Earlier this month, New Jersey’s Appellate Division ruled that it is improper to present a jury with evidence regarding “after-acquired evidence” until after it has determined that an employer violated New Jersey’s Conscientious Employee Protection Act (CEPA). CEPA is New Jersey’s whistleblower law.
After-acquired evidence is when a company learns during a discrimination or retaliation lawsuit that the employee did something while he worked for the company that would have been grounds for firing him. If the employer can prove it would have fired the employee based on the new evidence, the employee’s damages for lost salary and benefits are cut off from the date on which the employer learned the new information.
Even when it applies, the after-acquired evidence defense does not prevent an employee from proving a wrongful termination claim, does not impact damages for salary and benefits the employee lost before the employer discovered the wrongdoing, and does not limit damages for emotional distress damages in any way. It only cuts off damages for lost salary and benefits starting from the date on which the employer discovered the new information.
The reason why the after-acquired evidence bars some damages, but does not completely bar proving a wrongful termination claim, is to deter and punish unlawful discrimination and retaliation, while still penalizing an employee who is guilty of misconduct that would have caused him to lose his job irrespective of any discrimination or retaliation. Accordingly, it applies only if the employer can prove that the employee’s wrongdoing was so severe that it actually would have fired the employee, solely on that basis, when it learned of the wrongdoing.
On June 2, 2009, in Redvanly v. Automated Data Processing, Inc., the Appellate Division ruled that it is improper for a judge to allow a jury to hear any evidence supporting an after-acquired evidence defense until the jury has decided whether the employee was wrongfully discharged. In that case, Diane Redvanly sued her former employer, Automated Data Processing, Inc. (ADP) and her former supervisor, Richard Feeney, claiming they fired her in violation of CEPA.
In 1996, Ms. Redvanly began working for ADP in Clifton, New Jersey. In December 2002, she attended a seminar regarding the Sarbanes-Oxley Act, which requires publically traded companies to institute internal financial controls to ensure accountability. Based on what she learned at the seminar, Ms. Redvanly told Mr. Feeney that she intended to disclose the fact that ADP was over billing some of its clients.
According to Ms. Redvanly, during a meeting the next day, Mr. Feeney engaged in a “profanity-laced, verbal assault” of her, including complaining about her management style. Mr. Feeney continued to demonstrate his anger toward Ms. Redvanly for several weeks, culminating in him firing her because of her “recent behavior.” Ms. Redvanly then sued ADP and Mr. Feeney, claiming they fired her in violation of CEPA.
At the trial, the jury unanimously found that Ms. Redvanly failed to prove her CEPA claim because she did not engage in any legally protected whistleblowing activity. However, the Appellate Division found that the verdict might have been tainted by evidence ADP presented suggesting that Ms. Redvanly committed resume fraud. Specifically, on her employment application for the job with ADP, Ms. Redvanly indicated that she worked at NYNEX Mobile Communications, Inc. (NYNEX), and claimed she left NYNEX because her position was eliminated. She also claimed she never had been fired from another job. In actuality, NYNEX fired Ms. Redvanly. Ms. Redvanly sued NYNEX for national origin and gender discrimination, and eventually settled that case.
In other words, ADP asserted an after-acquired evidence defense. It claimed it would not have hired Ms. Redvanly in the first place if she had told the truth about why she was separated from her job at NYNEX, and it would have fired her if it had learned about her false statements on her resume.
The Appellate Division recognized that after-acquired evidence is relevant and admissible only with respect to the issue of damages. Accordingly, it ruled that the lower court should have separated the trial two phases. In the first phase, the jury should have determined whether ADP retaliated against Ms. Redvanly. During that phase, the jury should not have been told anything about Ms. Redvanly’s alleged resume fraud, since that information is irrelevant to whether ADP retaliated against her, and was likely to unfairly prejudice the jury against her.
If the jury found retaliation, then there should have been a second phase of the trial to determine Ms. Redvanly’s damages. During that phase, ADP should have been permitted to present evidence regarding the alleged resume fraud only if there was evidence that ADP would have not have hired her, or would have fired her, if it had known more about the circumstances of her separation from NYNEX. The Court questioned whether the after-acquired evidence defense was even viable since there was no way for the jury to know whether NYNEX fired Ms. Redvanly rightfully or wrongfully, since she and NYNEX settled that case.
By separating trials at which the after-acquired evidence doctrine applies into two phases, employees should have a fair opportunity to prove their retaliation or discrimination claims, while employers will have an opportunity to limit the economic damages if they can establish an after-acquired evidence defense. While the after-acquired evidence doctrine can often seem unfair to an employee who was fired illegally, keeping that evidence out of the case until after the jury decides whether the employer violated the law seems to be a fair compromise between the interests of employers and employees.