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EEOC v. HAY ASSOCS.

August 20, 1982

EQUAL EMPLOYMENT OPPORTUNITY COMMISSION, Plaintiff, and JOANN BAY, Intervenor,
v.
HAY ASSOCIATES, Defendant



The opinion of the court was delivered by: BECKER

 EDWARD R. BECKER, District Judge.

 I. Preliminary Statement

 This is an employment discrimination action brought by the Equal Employment Opportunity Commission to redress defendant Hay Associates' alleged discrimination against Joann R. Bay because of her sex, in violation of Title VII of the 1964 Civil Rights Act, 42 U.S.C. §§ 2000e to 2000e-17 (1976). After we granted Bay leave to intervene as a party-plaintiff, she filed a complaint alleging in addition that Hay violated the Equal Pay Act, 29 U.S.C. § 206(d) (1976). Together the complaints assert that Hay discriminated against Bay with respect to her compensation and opportunities for promotion while she was employed as an executive financial analyst and counsellor; that Hay constructively discharged her; and that Hay refused to rehire her in retaliation for her claims of discrimination.

 The parties agreed to bifurcate the trial, reserving certain damages issues relating to compensation for the second phase. Trial of the first phase consumed about three weeks, after which the parties filed voluminous post-trial submissions. This opinion constitutes our Rule 52(a) findings of fact and conclusions of law on the liability issues. *fn1" We take this opportunity to compliment the excellent trial and post-trial work of the three very able lawyers for the parties.

 The case arises in a professional setting in which employment decisions are rarely based on quantifiable, objective criteria. Instead, the subjective judgments of managers are often the reason for decisions about promotion and compensation. It is also true that the responsibilities of professional employees are often not amenable to exact description. Nonetheless, a clear picture of what actually occurred during Bay's employment at Hay emerged from the testimony at trial and the large number of exhibits submitted by the parties.

 Hay is a partnership whose main office is located in Philadelphia. Its principal business, conducted in numerous American and foreign offices, is management consulting with particular emphasis on job classification, evaluation, and compensation. *fn2" In 1970 Hay created a division known as the Executive Financial Counselling Service ("EFCS") to furnish personal financial services to the executives of Hay's corporate clients. From the beginning EFCS has been an insular unit within Hay and not directly related to Hay's principal business activities.

 Bay came to work at EFCS in March 1973. She was then age forty-six, having graduated from Bucknell University in 1948 and having completed a course of training at the Institute for Paralegal Training in Philadelphia in 1973. Immediately after finishing college, Bay taught school for two years and then left the work force to raise her family. During her years at home she participated in a wide variety of important community activities. In 1972 she decided to re-enter the work force. This decision led her to take the six-month paralegal training course, from which she was recruited by Hay.

 Bay was employed by Hay until July 4, 1977, when she resigned. During that period she performed many tasks relating to personal financial analysis and planning. She received one significant promotion and several salary increases, but never achieved the title or compensation of men working in or hired into the division during her tenure, even though, she submits, she was doing work equivalent to theirs. Thus the plaintiffs contend that Hay violated section 703(a) of Title VII, 42 U.S.C. § 2000e-2(a) (1976), by delaying one promotion and refusing another to Bay because of her sex; by paying her a lower salary than men were paid for work requiring substantially the same skill, effort, and responsibility; and by constructively discharging her. *fn3" The plaintiffs also allege that Hay violated the Equal Pay Act by paying Bay less than men were paid for substantially equal work.

 In addition to taking issue with the plaintiffs' factual contentions, Hay interposes a number of legal defenses. It raises statute of limitations defenses to significant portions of the Title VII and Equal Pay Act claims. It contends that Bay's allegations about her compensation are insufficient to establish either an Equal Pay Act violation or a Title VII "comparable work" claim. It also submits that the evidence does not, as a matter of law, permit the conclusion that Bay's resignation resulted from a constructive discharge.

 In the wake of the trial, the parties have presented us with a very large number of proposed findings of fact, covering even the minutiae of the record. But we need not address the minutiae, because the critical facts emerge boldly from the record. We will therefore proceed to make findings only of the important subsidiary facts and then to state broadly our ultimate factual findings. This procedure is exceptionally appropriate with respect to Bay's equal pay claims, for we find no merit in many of them. We do, however, find that Bay was denied equal pay for equal work in the spring of 1977. We find in addition that, from 1975 through 1977, Bay was not promoted as she should have been because of her sex, and we conclude that this refusal to promote was a continuing violation of Title VII. Finally, we hold that Bay was constructively discharged in July 1977.

 To place our findings in perspective, and because Hay has filed a post-trial motion to amend its answer to raise a statute of limitations defense, we turn first to the applicable limitations period.

 II. The Limitations Period

 Hay asserts two defenses based on the applicable statutes of limitations. For evaluating these defenses, the pertinent dates are the following. Bay filed her charge of discrimination with the EEOC on December 9, 1977. The complaint of the EEOC was filed on September 29, 1978, alleging violations of Title VII. Bay's complaint in intervention was filed on April 3, 1979, alleging violations of the Equal Pay Act and Title VII.

 Hay argues first that Bay cannot recover for any violations of the Equal Pay Act occurring before April 3, 1977, or before April 3, 1976, if they were willful, under 29 U.S.C. § 255(a) (1976). The predicate of this argument is that the filing date of Bay's rather than the EEOC's complaint is the pertinent one because the EEOC did not allege Equal Pay Act violations. The EEOC takes issue with this assumption because it now is empowered to enforce the Equal Pay Act, although it did not have that authority when its complaint in this action was filed. *fn4" The EEOC relies on Fed. R. Civ. P. 8(a), which requires only that a complaint state the grounds for relief and does not require identification of legal theories. See 2A J. Moore & J. Lucas, Moore's Federal Practice para. 8.14 (2d ed. 1982). When in 1979 enforcement of the Equal Pay Act became the responsibility of the EEOC, in that agency's submission, we acquired jurisdiction to apply the Act to the EEOC's claims.

 If the EEOC is correct, the limitations period is enlarged by slightly more than six months. We will assume for the purpose of our discussion that the EEOC is correct, but we need not decide this question because we find that the plaintiffs have proven only that Hay violated the Equal Pay Act in the spring of 1977, which, in view of our finding that the violation was willful, is not within the disputed period of time. *fn5"

 Hay asserts that it should be allowed to amend its answer either under subsection (a) or under subsection (b) of Fed. R. Civ. P. 15. Rule 15(b) permits pleadings to be amended to conform to evidence adduced at trial and ensures that "when issues not raised by the pleadings are tried by express or implied consent of the parties, they shall be treated in all respects as if they had been raised by the pleadings." This subsection is not pertinent to Hay's proposed amendment. The purpose of Rule 15(b) is to authorize amendments to conform the pleadings to issues or evidence that appear for the first time at trial. See Francois v. Francois, 599 F.2d 1286, 1294 n.6 (3d Cir. 1979), cert. denied, 444 U.S. 1021, 62 L. Ed. 2d 653, 100 S. Ct. 679 (1980); Joiner Systems, Inc. v. AVM Corp., 517 F.2d 45, 48-49 (3d Cir. 1975). The Title VII statute of limitations is not an issue of this kind, but rather is one of which Hay was or should have been aware from the filing of the complaint. Thus Hay is not entitled to amend under Rule 15(b).

 Rule 15(a) requires us "freely" to grant leave to amend "when justice so requires." But leave to amend may be denied when the opposing parties would be substantially prejudiced by the amendment or when the amendment is unreasonably delayed. Zenith Radio Corp. v. Hazeltine Research, Inc., 401 U.S. 321, 330, 28 L. Ed. 2d 77, 91 S. Ct. 795 (1971); Foman v. Davis, 371 U.S. 178, 182, 9 L. Ed. 2d 222, 83 S. Ct. 227 (1962); see Goodman v. Mead Johnson & Co., 534 F.2d 566, 569 (3d Cir. 1976), cert. denied, 429 U.S. 1038, 50 L. Ed. 2d 748, 97 S. Ct. 732 (1977). We deny leave to amend because the plaintiffs would be prejudiced. The plaintiffs have represented to us in offers of proof filed in response to Hay's motion that if the limitations defense had been asserted they would have proven specific acts within the limitations period and would have identified precise dates. They have represented further that they would have proven that Hay had a "pattern or practice" of discriminating against its female employees with respect to promotions, see Jewett v. International Telephone & Telegraph Corp., 653 F.2d 89, 91-92 (3d Cir.), cert. denied, 454 U.S. 969, 102 S. Ct. 515, 70 L. Ed. 2d 386 (1981); as it was, the case was tried strictly on the theory of disparate treatment, see McDonnell Douglas Corp. v. Green, 411 U.S. 792, 802, 36 L. Ed. 2d 668, 93 S. Ct. 1817 (1973). Moreover, Hay has offered no explanation for its delay in raising the possible statute of limitations defense. The plaintiffs' pre-trial memoranda advised Hay, if it did not know earlier, that Bay was asserting a continuing denial of promotion, in violation of Title VII, from 1975 through 1977. *fn6"

 Under these circumstances, we conclude that Hay has waived the statute of limitations defense and we deny its motion for leave to amend its answer. *fn7" The limitations period that applies to the promotion claims is that prescribed by 42 U.S.C. § 2000e-5(g) (1976), which gives us jurisdiction to award back pay from two years prior to the filing of the charge of discrimination, i.e., from December 9, 1975.

 III. Findings of Fact

 A. The Parties

 Our descriptions of the principal figures in this case -- Bay, EFCS, Bay's superiors and co-workers, and certain Hay partners -- is considerably more detailed than in the usual case. This detail results from the nature of the case, which deals with conflicting claims of professional competence and turns on credibility judgments about the personalities involved. We turn first to a description of EFCS and then to our evaluation of the principal figures.

 1. The Business of EFCS

 At its inception, the services provided by EFCS consisted of a thorough review of a client-executive's financial affairs, including personal interviews and counselling, and culminated in the preparation of a lengthy and comprehensive EFCS report that contained the Hay consultant's recommendations on all aspects of the executive's financial affairs and estate planning concerns. These reports were known as "full-blown" reports. From 1970 until late 1974, EFCS's business consisted exclusively of one-to-one counselling and preparing "full-blown" reports. Because the executives were usually in the upper levels of management and earned in excess of $80,000 per year, the work of EFCS was highly sophisticated. Its services were paid for by the executive's corporate employers.

 EFCS did well at first but by late 1973 its individual counselling business began to decline, because of a general downturn in the economy, the institution of wage-price controls, and an Internal Revenue Service ruling that made the EFCS service taxable as current income to the executives to whom it was provided. By early 1974 EFCS was beginning to experience serious financial difficulties, and EFCS thereupon undertook the development of an "executive financial planning seminar" program. This program had several facets, designed together to induce Hay's corporate clients to purchase EFCS services on a group basis for their executives. As the program was conceived, EFCS would invite representatives of client companies to sales or demonstration seminars, at which clients would be encouraged to retain EFCS to put on one or more "in-house" seminars for the client's executives. In-house seminars, in turn, would lead to interviews with the executives and the consequent preparation of EFCS reports. It was further contemplated that the client-executives would be middle-level managers and that shorter, "mini," rather than "full-blown" reports would be prepared.

 The first seminar was given in July 1974 in Minneapolis, and others soon followed. During 1974 and 1975 EFCS continued to provide individual counselling and "full-blown" reports, although it eventually became clear that the seminars and follow-up "mini" reports were EFCS' only hope for survival. Business was poor throughout 1974, however, and EFCS' future was uncertain. During the next two years the EFCS seminar format underwent constant revision. Business did not begin to pick up until near the end of 1975 when the first important sales -- to El Paso Gas Company and Southern Railway Company -- were made as the result of a demonstration seminar given in Atlanta in August 1975.

 During 1976 EFCS' business grew steadily. In that year EFCS presented eleven demonstrations and twenty-two in-house seminars for ten different customers. The in-house seminars generated a significant amount of mini-report business. The "mini" report was less sophisticated and less comprehensive than the "full-blown" report had been, but like a "full-blown" report it followed an interview between a Hay consultant and an executive.

 Throughout the relevant period, EFCS was a small division. It never had more than ten professional employees, which number was reached in early 1973 when the individual counselling business was successful. During 1973 through 1975, several of these employees resigned or were discharged. During most of 1976 and the first part of 1977, there were three to four professional employees in EFCS.

 2. Joann Bay

 Bay is a person of great intelligence. She is a quick learner, persistent and very resourceful. We introduce her personality because, at least in Hay's submission, it is one of the critical factors in this case. Hay's principal explanation for its judgment that Bay was not worthy of promotion and higher compensation was her alleged inability, by virtue of what was described as her monotone voice and lackluster personality, to inspire potential customers at various EFCS sponsored seminars to purchase EFCS's financial planning services. While conceding that Bay possessed excellent research and writing abilities, and that she performed the EFCS technical audit and report writing functions well, Hay contends that Bay lacked the "pizzazz" necessary to be or to become a successful seminar presenter.

 We agree that Bay has an uninteresting voice and that she does not have a dynamic personality. We find, however, that she was a quite capable seminar presenter. That judgment is informed by the documentary and testimonial evidence of disinterested persons who attended various seminars and gave her high marks. Concomitantly, we reject the testimony of several interested witnesses, all Hay employees or their spouses, who gave her negative ratings. Furthermore, we find that, because EFCS's manager, Gordon C. Campbell, believed that women could play only a minor role in executive financial planning, Bay was not given adequate opportunities to participate in seminars, and so to improve her seminar skills. We find that had she been given such opportunities she would have performed considerably better as a seminar presenter. The testimony showed that none of the EFCS personnel was an effective presenter from the outset; instead, each improved with experience. As will be discussed, Bay was given markedly less experience than her co-workers.

 Bay has been portrayed by Hay as a "crybaby" (defendant's posttrial brief [DPTB], at 38); as an "ambitious person who constantly demanded to take on ever-increasing responsibilities with a great degree of confidence in her success" (DPTB 34); as being unable to appreciate limitations on her capabilities or to accept constructive criticism (DPTB 34); as vastly magnifying her skills (DPTB 35); as being self-absorbed (DPTB 36); as having a distorted perspective and constructing imagined versions of conversations to fit into her preconceptions (DPTB 37); and as having a tendency to nag fellow employees with her complaints to the point that they made perfunctory expressions of sympathy which she viewed as an endorsement of her grievances against Hay (DPTB 37). We agree that Bay was ambitious, a quality that we do not view in a negative light. We reject the balance of the characterizations of Bay's personality, finding no basis for them in the record and concluding that, insofar as these judgments are based upon specific incidents chronicled in the record, Bay's conduct constituted nothing more than a good-faith effort to better herself in an inhospitable environment.

 3. Gordon C. Campbell

 Campbell was the manager of EFCS during Bay's employment there. Campbell is a very able and experienced financial planner, and possesses good judgment in financial planning matters. In terms of his ability as a manager, he may be described as careful, conservative, and reluctant to innovate. For example, he resisted the transformation in EFCS's business from individual counselling to seminar presentation until it became clear that only the latter would permit EFCS to survive.

 While we do not base these conclusions about Campbell on any one incident but rather on the testimony as a whole, we note a number of incidents that reflect Campbell's bias. First, when Bay was hired in March 1973 Campbell classified her as a non-exempt, i.e., non-professional, employee though her position as a technical services auditor was a professional one. Bay did not discover this misclassification until December 1973, when she received an invitation to the clerical employees' Christmas party. At that time Campbell explained to her that he had so classified her, despite her professional position, because she had requested that available insurance benefits be used to augment her salary; Campbell also promised to discover what it would cost to change her classification. Yet not until eight months later, when Bay tendered her resignation to take a job she had been offered elsewhere, did Campbell do as he had promised and reclassify her.

 Second, after the commencement of the seminar program Campbell at least twice inquired of Western Electric executives whether they would object to having a woman prepare financial counselling reports or make presentations at seminars. He testified that these inquiries were not prompted by clients' statements but by his perception that there might be some unhappiness if a female consultant was involved. Campbell similarly requested client evaluations of Bay's performance at seminars, although such evaluations had never been requested for a male member of the EFCS staff. Campbell also expressed to Bay his concern that Bay's husband would suffer for food and clean clothes while she was away on business trips.

 Third, Campbell refused for a period of months after Bay attended seminars and was asked by clients for her business card to furnish her with business cards. Male professional employees of EFCS were ...


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