DIVISION XI -- BURDEN OF PROOF AND PRODUCTION
SUBDIVISION F -- AFTER ACQUIRED EVIDENCE
XI. Burden of proof and
* * *
- F. After acquired evidence
In Atchison v. Brown & Root, Inc., 82-ERA-9 (Sec'y June 10, 1983), reversed on other grounds sub nom,. Brown & Root v. Donovan, 747 F.2d 1029 (5th Cir. 1984), dismissed on remand (Sec'y Apr. 12, 1985), it was discovered that Complainant had misrepresented his educational qualifications for the job. The Secretary found that Respondent would have discharged Complainant as soon as it discovered the misrepresentation even if he had not engaged in protected activity. The Secretary stated that "[f]iling a complaint under the ERA, and even proof that the firing itself was improperly motivated, should not insulate [Complainant] from other, legitimate, management actions. Therefore, I do not think it would be appropriate, under my authority to order affirmative action to abate a violation found (29 C.F.R. 24.6(b)(2)), to require reinstatement of an employee who repeatedly misrepresented material facts about his background, or to order back pay beyond the date of discovery of the misrepresen- tation."
[Editor's note: It is not clear from either the Secretary or the ALJ's decisions how Respondent discovered the misrepresentation, but it was a couple months after Complainant was discharged. In this case, Respondent apparently did not advance an "after acquired evidence" defense for its burden of articulation, but only in regard to the extent of damages.
On appeal, the Fifth Circuit ruled that Complainant's internal complaints did not support an ERA employee protection complaint. Although the Secretary dismissed Atchinson's complaint on remand, in subsequent Fifth Circuit cases, the Secretary has declined to acquiesce in Brown & Root .]
[N/E Digest XI F]
AFTER ACQUIRED EVIDENCE; CANNOT BE USED TO NEGATE LIABILITY, ALTHOUGH IT IS RELEVANT TO APPROPRIATE REMEDY
In McCafferty v. Centerior Energy , 96-ERA-6 (ARB Sept. 24, 1997), Respondent argued that one Complainant was not qualified for a rehire position, and therefore could not have been retaliated against, because he lied on a self-disclosure questionnaire about having been removed from a previous job because of a positive drug test.
The ARB found, however, that Respondent did not know of the false statement at the time it retaliated against him. The ARB cited the Supreme Court decision in McKennon v. Nashville Banner Pub. Co. , 130 L.Ed.2d 852 (1995), for the proposition that after-acquired evidence cannot not be used to negate liability. The ARB found, however, that it must consider how the after-acquired evidence bears on the remedy.
AFTER ACQUIRED EVIDENCE; APPROPRIATE SANCTIONS ON RESPONDENT
WHO UNDERTAKES INVESTIGATION OF COMPLAINANT
[N/E Digest XI F]
In James v. Ketchikan Pulp Co ., 94-WPC-4 (ARB June 28, 1996), Complainant moved for reconsideration and rehearing based on evidence obtained after the close of the record, which he contended showed that Respondent's witnesses lied concerning Respondent's knowledge of his protected activities, and its investigation of Complainant. The Board found that the new evidence concerned an issue on which Complainant had prevailed before the Secretary, who explicitly found that Complainant was singled out for suspension because of his protected activities. The Board held:
Implicit in this finding is the recognition that James
discriminatorily was targeted for investigation by KPC.
Notwithstanding KPC's impermissible motive in investigating
James, however, the company uncovered evidence that
justified firing him. As the Supreme Court recognized in
McKennon v. Nashville Banner Publishing Co.
S.Ct. 879, 1995 U.S. LEXIS 699 at *19: "Once an
employer learns about employee wrongdoing that would lead to
a legitimate discharge, we cannot require the employer to
ignore the information, even if it is acquired during the
course of discovery in a suit against the employer and even
if the information might have gone undiscovered absent the
- Here, the Secretary followed the Supreme Court's guidance and did not require KPC to ignore the evidence it uncovered, even though KPC's motive for conducting the investigation was wrongful. The Supreme Court recognized in McKennon that an award of attorney's fees and, in appropriate cases, an additional sanction may be employed to diminish the willingness of employers to "undertake extensive discovery into an employee's background or performance to resist claims." Id. at *20. In this case, we believe that the Secretary's decision awarding attorney's fees and costs to James is a sufficient deterrent.
AFTER ACQUIRED EVIDENCE; DOES NOT DEFEAT COMPLAINT, BUT IS
RELEVANT TO DAMAGES
[N/E Digest XI F]
Evidence of legitimate grounds for termination of employment of a complainant that is acquired by the employer after the decision to terminate does not defeat a discrimination complaint. Such evidence, however, is relevant to the issue of damages. Timmons v. Mattingly Testing Services , 95-ERA-40 (ARB June 21, 1996), citing McKennon v. Nashville Banner Publishing Co. , 115 S.Ct. 879 (1995) and Smith and Fitzpatrick v. Tennessee Valley Authority , 89-ERA-12, slip op. at 2-6 (Sec'y May 17, 1995).
XI.F. After acquired evidence
[Editor's note: The theory of after acquired evidence has arisen in several DOL enforced employee protection cases. I have not found a case in which the Secretary has squarely ruled on the issue. Compare Bryant v. Ebasco Services, Inc., 88-ERA-11 (Sec'y July 9, 1990) (refusal to rehire following settlement because originally obtained job using fraudulent credentials).
The United States Supreme Court had granted certiorari on this issue in a Title VII case, Milligan-Jensen v. Michigan Technological Univ., 975 F.2d 302 (6th Cir. 1992), cert. granted, 125 L. Ed. 2d 686, 113 S Ct. 2991 (U.S. 1993), cert. dismissed, 1993 U.S. LEXIS 4734, 62 U.S.L.W. 3113 (U.S. 1993). A last minute settlement resulted in dismissal of certiorari. The Wall Street Journal, Tuesday, August 31, 1993, p.1. According to The Wall Street Journal, the Clinton administration had taken the position that additional evidence should not absolve an employer, but should permit a court to lower the damage award.
In Milligan-Jensen, it was discovered in preparation for trial that the appellee had omitted a prior DUI conviction from her employment application for the position of campus security officer. The District Court found that this was a material falsification, and that had appellant known that appellee has falsified her employment application she would have been dismissed (falsification not the conviction being the critical factor). The District Court reduced the award for this reason.
The Sixth Circuit reversed based on its decision in Johnson v. Honeywell Info. Sys., Inc., 955 F.2d 409 (6th Cir. 1992), in which it was held that in cases where resume fraud is discovered after discharge, "summary judgment [or judgment as a matter of law pursuant to Fed. R. Civ. P. 50] will be appropriate where the misrepresentation or omission was material, directly related to measuring a candidate for employment, and was relied upon by the employer in making the hiring decision." Johnson, 955 F.2d at 414, n2. The Sixth Circuit found it immaterial whether the falsification or the underlying misrepresentation would have been the reason for the termination.
The circuits are divided on this issue. Compare Johnson, 955 F.2d 409 (no relief); Summers v. State Farm Mut. Auto Ins. Co., 864 F.2d 700 (10th Cir. 1988) (no relief); Washington v. Lake County, 969 F.2d 250 (7th Cir. 1992); Wallace v. Dunn Constr. Co., Inc., 968 F.2d 1174 (11th Cir. 1992).
The Sixth Circuit hinted that it may view the case differently if it was not shown that the termination would have resulted from the falsification.]
XI F After acquired evidence
In Bryant v. Ebasco Services, Inc., 88-ERA-31 (Sec'y Apr. 21, 1994), as part of a settlement agreement regarding Complainant's original ERA whistleblower complaint, there was an oral agreement to rehire complainant to a comparable position -- at least according to Complainant. Respondent contested the existence of such an oral agreement, but the ALJ found that there was such an agreement based on credibility determinations. The Secretary declined to make a finding on this matter in view of his finding that Respondent presented sufficient evidence of its legitimate reasons for not rehiring Complainant so as to rule out any discriminatory motive.
The Secretary found that Complainant presented evidence on all the elements of a prima facie case, but noted that Respondent presented uncontroverted testimony that it sought reemployment for Complainant by submitting his name for work on potential future contracts, and that Respondent's clients decided which of the offered candidates are hired. Later, Respondent discovered - - after the negotiation of the settlement agreement and Complainant's filing a his second ERA complaint (for violating the terms of the settlement agreement and blacklisting) -- that Complainant had misrepresented his educational qualifications for the position. After that date, Complainant was not considered for rehire.
The Secretary found that Complainant failed to show pretext, noting that Complainant admitted that he is not qualified for positions in a nuclear power facility. The Secretary also found that even assuming Complainant's protected activity played a part in the failure to rehire, under the "dual motive" analysis, Respondent sufficiently demonstrated that it would not have rehired Complainant even absent the protected activity.
In a footnote, the Secretary observed that in cases involving the post-discharge discovery of resume fraud, the after-acquired evidence doctrine has been applied by the courts to bar recovery by complainants. See McKennon v. Nashville Banner Publishing Co., 9 F.3d 539 (6th Cir. 1993); Summers v. State Farm Mut. Auto Ins. Co., 864 F.2d 700 (10th Cir. 1988); Puhy v. Delta Air Lines, Inc., 833 F. Supp. 1577 (N.D. Ga. 1993).
XI F After-acquired evidence
In McKennon v. Nashville Banner Publishing Co., 1995 U.S. LEXIS 699 (1995), the United States Supreme Court held that an employee discharged in violation of the Age Discrimination in Employment Act of 1967 is not barred from all relief when, after discharge, the employee's employer discovers evidence of wrongdoing that would have led to the employee's discharge on lawful and legitimate grounds had the employer known of it.
XI F After-acquired evidence; effect on damages award
In Smith v. Tennessee Valley Authority, 89-ERA-12 (Sec'y Mar. 17, 1995), the ALJ had made an initial recommendation that Complainant was unlawfully discriminated against for engaging in activity protected under the ERA. The Secretary stayed consideration of the recommended decision and order pending issuance of the ALJ's supplemental recommended decision on damages. The Respondent then filed a motion for summary judgment before the ALJ based on evidence discovered during the damages inquiry. The ALJ recommended granting the motion based on the after-acquired evidence decisions of the Sixth Circuit, which held that no relief may be awarded in a discrimination complaint where the complainant engaged in misconduct that would have precluded his or her selection for a position, or engaged in misconduct that would have led to his or her discharge, even where evidence of such misconduct is not discovered until later.
While the matter was pending before the Secretary, the United States Supreme Court issued a decision on a case arising in the Sixth Circuit concerning after-acquired evidence in the context of the Age Discrimination in Employment Act, McKennon v. Nashville Banner Publishing Co., 1995 U.S. LEXIS 699 (Jan. 23, 1995). The Supreme Court held that after-acquired evidence of the employee's wrongdoing is not a complete bar to recovery by the employee. The parties in Smith filed a joint motion to remand for reconsideration by the ALJ.
The Secretary in the remand order highlighted that McKennon included a ruling that after- acquired evidence must be taken into account in determining the appropriate remedy, and that, generally, neither reinstatement nor front pay are appropriate in cases of this type. There is no absolute bar on backpay, with a beginning point in the analysis being a calculation of backpay from the date of unlawful discharge to the date the new information was discovered. Finally, the Secretary noted that McKennon indicated that a trial court is permitted to consider extraordinary equitable circumstances that affect the legitimate interests of either party.