa eee taer es 18

Touchet v. Halliburton Co., 1996 U.S. App. LEXIS 3353

ti fo B.S ee re eer. ere 10

Wilde v. Florida Pneumatic Mfg. Corp., 941 F. Supp. 1203

(FP. FOR SOU 6 5066s eenneenecun dheee eee 12

vi

“mci iain

TABLE OF AUTHORITIES — (Continued)

Statutes: Page

I so tec uliss ic bieais b wie whee ine ay eee Ree 2

PR ike cWicckacu eX canes sasaenesss 2

og TP ree eee er ee err ee ee Pr 2

ee SES eT TEP reT er EE errr rere passim

PE crs Ci ani nae hens oaade seed 46-083 passim

oe ge Pe ree ee eae oa rere 15

Miscellaneous:

22 Charles A. Wright & Kenneth W. Graham, Jr., Federal

Practice and Procedure § 5239 at 436 (2d ed. 1997)... 15

Vii

ee ae

IN THE

; SUPREME COURT OF THE UNITED STATES

October Term, 1997

WESTINGHOUSE ELECTRIC CORPORATION,

Petitioner,

v.

JOHN M. RYDER,

Respondent.

PETITION FOR A WRIT OF CERTIORARI TO THE

UNITED STATES COURT OF APPEALS FOR THE

THIRD CIRCUIT

The petitioner Westinghouse Electric Corporation (here-

inafter “Westinghouse”) respectfully prays that a writ of cer-

tiorari issue to review the judgment and opinion of the United

States Court of Appeals for the Third Circuit entered in the

above-entitled proceeding.

OPINION BELOW

The opinion of the United States Court of Appeals for

the Third Circuit filed on September 30, 1997 is reported at

128 F.3d 128 and is included as Petitioner's Appendix A at

page A-l.

2

JURISDICTION

The judgment of the Third Circuit Court of Appeals was

filed on September 30, 1997. This Petition for Certiorari is

sought within 90 days of this judgment and is timely pursuant

to 28 U.S.C. §§ 1257 and 2101(c) and Rule 10(1)(c) of the

Rules of Court for the Supreme Court.

STATUTES INVOLVED

29 U.S.C. § 623(a):

It shall be unlawful for an employer:

(1) to fail or refuse to hire or to discharge any individual

or otherwise discriminate against any individual with respect

to his compensation, terms, conditions, or privileges of

employment, because of such individual’ age...

F.R.E. 401:

“Relevant Evidence” means evidence having any ten-

dency to make the existence of any fact that is of consequence

to the determination of the action more or less probable than

it would be without the evidence.

F.R.E. 403:

Although relevant, evidence may be excluded if probative

value is substantially outweighed by the danger of unfair

prejudice, confusion of the issues, or misleading the jury, or by

considerations of undue delay, waste of time, or needless pre-

sentation of cumulative evidence.

STATEMENT OF THE CASE

A. The Elimination of Ryder’s Position

Plaintiff, John M. Ryder, (“Ryder” 52 years old, R. 60)!

became a staff assistant in Defendant's Pittsburgh offices in

1983. Lucio Facchini (“Facchini” 53 years old, R. 742) became

controller for Westinghouse’s Power Systems Group in 1990

and “inherited” Ryder. (R. 358, 743).

Facchini’s practice was to rotate his staff assistants; he had

five assistants in the eight years prior to “inheriting” Ryder.

1. References to the record are noted as “(R_____).”

3

(R. 753). Facchini was dissatisfied with Ryder’s performance;?

he informed Ryder; and unsuccessfully searched for a position

for Ryder in other Westinghouse organizations. (R. 752).

On April 6, 1993, Facchini elected to eliminate Ryder’s

job rather than laying him off or discharging him for cause

because the job elimination made Ryder eligible for substan-

tial financial separation benefits, which are unavailable to

those laid off or discharged. (R, 793-95).2 To ease Ryder’s

transition, it was agreed that he could work from the April 6

notification date until August 31, 1993. (R. 32).

As part of the restructuring process following the elimina-

tion of his position, some of Ryder’s duties were assigned to

Patricia Newingham, another staff assistant, who at the time

was thirty-seven years old. (R. 14-15). While she performed a

limited portion of Ryder’s former duties, most of her respon-

sibilities had not been performed by Ryder.* (R. 498, 500-02,

504, 798-99).

Ryder’s legal theory of discrimination was that the elimi-

nation of his job and Facchini’s dissatisfaction with his perfor-

mance were pretexts for age discrimination. Ryder’s argument

as to pretext was based upon a document referred to as the

“Chairman’s Initiative Memorandum” (“Memorandum’”’).5

B. The Memorandum

The Memorandum is a paraphrased summary written

about two months after one of a series of meetings for man-

agers that were held in mid-to-late 1994, more than a year

2. For example, Ryder would not write or prepare any written charts,

had poor interpersonal skills and failed to complete assigned tasks while

working only the minimum hours required. (R. 762). Ryder did not receive

a merit increase in the three years he worked for Facchini. (R. 766-67).

3. The parties stipulated that under the separation program, Ryder

received at the time of his termination a lump sum payment of his vested

pension amounting to $172,000, plus $391,027 in deferred compensation that

he would not have otherwise received unless he would have worked to age

sixty-five. (R. 1181-182).

4. Three months after Ryder left Westinghouse, the entire Power Sys-

tems Group was eliminated from the Company. (R. 741, 801).

5. The text of the Memorandum is included as Petitioner's Appendix B

at page A-19.

4

after Ryder’s position was eliminated (R. 447), to enable West-

inghouse'’s president and new CEO to listen to views of man-

agers from various operations throughout the country about

the future of the Company. (R. 637-640). Although there were

many attendees at the meeting, the Memorandum identifies

only two: Michael Jordan (“Jordan”) and Gary Clark

(“Clark”), respectively, the new Chief Executive Officer and

the President of Westinghouse. Jordan was hired in July of

1993. (R. 634). He was not employed by Westinghouse when

Ryder’s position was eliminated.

All of the other participants in the meeting were uniden-

tified managers from different Westinghouse-owned subsidiar-

ies and companies at various locations throughout the country.

(R. 639). There was no evidence showing that Facchini (or

Facchini$ supervisor) attended the meeting described in the

Memorandum. The meeting did not occur and comments in

the Memorandum were not made until over one year after

Ryder’s position was eliminated. (R. 485-488, 447).

The Memorandum is a fifteen page single-spaced docu-

ment summarizing a broad-ranging discussion covering numer-

ous strategic, technical and business aspects of Westinghouse'’s

future. Anonymous participants commented upon issues such

as products being essentially U.S. oriented (R. 46), the true

power of the Company name (R. 47), being dominated by

technical people not marketing people (R. 50), the need for a

Strategic vision (R. 52), training (R. 55), performance evalua-

tions (R. 54) and the desirability of different incentives as the

Company moved to a flatter organization (R. 57).

This Memorandum — written two months after the meet-

ing and over a year after Ryder’s job was eliminated — was

admitted into evidence over Westinghouse’s strenuous

objection — even though there was no nexus between the

statements in the Memorandum to Ryder, or the decision to

eliminate Ryder’s position, or the person who made the deci-

sion, or the time when Ryder’s position was eliminated, or the

place where Ryder worked, or the department in which Ryder

worked, or the “atmosphere” in which the decision was made.

The district court admitted the Memorandum into evi-

dence over Westinghouse’s objections under Rule 401 and

>

Rule 403. The district court did not balance on the record

whether any probative value of the Memorandum was out-

weighed by its potential for unfair prejudice, confusing the

issues or misleading the jury.

Once the Memorandum was admitted during the trial,

Ryder’s counsel conducted emotionally targeted witness

examinations and made arguments that sought to create a con-

nection for the jury between the Memorandum and the deci-

sion to eliminate Ryder's position and to Facchini when no

connection existed. During cross-examination, Ryder’s counsel

asked Clark about one of the anonymous statements in the

Memorandum. Counsel then argued in his closing that Clark

conceded that the anonymous statement was ageist and that it

proved Ryder was discriminated against. (R. 1288). The record

was totally devoid of any connection whatsoever between this

anonymous allegedly ageist statement and either Ryder or the

corporate culture of the workplace in which he was employed.

Yet, Ryder’s counsel represented to the jury during his closing

argument:

That man sat there as president of Westinghouse

Corporation and said oh, yes, Mr. Ogg, this is a dis-

crimination statement. That's exactly what it is...

And that is the tone and that’s the atmosphere in

which the Newingham-Ryder decision was made,

folks, right here.

Ryder’s counsel also made this representation to the jury

during his closing:

You hear this stuff long enough and people are talk-

ing about it, it is going to infiltrate your thought

process, and that is what happened to Lou

Facchini.

(R. 1278-1279, 1285-286) (emphasis added).

Plaintiff's counsel did this although it was undisputed that

the Memorandum did not even exist until over one year after

Facchini made the decision to eliminate Ryder’s position, and

there was no evidence linking any of the participants whose

statements were summarized in the Memorandum to the loca-

tion or part of the Company where Ryder was employed.

6

The jury returned a verdict in Ryder’s favor on May 15,

1996, finding that Westinghouse discriminated against Ryder

on the basis of age and awarding him back pay of $241,909.00.

(R. 1333). The jury did not award Ryder front pay or liqui-

dated damages. (R. 1334).

C. The Third Circuit Ruling

The court of appeals panel acknowledged the lack of any

nexus between the remarks and the termination of Ryder, in

that: (a) none of the stray remarks in the Memorandum

related directly to Facchini’s decision to eliminate Ryder’s

position; (b) the remarks were made approximately one year

after that decision; (c) the remarks were by persons not

involved in the decision to terminate Ryder; and (d) Jordan,

the CEO, was not even employed by Westinghouse when

Ryder was terminated. Ryder v. Westinghouse Elec. Corp., 128

F.3d 128, 133 (3d Cir. 1997). In spite of these findings, the

court of appeals panel held that the Memorandum was prop-

erly admitted. Ryder, 128 F.3d at 134.

The Third Circuit collated five carefully selected excerpts

from the 15-page Memorandum, constituting views aired by

anonymous participants and the generalized responses of Jor-

dan in the course of this listening session. Jd. Significantly, no

statement attributed to Jordan or the anonymous participants

describes Westinghouse taking action against older workers

prior to the meeting. (If anything, they reflect Westinghouse’s

not taking any such action).

The court of appeals held the Memorandum was admis-

sible because: (1) the comments were made by the CEO or a

manager with authority to make personnel decisions — (even

though the CEO and managers neither made nor knew about

the decision at issue in the trial); (2) the comments were made

in reflection on past managerial viewpoints with an eye

towards future change; and (3) if the jury believed the com-

ments reflected managerial attitudes that were in existence

when Ryder’s job was eliminated in April 1993, the Memoran-

dum would make the existence of a discriminatory motive

more likely. Jd. at 133.

7

The Third Circuit concluded that the Memorandum

would not have unduly prejudiced Westinghouse because the

jury could not be confused into concluding that the statements

were made before the decision was made to eliminate Ryder’s

position. /d. at 134. In spite of the lack of any evidence of bal-

ancing in the trial record, the court of appeals held that the

trial court did not act arbitrarily in concluding that the rel-

evancy of the Memorandum outweighed any unfair prejudice

to Westinghouse. Jd. at 133.

D. The Jury Instructions

The district court gave conflicting instructions as to the

law of age discrimination. It erroneously instructed the jury

that disbelief of Westinghouse’s reason for eliminating Ryder’s

position is what is meant by a “pretext” for illegal discrimina-

tion and that a finding of pretext required a verdict against

Westinghouse. Jd. at 137. The trial court also instructed the

jury correctly that the burden was on Ryder to prove age dis-

crimination.

There is no dispute as to which key portions of the charge

were correct and which were incorrect. The portion in bold

face in sentence [1] is incorrect. The portion in bold face in

sentence [2] is misleading when read with sentence [1].

The pertinent portions of the charge are as follows:

.. . If you find that Westinghouse articulated legiti-

mate, nondiscriminatory reasons for eliminating

plaintiffs [sic] job, then you must determine whether

the plaintiff, John Ryder, has proven by a prepon-

derance of evidence that the reason or explanation

given by the defendant was not the real or true rea-

son behind Westinghouse’s action in terminating Mr.

Ryder’s employment.

[1] In this area of the law, an explanation offered

by an employer for its treatment of an employee

that is not its real reason for such treatment is

referred to as a pretext for illegal discrimination. [2]

If you find that Mr. Ryder has proven by a prepon-

derance of the evidence that the defendant, West-

8

inghouse Electric Corporation, used the elimination

of plaintiff's job as an excuse or pretext for discrimi-

nating against him on the basis of his age, then your

verdict will be for Mr. Ryder, the plaintiff.

On the other hand, if you find that the explana-

tion offered by Westinghouse Electric Corporation

... were [sic] legitimate reasons for plaintiff's termi-

nation, and that plaintiff has not proven by a pre-

ponderance of evidence that age was a determining

factor in the termination of his employment, then

your verdict will be for the defendant, Westinghouse

Electric Corporation.

In making the determination, you should be

aware of the following: The burden of proving dis-

crimination always remains with the plaintiff, John

Ryder, to prove that he was a victim of age discrimi-

nation. .. . Your job is to determine whether West-

inghouse discriminated against Mr. Ryder on the

basis of his age.

(R. 1235-1236) (numbers and emphasis added).

The trial court, after giving these inconsistent statements

of the law, gave no curative instruction. It is not possible to

determine whether one or more jurors based their verdict

upon the erroneous definition of pretext or the more general

instruction given later that Ryder was required to prove that

his age was a determining factor in his termination.

The court of appeals panel agreed that the district court's

instruction that a finding of pretext meant Westinghouse ille-

gaily discriminated was erroneous. Jd. However, the court held

that the error was “offset” by the correct instructions and that

“as a whole,” the instructions provided the jury with adequate

guidance and hence, there was no plain error.® Jd. The Third

Circuit made no reference to and apparently did not consider

the district court’s failure to give a curative instruction.

6. The Third Circuit held that Westinghouse did not present its objec-

tion to the jury instruction described above and therefore evaluated the

instruction under a plain error standard. Jd. at 136.

9

REASONS FOR GRANTING THE WRIT

I.

The Circuits’ Conflicting Decisions on Admissibility of “Stray

Remarks” Purporting to Show Discriminatory Attitudes or

Corporate Culture, Which Lack Any Nexus to the Employ-

ment Action But Have Unfair Prejudicial Impact, Requires

Resolution.

Despite the plethora of employment discrimination cases.

and despite the inevitable assertion by plaintiffs’ counsel in

such cases that various stray remarks in the workplace demon-

strate discriminatory managerial attitude or corporate culture.

there is no uniform standard for evaluating admissibility

among the circuits and little consistency within individual cir-

cuits.

Currently, there is a distinct conflict between the Third

Circuit and the First, Fourth, Sixth, Seventh and Tenth Cir-

cuits on the legal question of whether stray remarks of an

arguably discriminatory nature by corporate officials are

admissible in an age discrimination case when there is no evi-

dentiary foundation or nexus linking the comments or atti-

tudes to the specific employment decision involved in the case.

The First, Fourth, Sixth, Seventh and Tenth Circuits have

held that stray comments are not admissible in the absence of

an evidentiary link or nexus to the specific employment deci-

sion involved in the case.

The requirement of a nexus between the comments to be

admitted and the employment decision at issue is highlighted

by Judge Posner’s well-reasoned opinion in Fortino v. Quasar

Co., 950 F.2d 389 (7th Cir. 1991). In Fortino, the trial judge

admitted a videotaped speech of Omoto, the marketing man-

ager of Quasar’s Television Group. In his speech, Omoto

stated: “because of a change in our TV Group organization at

Headquarters, our average age of employees has become a lot

younger [and] . . . that means we will be ready to spend many

hours, day and night, to help you out in your work.” Fortino,

950 F.2d at 395. Since the plaintiffs were not in the Television

Group and Omoto played no role in their discharge, Judge

Posner reasoned that his comment about age “had no proba-

10

tive value and, being prejudicial, was inadmissible.” Jd. Judge

Posner explained: “ ‘[A]ctions and comments by employees

not involved in a discharge decision cannot provide a basis for

charging other employees with discrimination.’ ” /d., quoting

Jardien v. Winston Network, Inc., 888 F.2d 1151, 1155 (7th Cir.

1989).

Likewise, the Tenth Circuit held in Touchet v. Halliburton

Co., 1996 U.S. App. LEXIS 3353, *12-16 (10th Cir. 1996) that

a district court erred where testimony had been admitted con-

cerning an ageist statement made by a company supervisor

because there was no evidence the supervisor had any effect

on the challenged employment decision. The court stated:

“[A] plaintiff must demonstrate that a nexus exists between

the discriminatory comment to be admitted arid the allegedly

discriminatory action to be proven. Even comments by a

supervisor involved in the allegedly Viscriminatory actions are

not admissible unless connected to the discriminatory actions

themselves.” Jd. (emphasis added).

The Fourth Circuit held in O’Connor v. Consol. Coin

Caterers Corp., 56 F.3d 542, 549 (4th Cir. 1995), rev’d on other

grounds, 517 U.S. 878 (1996) that a decisionmaker’s statement

to the plaintiff two weeks prior to his termination that “you

are too damn old for this kind of work” did not show discrimi-

natory intent without evidence that it was made in the context

of plaintiff's termination. Similarly, the Sixth Circuit held in

McLaurin v. Fischer, 768 F.2d 98, 104 (6th Cir. 1985) that the

district court had properly excluded a letter authored by the

decisionmaker referring to “young men whom we would like

to attract.” The court ruled that the letter had little, if any, rel-

evance to the plaintiff's discharge and was unduly prejudicial.

Lixewise, the First Circuit in Conway v. Electro Switch Corp.,

825 F.2d 593 (ist Cir. 1987) held that the district court prop-

erly allowed into evidence statements by the company’s presi-

dent and its industrial relations manager that evidenced gen-

der bias, but only because a connection did exist between

those persons and plaintiff's termination. ‘

In contrast to the other circuits, in the decision here and

in other cases, the Third Circuit endorsed the admissibility of

comments by decisionmakers and non-decisionmakers for the

penereerermmrmnre, ts mania area eames

11

purpose of proving discriminatory management attitudes or

corporate culture — without requiring proof of a nexus or evi-

dentiary link to the specific employment decision involved in

the litigation. See, e.g., Brewer v. Quaker State Oil Ref. Corp.,

72 F.3d 326, 333 (3d Cir. 1995) (“We have held that a supervi-

sor’s statement about the employer's employment practices or

managerial policy is relevant to show the corporate culture in

which a company makes its employment decision and may be

used to build a circumstantial case of discrimination.”) Thus,

the Third Circuit would admit into evidence what the First,

Fourth, Sixth, Seventh and Tenth Circuits exclude.

Here, the Third Circuit ruled that “a plaintiff may offer

circumstantial proof of intentional discrimination on the basis

of age in the form of a supervisor's statement relating to for-

mal or informal managerial attitudes held by corporate execu-

tives,” although it acknowledged that there was no evidence of

any connection with: (a) Ryder’s termination of employment;

or (b) the persons involved in the decision to terminate plain-

tiff's employment; or (c) the employment practices at the

plaintiff's workplace location. Ryder, 128 F.3d at 132-133. As

to none of the above was there any nexus.

Under the Third Circuit's approach, the evidence that was

inadmissible in Fortino v. Quasar Co., s@pra, would have been

admissible because Omoto was a cor}. «ite manager and his

suggestion that young people work !- ~ + hours would pro-

vide some evidence of “corporate culture or attitude.” The

Third Circuit upholds the admission of unrelated statements

simply because of the positions of the declarants in the com-

pany, as opposed to any connection in person, time or location

to the alleged discriminatory employment decision.

Even within individual circuits, the courts have followed

blatantly inconsistent approaches concerning stray comment

evidence. Compare McLaurin v. Fischer, supra, which

excluded a letter by the decisionmaker with Cooley v. Carmike

Cinemas, Inc., 25 F.3d 1325, 1332 (6th Cir. 1994), in which the

court held that it was not an abuse of discretion for the trial

judge in an age discrimination case to admit a statement made

12

by the chief executive officer when he was a teenager to the

effect that “all old people should be kept in concentration

camps.”

The Third Circuit also has panels in disagreement. In

Ezold v. Wolf, Block, Schorr and Solis-Cohen, 983 F.2d 509.

545 (3d Cir. 1992), the Third Circuit reversed a trial judge’s

finding of discrimination as clearly erroneous. The Court held

that since the law firm department chair’s comments were tem-

porally remote, and since he was no longer with the firm when

plaintiff was denied partnership and was not a final decision-

maker, his statements could not support finding in plaintiff's

favor, stating as follows:

Stray remarks by non-decisionmakers or by decision-

makers unrelated to the decision process are rarely

given great weight, particularly if they were made

temporally remote from the date of decision. See

Hopkins, 490 U.S. at 277, 109 S.Ct. at 1804

(O’Connor, J., concurring); Frieze, 950 F.2d at 541;

Guthrie v. Tifco Indus., 941 F.2d 374, 378-79 (Sth Cir.

1991), cert. denied, ___ U.S. ____, 112 S.Ct 1267, 117

L.Ed.2d 495 (1992). We decline to depart from this

principle in the present case.

983 F.2d at 545 (emphasis added). Thus, even the Third Circuit

sometimes concedes that in the absence of nexus to the spe-

cific employment decision involved, stray comments lack pro-

bative value in a discrimination case.

There is also widespread disagreement within other fed-

eral courts on the basic question of whether stray unrelated

comments have any probative value in supporting a prima

facie case of intentional age discrimination under McDonnell

Douglas Corp v. Green, 411 U.S. 792 (1973). For example, in

Wilde v. Florida Pneumatic Mfg. Corp., 941 F. Supp. 1203 (S.D.

Fla. 1996), the court, in its search for the proper analytic

framework, identified three distinct analytical approaches

among the various circuits. /d. at 1206-1207. Under these

unpredictable precedents, it is little wonder that practicing

lawyers and judges have difficulty determining the legal stan-

dard to be applied.

13

The question of the probative value of stray comments

goes to the very heart of whether such comments should be

admitted into evidence at trial. If stray comments with no

nexus to the specific employment decision have no probative

value on the question of discriminatory intent (as most of the

circuits that have considered questions have held), then the

comments should not be admitted into evidence. As Judge

Posner perceptively concluded in Fortino, supra, stray com-

ments must be excluded from evidence when they have no

probative value, because there is nothing to balance against

their prejudicial effect.

Even apart from this important doctrinal inter-circuit con-

flict, there are three other related reasons why certiorari is

merited in this case:

(a) U.S. Supreme Court's Supervisory Role. Rulings by

trial courts on evidentiary issues are typically reviewed on an

“abuse of discretion” standard, see, e.g., General Elec. Co., et

al. v. Joiner, US. ,1997 U.S. LEXIS 7503 (Decem-

ber 15, 1997), and we do not suggest any change. However,

this Court has exercised its supervisory role to clarify the fed-

eral law of evidence governing what are ordinarily discretion-

ary rulings. See, e.g., Daubert v. Merrel Dow Pharms., Inc., 509

U.S. 579, 589 (1993) (clarifying the standard governing the

admissibility of scientific expert testimony under Federal Rule

of Evidence 702). Here, as in Daubert, there is a need for this

Court to resolve the conflicting approaches and identify the

controlling evidentiary principles under Rules 401 and 403 to

be applied in the federal courts in this genre of frequently liti-

gated cases.

Leaving the issue of admissibility to the gatekeepers with-

out Supreme Court guidance will perpetuate conflicting rul-

ings on the law. This Court should set the legal standard by

which the district courts should open or close the gate. After

this Court specifies the standard and identifies the controlling

legal considerations governing admissibility of stray com-

ments, appeals to circuit courts will be reduced and all appel-

late reviews will then turn upon an abuse of discretion stan-

dard established by this Court. This Court recently achieved

this very result in Joiner, supra.

14

(b) Public Importance. Although this Court cannot

resolve every controversy in the law of evidence, this is an

issue of public importance and special sensitivity. In today’s

enlightened, but “politically correct” climate, most Americans

rightly condemn discriminatory remarks or attitudes by corpo-

rate officials, which is why “stray comments” are inherently

prejudicial and inflammatory. But, if the ticket of admissibility

comes with nothing more than a vacuous invocation of the

phrase “relevant to corporate attitudes or culture,” with no

requirement of a nexus in time, place or person to the specific

employment decision involved in the litigation, then the

potential for appeals to jurors’ emotions and prejudice is enor-

mous and uncontrollable. The consequence of this approach is

that employers will pay the price of that ticket by being pun-

ished for having managers who are politically incorrect,

regardless of whether they violated the anti-discrimination

laws.

(c) The Record in This Case. The instant case presents an

excellent record for the Court to clarify this area of law

because the trial judge admitted over Westinghouse’s in limine

objection two distinct types of “stray comments.” The Memo-

randum included: (1) isolated, but prejudicial inflammatory

comments by anonymous mid-level corporate executives with

no connection to plaintiff; and (2) generalized comments by a

chief executive officer (Mr. Jordan), who was hired approxi-

mately three months after the decision to terminate Ryder’s

employment. Both types of evidence are classic types of “stray

comments,” which this Court can use to identify, analyze and

clarify the controlling evidentiary standards.

* * *

The “nexus” standard adopted by the First, Fourth, Sixth,

Seventh and Tenth Circuits is surely the correct legal test. If

there is no evidentiary foundation to connect the stray remark

and the employment decision, then it has no probative value

and it must be excluded under Rule 401, or at the very least

as prejudicial under Rule 403. To assert, as the Third Circuit

did in this case, that the evidence is being offered “only” to

show a discriminatory corporate attitude or culture, with no

15

nexus to the specific employment decision, violates basic prin-

ciples of the law of evidence under both Rules 401 and 403.

The Advisory Committee Notes to Rule 401 point out

that relevancy “is not an inherent characteristic of any item of

evidence but exists only as a relation between an item of evi-

dence and a matter properly provable to the case.” The trial

court and the Third Circuit considered the remarks to be

inherently relevant, ignoring whether there was a relationship

(nexus) between the purported evidence and the matter to be

proved. The test used in the First, Fourth, Sixth, Seventh and

Tenth Circuits requires the “relation” specified in the Advi-

sory Committee Notes that the Third Circuit ignored.

In the absence of such a nexus, admission of stray com-

ments to prove a discriminatory corporate attitude or culture

is nothing more than an attempt to persuade the jury that a

corporate employer discriminated in a specific decision

because it spoke or acted in a discriminatory manner on

another occasion or occasions. Yet, “it has long been accepted

in our law that the doing of one act is in itself no evidence that

the same or a like act was again done by the same person.” 22

Charles A. Wright & Kenneth W. Graham, Jr., Federal Prac-

tice and Procedure § 5239 at 436 (2d ed. 1997) (emphasis

added; internal quotation and ellipses deleted). Such propen-

sity or “character evidence is of slight probative value and

may be very prejudicial .. . . It subtly permits the trier of fact

. . . to punish the bad man... despite what the evidence in

the case shows actually happens.” Fed. R. Evid. 404 Advisory

Committee Notes (internal quotation and citation omitted). It

is only when there is evidence that connects the stray com-

ment or attitude to the specific employment decision that the

evidence becomes proper and admissible.

The initial question for any court (which was completely

ignored in this case by the district court and the court of

appeals) must be whether the alleged stray comment has any

meaningful probative value on the ultimate question of

whether the employer made the decision to terminate the

plaintiff for a discriminatory reason. If the answer is “no,”

then there is no probative value, and the stray comment

should be excluded. If the answer is “yes,” then the court pro-

16

ceeds to the normal Rule 403 balancing of probative value

against “danger of unfair prejudice, confusion of the issues, or

misleading the jury.” Further, this balancing must be con-

ducted on the record so that it is possible for the reviewing

court to determine whether the trial court fulfilled its obliga-

tion as gatekeeper in the screening of evidence or whether it

abused its discretion.

Congress did not enact any law making political incorrect-

ness or isolated discriminatory comments by managers or

proof of lack of sensitivity in corporate culture illegal. Dis-

criminatory actions, not unrelated managerial attitudes, are

illegal. Evidence of attitudes, whether of managers or through

corporate culture, must be connected to an alleged discrimina-

tory action in order to avoid putting the attitudes themselves

on trial.

For all of these reasons, this is a “cert-worthy” legal issue

in which this Court can and should identify the controlling

evidentiary principles governing the admissibility of “stray

comment” evidence under Rule 401 as a predicate for the fur-

ther analysis required under 403 of the Federal Rules of Evi-

dence.

Il.

All Circuit Courts Should Be Mandated to Remand — As a

Majority of Circuits Do — Where Conflicting Jury Instruc-

tions on the Same Key Legal Point Make It Impossible to

Determine If the Jury Based Its Verdict on the Correct or

Erroneous Instruction.

An underlying assumption vital to the judicial system is

that “juries will follow the instructions given them by the trial

judge. Were this not so, it would be pointless for a trial court

to instruct a jury ....” Parker v. Randolph, 442 U.S. 62, 73

(1979) (opinion of Rehnquist, J.). The issue here is the stan-

dard circuit courts are to apply when reviewing instructions

that state a particular standard both erroneously and correctly.

It is not exacting enough to ensure the integrity and efficacy

of a trial by jury merely to invoke (like a mantra) “reviewing

the instructions as a whole” and attempting to divine whether

ee

17

the jury was misled. But, that kind of divination and guess

work is exactly what the Third Circuit did here.

The court of appeals in this case determined that the dis-

trict court erroneously defined “pretext for illegal discrimina-

tion” in one of its key instructions to the jury. Ryder, 128 F.3d

at 137. In spite of failing to state the law correctly, the court

below concluded that the misstatement of law was “offset” by

the district court’s subsequent correct instruction regarding

Ryder’s burden of proof in general terms. Jd. Similarly, the

Sixth Circuit in O-So Detroit, Inc. v. Home Ins. Co., 973 F.2d

498 (6th Cir. 1992) found that a portion of the jury instruction

was erroneous, yet did not require remand because other por-

tions of the instruction were correct and, read as a whole, the

inclusion of the erroneous portion was “harmless.” O-So, 973

F.2d at 502. This analysis is markedly different from that which

the Second, Fourth, Eighth, Eleventh and Federal Circuits

have applied and indeed, is different from that which the

Third and Sixth Circuits have previously endorsed.’

Contrary to the Third and Sixth Circuit view, this Court

and the Second, Fourth, Eighth, Eleventh and Federal Circuits

have recognized that when a judge makes an incorrect state-

ment of the law to the jury and in other parts of the instruc-

tions states it correctly, remand is required because it cannot

be determined whether the jury followed the right instruction

or the wrong one. Francis v. Franklin, 471 U.S. 307 (1985).

“Language that merely contradicts and does not explain a con-

stitutionally infirm instruction will not absolve the infirmity. A

7. In Moreau v. Pennsylvania R.R. Co., 166 F.2d 543 (3rd Cir.

1948), the Third Circuit held that where a district court makes both an

incorrect and correct statement of the law, it may be corrected “only (1) by

making a definite statement of the correct rule to guide the jury and (2)

making it clear to the jury that it should substitute the later correct state-

ment for the former erroneous one.” Jd. (citation omitted). In Sessoms v.

Union Sav. & Trust Co., 338 F.2d 752 (6th Cir. 1964), the court held that “as

a rule, a misdirection is not cured by a subsequent statement of a correct

principle, unless the judge calls the jury’s attention to the incorrect state-

ment and retracts or modifies it, or unless the context shows that one charge

is in fact a correction or modification of the other.” Jd. at 757-78 (citation

omitted).

18

reviewing court has no way of knowing which of the two irrec-

oncilable instructions the jurors applied in reaching their ver-

dict.” Francis, 471 U.S. at 322.

The Second Circuit in Thornley v. Penton Publ’g, Inc., 104

F.3d 26 (2d Cir. 1997), an age discrimination case, held that the

trial court did not cure its earlier erroneous instruction by a

correct general instruction stating the plaintiff's burden of

proof. Thornley, 104 F.3d at 30. Because “[it could not] be

confident that the jury did not rest its verdict” on the errone-

ous charge, the case was remanded. /d. at 30, 32.

The Eleventh Circuit in Blossom v. CSX Transp., Inc., 13

F.3d 1477 (11th Cir. 1994) recognized that a proper jury

instruction “cannot cure an improper one if there is a possibil-

ity that the jury employed the improper rule . . .” and, there-

fore, where there are “[t}wo contradictory standards of liabil-

ity . . . we cannot say that the jury followed the proper rule.”

Blossom, 13 F.3d at 1480, quoting Johnson v. Bryant, 671 F.2d

1276, 1281 (11th Cir. 1982). “Because we are uncertain as to

whether the jury was misled by the district court’s erroneous

instruction,” the court concluded, “these instructions cannot

be harmless” Jd.

Similarly, the Federal Circuit Court in Jamesbury Corp. v.

Litton Indus. Prod., 756 F.2d 1556 (Fed. Cir. 1985) ruled that

“more is required of jury instructions than to state the law

correctly somewhere in the instructions.” Jamesbury, 756 F.2d

at 1560. The Jamesbury court ruled that, taken as a whole, the

incorrect instruction and subsequent correct instruction was

“at best confusing and continues to erroneously vary the quan-

tum of proof.” Jd. See Smalley v. Duluth, W. & Pac. Ry., 940

F.2d 296, 298 (8th Cir. 1991) (“if two or more conflicting state-

ments of law are suggested, it cannot be presumed that the

jury followed the proper rule”); Spartanburg County Sch. Dist.

v. Nat’l Gypsum Co., 805 F.2d 1148, 1151 (4th Cir. 1986) (cita-

tion omitted) (erroneous instruction on law for breach of

implied warranty was not rendered harmless by second, cor-

rect instruction because “merely superimposing correct

instructions over erroneous ones serves only to foster preju-

dice and confusion”). See also Houston v. Herring. 562 F.2d

347, 348 (Sth Cir. 1977) (conflicting instructions cre. .ed suffi-

19

cient opportunity for jury confusion; “erroneous instructions

are not cured by correct instructions in other portions of the

charge when ‘the charge leaves us with substantial and

ineradicable doubt whether the jury has been properly guided

in its deliberation’ ”).

The Ninth Circuit presents the most explicit guidance.

requiring remand in the absence of an explicit corrective

instruction. In Seltzer v. Chesley, 512 F.2d 1030, 1035 (9th Cir.

1975), the Ninth Circuit made it clear that when a jury instruc-

tion contains both correct and incorrect statements of the law,

erroneous instructions “can be corrected by the trial judge

only by expressly correcting them and by directing the mem-

bers of the jury to expunge the erroneous statements from

their minds” (citation omitted). The Seltzer court upheld a

curative jury instruction that met this standard by specifically

calling to the jury’s attention an error in the instruction on

contributory negligence and “distinctly and particularly point-

[ing] out what the law was.” Jd. at 1036.

The critical issue for review is whether the jury made its

decision using the correct legal standard. Where the law has

been described both correctly and incorrectly, there is no way

to resolve that question. Here, the district court never

informed the jury that it defined “pretext” incorrectly and that

mere disbelief of the employer’s reason does not necessarily

constitute a pretext for illegal discrimination. Each time the

word “pretext” was used by the court, the erroneous defini-

tion was implicitly re-affirmed and therefore logically contin-

ued to mislead the jury. Then correct instructions were given.

Did the district court’s erroneous definition of “pretext for

illegal discrimination” provide the basis for the verdict or con-

fuse the jury? How could anyone ever divine the answer?

Put in a simple analogy, suppose the court below

instructed a jury twice that the burden of proof is on the

plaintiff and once that the burden of proof is on the defen-

dant. Which instruction should the jury follow? Contrary to

the holding below, jury instructions are not viewed in a quan-

titative calculus of a greater number right than wrong. The

Third Circuit approach results in ad hoc decision making, with

courts forced to “count” the number of correct instructions

20

and compare the total with the number of incorrect instruc-

tions, straining to “intuit” from the jury instructions “as a

whole” which instruction was followed. Francis, 471 U.S. at

323 n.8. If the jury follows the instruction that is wrong, it can

not matter how many times the district court also gave the

correct instruction.

This Court has acknowledged the importance of provid-

ing an explicit curative instruction, recognizing that there is no

opportunity for confusion by the jury where the trial judge

brings the earlier error to the jury’s attention and explicitly

states the correct law. Mercer v. Theriot, 377 U.S. 152, 154

(1964) (where the “re-instruction . . . properly stated the law

... it would have remedied any erroneous impression the jury

may have received from the first instruction”).

The rule enunciated in the other circuit court decisions

cited above differs from that in the Third Circuit. This Court

should grant certiorari to correct the Third Circuit’s decision

and to provide guidance to all trial and circuit courts by adopt-

ing the “bright-line test” that when a jury’s instructions on key

elements contain both an incorrect and a correct statement of

the law, an explicit curative instruction must be given to elimi-

nate jury confusion, or a new trial is required.

CONCLUSION

For the foregoing reasons, Petitioner respectfully asserts

that its Petition for a Writ of Certiorari should be granted.

Henry W. Ewalt

Vice President and Associate

General Counsel Litigation

Westinghouse Electric Corp.

Gateway Center

11 Stanwix Street

Pittsburgh, PA 15222

(412) 642-4025

Glen D. Nager

Jones, Day, Reevis, & Pogue

1450 G Street, N.W.

Washington, DC 20005

(202) 879-3939

Date: December 29, 1997

Respectfully submitted,

Jerome J. Shestack

(Counsel of Record)

Joseph C. Crawford

Jonathan D. Wetchler

Elizabeth J. Vrato

Linda B. Hollinshead

Wolf, Block, Schorr

and Solis-Cohen LLP

Twelfth Floor Packard Building

15th and Chestnut Streets

Philadelphia, PA 19102-2678

(215) 977-2000

Counsel for Petitioner

APPENDICES

Filed September 30. 1997

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

No. 96-3414

JOHN M. RYDER

v.

WESTINGHOUSE ELECTRIC CORPORATION,

Appellant

ON APPEAL FROM THE

UNITED STATES DISTRICT COURT

FOR THE WESTERN DISTRICT OF PENNSYLVANIA

(D.C. Civ. No. 93-cv-01945)

Argued April 14, 1997

Before: GREENBERG, ALITO and SEITZ. Circuit Judges.

Filed: September 30, 1997

SAMUEL J. CORDES, ESQUIRE

245 Fort Pitt Boulevard

Pittsburgh. PA 15222

Attorney for Appellee

APPENDIX A

A-1

A-2

JEROME SHESTACK, ESQUIRE

(Argued)

JOSEPH C. CRAWFORD, ESQUIRE

JONATHAN D. WETCHLER,

ESQUIRE

Wolf, Block, Schorr & Solis-Cohen

S.E. Corner 15th & Chestnut Streets

Packard Building, 12th Floor

Philadelphia, PA 19102

RICHARD J. ANTONELLI, ESQUIRE

Buchanan Ingersoll Professional

Corporation

One Oxford Centre

301 Grant Street

20th Floor

Pittsburgh, PA 15219-1410

Attorneys for Appellant

CATHY VENTRELL-MONSEES

THOMAS W. OSBORNE

MELVIN RADOWTTZ

American Association of Retired

Persons

601 E Street, N.W.

Washington, D.C. 20049

Attorneys for Amicus Curiae

American Association of Retired

Persons

OPINION OF THE COURT

SEITZ, Circuit Judge.

Defendant, Westinghouse Electric Corporation

(“Westinghouse”), appeals from a judgment, entered on a

jury verdict, in favor of Plaintiff, John M. Ryder (“Ryder”).

This action is based on the Age Discrimination in

Employment Act, 29 U.S.C. §§621-634 (1994) (“ADEA”),

A-3

and the Pennsylvania Human Relations Act, 43 Pa. Cons.

Stat. Ann. §§ 951-963 (“PHRA”).'

Ryder was employed as a staff assistant to the group

controller for Westinghouse’s Power Systems Group from

1983 until April 6, 1993. Prior to assuming this position,

Ryder had been employed at Westinghouse in various other

capacities since January 7, 1963. On April 6, 1993, Lou

Facchini (“Facchin!"), who had been the group controller for

the Power Systems Group since 1991 and who had

“inherited” Ryder from the previous controller, terminated

Ryder’s employment under Westinghouse’s permanent job

separation program.’ At the time of his termination, Ryder

was fifty-two years old.

Two days after leaving Westinghouse, Ryder filed a

complaint with the Equal Employment Opportunity

Commission (“EEOC"), ng that Westinghouse wilfully

terminated him because of his age. After waiting for the

required time periods to elapse, Ryder filed his complaint in

the district court on November 11. 1993. A two-week jury

trial concluded with the jury's verdict in favor of Ryder, and

with an award in the amount of $241,909. Westinghouse

filed this timely appeal.

Westinghouse attacks the district court's management of

the trial in two separate respects. each of which,

Westinghouse submits, requires us to reverse the Judgment

and remand this case for a new trial. We turn to those

issues.

1. The district court exercised subject matter jurisdiction over Ryder's

ADEA claim pursuant to 29 U.S.C. §623f{a). 626{cKM1) and 28 U.S.C.

§ 1331. and based jurisdiction over Ryder's PHRA claim on 28 U.S.C.

§ 1367. We have jurisdiction under 28 U.S.C. § 1291.

2. Facchini testified that he terminated Ryder only after trying

unsuccessfully to place him elsewhere in the company. Westinghouse

explained that by eliminating Ryder's position. as opposed to terminating

hirn for cause or laying him off. it could offer Ryder a permanent job

separation. The parties stipulated that under this arrangement. Ryder

received. at the time of his termination. a lump-sum payment of his

vested pension benefit amounting to $172.000. along with a payment of

$39 1.027 in deferred compensation. By mutual agreement of the parties.

Ryder actually continued in his position until August 31. 1993.

A-4

I.

Admission of the “Chairman's Initiative

Memorandum”

Westinghouse first challenges the admission of the so-

called “Chairman's Initiative Memorandum,” which was

authored by Michael Jordan, Westinghouse’s CEO, and

which contained allegedly ageist comments made by

unidentified Westinghouse executives who were authorized

to make personnel decisions.’ These comments were made

at a series of meetings attended by Jordan, who became

CEO in June of 1993, approximately two months after

Ryder's “official termination.” Also in attendance was Gary

Clark, who was acting as CEO when Ryder was terminated,

and who became-president of the company after Jordan

was hired.

The controversial comments. reflected in the

memorandum were made at a meeting held on July 6-7,

1994, the topic of which was “Employee Selection

Development Rewards and Costs.” App. at 54. Jordan's

memorandum was distributed to “All Previous Attendees of

Chairman's Initiative.” and included his introductory

comments that the summaries contained “some good ideas”

and were “long, but valuable.” Id. at 45. Some of the

allegedly ageist comments included:

Participant: In many of our businesses we have an

older workforce. As a_ result, that

workforce gets a_ higher _ salary.

Additionally, our low growth businesses

can strain opportunities for younger

workers. Somehow we must provide those

opportunities. We have to get the

3. Facchini. who attended some but not all of the meetings. testified at

trial that those in attendance were of the “general manager” level. who

“majdje decisions as far as hiring and firing people.” App. at 426. Based

on this testimony. the district court noted that the attendees had “hiring

and firing responsibilities.” id. at 430.

Participant:

Jordan:

Participant:

Jordan:

Participant:

Jordan:

A-5

“blockers” out of the way.

Westinghouse has been pretty

paternalistic in the past and we've ended

up with too much dead wood in the

organization.

Yes, and that's a big issue because as

you squeeze the infrastructure, you want

your best talent to stay in_ the

organization.

We really haven't hired much over the

last 10-15 years. As a result, we have a

hole in terms of people development. We

don't have enough people in_ the

organization ages 30-40. Somehow we

have to anticipate what our requirements

are for people three years down the road

and be willing to hire people for the

future.

That's the issue at many business units.

You have to have regeneration.

Blockers are always an issue but they're

less of an issue when you are in a growth

mode. Removing blockers is very

important when you're in a downsizing

mode because you don't have the kinds of

opportunities that growth provides you.

People down in the organization know

who they are. . . . [Wie have to put

ourselves in a position of getting high

pots into more responsible jobs and move

the blockers aside. That's hard to do, and

no one likes to do it, but we're paying the

price now for our inability to do it in the

past.

A-6

Jordan: What we need to do as the leadership of

this organization, is force ourselves to

those standards so that the best persons

get into the right positions. An eager

high-energy person will get more done in

one month than someone who has retired

in place will do in one year.

Jordan: We seem to be missing the people in the

middle of the age range who have talent.

the willingness and the horsepower to

take on risky change projects. We don’t

have those types pushing up from the

bottom. We have a kind of regeneration

gap here. We have to have those kinds of

people. Not only are these individuals the

leadership of tomorrow, these are the

people that create ferment down in the

ranks that pushes against the status quo

in the system.

App. at 54-59.‘

!

Westinghouse contends that any relevancy that this

document may have to Ryder’s termination one year prior

to the chairman's initiative meeting is substantially

outweighed by its highly prejudicial nature. Westinghouse

also argues that the document constitutes inadmissible

hearsay. Ryder responds that the document was properly

admitted as circumstantial evidence of the corporate

culture existing when Ryder was terminated one year

earlier.

We review the district court's evidentiary rulings for

abuse of discretion. Sheridan v. E.I. DuPont de Nemours &

Co., 100 F.3d 1061, 1076 (3d Cir. 1996) (en band, cert.

denied, 117 S. Ct. 2532 (1997). We will not disturb the

district court's application of a balancing test under Federal

Rule of Evidence 403 unless it is “arbitrary and irrational.”

4. At trial. Facchini agreed with Ryder's counsel's characterization of a

“blocker” as “somebody who is preventing somebody younger from

getting through to another executive level....” App. at 482.

A-7

Abrams v. Lightolier Inc., 50 F.3d 1204, 1213 (3d Cir. 1995)

(internal quotations and citations omitted).°

We have recognized that a plaintiff may offer

circumstantial proof of intentional discrimination on the

basis of age in the form of a supervisor's statement relating

to formal or informal managerial attitudes held by

corporate executives. See, e.g.. Brewer v. Quaker State Oil

Refining Corp., 72 F.3d 326, 333 (3d Cir. 1995): Lockhart v.

Westinghouse Credit Corp., 879 F.2d 43, 54 (3d Cir. 1989).

We have noted that it is often crucial to the jury's

assessment of whether the employer's reasons were

pretextual and the ultimate question whether the employer

intentionally discriminated against an employee. Antol v.

Perry, 82 F.3d 1291, 1302 (3d Cir. 1996). Its importance

seems to become ever more critical as sophisticated

discriminators render their actions increasingly more subtle

to circumvent adverse judicial precedent. See Sheridan. 100

F.3d at 1071; Aman v. Cort Furniture Rental Corp., 85 F.3d

1074, 1081-82 (3d Cir. 1996).

In resolving whether these comments were properly

admitted, we can take guidance from our decisions in

5. We decline Westinghouse's invitation to exercise plenary review of this

issue on the basis that the district court failed to make explicit its Rule

403 balancing analysis.

Our review of the record indicates that Westinghouse raised its Rule

403 objection in its pre-trial pleading entitled. “Defendant's Opposition to

Plaintiff's Second Supplemental Pretrial Statement and Offer of

‘Chairman's Initiative’ Exhibit.” Supp. App. at 1341. 1348-49. The basis

for the objection was that the comments were not probative because they

post-dated the termination by approximately one year and did not

suggest a corporate culture aimed at eliminating older workers. The

comments were highly prejudicial because they would sway the jury's

focus from events at the time of Ryder’s termination and invite the jury

to react irrationally given the negative public opinion of corporate

reorganizations.

Although not expressly citing Rule 403. the district court addressed

both concerns in ruling on the admissibility of the memorandum. App.

at 131-34. 467. Based on our review of the record. we think that the

district judge's analysis was sufficiently explicit here. See In re Paoli R.R.

Yard PCB Litig.. 113 F.3d 444. 457 n.8 (3d Cir. 1997): Sheridan. 100

F.3d at 1076 n.10.

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Lockhart, 879 F.2d at 54, and Brewer, 72 F.3d at 333-34.

In Lockhart, we held that an ageist comment made by the

senior-most executive of one of the four Westinghouse

Credit Corporation divisions was relevant to the company’s

atmosphere or culture when the plaintiff was terminated

approximately one year earlier. 879 F.2d at 54. Even

though this executive did not occupy his post at the time of

the plaintiff's termination and did not comment

about and was not involved in dismissing the plaintiff. we

reasoned that a jury could read his comment as

a “cumulative statement of managerial policies” that had

been effectuated by other high ranking company executives

for “a considerable time.” Id. We concluded that an

executive of such stature in the organization was likely to

be aware of the prevailing atmosphere even if he did not

participate in a particular termination.

In Brewer, we confronted the admissibility of Quaker

State’s CEO's description in a company newsletter of two

new executives as “two of our star young men in their mid-

40s. That age group is our future.” 72 F.3d at 333. We held

that this comment was a “stray remark” because the CEO

played no role in the termination decision at issue and he

made the remark nearly two years prior to the plaintiff's

termination. Id. Nonetheless. we found it relevant as

probative of informal managerial aititudes. This was

particularly so because the remark was written by the CEO.

and thus, was “not an off-hand comment made by a low-

level supervisor.” id. at 334. We concluded that the

question whether the comment was entitled to any — and

how much — weight as _ circumstantial evidence of

discrimination was for the factfinder.

This is not to say that an ageist statement made by any

corporate executive is relevant as evidence of “corporate

culture.” which would’ circumstantially prove a

discriminatory animus. Rather, the court must, as we did

in Lockhart and Brewer, evaluate factors pertaining to the

declarant’s involvement in recognizing a formal or informal

managerial attitude. including the declarant’s position in

the corporate hierarchy. the purpose and content of the

statement. and the temporal connection between the

statement and the challenged employment action.

——eS a

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In the case at bar. none of the comments contained in

the memorandum relate directly to Facchini's decision to

terminate Ryder. They were made approximately one year

after the fact by individuals not involved in the decision.

Neither of the foregoing facts renders the comments

irrelevant, however. The comments were made by either the

company CEO or by executives with authority to render

personnel decisions. Moreover, the comments were made in

reflection on past managerial viewpoints at Westinghouse

with an eye toward future change. If the jury were to believe

that these comments accurately reflected a then existing

managerial attitude toward older workers in April 1993.

this evidence would make the existence of an improper

motive for Ryder’s termination more probable. Fed. R. Evid.

401: Brewer, 72 F.3d at 333-34; Abrams, 50 F.3d at 1214-

15; Lockhart, 879 F.2d at 54. See also Walden v. Georgia-

Pacific Corp., No. 96-7045, slip op. at 23-25 (3d Cir. Sep.

26, 1997) (‘stray remarks” made by individuals outside the

employer's decision-making process may nevertheless

constitute admissible evidence of managerial atmosphere

and a possible discriminatory intent).

The remaining question. then. is whether the district

court acted arbitrarily and irrationally in concluding that

the relevancy of these comments is not substantially

outweighed by the dangers of unfair prejudice or misleading

the jury. given the statements’ temporal remoteness and

the fact that the speakers were not involved in Ryder's

termination. Certainly. their relevancy is somewhat

diminished by the fact that they were not made by the

individuals who terminated Ryder. Cf Abrams, 50 F.3d at

1215 (negative comments by a decision maker are often the

circumstantial evidence of discrimination). Their

is conversely enhanced by the fact that many of

the statements (and seemingly the more controversial ones)

were made by the CEO himself. Brewer, 72 F.3d at 333-34.

In this regard. we agree with Westinghouse that a CEO's

comments are likely to be reviewed carefully by a jury: as

noted in Lockhart. “jwihen a major company executive

speaks. ‘everybody listens’ in the corporate hierarchy....”

879 F.2d at 54. Although he spoke approximately one year

after Facchini decided to terminate Ryder. Jordan had

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served as CEO since July 1993, approximately one month

before Ryder left Westinghouse. He had a basis for

knowledge of the existing managerial viewpoints during the

relevant time period. As to the other participants, it is clear

that they were discussing past practices at Westinghouse.

In any event, we conclude, as we did in Lockhart, that

these statements may have reflected a cumulative

managerial attitude that had been held for “a considerable

time.” 879 F.2d at 54. Therefore, we cannot say that the

district court acted arbitrarily and irrationally in its findin

that any unfair prejudice did not outweigh the relevancy o

the comments based on their temporal remoteness or on

the fact that the speakers were not involved in Ryder's

termination.®

We also believe that the jury would not have been

confused by the fact that these comments were made one

year after Ryder's termination. They were expressly offered

to fllustrate the pervasive ageist managerial attitude when

Rycer was terminated, and Westinghouse clarified this

temporal factor on cross examination. Consequently, we

conclude that the district court did not act arbitrarily and

irrationally in balancing these competing interests in favor

of admissibility.

We also reject Westinghouse’s argument that these

statements constitute inadmissible hearsay. Ryder offered

these statements into evidence as circumstantial proof of

the managerial viewpoint on “blockers” that prevailed when

Ryder was terminated. Thus, we find that the statements

were not offered to prove the truth of the matters asserted.’

6. We think likewise as to any prejudice resulting from the allegedly

negative public perception of corporate reorganizations. Such a

generalized view is too speculative to support the conclusion that the

introduction of a document that Westinghouse contends in its brief

evinces no age animus was unfairly prejudicial because it would cause

the jury to act irrationally.

7. For instance. Jordan's statement that “[ajn eager. high energy person

will get more done in one month than someone who has retired in place

will do in one year” was not offered for its truth. Instead. it was offered

to iBustrate the CEO's state of mind on the issue of unproductive (and

older) individuals. Fed. R. Evid. 801(c): see also id 803(3}.

This reasoning applies to the other comments as well.

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Even if the statements were offered to prove the truth of

the matters asserted, we nevertheless would conclude that

they were admissible as exceptions to the definition of

hearsay. First, the statements made by Jordan at the

meeting and summarized in the memorandum were

admissions by the agent of Westinghouse. Fed. R. Evid.

801(d)(2)(D). Jordan was speaking as the CEO of

Westinghouse to a group of Westinghouse executives about

personnel matters over which these executives exercised

authority. Thus, he spoke as Westinghouse’s agent within

the scope of his employment. Carden v. Westinghouse Elec.

Corp., 850 F.2d 996, 1001-02 & n.6 (3d Cir. 1988).

Jordan's summarization of the statements made by the

unidentified participants presents a “double hearsay”

problem. For these comments to have been properly

admitted then, we must find each level of hearsay to fall

within some applicable exception. Fed. R. Evid. 805. As we

noted above, in summarizing these statements in a

memorandum sent to all meeting attendees, Jordan acted

within the scope of his employment as CEO of

Westinghouse. Thus, his recitation of the statements is an

admission by a party-opponent under Federal Rule of

Evidence 801(d)(2)(D). See Carden, 850 F.2d at 1001-02 &

n.6.

We find this exception to apply to the actual utterances

of these statements by the unidentified meeting

participants as well. The speakers, though unidentified by

name or specific title, were all Westinghouse executives who

had authority to make personnel decisions. They acted

within the scope of their employment in stating their views

on the state of their workforce at the request of the

company CEO. Thus, the sources of the statements are

identified sufficiently to establish that they were made by

agents of Westinghouse acting within the scope of and

during the existence of their employment relationship. See

Big Apple BMW, Inc. v. BMW of North America, Inc., 974

F.2d 1358, 1373 (3d Cir. 1992).* Based on thé foregoing

8. As to this level of hearsay. we find our decision in Carden to be

distinguishable. There. we held that a supervisor's statement to his

employee. who was terminated pursuant to a reduction in force, that

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analysis, the comments contained in the memorandum

were properly admitted.

I.

The Jury Instructions

A.

Westinghouse next challenges the correctness of the

following jury instruction:

In this area of the law, an explanation offered by an

employer for its treatment of an employee that is not

its real reason for such treatment is referred to as a

pretext for illegal discrimination.

App. at 1235. Ryder first responds by asserting that

Westinghouse failed to preserve, and therefore has waived.

its objection to the jury instructions.

If a timely objection preserved the issue for appeal, we

exercise plenary review to determine if the jury

instructions, as a whole, stated the correct legal standard.

Otherwise, we may exercise our discretion to reverse the

judgment only for plain error contained in the instructions.

Seman v. Coplay Cement Co., 26 F.3d 428, 435 (3d Cir.

1994).

Federal Rule of Civil Procedure 51 provides, in pertinent

part:

No party may assign as error the giving or the failure

to give an instruction unless that party objects thereto

before the jury retires to consider its verdict, stating

distinctly the matter objected to and the grounds for the

objection.

“they wanted a younger person” constituted inadmissible doubie

hearsay. 850 F.2d at 1002. At the heart of our conclusion there was the

fact that “they” were not identified anywhere in the record. Thus. we

were unable to determine if “they” acted within the scope of their

employment in making the statement at issue. id: see also United States

v. Cruz, 910 F.2d 1072. 1081 n.10 (3d Cir. 1990).

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Fed. R. Civ. P. 51 (emphasis added). We have interpreted

this rule explicitly to require that any objections to the jury

charge be made at the close of the charge. Seman, 26 F.3d

at 436. It is clear from the record that while it objected to

a separate portion of the court's instruction after the jury

was charged, Westinghouse did not object to the sentence

attacked on appeal. App. at 1244-45.°

We find inapplicable the exception to Rule 51 that no.

objection at the close of the charge is needed where the

9. Rule 51 also requires that a party identify the objectionable matter

“with sufficient clarity to give the trial judge notice of a possible error in

the instruction.” Chemical Leaman Tank Lines, Inc. v. Aenta Cas. & Sur.

Co.. 89 F.3d 976, 993 (3d Cir.), cert. denied sub nom., Jackson v.

Chemical Leaman Tank Lines, Inc., 117 S. Ct. 485 (1996).

Our Independent review of the record here shows that Westinghouse

never objected specifically to the instruction challenged on appeal. At the

charge conference, Westinghouse objected to the inferential proof

instruction, which read:

You may infer that Mr. Ryder has met his burden of proof if you find

that the four facts set forth above have been proven by a

preponderance of the evidence and if you further disbelieve

defendant's explanation for why plaintiff's employment was

terminated.

App. at 1234-35. On appeal, Westinghouse identifies as the erroneous

instruction a sentence found in the paragraph immediately succeeding

the instruction attacked at the charge conference:

In this area of the law. an explanation offered by an employer for its

treatment of an employee that is not its real reason for such

treatment is referred to as a pretext for illegal discrimination.

App. at 1235 (emphasis added).

We conclude that Westinghouse’s objection at the conference would

not have alerted the district judge to the alleged error advanced on

appeal. The former objection pertained to whether the inferential proof

contravention of our holding in Seman. 26 F.3d at 435. We:

contends that the instruction now challenged equated the disbelief of

Westinghouse's reason with a finding that the reason was a pretext for

discrimination. in contravention of the holding in St Mary's Honor

Center v. Hicks, 509 U.S. 502. 511 (1993).

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district court expressly permits the parties “to incorporate

by reference objections made during the charge

conference.” Seman, 26 F.3d at 436. Westinghouse argues

that the district judge granted such express permission

toward the end of the charge conference, in responding to

Westinghouse’s objection to the use of the word

“performance” on page eight of the proposed instructions.

The court stated that “[aJll those are noted. . . . And they

are preserved every time it is done.” App. at 1224.

Our review of this colloquy in context, however, leads us

to conclude that the judge was not granting the parties

express permission to dispense with objections to the final,

altered version of the jury instructions that were act::a!ly

given to the jury. First, the reference to “performance «an

be traced to an earlier Westinghouse objection, on pages six

and seven, to the inclusion of “performance” in the

instructions as “add{ing] an element to the case that really

isn't In the case.” App. at 1215. When Westinghouse

objected to its inclusion again on page eight, the judge

responded by noting that the issue was preserved. Second,

Westinghouse’s claim is belied by the district judge's

invitation and acceptance of Westinghouse’s objections after

the charge was given. Id. at 1243-44.

Having concluded that Westinghouse did not preserve its

objection to the jury instruction that it claims is erroneous,

we will review the instruction only for plain error. Chemical

Leaman Tank Lines, 89 F.3d at 993; Seman, 26 F.3d at

435. We will reverse and remand for a new trial only ‘{ the

alleged error is fundamental and highly prejudiciai, such

that the instructions failed to provide the jury with

adequate guidance and our refusal to consider the issue

would result in a miscarriage of justice. Brereda v. i

Creek Indus. Park, Inc., 865 F.2d 49, 53 (3d Cir. 1989).

B.

It is helpful to review briefly the evidentiary framework

that applies in age discrimination cases based on a

“pretext” theory. The plaintiff first must establish, by a

preponderance of the evidence, a prima facie case of age

discrimination by proving that he: (1) is over forty years of

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age; (2) is qualified for the position in question; (3) suffered

an adverse employment action; and (4) was replaced by a

sufficiently younger person to permit an inference of age

discrimination. Brewer v. Quaker State Refining Corp., 72

F.3d 326, 330 (3d Cir. 1995).

The defendant then must rebut this presumption by

articulating a legitimate, nondiscriminatory reason for the

adverse employment action. Hicks, 509 U.S. at 506-07

(1993); Brewer, 72 F.3d at 330. Finally, the plaintiff must

satisfy his ultimate burden of proving, by a preponderance

of the evidence, that the defendant's proffered reason is not

the “true reason” for the decision. but instead is merely a

pretext for age discrimination. Hicks, 509 U.S. at 511; Bray

v. Marriott Hotels, 110 F.3d 986, 990 (3d Cir. 1997).

The plaintiff can meet this ultimate burden by proving,

by circumstantial evidence, that the defendant's reason is

“unworthy of credence.” Armbruster v. Unisys Corp, 32 F.3d

768, 783 (3d Cir. 1994). To establish such circumstantial

proof, the plaintiff first must present evidence that each of

the defendant's reasons is pretextual, viz, each reason was

“a post hoc fabrication or otherwise did not actually

motivate the employment action.” Fuentes v. Perskie, 32

F.3d 759, 765 (3d Cir. 1994). This proof of pretext then

may be combined by the factfinder with the evidence used

to support the plaintiff's prima facie case of age

discrimination, and from this union, the factfinder may

reasonably infer that the defendant discriminated against

the plaintiff because of his age. Hicks, 509 U.S. at 511.”

Westinghouse contends that the district court instruction

as to the final portion of the required proof was legally

10. The plaintiff also may prove, by direct evidence, that a discriminatory

reason more likely than not motivated the defendant, Armbruster 32 F.3d

at 782-83, or that age played a role in and had a determinative effect on

the outcome of the defendant's decisionmaking process. Miller v. CIGNA

Corp., 47 F.3d 586, 588 (3d Cir. 1995) (en banc).

11. Of course, such an inference is by no means compelled as a matter

of law. Hicks, 509 U.S. at 511. We have stated that the factfinder in a

pretext case “is not limited to a choice between finding that the alleged

discriminatory motive or the employer's nondiscriminatory explanation

was the sole cause of the employment action.” Miller, 47 F.3d at 596.

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erroneous. In its proper context, the pertinent portion of

the instruction reads:

You may infer that Mr. Ryder has met his burden of

proof if you find that the four facts set forth above have

been proven by a preponderance of the evidence and —

noie that I say “and” — if you further disbelieve

defendant's explanation for why plaintiff's employment

was terminated.

. . If you find that Westinghouse articulated

legitimate, nondiscriminatory reasons for eliminating

plaintiffs [sic] job, then you must determine whether

the plaintiff. John Ryder, has proven by a

preponderance of evidence that the reason or

explanation given by the defendant was not the real or

true reason behind Westinghouse's action in

terminating Mr. Ryder’s employment.

In this area of the law, an explanation offered by an

employer for its treatment of an employee that is not its

real reason for such treatment is referred to as a pretext

for illegal discrimination. If you find that Mr. Ryder has

proven by a preponderance of the evidence that the

defendant, Westinghouse Electric Corporation, used

the elimination of plaintiff's job as an excuse or pretext

for discriminating against him on the basis of his age,

then your verdict will be for Mr. Ryder, the plaintiff.

On the other hand, if you find that the explanation

offered by Westinghouse Electric Corporation . . . were

[sic] legitimate reasons for plaintiff's termination. and

that plaintiff has not proven by a preponderance of

evidence that age was a determining factor in the

termination of his employment, then your verdict will

be for the defendant, Westinghouse Electric

Corporation.

In making this determination, you should be aware

of the following: The burden of proving discrimination

always remains with the plaintiff, John Ryder, to prove

that he was a victim of age discrimination. . . . Your job

is to determine whether Westinghouse discriminated

against Mr. Ryder on the basis of his age.

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App. at 1235-36 (emphasis added).

Westinghouse asserts that this highlighted sentence

equated any disbelief of its proffered reasons with the

finding that the reasons were necessarily pretexts for age

discrimination. Westinghouse states that the jury should

have been instructed that under Hicks, a jury may infer the

ultimate fact of discrimination from its disbelief of the

employer's reason and its belief of the evidence used to

establish a prima facie case, but the jury is not required to

do so.

We agree that this statement was erroneous. We have

stated that the factfinder in a pretext case is free to accept

either or neither of the parties litigating positions as

reflecting the whole truth. Miller, 47 F.3d at 597. That is

why in Miller, we held that it was reversible error for the

court to instruct the jury repeatedly that it had to find that

age was the “sole cause” of the adverse employment action

for the plaintiff to prevail on his ADEA claim. Id. In the case

at bar, the jury may have believed that Westinghouse’s

reasons were pretextual, without necessarily believing that

age discrimination was the real reason.

Despite this isolated error, we must read the jury

instructions as a whole. Lockhart v. Westinghouse Credit

Corp., 879 F.2d 43, 56 n.13 (3d Cir. 1989). Much like the

case presented in Lockhart, we find this solitary

misstatement of the law to be offset by the court's repeated

correct explanation of Ryder’s burden of proof.

For instance, in the sentence immediately following the

erroneous sentence, the court clearly instructed that a

verdict for Ryder was proper if the jury found that

Westinghouse used the elimination of his job “as an excuse

or pretext for discriminating against him on the basis of his

age.” App. at 1235." Then, in the next paragraph, the court

instructed the jury that if it believed Westinghouse's

reasons and concluded that Ryder did not prove that “age

12. We note that Westinghouse requested no such instruction in its

proposed jury instructions.

13. This is nearly the exact language that Westinghouse requested the

court to use. App. at 83-84.

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was a determining factor in the termination of his

employment,” then its verdict would be for Westinghouse.

Id. at 1235-36. Finally, the court again admonished the

jury that “you should be aware of the following: The burden

of proving discrimination always remains with [Ryder] to

prove that he was the victim of age discrimination.” Id. at

1236.

Based on our review of the instructions, we conclude that

the multiplicity of correct statements negates the effect of

the solitary erroneous utterance. Thus, we find that the

court's instructions, as a whole, provided the jury with

adequate guidance on the parties’ respective evidentiary

burdens, and we perceive of no miscarriage of justice that

could have resulted.

Conclusion

For the foregoing reasons, we will affirm the order of the

district court entering judgment for Ryder on the jury’s

verdict in his favor.

A True Copy:

Teste:

Clerk of the United States Court of Appeals

Sor the Third Circuit

ts lth RF Wt esa.

iii

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From: 2300 Westinghouse Building

WIN: 272-5220

Date: September 1, 1994

Subject:

To: ALL PREVIOUS ATTENDEES OF CHAIRMAN’S

INITIATIVE

We have now completed five Chairman’s Initiative sessions.

Each one reinforces my belief in the need for change and pro-

vides some good ideas on how change can be achieved. The

topics for this fifth session were: How to Achieve Our Inter-

national Growth Objectives, How to Enhance our Strategic

Direction and Implementation and Employee Selection,

Development, Rewards and Costs.

The attached summaries of the discussions that took place on

these topics are long, but valuable.

s/ Mike Jordan

Attachment

APPENDIX B

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CHAIRMAN’S INITIATIVE - JULY 6-7, 1994

TOPIC: HOW TO ENHANCE OUR STRATEGIC

DIRECTION AND IMPLEMENTATION

DISCUSSION:

Participant:

A part of our discussion had to do with whether Westing-

house has a strategic. direction and some discussion on

whether the strategic planning process needed to be

improved within the businesses. A central question for us

was whether we are a holding company or an integrated

company.

Jordan:

Let me know when you figure it out.

Participant:

We think we’re a hybrid and what happens frequently when

you are a hybrid is that mixed signals are sent to the orga-

nization. Given the business climate we're in, and the orga-

nizational transition we have, the lack of a clearly articu-

lated vision and strategic direction hampers the ability to

motivate the stakeholders. While our primary focus was on

employees this also includes shareholders and customers.

The last five years have been embarrassing. You hate to tell

people that you work for Westinghouse. We have an iden-

tity crisis. People are not motivated today. We think there is

a need for the employees to believe in something. In order

to break the cycle of negativism we need to have a very

positive vision. We need to know where we want to be as a

corporation five to ten years from now. This vision clearly

has to be linked to a global strategy and direction. For

example, ABB has a slogan that is “think globally but act

locally.” That tends to unite how they go about doing their

business. A vision of where we wanted to be globally would

facilitate greater business unit cooperation. Another

at. Pa es Se CE RE A he eS ase ae ©

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example is Hewlett-Packard. Their equivalent of the Chair-

man’s Advisory Council believes that you have to wear the

HP hat in whatever country you’re in. HP wants to create a

sustainable corporate presence in target countries. We don’t

have similar guidelines. One of the people commented, “We

buy airline tickets instead of having a presence”. Our prod-

ucts are essentially U.S. oriented. Our turbines are 60 cycle

instead of 50 cycle. Radars are another example.

This makes it difficult to sell these products in international

markets. Today, we are an opportunistic, individualistic

initiative-oriented company. A lack of presence in a country

like India which has 15% of the world’s population seems

grossly shortsighted.

We discussed the fact that our failures are tied to a lack of

understanding of the markets and a commitment to a long-

term presence. This leads to impatience and a quick trigger

in terms of pulling out.

Mike, earlier this year you articulated a strategic position

for the Corporation that was an improvement on what

we’ve had in the past. Historically, our strategy has been

purely financial. You categorized our businesses in terms of

whether we would grow them or maintain them. That's not

enough. We also have some concern that there’s slippage

back into a strict financial view of our business portfolio. We

also challenged some of the statements made on the over-

head Gary used yesterday. One of the items that appeared

was that we have “six strong core businesses.” I guess we’d

ask you what your definition of “strong” is.

Participant:

From a technology standpoint, we need to be better. I know

in our business, technology is changing drastically. The cur-

rent technology for the most part in radar, we’re the best.

But some of that technology is changing to a satellite base.

For the most part I think we have good technical leadership

but I believe we are lacking in some other key areas. We

need to be more broad-based in our leadership to include a

——————— SS eee

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greater variety of skills. My opinion is we need to be more

coaches than managers. In terms of the work force, I think

they’re confused. For example, some of the people who

work for me talked to me before I came here. They ~2n-

tioned the letter that you wrote. They think, as I dc. hat

your statement about blowing away the bureaucracy is abso-

lutely right on the mark. Their question to me was, “When

is this going to get to me? When am I going to see some of

this happen at my level?” Our people are thirsty to blow

away bureaucracy.

Jordan:

We have to be realistic. We’ve made a start. We have the big

financial crisis behind us but we have an awful lot of work

to do. Clearly, we have competitive issues and marketplace

issues. We have to drive costs down across the board.

Regarding the businesses we’re in — until something better

comes along, lets just run the hell out of those businesses.

Participant:

What does that mean? Does that mean to grow them? Does

that mean to pull cash out of those businesses?

Jordan:

I think we have to spend time in each of the businesses

defining that balance. We are in a position to and will fund

growth initiatives. But we must also drive the last nickel out

on performance. That’s a difficult trade-off. What we’re

finding is the more you get people involved in solving busi-

ness problems, the more you'll get costs out. For example,

in the finance organization, when we benchmarked our-

selves against other major corporations, we were at the bot-

tom of the 4th quartile in every financial transaction. People

were embarrassed, but this is just evidence that no one had

ever challenged the system. For example, why do we have

to have five travel expense signatures and audit every one?

No one does that — no one. You don’t “control your way to

success”. :

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[sic] also wrestling with the strategic issues regarding

whether we’re going to play in certain markets or not. That

process is by no means clear nor will it become clear within

the next year or two. We will continually refine the dia-

logue. It’s an iterative process. You keep going over it and

over it and over it. You keep certain things. You throw out

certain things. You set tighter performance standards. Obvi-

ously, we’re living in a period of dynamic uncertainty. Noth-

ing is going to be nailed down — ever. That's the nature of

the world we live in. If you’re going to grow and improve

performance and dig your way out of financial problems.

you’re like the guy whose standing on the seal’s back jug-

gling six plates. That's essentially the way it’s going to be.

We’ll try to make the best decisions as we move forward.

You can't chisel anything in stone.

Where we are from a strategic standpoint is that we have six

core businesses. These have greater or lesser degrees of

strengths. Greater or lesser degrees of competitive position

and market opportunity.

We have to maximize these trade-offs and it will be a

dynamic activity so if the question is, “Are we going to

grow?” The answer is, “Yes.” If the question is, “Will there

be pressure on the P&Ls?” The answer is, “Yes.” Those

things may be a little bit contradictory but you can never be

satisified. For example, I’ll never forget the look of abso-

lute horror on Jim Watson’s face when he saw the results of

the purchasing study we did at Thermo King. They thought

they had that thing buttoned down. There were certain

areas they were managing very well. But there was a vast

array of items between $50,000 and $500,000 where they

weren't. So I think we have to realize that the pressure on

operating performance does not mean that we’re unwilling

to invest — it just means we have to put the squeeze on

everything and never be satisfied. By doing that, we can

improve cash flow and generate many for acquisitions like

Norden. I think that’s hard for money people to grasp

because they’re not involved in the process. Our key is to

get more people involved in the process of deciding how we

can improve performance. When more people are involved

A-24

in the process, the less they feel that these things are

imposed upon them. That’s our challenge. We need to

articulate what we’re doing more clearly but we also have to

get many more people involved.

What we need more help on is how do we get many people

involved in driving the whole business performance for-

ward. What I’ve seen is that we have good management but

not good general management skills. We have tended to

look at discrete slices of the businesses. We have to be

taught how to make these trade-offs.

Participant:

Most manufacturing operations shifted in the ’80s. Shifted

from “push through” processes in the ’80s to “pull through”

in the 90s. We are not very customer focused. Westinghouse

has historically been a weak marketing organization [sic]

that doesn’t mean sales, it means marketing. This results in

a business planning or strategic planning process that is a

little bit in chaos.

A few years ago we had a process where the Chairman

would visit each business unit once every two years for a

couple of hours to discuss the business. You’ve wanted to be

more involved so we’re doing that. But, in the interim, we

had a business planning process that looked like it was

going to provide an integrated business performance and

Strategic thinking system. We had hoped we could institu-

tionalize that within the business unit along predicable

cycles but since you and Rick and Fred have come in, you

tend to approach things in a different way and use a differ-

ent language.

A-25

We need to develop a common language and a common

framework for strategic thinking that allows the Execu-

tive Office to be involved. We think you have the capac-

ity to stand back from these businesses and look at them

in a more objective way. You can also help us to think

more globally. We also think that we must focus on com-

bining the capabilities of various Westinghouse organiza-

tions to create new market opportunities.

We think we need to get younger individuals who think

well and who think differently involved in the process as

well. Strategic thinking has to be a line [sic] management

job; not a job you delegate to someone. Having an estab-

lished strategic direction and vision for Westinghouse is

essential. Many of our other issues as a group are related

to this.

Participant:

I think a high percentage of people are in the bleachers

waiting for the game to begin. They’re waiting for some-

thing to happen and don’t realize that they’re the ones

who have to make it happen.

Clark:

How would you describe the current strategic process?

Participant:

The way I see it we’ve been trying to explain our business

to the Executive Office and gotten a little bit frustrated

because we’ve explained it multiple times, but it doesn’t

appear that we’re speaking the same language yet. We

recognize that that’s a major fault of ours because we

understand our business and we have to be able to

explain it to our chief stakeholders — the Executive

Office. We recognize we have a long way to go. As you

flatten the hierarchy in a large organization and empower

people, you have to be more disciplined in establishing

the common language. We need to establish a common

frame of reference and a common understanding so that

A-26

when people act they act appropriately — they’re not

confused and they don’t make mistakes.

Participant:

It’s hard to relate strategic direction when we don’t have

and don’t share common frameworks.

Jordan:

Because we have new people with different perspectives

as well as changing circumstances we’ve had to have

shorter feedback loops on the business planning cycle. I

think we need a concrete set of expectations, priorities

and actions. We need to do it in a more comprehensive

way than we’ve ever done it in the past because we’re

talking about trade-offs.

Participant:

I believe one of the difficulties is an inherent skepticism

on the part of management to CEO involvement because

of what we went through. Many of them don’t see the

positive aspects of it yet. That’ why you need to share

your vision regarding where we’re going.

Participant:

I think that one of the things that we take for granted is

the true power of our company name. Frequently, we are

in places because of yesterday’s power. People every-

where know our name but they don't necessarily know

who we are. Most people still believe that we make refrig-

erators.

Our core competencies are large projects, systems engi-

neering, systems analysis on a broad scale, setting up

large projects, (nuclear power plants, power generation,

power plants, air traffic control systems). We’re pretty

good at integrating various hardware components where

software is the key that links it all together. Our people

need to be taught how to manage those projects and once

they become proficient they can go on from there into

broader general management assignments. So, large

A-27

project management is our strength and we should bid

more jobs like that. The product sometimes becomes a

commodity but that large system's integration capability is

where we have our strength.

Participant:

One of our difficulties is that products we have don’t

match up well with our customers expectation interna-

tionally. Is it that we don’t take time to find out what

non-U.S. customers need, or we just don’t think that way.

Participant:

As a strong engineering technology company, we think we

have the answer. The customer just doesn’t understand.

We're dominated by technical people not marketing

people.

Participant:

You know Mike, you’re [sic] strategy description that

grouped Westinghouse into three groups of businesses

was the first time a CEO has put a stake in the ground for

a long time. Both you and Gary have mentioned the fact

that you have gone after industry segments in addition to

geographic regions and we think that’s important. We

haven't had an executive office in the last ten years that

has been willing to take on that role. That's part of being

customer focused but I think that has to be advertised

more. People need to know what the Executive Office is

doing. Other than a few of us who get the E-Mails that

come in, I don’t think the majority of the organization

knows what you’ve been doing. The fact that you went

golfing with two of our key customers at ESBU and

PGBU is great but I think it’s accidental if anybody

knows you're out there trying to develop relationships

with our customers.

Jordan:

That's interesting because from my background you did

these things just as matter of course. But I’d like to come

A-28

back for a minute to recognizing the realities of the mar-

ket and our position in it. Are we really good at seeing

the works?

Participant:

No, because we don’t segment the market the way we

need to segment it in order to see the works.

Participant:

Right, and it becomes hard for you to challenge the asser-

tions because the facts aren’t there.

Jordan:

I think a big part of this is confusion of language when we

get together for the business planning dialogue. I’m com-

ing at it from a very different perspective and we’re not

intersecting. I think we have to find a way to close the

communication.

Participant:

We've been told that there’s going to be a business think-

ing or strategic thinking seminiar. That [sic] I endorse the

hell out of that because it would help us to narrow the

gap. All of us want to enhance and improve. One of the

most frustrating things we’ve been through is to have the

boss come in and you want to tell him all the great things

your [sic] doing and they’re coming at it from a totally

different perspective.

Participant:

This is something we really need to change.

Jordan:

I think this is a useful insight because I think you’ve

defined the status quo direction and the reason for the

direction as well as some add-ons, pluses and minuses but

my question is, “why”? Why is that the status quo direc-

tion? There's been no logic process that would lead you to

that course of action. For example, if we want to sell

A-29

radar systems and air traffic control systems in places all

over the world, they’re going to have to be a lot simpler

than the ones we make. There’s a marketplace logic and a

fit that we don’t really discuss. Those are really the first

principals of the discussions.

Participant:

While the third group is going to touch on this, our group

firmly believes that Westinghouse employees want to be

proud of Westinghouse. One of our other guys talked

about the fact that your words sink down about one or

two layers and that’s it. We have to get the word out to

the whole organization. We think a vision can motivate a

large number of people a lot easier than numbers can. We

think those numbers follow a strategic direction.

Jordan:

What people really want to hear and identify with is a

description of the businesses that we need to be in and

can be successful in but I don’t think we need to be pre-

scriptive in terms of what people need to do to be suc-

cessful in those businesses. People need to know that we

are willing to invest in these businesses. They need to

know there is a light at the end of the tunnel. People

might need to know that the company can be successful.

It can be a winner.

There are many opportunities for improvement. Every

time we go after a major change activity and get the

people involved, we find that it works. People get excited

about it. It’s a big job but people need to know that man-

agement is behind them; that their [sic] not out there

laboring alone.

Participant:

Your history has been that when a business got in trouble

you got rid of it. It was “buy high, sell low.” What you’ve

said, Mike, is that “we’re committed; we’re going to fix

this.” We all know there are some tough things we have

to do to accomplish that.

A-30

Participant:

I have a question Mike. Our markets are going off on a

lot of different directions. I guess one of things we were

questioning is whether Westinghouse should be going off

in some very different directions with one or two of our

businesses.

Jordan:

Yes, I think we need to take a look at that but, unfortu-

nately, that has taken a back seat to the overall financial

issues as well as refining the goals and strategies at the

business unit level. Hopefully, after this year is over we

can start thinking a lot more creatively. But realistically.

the bulk of our improvement in the next two years is

going to be cost reduction.

Participant:

Employees see the stability we’ve achieved. But I believe

our people want to see a strategic vision for Westing-

house. They would like to believe that we’re something

more than a holding company.

Participant:

That's right. Our employees would like to believe that the

whole of Westinghouse is greater than the sum of its

parts. The name Westinghouse is such a powerful name

around the world. You can get into almost anywhere on

the strength of the name. I think we under value that. I

think we should strive more to look for opportunities to

do large project and systems integration work.

Jordan:

We have a collection of businesses that have some rela-

tionship with one another. Some are weaker, some are

stronger. That’s the hand we’ve been dealt. I’ve always

believed that you’re much better off taking the business

you’re in and maximizing performance in that business.

You want to maximize your future and look for growth

opportunities in those businesses. You look for extensions

eS er

A-31

and relationships beyond that. It’s often a mistake to buy

into a growth market. One, it’s awfully expensive and,

two, you don’t bring much to the party. It’s hard to figure

out how to articulate that. We're not a holding company

but we’re a holding company with a relatively intent man-

agement style. We’re not going to manage the business by

the numbers. We’re going to manage it by being competi-

tive and maximizing our operating performance. In my

mind that’s the role that we (Executive Office) have to

play. We have to be convinced that we’re doing that. We

have to be operating at a higher level of Strategic thought

and performance. We have to manage the financial

resources and the people resources in order to make that

happen.

Participant:

Regarding our global business Strategy, you know our

businesses are tied to infrastructures for the most part.

These are large, well-developed economies whose compa-

nies and markets have their own indigenous capabilities

that are very well protected. And these are countries

totally without resources. We’re not after either of those

countries, but we’re somewhere in between. We're after

working with those economies and those countries that

are trying to build their economy and develop their infra-

Structure. In those cases, we believe that we are a corpo-

ration which has synergies that we can bring to bear in

those countries. We believe that decisions that are being

made in these countries are being made regarding how to

invest in developing electric power, how to develop a

defense capability, how to pursue telecommunications

capability.

Jordan:

You’re right. The places where we’re going to make the

greatest advances are in those emerging economies.

Financing issues, political issues, relationship issues, all

have to be dealt with.

A-32

Participant:

That's why we have to get ourselves coordinated. People

in these countries don’t want four or five people from the

same company coming in selling them different products.

They want a coordinated effort presented to them by one

lead person.

A-33

CHAIRMAN’S INITIATIVE - JULY 6-7, 1994

TOPIC: EMPLOYEE SELECTION DEVELOPMENT

REWARDS AND COSTS

DISCUSSION: _

Participant:

Our group selected employees. How we develop them,

how we reward them, how we incentivize them and how

we manage those costs.

We discussed a number of things such as acting like a

small company, movement of people between business

units and incentives. Much of our discussion focused on

the question of which are corporate activities and which

belong to the business units. We decided that both the

business units and the corporation must do all. You can’t

separate the two.

We discussed the Leadership Development Process

(LDP). We believe that it’s a good start but it’s superficial

because it can only go down so far. We believe that both

performance appraisals and the 360 evaluation process

Should be used down in the organization. We also think

that it should be used for both development and if pos-

sible evaluation.

Jordan:

Regarding the 360 evaluation process, it seems to me that

any dialogue that the boss has with one of his subordi-

nates after getting the 360 evaluation is good. If the boss

has his antenna up he will get a lot out of that discussion.

Participant:

We've been doing this inside ESBU for a while. I think

you have to be careful in using the 360 for evaluation

purposes. In it we’re asking the employee to be frank and

honest and expose their areas, certain areas for develop-

ment. If we then use it for evaluation purposes, perhaps

the honesty won't be there.

A-34

Participant:

The 360 instrument builds on strength. It’s good for

assessment. However, we need help because we may have

the right players but they could be in the wrong chairs.

Participant:

In many of our businesses we have an older workforce.

As a result, that workforce gets a higher salary. Addition-

ally, our low growth businesses can strain opportunities

for younger workers. Somehow we must provide those

opportunities. We have to get the “blockers” out of the

way.

Participant:

We're often in the position to having to let younger

people go because of the guidelines we’re forced to used.

However, often they are the ones who have the skills we

need.

Participant:

We believe that training budgets should be spent for

training. Don’t cut them at the first sign of pressure.

Additionally, programs should be designed for the spe-

cific needs of individuals.

Participant:

Yes, the question should be to the business unit ieaders.

Did you invest your training and development money

wisely?

Jordan:

Do you have any sense of what is most and least success-

ful in the area of training for management development?

Participant:

Some course work is not productive. Seminars and con-

ferences that are technology related can help. Job rota-

tion is probably best.

A-35

Participant:

We had some diversity training which was very good

because it helped us to change our thinking. It wasn’t like

we went back to business as usual. I was able to see how

people changed the way they looked at things.

Participant:

Training for general management tends to be financial.

Management development approaches are important too.

Participant:

We discussed the possibility of using long-term incentives

to get management to move on development issues.

Participant:

We talked about how important it would be to look at

how many people come out of a person's business. It

adversely impacts short-term results when we give up our

good people but it is the right thing to do.

Jordan:

Strategic areas of the non-financial nature are now being

included in incentive calculations.

Participant:

We discussed the cost of employee development and

we’re looking for some creative ways to accomplish it. We

thought that maybe we could exchange employees

between business units or business unit sites. Even short-

term visits might be helpful.

Participant:

Our business unit exchanges young EMPDPs (Engineer-

ing Manufacturing Professional Development Program)

for a year and that’s working very well for us.

Participant:

We think a lot could be accomplished by the Councils in

the area of development. Perhaps we should give them

people development responsibility and push them to

management rotation.

Participant:

When you have a risky business venture, some senior

managers may not want to touch it because it is so risky.

Potentially, people down in the organization could take it

on. But, I guess the question is how much tolerance do we

have for failure here. Do you tell a person, “Hey, don't

worry about it if it doesn’t work, we won't hold it against

you”? Perhaps they would behave differently if we give

them that message.

Jordan:

First, you have to understand the nature of the risk. Sure,

circumstances change. You have to determine if the per-

son is doing the right things. You must have an insight

into that situation to determine if the person was doing

the right things or whether they were playing it safe.

From the developmental standpoint, these types of expe-

riences force you to rethink the entire business system,

the environment, what are we trying to accomplish ...

you get people to break out of the mold. Anytime you

force people to think, and they demonstrate a capability

to do that, you have a great developmental experience.

But some senior person has to keep a lifeline into that

project so that if it fails, the person understands why it

fails. If you do things by the numbers, people are always

going to take the safe route. But if you manage the busi-

ness with penetration and insight, than [sic] you can over-

come it. If it’s just the numbers, the young managers

never learn. Senior managers have to keep track of that

and be sure that people learn.

Participant:

We also discussed acquisitions and we were concerned

about how to do those acquisitions without applying

Westinghouse restrictions and constraining them. How do

we take advantage of their small company approach to

things within the context of a big Westinghouse.

OO << nT

A-37

Jordan:

What you find is that a lot of people can’t make the jump

from a five million dollar business to a ten million dollar

business. The danger is when you take the position “Well,

we'll just leave these guys alone.” In any new venture like

that, you have to put one or two quality people in there

to interpret the big company to the little company.

Participant:

We discussed employee selection and development. We

agreed that moving someone is a major developmental

activity.

Participant:

We're pretty good at getting good people.

Jordan:

The next 18 months are going to be pretty intense in

looking at reductions.

Participant:

Westinghouse has been pretty paternalistic in the past and

we've ended up with too much dead wood in the organi-

zation.

Jordan:

Yes, and that’s a big issue because as you squeeze the

infrastructure, you want your best talent to stay in the

organization.

Participant:

As Westinghouse moves to a flatter organization struc-

ture, we may have to have different kinds of incentives.

Participant:

We had a discussion regarding how to grade jobs. In the

past we've put an awful lot [sic] emphasis on the number

of people an individual manages. We have to look at

A-38

changing that to avoid building empires and grade jobs

according to knowledge, experience and the ability to

make a contribution.

Participant:

We really haven't hired much over the last 10-15 years. As

a result, we have a hole in terms of people development.

We don't have enough people in the organization ages 30-

40. Somehow we have to anticipate what our require-

ments are for people three years down the road and be

willing to hire people for the future.

Jordan:

That’s the issue at many business units. You have to have

regeneration.

Participant:

We spent some time talking about the dynamic staffing

process we used in Human Resources and in ESBU. It’s

different than from what we’ve done in the past. Typi-

cally, we do a percentage reduction. This new approach is

really reengineering. It’s painful as hell, but it’s caused us

to look at the fundamentals of our business. It’s provided

real benefits without putting us in a position of too much

exposure. We seem to have gotten buy-in from people.

Also it allows us to get the blockers out of the way.

Participant:

Blockers are always an issue but they’re less of an issue

when you are in a growth mode. Removing blockers is

very important when you're in a downsizing mode

because you don’t have the kinds of opportunities that

growth provides you.

Jordan:

People down in the organization know who they are. As

we roll out this Leadership Development Process (LDP)

over the next year, we have to put ourselves in a position

of getting high pots into more responsible jobs and move

A-39

the blockers aside. That's hard to do, and no one likes to

do it but we’re paying the price now for our inability to

do it in the past.

Clark:

I think compression has exacerbated this issue. For

example, in what was our Distribution and Control Busi-

ness Unit, we took that from four business units and 17

divisions to one business unit with four divisions. The

downsizing at ESG and ESBU has compounded our

problem.

Jordan:

I have a perspective on that. In a different culture, in

Pepsi we had to review organizations every year. Over a

period of three years, with an organization that had

10,000 sales people, 28 out of 35 second level managers

changed. When you have a concept of what you want the

job to be you must hold yourself to it. What we need to

do as the leadership of this organization, is force our-

selves to those standards so that the best persons get into

the right positions. An eager high-energy person will get

more done in one month than someone who has retired

in place will do in one year.

A-40

Participant:

In our culture. we’re very queasy about letting people go.

Participant:

Of the 28 managers who were changed, how many stayed

with Pepsi?

Jordan:

Seven or eight. Some of those individuals were down-

graded to lower level positions but if you see a person

can't perform even at lower levels, you must let them go.

That's very difficult to do in a paternalistic culture. How-

ever, in the final analysis we pay a big price for not doing

it. The synergism in the people lower down in the organi-

zation is very high. If you want to know who the blockers

are in the organization ask them. We just have to go after

that. The frustration at lower levels in the organization

comes from layers of bureaucracies but it also comes from

having “mediocrity in depth”.

Participant:

In the past we had what we called “The Imperial Chair-

man”. The people who got rewarded were the “friends in

the old boys system”.

Jordan:

Right, that’s called cronyism.

Participant:

One of the things that exacerbates that is that our cus-

tomers have the same bureaucratic culture. They’re status

conscious. When they have a problem their expectations

[sic] is that we have the appropriate level of management

to respond.

Clark: ;

That's one of the reasons why we made our business unit

guys Presidents. It seems like every time you talk with

potential customer or customers they tell you we want the

“President”.

mn am ta ict ata

A-41

Jordan:

Getting back to the main focus. We’re trying to initiate a

process (LDP) to get at these issues of organization

develop [sic] and people. We're just introducing the idea

this time around and in subsequent sessions we're [sic] try

to penetrate further into the organizations. Essentially.

we’re trying to communicate an idea. It’s up to you guys

to push these ideas down in the organization. Every

group we talk with here brings up the same issues because

every one recognizes the problem. I encourage you to

really push that from your side.

Clearly, we want the highest calibre organization we can

get. In some cases, that means replacing managers who

don’t have the skills or potential of some of the people

down below. In some cases it means going outside for tal-

ented people. We have a problem in that Westinghouse

has stagnated over time. As we increase the pressure and

push on making the organization smaller, that must be a

positive pressure, not a negative one as we have in the

past. That's the message: we have to do every thing we

can to utilize the talents of people down in the organiza-

tion.

One of the exercises we did at one of the business units

was to determine where the four or five change activities

are that go beyond day-to-day management, than [sic] we

asked, “Who are the candidates in the organization who

can take on those roles”. Unfortunately, the same four or

five names kept coming up. We seem to be missing the

people in the middle of the age range who have talent,

the willingness and the horsepower to take on risky

change projects. We don’t have those types pushing up

from the bottom. We have a kind of regeneration gap

here. We have to have those kinds of people. Not only are

these individuals the leadership of tomorrow, these are

the people that create ferment down in the ranks that

pushes against the status quo in the system.

A-42

CLOSING COMMENTS

Jordan:

Just two. First, like the ideas that came out today. Some

good clarifications for us of past issues and some new

issues. It’s good food for thought for us. On the flip side,

I hope the same goes for all of you. In the last few of

these sessions, I had the sense that we are on the same

page. We have a lot of talent in this organization. We just

have to break free of some of our past practices.

Clark:

We certainly appreciate your participation and your

input. This whole issue of global strategy is something

that we’re spending time on and we’re focusing on. Mike

has a lot of experience in this area as well as a lot of

interest. We’ve had a China summit: we are soon going to

have a Russia summit. We do need to leverage our corpo-

rate strengths abroad. This issue of corporate direction

and strategy is something I have a lot of interest in but Ill

tell you, it’s a tough issue. Regarding the issue of block-

ages in the organization, that’s something that you need

to work on in the business units. Its difficult for us to do

that from Gateway. We are going to push to change the

old rules and the old paradigms. This was a good session

with a lot of good ideas and I hope you feel the same way.