Heyl Royster

The Limitation of Damages in Employment Discrimination Cases: A Case Analysis

september 29, 2015

By: Doug Heise

The doctrine of "after-acquired-evidence," established by the United States Supreme Court in McKennon v. Nashville Banner Publishing Co., 513 U.S. 352 (1995), has provided employers with an effective tool for limiting their damages in employment discrimination cases. The doctrine allows employers who later discover a dischargeable offense to cut off an employee's damages for lost wages from the time the employer discovers the violation forward. However, the doctrine of "after-acquired evidence" does not preclude a plaintiff from obtaining damages for lost wages which accrued before the plaintiff's violation was discovered.

In McKennon, the sixty-two-year-old plaintiff sued her former employer (The Nashville Banner Publishing Company) under the Age Discrimination in Employment Act (ADEA), 29 U.S.C. § 621, after she was terminated from her job of over thirty years. During her deposition, the plaintiff admitted copying and removing confidential information from Nashville Banner's offices and showing them to her husband, a dischargeable offense. There, the court held the plaintiff was precluded from collecting any damages for lost wages from the time the violation was discovered forward.

Prior to McKennon, the Seventh Circuit Court of Appeals and several other federal courts of appeal had barred plaintiffs' claims in cases where "after-acquired evidence" of a dischargeable offense was discovered. See, e.g., Washington v. Lake County, 969 F.2d 250 (7th Cir. 1992); See also O'Driscoll v. Hercules Inc., 12 F.3d 176, (10th Cir. 1994). The McKennon court declined to do so, however, reasoning that a complete bar would undermine the purpose behind the ADEA, which was designed to establish and further public policy against age discrimination. McKennon, 513 U.S. at 362. Instead, the court sought to craft a more appropriate remedy that would balance the ADEA's public purpose of deterring discrimination with employers' interests arising from employee misconduct. Id. at 362-63.

To date, the Illinois Supreme Court and appellate courts have not squarely addressed whether the doctrine of "after-acquired evidence" will apply to similar federal or state law claims. The Illinois appellate court's decision in Valentino v. Hilquist, 337 Ill. App. 3d 461 (1st Dist. 2003), is the only Illinois state decision to discuss the doctrine of "after-acquired evidence" thus far.In Valentino, the plaintiff asserted a claim for breach of contract against his former employer, and the employer asserted the doctrine of "after-acquired evidence" as a defense. However, the court recognized that the doctrine of after-acquired evidence had only been utilized in cases involving employment discrimination statutes like McKennon. Therefore, it held the doctrine did not apply to the plaintiff's breach of contract claim.

Valentino does not seem consistent with the Supreme Court's rationale in McKennon. Before McKennon, the doctrine of after-acquired evidence operated as a complete bar to a plaintiff's claims. As a result, what was previously an absolute defense became a partial defense. Thus, it is difficult to understand why the appellate court's determination that McKennon did not apply operated to limit rather than to expand the employer's rights in Valentino. This is especially true given the fact that Valentino involved the discrete, private interests of contracting parties rather than larger public interests regarding employment discrimination. This distinction should not be lost when trying to apply McKennon to an Illinois employment case involving a public policy claim. An example would be a retaliation claim. Retaliation is argued as being a violation of public policy, and as such, it would be similar to the claim made in McKennon.

The fact that the Illinois Supreme Court and appellate courts have not settled the law regarding "after-acquired evidence" is surprising, given that McKennon was decided twenty years ago in 1995. Of note, the portion of Valentino that addresses after acquired evidence was authored pursuant to Illinois Supreme Court Rule 23. Therefore, it cannot be cited as precedent, leaving Illinois with no state precedent on this issue. The lack of authority in Illinois presents employers and the defense bar with a prime opportunity to set positive precedent in this area.

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