Plaintiffs Qinghua Zhang and Steven Heiland sued defendant Federal Home Loan Bank of Topeka (FHLB) in the U.S. District Court for the District of Kansas raising claims of retaliation for whistleblowing and racial discrimination in violation of Title VII of the Civil Rights Act of 1964 and for common law retaliatory discharge. The district court held a jury trial that resulted in a verdict for FHLB on all claims, and the plaintiffs appealed to the U.S. Court of Appeals for the Tenth Circuit.
Factual Overview
Zhang and Heiland were former employees of FHLB who alleged they were terminated in retaliation for whistleblowing activities. Zhang additionally claimed that her termination was motivated by racial discrimination. FHLB contended that the plaintiffs were terminated for legitimate reasons, including insubordination and violation of email policies.
During the district court proceedings, the plaintiffs submitted proposed jury instructions including an instruction on pretext, which would have instructed the jury that if it disbelieved FHLB’s stated reasons for terminating the plaintiffs, it could conclude those reasons were a pretext for discrimination. The district court did not include this instruction. The court also excluded evidence of proposed severance packages that FHLB had offered the plaintiffs, which would have provided certain pay and benefits if they released their claims against FHLB.
After the jury returned a verdict in favor of FHLB on all claims, Zhang and Heiland filed a motion for a new trial, which the district court denied. The plaintiffs then appealed to the Tenth Circuit, challenging both the district court’s failure to give their requested pretext instruction and its exclusion of the severance offers.
Legal Analysis
Failure to Instruct the Jury on Pretext:
The Tenth Circuit found that Zhang and Heiland did not properly preserve their claim of error regarding the jury instruction. Under Federal Rule of Civil Procedure 51, a party must state distinctly the matter objected to and the grounds for the objection on the record to preserve the right to appeal a failure to give a requested instruction. Although the plaintiffs submitted their proposed pretext instruction, they did not object to its omission in their written objections to the court’s proposed instructions, nor did they renew their request or object during the conference at which the district court finalized jury instructions.
Because the argument was not preserved, the court reviewed only for plain error, which requires showing (1) error, (2) which is plain, (3) which affects substantial rights, and (4) which seriously affects the fairness, integrity, or public reputation of judicial proceedings. The court found that while the plaintiffs asserted plain error, they did not develop arguments addressing the third and fourth requirements of the plain error standard. The court concluded that even if it agreed that the district court plainly erred (which it found doubtful), the plaintiffs had not offered a sufficient basis for reversal on this unpreserved claim.
Exclusion of Severance Offers Under Federal Rule of Evidence 408:
The court reviewed the district court’s evidentiary ruling for abuse of discretion. Under Federal Rule of Evidence 408, evidence of compromise offers is generally inadmissible when offered to prove or disprove the validity of a claim or to impeach by prior inconsistent statement or contradiction.
The plaintiffs argued that the severance offers should have been admitted under Rule 408(b), which provides that a court “may” admit evidence of compromise offers “for another purpose.” Specifically, they contended that the severance offers were relevant to show pretext because FHLB allegedly had a policy making employees ineligible for severance packages if terminated for misconduct. Therefore, the fact that FHLB offered severance packages could suggest its stated reasons for termination were pretextual.
The Tenth Circuit found that the district court did not abuse its discretion by excluding this evidence. The court emphasized that Rule 408(b) is permissive, not mandatory — it permits but does not require the admission of compromise offers for other purposes. The district court had concluded that admitting the severance proposals would be cumulative of other evidence already presented on the issue of pretext. The Tenth Circuit noted that, as the plaintiffs themselves acknowledged, “considerable evidence of pretext [was] presented at trial,” and the district court was not required to allow introduction of otherwise inadmissible severance offers to further support their pretext arguments.
The court also briefly addressed another argument that the plaintiffs made regarding evidence of their rejection of the severance offers to show they acted in good faith when reporting unlawful conduct. The court found that any error in not allowing evidence on this basis would not warrant reversal because the jury expressly found that Zhang and Heiland did act in good faith.
The Tenth Circuit affirmed the district court’s judgment and its denial of the motion for a new trial.
Schrag on Law 