Opinion ID: 1341372
Heading Depth: 1
Heading Rank: 3

Heading: Development of the After-Acquired Evidence Doctrine

Text: Summers v. State Farm Mutual Automobile Insurance Company, 864 F.2d 700 (10th Cir.1988) provides a starting point for consideration of the after-acquired evidence doctrine. In this seminal case, an employee brought an action against State Farm for discrimination on the basis of age and religion. In the course of discovery, State Farm found evidence of 150 instances where the employee had falsified records. It sought to have this evidence admitted against employee. On appeal, the Tenth Circuit held that such after-acquired evidence could be admitted to bar relief for the employee. In reaching its conclusion, the Court gave the following analogy that has since been often cited in discussions about the after-acquired evidence doctrine: The present case is akin to the hypothetical wherein a company doctor is fired because of his age, race, religion, and sex and the company, in defending a civil rights action, thereafter discovers that the discharged employee was not a `doctor.' In our view, the masquerading doctor would be entitled to no relief.... Summers, 864 F.2d at 708. In Wallace v. Dunn Construction Company, 968 F.2d 1174 (11th Cir.1992), the Eleventh Circuit rejected the Summers rule that after-acquired evidence may effectively provide an affirmative defense to Title VII liability. Wallace, 968 F.2d at 1181. Wallace declared that the Summers rule was antithetical to the principal purpose of Title VIIto achieve equality of employment opportunity by giving employers incentives to self-examine and self-evaluate their employment practices and to endeavor to eliminate, so far as possible, employment discrimination. Wallace, 968 F.2d at 1180 (internal citations omitted). Instead, the Eleventh Circuit held that after-acquired evidence may be allowed on the issue of damages. In 1995, the split between the federal circuits was resolved by the United States Supreme Court in McKennon v. Nashville Banner Publishing Company, 513 U.S. 352, 115 S.Ct. 879, 130 L.Ed.2d 852 (1995). McKennon involved an action brought under the Age Discrimination in Employment Act of 1967 (ADEA). The Supreme Court noted that the ADEA and Title VII share common substantive features and also a common purpose: the elimination of discrimination in the workplace. Deterring discrimination and compensating for injuries caused by prohibited discrimination are two objectives of these statutes. The McKennon Court wrote that It would not accord with this scheme if after-acquired evidence of wrongdoing that would have resulted in termination operates, in every instance, to bar all relief for an earlier violation of the Act. McKennon, 513 U.S. at 358, 115 S.Ct. at 884, 130 L.Ed.2d at 861. The Supreme Court unanimously reversed the lower court, which had allowed after-acquired evidence to serve as a complete bar to recovery. McKennon rejected the use of after-acquired evidence on the issue of liability; however, it did consider the evidence relevant to the remedy to be ordered: The employee's wrongdoing must be taken into account, we conclude, lest the employer's legitimate concerns be ignored. [1] McKennon, 513 U.S. at 361, 115 S.Ct. at 886, 130 L.Ed.2d at 863. The Supreme Court set the following threshold standard for admitting after-acquired evidence: Where an employer seeks to rely upon after-acquired evidence of wrongdoing, it must first establish that the wrongdoing was of such severity that the employee in fact would have been terminated on those grounds alone if the employer had known of it at the time of the discharge. McKennon, 513 U.S. at 362-63, 115 S.Ct. at 886-87, 130 L.Ed.2d at 864. We adopted the McKennon standard in Baber v. Greenville County, 327 S.C. 31, 488 S.E.2d 314 (1997) in the context of a whistleblower's suit. Baber had brought an action, under the Whistleblower's Act, alleging he was terminated as a result of his refusal to delete portions of an audit report he had prepared detailing the County Tax Collector's waiver of penalties for certain parties. The trial court allowed the County to introduce evidence acquired during discovery concerning Baber's poor job performance on the tax audit; however, the court charged the jury not to consider the after-acquired evidence. On appeal, we accepted the McKennon test for determining whether after-acquired evidence may be used to limit employee damages. We concluded that the wrongdoing was not of such severity that the employee in fact would have been terminated on those grounds alone if the employer had known of it at the time of the discharge. A number of other jurisdictions have also followed the McKennon approach of allowing, in certain cases, after-acquired evidence on the issue of damages. Recently, the Texas Supreme Court adopted the McKennon test, holding that after-acquired evidence can serve as a limitation on an employee's recovery for a retaliatory discharge claim brought under the Texas Workers' Compensation Act. Trico Technologies Corp. v. Montiel, 949 S.W.2d 308 (Tex.1997). Likewise, in Walters v. United States Gypsum Company, 537 N.W.2d 708 (Iowa 1995), the Iowa Supreme Court adopted the McKennon standard for purposes of retaliatory discharge/discrimination actions. The employee had claimed that she had been discharged from her employment because she had filed a civil rights complaint against her employer. In an action involving sexual harassment, constructive discharge, and retaliation, the Michigan Court of Appeals recently reaffirmed its rule that an employee is not barred from all relief as a matter of law for after-acquired evidence of misconduct, but that any wrongdoing could be reflected in the nature of the relief awarded to him. Horn v. Dep't of Corrections, 216 Mich.App. 58, 548 N.W.2d 660 (1996). See also Thompson v. Better-Bilt Aluminum Prods. Co., 187 Ariz. 121, 927 P.2d 781 (Ct.App.1996) (finding that public policy does not preclude, in action involving wrongful termination for filing of a workers' compensation claim, an employer from presenting after-acquired evidence of application fraud when the jury is instructed as to the significance of such evidence on the measure of damages); Barlow v. Hester Industries, Inc., 198 W.Va. 118, 479 S.E.2d 628 (1996) (adopting the McKennon standard for employment discrimination cases). Courts, however, have not been unanimous in their adoption of the McKennon approach. Some jurisdictions have held that after-acquired evidence can serve as a complete bar to employee claims. In Crawford Rehabilitation Services, Inc. v. Weissman, 938 P.2d 540 (Colo.1997) (en banc), the Colorado Supreme Court declined to apply the limitations placed on the after-acquired evidence doctrine by McKennon to claims for breach of implied contract and promissory estoppel. It held that after-acquired evidence of resume fraud may provide an employer with a complete defense to such claims. Similarly, in Gassmann v. Evangelical Lutheran Good Samaritan Society, Inc., 261 Kan. 725, 933 P.2d 743 (1997), the court held that as to ordinary wrongful discharge breach of employment contract cases not involving any overriding governmental interest, the limits placed on the after-acquired evidence doctrine by McKennon are not applicable, and the employee is not entitled to any relief if the employer can establish after-acquired evidence sufficient for termination. See also Camp v. Jeffer, Mangels, Butler & Marmaro, 35 Cal.App.4th 620, 41 Cal.Rptr.2d 329 (1995) (finding employees' misrepresentations about their felony convictions related directly to their wrongful termination claims; since they were not lawfully qualified for their jobs, they cannot be heard to complain that they improperly lost them.).