| Appendix B – Chapter Exercises
Chapter Exercise 7.3
Price Waterhouse v. Hopkins
Objective. The purposes of exercise 7.3 are twofold: (1) to acquaint students with an important U.S.
Supreme Court case related to performance appraisal; and (2) to allow students to consider the
implications of this case as they relate to appraisal system development, implementation, and
Description. Students will assume the role of an outside consultant engaged by Price Waterhouse to
design a performance assessment system that is valid and legally defensible. Therefore, the students'
efforts should be directed toward developing expertise about: the specifics of the Hopkins case (see
Exhibit 7.3.1), performance appraisal issues (Chapter 7), and the relevant EEO issues (Chapter 3).
As consultants to Price Waterhouse HR senior management, students will be challenged to give
constructive criticism about the firm's present staffing (especially promotion) systems. The
background case information includes the specifics of a lawsuit filed against Price Waterhouse by a
female manager (Hopkins), who was rejected as partner candidate. The basis for the former litigation
is a violation of Title VII of the Civil Rights Act of 1991.
Students should be aware that Title VII of the Civil Rights Act of 1991 is an amendment to Title VII of
the Civil Rights Act of 1964. The former overruled a 1989 Supreme Court decision. Under the 1989
Price Waterhouse ruling, the Supreme Court allowed the defendant an opportunity to present a
"mixed motive" argument. The "mixed motive" argument states that setting aside the "motivating
factor," the Company would have made the same personnel decision. The Company was thus given
an opportunity to prove by a preponderance of the evidence that it relied on valid reasons in making
absence of any discriminatory motive becomes relevant only in the remedial phase of the litigation