On appeal from the United States District Court For the Western District of Pennsylvania; D.C. Civil Action No. 87-565.
Sloviter, Becker and Stapleton, Circuit Judges.
We here review a proceeding in which the plaintiff, Donald E. Smith, achieved a sizeable jury verdict on a Pennsylvania state law cause of action for wrongful discharge.*fn1 At trial, Smith, an at-will employee, argued that he had been dismissed because of certain activities he undertook on the suspicion that his employer, Calgon Carbon Company ("CCC"), had polluted water and air. The jury awarded Smith $222,000 in compensatory damages and $181,150 in punitive damages. The defendant now attacks both the legal and factual bases for plaintiff's award, and also appeals an allegedly misleading jury instruction. For the reasons stated herein, we will reverse the judgment of the district court and remand with instructions to enter judgment for the defendant.
Donald Smith was employed by CCC and its predecessors for his entire adult life, working his way up from sweeping floors to his final position as Supervisor of Warehouse and Inventory Control, a low level management position. Smith's duties included keeping track of CCC's inventory of raw materials and finished product, both by taking physical inventories and by monitoring usage and deliveries. Smith's responsibilities also included preparation of monthly Production, Shipping and Inventory ("P.S.I.") reports, which were sent to corporate management.
CCC employed a yearly employee review system in which each employee was rated from one to five, with three being average. Over the course of his employment, Smith received generally favorable reviews, although in later years his average rating declined from four to three, and for some time his reviews commented on his inability to manage time efficiently, as well as on certain problems with his attitude towards superiors. Early in 1985 Smith's long-time immediate supervisor, with whom he had apparently had a good working relationship, retired, and Smith began reporting directly to the new plant manager, Will Bennett.
On October 30, 1985 -- approximately the time Smith's annual review was expected -- Bennett instead gave Smith a memorandum entitled "Don Smith -- Interim Review and Improvement Program." Joint Appendix at 680-82. The expressed purpose of this document was to "address the development and continuation of excessive overtime." On March 7, 1986, Bennett gave Smith an "unsatisfactory" rating of two, and pursuant to company policy placed Smith on a "Performance Improvement Program" ("P.I.P."). This program involved detailed goal-setting and regular meetings with supervisors to review progress, with a new evaluation to be performed after three months. At the end of Smith's P.I.P., he again received a rating of two, and on June 13, 1986, was terminated.
Smith focuses on two separate incidents which he claims led to his dismissal. The first involves his discovery in October 1985 of what he believed to be a "spill" of over 73,000 pounds of caustic soda into the river adjacent to the plant. Caustic soda is a raw material used in vast quantities in the production of "IVP 4 by 6," a recycled charcoal product used in filters. The caustic is stored in a large storage tank outside the plant that can hold upwards of 100,000 pounds of the material. The only way to determine how much caustic is actually in the tank is to drop a cable down to determine the depth of the liquid and from that figure calculate the amount of caustic. Smith testified that he did not take these measurements very often -- prior to October of 1985, the last measurement seems to have been in June -- but instead generally determined how much caustic was on hand by keeping track of how much of the substance was delivered and how much should have been used in manufacturing. This latter figure was determined by multiplying the amount of IVP produced by a "standard usage figure" supplied by the engineering department.
It was through this method -- adding for deliveries and subtracting for projected usage from June to October -- that Smith calculated that there should have been 76,000 pounds of caustic left in the tank after the October production campaign. The actual reading was only 3,000 pounds. Alarmed by this discrepancy, Smith reported it to his supervisors, Bennett and Stan Kreminski, the plant engineer. Shortly thereafter, Kreminski told Smith to repeat his calculations, and if the discrepancy remained to "spread that usage out over the next few months." Joint Appendix at 143.*fn2
Uncomfortable with such a procedure, Smith decided to "do my own -- do an investigation to find out where it went." Joint Appendix at 143. His investigation consisted of a discussion with Victor Shtivelman, a plant engineer, and John Homewood, the maintenance supervisor. Shtivelman told Smith that there had been a "loss of material" and that a maintenance worker had "burned his shoes working in that area, and material leaking out of there." Joint Appendix at 169. Later that day, Smith asked Homewood to check his records for any reports concerning the caustic soda storage area. Homewood came to Smith's office and produced a "work ticket" that stated "Steam line inside caustic dike is leaking." Joint Appendix at 585. More significant from Smith's perspective than the content of this work order,*fn3 however, are events he described surrounding his discussion with Homewood:
When [Homewood] walked in to talk to me I noticed Mr. Bennett followed him outside my door whenever he was in there talking to me about this. He then looked at me, and I saw him, he looked at me and he went over into Stan's [Kreminski's] office, which is immediately from my office, he went in and slammed the door.
Less than a week later, Bob Courson, CCC's Personnel Director, and Bennett met with Smith. Bennett told Smith that he had been working too much overtime when he could be accomplishing more during regular hours, and therefore Bennett was going to reduce Smith's claim for overtime for the preceding two weeks. The next day, Smith sent the P.S.I. report to corporate headquarters; in this document Smith reported as consumed the entire 73,000 pound unfavorable discrepancy of caustic soda, without spreading out the usage as Kreminski had instructed. That same day Bennett gave Smith the "Interim Review and Improvement Program" memo described above.
Smith also claims to have discovered, in a manner similar to his calculation of the caustic soda "spill," that on certain days in March of 1986 the actual production on CCC's "A-furnace" exceeded the production indicated on the production reports prepared and sent to management in accordance with a directive from Bennett to one of Smith's subordinates. Although Smith did not realize it until after his employment with CCC was terminated, the actual production believed by him to have occurred exceeded the production allowed under CCC's permit from Allegheny County. Smith testified that this excessive production created air pollution. This alleged overproduction occurred several days after Smith had received his unfavorable rating and been placed on the Performance Improvement Program. Immediately after receiving his unfavorable rating and being placed on the P.I.P., Smith called Bob Courson, the CCC Personnel Director, to voice his disagreement with how he was being treated. Three days later, Smith met with Courson at corporate headquarters. Smith testified that at this meeting he told Courson that "the main reason that I had received [the unsatisfactory rating] had to do with my reporting of the caustic material on my [P.S.I.] report, and the fact that I hadn't changed the numbers." Joint Appendix at 263. Courson denied that Smith made this allegation to him.
At Courson's suggestion, Smith sent a number of documents to CCC President Thomas McConomy detailing his objections to his poor rating and placement on the P.I.P. With the first of these memos, dated March 24, 1986, Smith also enclosed two memos "to File" he had prepared, one in November of 1985 in response to his "Interim Review and Improvement Program," and one dated March 17, 1986, in response to his unsatisfactory rating. On April 15, 1986, Smith sent McConomy and Tisch yet another memo in response to the first of his interim P.I.P. reviews. All told, Smith wrote 25 single-spaced pages with the expressed purpose of responding to the actions taken against him; in none of these memos does he mention the caustic soda incident or the alleged overproduction on the A-furnace. In fact, only in his final letter to McConomy, dated two days prior to his termination, did Smith mention the spill, on page 9 of a twelve page letter, and then only citing it as "another reason why I received the 10/30/85 memo from Mr. Bennett." Joint Appendix at 485-86. McConomy returned this letter to Smith unopened. Moreover, Smith testified that he met with McConomy personally and read into the record notes he had made immediately after these meetings purportedly recounting the conversations verbatim, Joint Appendix at 274-75, 278-81; in neither of these conversations did Smith discuss the "spill" or A-furnace. Smith testified at trial, however, that he informed McConomy that the production reports received by management understated actual production from the A-furnace during a number of days in March.
Smith also sent a handwritten note to McConomy concerning the A-furnace approximately a week before his termination.
Smith acknowledged that he had no responsibility for reporting spills, emissions or inventory to any public ...