McKennon After Acquired Evidence Doctrine
Summers v. State Farm Mut. Auto. Ins. Co., 864 F.2d 700 (10th Cir. 1988), provides a starting point for consideration of the after-acquired evidence doctrine.
In Summers, an employee began working for State Farm in 1963. From 1963 to July 1980 his work record was satisfactory. In 1981, it was discovered that in 1977 Summers had falsified a record. Summers did not dispute the falsification and was warned by his employer that another falsification could result in dismissal. State Farm reviewed other files that Summers had handled and concluded that seven or eight of these files were "suspicious."
Summers was again confronted and admitted he had falsified other records. Summers was placed on probation. On May 19, 1982, Summers was discharged by State Farm because of poor attitude and inability to get along with fellow employees and customers.
Summers brought an action against State Farm for discrimination on the basis of age and religion. During discovery, State Farm found evidence of 150 additional instances where the employee had falsified records. State Farm's after-acquired evidence was admitted and considered. Based on the after-acquired evidence the judge granted the employer's motion for summary judgment. On appeal, the Tenth Circuit held that the after-acquired evidence could be admitted to bar relief for the employee. In reaching its conclusion, the Summers Court made the following analogy:
"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 . . . ." 864 F.2d at 708.
In Wallace v. Dunn Const. Co., Inc., 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.
The Wallace court 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.'" Lewis v. Fisher Service Co., 329 S.C. 78, 82, 495 S.E.2d 440 (1998) (quoting Wallace, 968 F.2d at 1180). However, the Wallace court held that after-acquired evidence is allowed in determining the amount of damages.
In 1995, the split between the federal circuits was resolved by the United States Supreme Court in McKennon v. Nashville Banner Publishing Co., 513 U.S. 352, 130 L. Ed. 2d 852, 115 S. Ct. 879 (1995). McKennon involved an action brought by a 62-year-old discharged 30-year employee against her employer under the Age Discrimination in Employment Act of 1967 (ADEA).
The ADEA makes it unlawful to discharge any employee or otherwise discriminate against any employee with respect to the employee's compensation, terms, conditions, or privileges of employment because of the employee's age. 29 U.S.C. 623(a)(1) (1994).
The employer claimed the employee was discharged as part of a work force reduction plan necessitated by cost considerations. During discovery, the employer learned that the employee had copied several confidential documents while working as a secretary. When confronted, the employee stated she had copied the documents as insurance and protection. The employer notified the former employee that had it known of her misconduct, it would have discharged her at once for that reason.
For purposes of summary judgment, the employer conceded it discriminated against the employee. The federal district court granted summary judgment to the employer, finding that the employee's misconduct was grounds for her termination and that neither back pay nor any other remedy was available to her under the ADEA. The United States Court of Appeals for the Sixth Circuit affirmed on the same rationale. The United States Supreme Court granted the employee's request for certiorari.
The Supreme Court noted that the ADEA and Title VII share common substantive features and also a common purpose, i.e., the elimination of discrimination in the work place. After noting that deterring discrimination and compensating for injuries caused by prohibited discrimination are two shared objectives of these statutes, the McKennon Court stated:
"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.
"The objectives of the ADEA are furthered when even a single employee establishes that an employer has discriminated against him or her. The disclosure through litigation of incidents or practices that violate national policies respecting nondiscrimination in the work force is itself important, for the occurrence of violations may disclose patterns of noncompliance resulting from a misappreciation of the Act's operation or entrenched resistance to its commands, either of which can be of industry-wide significance. The efficacy of its enforcement mechanisms becomes one measure of the success of the Act." McKennon, 513 U.S. at 358-59.
The Supreme Court unanimously reversed the lower court's use of after-acquired evidence as a complete bar to recovery in wrongful termination cases when the employee establishes that age discrimination was the reason for termination.
Although McKennon rejected the use of after-acquired evidence on the issue of liability in age discrimination cases, it did consider the evidence relevant in determining the remedy to be ordered, stating: "The employee's wrongdoing must be taken into account, we conclude, lest the employer's legitimate concerns be ignored. " McKennon, 513 U.S. at 361.
The Supreme Court set the following threshold standard for admitting after-acquired evidence on the issue of damages:
"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. The beginning point in the formulation of a remedy in such a case is the calculation of back pay from the date of the unlawful discharge to the date the employee's wrongful conduct was discovered. 513 U.S. at 362.