U.S. 9th Circuit Court of Appeals Reports
O'DAY v. McDONNELL DOUGLAS HELICOPTER CO., 79 F.3d 756 (9th Cir. 1996)
DENNIS V. O'DAY, PLAINTIFF-APPELLANT, v. MCDONNELL DOUGLAS HELICOPTER
COMPANY, A FOREIGN CORPORATION, DEFENDANT-APPELLEE. (TWO CASES).
Nos. 92-15625, 92-16512.
United States Court of Appeals, Ninth Circuit.
Argued and Submitted February 7, 1994 - San Francisco, California
Submission Withdrawn April 12, 1994.
Submission Further Suspended November 8, 1994.
Resubmitted June 9, 1995.
Decided March 26, 1996.
Page 757
[EDITOR'S NOTE: THIS PAGE CONTAINED HEADNOTES AND HEADNOTES ARE NOT
AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.]
Francis> <G>. <Fanning>, Tempe, Arizona, for the plaintiff-appellant.
Tibor Nagy, Jr., Snell & Wilmer, Tucson, Arizona, for the
defendant-appellee.
Robert J. Gregory, Attorney, Equal Employment Opportunity
Commission, Washington, D.C., for amicus Equal Employment
Opportunity Commission, on behalf of the plaintiff-appellant.
Appeal from the United States District Court for the District
of Arizona, Paul G. Rosenblatt, District Judge, Presiding.
D.C. No. CV-91-777-PGR
D.C. No. CV-91-00777-PGR
Before: FLETCHER, KOZINSKI, and TROTT, Circuit Judges.
Opinion by Judge KOZINSKI; Partial Concurrence and Partial
Dissent by Judge FLETCHER.
KOZINSKI, Circuit Judge.
Page 758
[1] We consider whether an employer found to have violated the
Age Discrimination in Employment Act, 29 U.S.C. § 621 et
seq., can avoid all liability for its discrimination by
proving with "after-acquired evidence" that the plaintiff could
have been discharged for a legitimate reason.
I.
[2] On June 8, 1990, Dennis O'Day was denied a promotion to the
position of Lead Engineer at the McDonnell Douglas Helicopter
Company's plant in Mesa, Arizona. One month later, he was laid
off as part of a general workforce reduction. O'Day was 46 years
old, had worked for the company for 14 years, and was convinced
he had been denied the promotion and laid off because of his age.
[3] After first exhausting his administrative remedies with the
Equal Employment Opportunity Commission, O'Day filed this lawsuit
against McDonnell Douglas challenging the promotion denial and
layoff. He states four causes of action: (1) discrimination in
employment under the Age Discrimination in Employment Act (ADEA),
29 U.S.C. § 621, et seq.; (2) discrimination in employment
under the Arizona Civil Rights Act (ACRA), Ariz. Rev. Stat. Ann.
§ 41-1461 et seq.; (3) breach of the promotion,
O'Day returned to the plant and searched his contract; and (4)
wrongful discharge.[fn1]
[4] The evening after he was denied supervisor's office.
Ostensibly, he was looking for his own personnel file (to which
access was restricted), but while he was rummaging through his
supervisor's desk, O'Day came across other documents he found
interesting, including his supervisor's promotion recommendations
and a handwritten list ranking employees for layoff (a so-called
"totem" list). These documents O'Day found in a file that was
clearly not meant for general inspection. Not only was the file
kept in a closed drawer in his supervisor's desk, but it
contained notes and memoranda about sensitive personnel matters
and was prominently marked "personal/sensitive." Undaunted, O'Day
photocopied the handwritten "totem" list along with several other
documents, and later showed them to another employee who had been
slated for layoff.[fn2]
[5] It was not until after discovery began that McDonnell Douglas
learned of O'Day's misconduct. McDonnell Douglas immediately
converted O'Day's "layoff" status to "terminated," and filed for
summary judgment on the grounds that O'Day's misconduct absolved
the company of all liability for its alleged discrimination. The
district court assumed for purposes of this motion that McDonnell
Douglas had in fact discriminated against O'Day, and concluded
there was no genuine issue of material fact that McDonnell
Douglas would have fired O'Day had it learned of the misconduct
earlier. Rejecting O'Day's contention that his conduct could not
legally form the basis for discharge because it was protected
activity under the ADEA's "opposition clause," 29 U.S.C. § 623(d),
the district court applied the after-acquired evidence
doctrine first developed in Summers v. State Farm Mut. Auto.
Ins. Co., 864 F.2d 700 (10th Cir. 1988), and held that O'Day
was barred by his own wrongdoing from obtaining any remedy for
McDonnell Douglas' discrimination. The district court therefore
granted summary judgment in favor of McDonnell Douglas.
[6] On appeal, we consider three issues: 1) whether the after-acquired
evidence of O'Day's misconduct absolves McDonnell
Page 759
Douglas of all liability for its discrimination; 2) whether McDonnell
Douglas has carried its burden at summary judgment of proving that it
would have discharged O'Day had it learned of his misconduct earlier;
and 3) whether O'Day's conduct in stealing sensitive personnel files
was protected activity under the ADEA's opposition clause.
II.
[7] After one false start, see Milligan-Jensen v. Michigan
Tech. Univ., 975 F.2d 302 (6th Cir. 1992), cert.
granted, ___ U.S. ___, 113 S. Ct. 2991 (1993), cert.
dismissed, ___ U.S. ___, 114 S. Ct. 22 (1993), the Supreme
Court has provided some much-needed guidance as to how
after-acquired evidence of employee wrongdoing should be treated
in employment discrimination cases.[fn3] In McKennon v.
Nashville Banner Publishing Co., ___ U.S. ___, 115 S. Ct.
879 (1995), the Court considered a factual scenario very similar
to that presented here. A longtime employee of the Banner
Publishing Company sued the company claiming she was discharged
because of her age in violation of the ADEA. During her
deposition, she admitted that she had "copied several
confidential documents bearing upon the company's financial
condition," and that she had taken these documents as "insurance"
in case she was ever discharged. Id. at ___. Banner
asserted that this misconduct, which according to company policy
was grounds for discharge, absolved the company of all liability
for its unlawful discrimination.
[8] [1] The Supreme Court held that if an employer discharges an
employee for a discriminatory reason, later-discovered evidence
that the employee could have been discharged for a legitimate
reason does not immunize the employer from liability.
Id. at ___-___, 884-85. Reasoning that "a violation of
the ADEA cannot be . . . altogether disregarded," id. at
___, the Court held that after-acquired evidence of an employee's
wrongdoing bears on the specific remedy to be ordered.
Id. at ___.
[9] McKennon did not explicate how after-acquired
evidence should be treated in every situation, leaving this issue
to "be addressed by the judicial system in the ordinary course of
further decisions." Id. The Court did hold, however,
that after-acquired evidence of wrongdoing generally limits an
employee's remedy in three significant ways. If an employer
discovers that the plaintiff committed an act of wrongdoing and
can 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," id. at ___-___, the employer does not have
to offer reinstatement or provide front pay, and only has to
provide backpay "from the date of the unlawful discharge to the
date the new information was discovered," id. at ___.
[10] [2] McKennon places the burden of proof with respect
to this issue on the employer, carefully articulating that the
employer must establish not only that it could have
fired an employee for the later-discovered misconduct, but that
it would in fact have done so. Id.; accord Reed v.
AMAX Coal Co., 971 F.2d 1295, 1298 (7th Cir. 1992). This
burden comports with the well-established rule in mixed-motive
cases, where the burden rests on the employer to prove by a
preponderance of the evidence that it would have discharged the
employee (or taken whatever adverse action is at issue)
regardless of its discriminatory motive. See Price Waterhouse
v. Hopkins, 490 U.S. 228, 258 (1989). The inquiry focuses on
the employer's actual employment practices, not just the
standards established in its employee manuals, and reflects a
recognition that employers often say they will discharge
employees for certain misconduct while in practice they do not.
As the Supreme Court stated in Price Waterhouse,
"proving that the same decision would have been justified . . .
is not the same as proving
Page 760
that the same decision would have been made." Id. at 252 (internal
quotation marks omitted).
[11] McKennon left open whether the preponderance of the
evidence standard applicable in mixed-motive cases also applies
in the after-acquired evidence context. Nowhere in
McKennon does the Supreme Court suggest that employers
bear a particularly heavy burden in this context; throughout the
opinion the Court refers only to what employers must "establish."
Relying on our decision in Nanty v. Barrows Co.,
660 F.2d 1327, 1333 (9th Cir. 1981), O'Day nevertheless argues that
we should require McDonnell Douglas to come forward with clear
and convincing evidence that it would have discharged him for his
misconduct. This we decline to do.
[12] [3] Nanty held that an employer who had an illegal
motive for an employment decision could limit the employee's
remedy by providing clear and convincing evidence that it would
have made the same decision apart from the illegal motive.
Id. The clear-and-convincing standard was thoroughly
rejected in Price Waterhouse, however; there a majority
of the Supreme Court held that an employer who had an illegal
motive for an employment decision could avoid liability outright
if it showed by only a preponderance of the evidence that it
would have made the same decision apart from the illegal motive.
490 U.S. at 258 (plurality opinion); id. at 259-60
(White, J., concurring); id. at 261 (O'Connor, J.,
concurring). By enacting the 1991 Civil Rights Act, Congress
partially overruled Price Waterhouse. The Act allows an
employer to limit the employee's remedy, rather than defeat
liability outright, by showing it would have made the same
decision. See 42 U.S.C. § 2000e-2(m), 2000e-5(g)(2)(B).
Congress also approved Price Waterhouse in
part, however, as the Act consciously left the opinion
undisturbed to the extent it held the employer to a preponderance
of the evidence standard. See H.R. Rep. No. 102-40(I),
102d Cong., 2d Sess. 45 n. 39 (1991), reprinted in 1991
U.S.C.C.A.N. 549, 583 n. 39; see also Dissent at 25-26.
Taken together, Price Waterhouse and the 1991 Civil
Rights Act stand squarely for the proposition that an employer
may limit the employee's remedy if it shows by a preponderance of
the evidence that it would have made the same decision apart from
an illegal motive. On the standard of proof issue, Nanty
has therefore been overruled.
[13] The dissent argues that Price Waterhouse was a
mixed-motive case and that "[t]he Supreme Court in
McKennon emphasized that mixed-motive cases are not
applicable in the after-acquired evidence context, where `the
case comes to [the court] on the express assumption that an
unlawful motive was the sole basis for the firing.'" Dissent at
766-767 (quoting McKennon, ___ U.S. ___, 115 S. Ct. at
885). This overlooks the reason we are now considering the
standard of proof issue; the Supreme Court did not address it in
McKennon. The issue there was whether after-acquired
evidence could defeat liability out-right, or merely limit the
employee's remedy. Of course mixed-motive cases don't bear on
that question. As the Court explained in McKennon, it
had taken the view in Mount Healthy City Bd. of Educ. v.
Doyle, 429 U.S. 274 (1977), a mixed-motive case, that an
employer could defeat liability outright, if it showed that it
had a legitimate motive for an employment action, not only an
illegitimate one. McKennon, ___ U.S. at ___, 115 S. Ct.
at 885. The Mt. Healthy Court had reasoned that it would
be difficult and unnecessary to untangle the impermissible from
the permissible motives. Id. This reasoning couldn't
possibly apply in the McKennon context, however, for
precisely the reason the Court there gave: In an after-acquired
evidence case, the employer's actual motive for taking the
employment action is clear and illegal. Id. Taken in
context, the Court's language in McKennon gives not the
slightest indication that Price Waterhouse is
inapplicable to the issue of the employer's standard of proof at
the remedy stage of an after-acquired evidence case.
[14] [4] Our dissenting colleague also observes that the employer
in a mixed-motive case has acted from a legitimate motive as well
as an illegitimate one, whereas the employer in an after-acquired
evidence case has acted only from an illegitimate motive;
according to the
Page 761
dissent, the employer's "post hoc justifications" in an after-acquired
evidence case are therefore "properly viewed with greater suspicion"
than in a mixed-motive case. Dissent at 25. Title VII rejects any such
distinction. Since Congress passed the 1991 Civil Rights Act, liability
in mixed-motive cases is deemed established once the employee shows
that a discriminatory criterion was a motivating factor in the employer's
decision, 42 U.S.C. § 2000e-2(m); the only issue raised by the
employer's evidence of an additional, legal motive is what the employee's
remedy will be. After-acquired evidence cases are identically structured.
Liability is established after the employee shows that a discriminatory
criterion was a motivating factor in the decision, 42 U.S.C. § 2000e-2
(m); the only issue raised by the employer's after-acquired evidence is
what the employee's remedy will be, McKennon, ___ U.S. at ___-___,
115 S. Ct. at 883-84. The mixed-motive employer is thus no less legally
culpable by virtue of its legitimate motive than the after-acquired
evidence employer. Under Price Waterhouse and the 1991 Civil Rights
Act, the mixed-motive employer need only meet the preponderance of the
evidence standard at the remedy stage. There's no reason the after-acquired
evidence employer should have to meet a higher standard.[fn4]
[15] [5] We therefore decline to apply the Nanty standard, and
instead take our cue from Price Waterhouse and the 1991
Civil Rights Act. An employer can avoid backpay and other
remedies by coming forward with after-acquired evidence of an
employee's misconduct, but only if it can prove by a
preponderance of the evidence that it would have fired the
employee for that misconduct. Accord Washington v. Lake
County, 969 F.2d 250, 255 (7th Cir. 1992); Smallwood v.
United Air Lines, Inc., 728 F.2d 614, 616 n.5 (4th Cir.
1984).
III.
[16] We consider next whether McDonnell Douglas met its burden of
proof at summary judgment. The district court found that
McDonnell Douglas had produced sufficient evidence to prevail on
its after-acquired evidence defense, and granted summary judgment
because O'Day came forward with no evidence to refute that
showing. We review the grant of summary judgment de novo, and
entertain every reasonable inference in favor of the non-moving
party. Maffei v. Northern Ins. Co., 12 F.3d 892, 895-96
(9th Cir. 1993).
[17] [6] As evidence that O'Day's misconduct would have resulted
in his immediate discharge, McDonnell Douglas introduced the
sworn affidavit of Olinda Willis, a "Human Resources
Representative" for the division in which O'Day worked. Willis
testified that "[h]ad [McDonnell Douglas] been aware of Mr.
O'Day's conduct before his layoff, he would have been terminated
immediately." CR 14, exh. 6, at 1. Willis also testified that
O'Day committed two "Group I" infractions: "Theft or
unauthorized removal from premises of Company property
or property of others" and "[d]eliberate or negligent
destruction, damage or misuse of Company property or
property of others." Id. at 1-2 (emphasis in original).
Under McDonnell Douglas' Company Rules, Group I rule infractions
"are extremely serious and will normally result in
Page 762
discharge unless extenuating circumstances are present." CR 14, exh. 7.
[18] O'Day contends that this affidavit does not carry McDonnell
Douglas' burden because it is "self-serving" and "speculative."
He has a point: Working from hindsight, and given the opportunity
to limit the backpay and other remedies it might otherwise have
to provide, an employer has a strong incentive not only to
discover previously undisclosed wrong-doing on the part of the
plaintiff, but also to conclude that that conduct would in fact
have resulted in the plaintiff's immediate discharge. Cf.
Smallwood, 728 F.2d at 616 (district court felt "`entitled
to be . . . skeptical of after-the-fact decisions as to what the
defendant would have done'"). But the fact that Willis' testimony
might be thoroughly impeached does not render it incompetent, and
McDonnell Douglas is entitled to rely on sworn affidavits from
its employees in proving that it would have discharged O'Day for
the alleged misconduct. Id. at 623 (circuit court would
weigh employer's averments "by the same standard as other
testimony"). We could hardly require employers in these cases to
come forward with proof that they discharged other employees for
the precise misconduct at issue (though such evidence would no
doubt be helpful to their case), as often the only proof an
employer will have is that adduced in this case - a company
policy forbidding the conduct and the testimony of a company
official that the conduct would have resulted in immediate
discharge. Compare Reed, 971 F.2d at 1298 ("AMAX did
not, for instance, provide proof that other employees were fired
in similar circumstances.") with Washington, 969 F.2d at
256-57 (uncontradicted affidavit by employer is enough).
[19] [7] This does not mean that employers can prevail based only
on bald assertions that an employee would have been discharged
for the later-discovered misconduct. In this regard, we find it
significant that Willis' testimony is corroborated both by the
company policy, which plausibly could be read to require
discharge for the conduct at issue here, and by common sense.
There is nothing inherently incredible about McDonnell Douglas
asserting that it would discharge an employee, even an employee
with a spotless record, for sneaking into his supervisor's
office, stealing sensitive documents pertaining to employment
matters, and showing them to one of the very people affected by
the documents. Cf. Bonger v. American Water Works, 789
F. Supp. 1102, 1107 (D. Colo. 1992).
[20] [8] O'Day offers no evidence to rebut Olinda Willis'
affidavit;[fn5] indeed, in his response to McDonnell Douglas'
motion for summary judgment, O'Day does not contest that he
committed the wrongdoing or that he would have been discharged
for it.[fn6] Instead, O'Day argues that McDonnell Douglas could
not legally have discharged him for his misconduct - and
thus could not point to his wrongdoing as a bar to backpay and
other remedies under McKennon - because he was
engaging in activity protected from retaliation under the ADEA's
"opposition clause," 29 U.S.C. § 623(d).
[21] O'Day claims that his conduct - stealing sensitive
personnel documents - was protected activity under section
623(d) because his purpose was to preserve evidence for his
Page 763
future lawsuit against the company. O'Day had suspected for some
time that McDonnell Douglas would fire him, and even filed a
complaint with the company claiming that one of his supervisors
had discriminated against him on the basis of his age. And he was
aware that the company made it a policy to periodically destroy
documents, including papers recording the reasons for personnel
decisions. In fact, as O'Day points out, the handwritten totem
list was destroyed prior to this litigation; McDonnell Douglas
produced only a typed, somewhat amended version of the list in
discovery. O'Day claims that by gathering evidence for an
eventual lawsuit, he was participating in the investigation of an
unlawful employment practice under the ADEA, or at the very least
opposing such a practice. Cf. Jefferies v. Harris County
Community Action Ass'n, 615 F.2d 1025, 1036 (5th Cir. 1980)
(surreptitiously copying and disseminating personnel records is
not protected under 42 U.S.C. § 2000e-3(a) because the
plaintiff "ha[d] not established that HCCAA would have destroyed
the documents had she not taken action to preserve them").
[22] [9] Section 623(d) is the ADEA equivalent of the
anti-retaliation provision of Title VII, 42 U.S.C. § 2000e-3(a),
and like its counterpart it makes it unlawful for an employer to
retaliate against an employee for opposing the employer's
discriminatory practices or participating in any investigation or
proceeding under the ADEA. 29 U.S.C. § 623(d). To make out a
claim of retaliation, an employee must establish three things:
first, that he engaged in statutorily protected activity; second,
that he was discharged or suffered some other adverse employment
decision; and third, that there is a causal connection between
the two. See EEOC v. Crown Zellerbach Corp., 720 F.2d 1008,
1012 (9th Cir. 1983); Cohen v. Fred Meyer, Inc.,
686 F.2d 793, 797 (9th Cir. 1982); see also Merrick v.
Farmers Ins. Group, 892 F.2d 1434, 1441 (9th Cir. 1990)
(applying Title VII retaliation cases in interpreting section
623(d)). The key question is whether O'Day was engaged in
protected activity that could not legally form the basis of
McDonnell Douglas's decision to discharge him.
[23] We have previously adopted a balancing test for determining
whether an employee's conduct constitutes "protected activity"
under Title VII, and here adopt the same balancing test for
retaliation claims under the ADEA. The court must balance "the
purpose of the Act to protect persons engaging reasonably in
activities opposing . . . discrimination, against Congress'
equally manifest desire not to tie the hands of employers in the
objective selection and control of personnel." Wrighten v.
Metropolitan Hosp., Inc., 726 F.2d 1346, 1355 (9th Cir.
1984) (quoting Hochstadt v. Worcester Foundation,
545 F.2d 222, 231 (1st Cir. 1976)). An employee's opposition activity
is protected only if it is "reasonable in view of the employer's
interest in maintaining a harmonious and efficient operation."
Silver v. KCA, Inc., 586 F.2d 138, 141 (9th Cir. 1978);
accord Jefferies, 615 F.2d at 1036 (activity must be
"reasonable in light of the circumstances").
[24] We strike the balance here in favor of McDonnell Douglas.
O'Day committed a serious breach of trust, not only in rummaging
through his supervisor's office for confidential documents, but
also in copying those documents and showing them to a co-worker.
Like any employer, McDonnell Douglas has a strong interest in
maintaining employee morale, and in discouraging this sort of
behavior. To be sure, O'Day also has a legitimate interest in
preserving evidence of McDonnell Douglas' unlawful employment
practices, but that doesn't explain why he showed the purloined
documents to a coworker who had been slated for lay-off, or why
he felt compelled to preserve evidence of McDonnell Douglas'
lay-off decisions. At the time he stole the "totem" list, O'Day
had only been denied a promotion; he had not been laid off, nor
had he been given any indication that he would be.
[25] In balancing an employer's interest in maintaining a
"harmonious and efficient" workplace with the protections of the
anti-discrimination laws, we are loathe to provide employees an
incentive to rifle through confidential files looking for
evidence that might come in handy in later litigation. The
opposition clause protects reasonable attempts to contest an
employer's discriminatory practices;
Page 764
it is not an insurance policy, a license to flaunt company rules
or an invitation to dishonest behavior.
[26] [10] O'Day was not engaged in protected activity under the
ADEA, and could legally be discharged for his misconduct. As
O'Day has offered no evidence to controvert McDonnell Douglas'
showing that it would in fact have done so, we affirm the grant
of summary judgment in favor of McDonnell Douglas on its
after-acquired evidence defense.
[27] [11] But that is not the end of the matter. The district
court assumed for the purposes of McDonnell Douglas' summary
judgment motion that O'Day had carried his burden of establishing
a violation of the ADEA, but held that the after-acquired
evidence of O'Day's misconduct was a complete bar to relief under
the ADEA. Under McKennon, however, O'Day would be
entitled to some remedy for the discrimination. If O'Day prevails
on his discrimination claim on remand, he would at the very least
be entitled to backpay from the date of his wrongful termination
to the date that McDonnell Douglas learned of his wrongdoing, as
well as any other remedies not precluded under
McKennon.[fn7]
IV.
[28] [12] Based on its conclusion that O'Day was not entitled to
any relief, the district court awarded McDonnell Douglas
attorneys' fees under Ariz. Rev. Stat. Ann. § 41-1481(J) (the
Arizona Civil Rights Act) and Ariz. Rev. Stat. Ann. § 12-341.01
(Arizona's fee-shifting statute for contract actions).
McKennon holds that after-acquired evidence of O'Day's
wrongdoing can only reduce his remedy, and McDonnell Douglas has
by no means won a complete victory. In light of this holding,
McDonnell Douglas could not be considered a successful party for
purposes of these fee-shifting statutes, nor could O'Day's claims
be deemed frivolous. See Associated Indemn. Corp. v.
Warner, 694 P.2d 1181, 1184 (Ariz. 1985). We therefore
reverse the fee award, and decline both parties' request for
attorney's fees on appeal. Each party shall bear its costs.
[29] AFFIRMED IN PART; REVERSED IN PART; REMANDED.
[fn1] O'Day filed suit in state court, but McDonnell Douglas
removed the case to federal district court, which asserted
pendent jurisdiction over the state law claims.
[fn2] A week later, but also before he was laid off, O'Day
returned and photocopied his entire personnel file. O'Day did not
break into the plant; he had access to the building during the
night shift.
[fn3] See generally Cheryl Krause Zemelman, Note,
The After-Acquired Evidence Defense to Employment
Discrimination Claims: The Privatization of Title VII and the
Contours of Social Responsibility, 46 Stan. L. Rev. 175
(1993) (discussing the development of the law in this area).
[fn4] The dissent points to the report of the House Committee on
Education and Labor that accompanied the 1991 Civil Rights Act:
"The report . . . indicates that Congress intended `to restore
the decisional law in effect in many of the federal circuits
prior to . . . Price Waterhouse', and one of the
decisions cited in the report is Nanty (as well as
[another case] which followed Nanty)." Dissent at 25-26
(citing H.R. Rep. No. 102-40(I), 102d Cong., 2d Sess. 48, 46
n. 41, reprinted at 1991 U.S.C.C.A.N. 549, 586, 584
n. 41). The dissent errs to the extent it suggests that Congress
endorsed Nanty's clear-and-convincing evidence standard.
The single aspect of the prior decisional law the House Committee
endorsed was that "proof that an employer would have made the
same employment decision in the absence of discriminatory reasons
is relevant to determine not the liability for discriminatory
employment practices, but only the appropriate remedy."
Id. at 48, reprinted in 1991 U.S.C.C.A.N. at
586 (emphasis in original); see also id. at 46 & n. 41,
reprinted in 1991 U.S.C.C.A.N. at 584 & n. 41 (same)
(citing Nanty). Nothing in the legislative history of
the 1991 Civil Rights Act - much less the Act itself
- supports the view that the employer must provide clear
and convincing evidence at the remedy stage of an after-acquired
evidence case.
[fn5] McDonnell Douglas moved for summary judgment immediately
upon learning of O'Day's misconduct, and it is unclear whether
O'Day had an opportunity to conduct discovery or otherwise
inquire into McDonnell Douglas' employment practices before
opposing the motion. However, O'Day did not ask for a continuance
to conduct discovery, see Fed. R. Civ. Proc. 56(f), nor
did he file an affidavit showing the particular facts he expected
to find through discovery. In these circumstances, we must accept
the record as it stands.
[fn6] For the first time on appeal, O'Day argues that there is a
genuine issue of fact for the jury because O'Day committed his
wrongdoing only after McDonnell Douglas denied him the promotion.
He claims that he would have had no cause to steal documents
relating to McDonnell Douglas' employment decisions if he had not
first been discriminated against. As we explain above, an
employer has every incentive to invent reasons why it would have
discharged an employee for his misconduct. But just as an
employee's wrongdoing does not immunize his employer from
liability for its discrimination, an employer's discrimination
does not immunize its employees from the consequences of their
wrongdoing. That O'Day may have been discriminated against does
not give him a license to break company rules.
[fn7] O'Day's remedies under Arizona law are limited to the same
extent as his remedies under the ADEA. Arizona courts interpret
ACRA consistent with Title VII, see Higdon v. Evergreen Int'l
Airlines, Inc., 673 P.2d 907, 909 n.3 (Ariz. 1983), and we
have no reason to believe that Arizona would part company with
the federal courts as to the after-acquired evidence doctrine as
developed by McKennon.
On remand, the district court may entertain further briefing
and argument concerning the effect of after-acquired evidence on
O'Day's wrongful discharge and breach of contract claims. Arizona
has not determined the extent to which after-acquired evidence of
wrongdoing limits an employee's recovery of compensatory and
punitive damages on these causes of action.
[30] FLETCHER, Circuit Judge, concurring in part and dissenting in
part.
[31] I concur in that portion of the majority opinion that
reverses the district court's grant of summary judgment to
McDonnell Douglas on the grounds that after-acquired evidence
barred O'Day from obtaining any remedy for his employer's alleged
discrimination. I dissent from the remainder of the opinion
because it is entirely advisory, substantively wrong, and does
violence to our circuit's precedents.
[32] The district court granted summary judgment in favor of
McDonnell Douglas because it reasoned that even if it were
assumed that McDonnell Douglas fired O'Day on account of
his age, the company would have fired him anyway for wrongfully
acquiring and disseminating confidential company information. As
the majority recognizes, this analysis was flawed. Under
McKennon v. Nashville Banner Publishing, Co., ___ U.S.
___, 115 S. Ct. 879 (1995), after-acquired evidence of an
employee's wrongdoing is not a ground for avoiding liability
under the anti-discrimination laws if the employer initially
terminated the employee for a discriminatory motive. The
evidence's only benefit to the employer is to limit the extent of
the remedy.
[33] Whether McDonnell Douglas terminated O'Day because of his age
is an issue that has yet to be litigated. The majority
nonetheless determines that if McDonnell Douglas were
Page 765
to be found liable in further proceedings, its damages will be
limited because it has proved as a matter of law that it would
have terminated O'Day anyway for his snooping. In doing so, the
majority concludes that the appropriate standard of proof at the
remedy stage is the preponderance of the evidence standard, that
there are no genuine issues of material fact regarding whether
McDonnell Douglas would have terminated O'Day, and that there are
no genuine issues of material fact regarding whether O'Day's
conduct was protected activity. We should not reach any of these
issues. If the district court determines (either on summary
judgment or after a trial) that McDonnell Douglas did not have
discriminatory motives and that the general layoff was not a
pretext for discrimination, that will be the end of the case.
There will be no remedy stage, and the issues determined by the
majority will never be raised.
[34] The most troubling portion of the majority's advisory opinion
is its attempt to decide that the employer prevails at the remedy
stage if it proves by a preponderance of the evidence that it
would have fired the employee for his misconduct that came to
light after the initial firing. The majority departs from the
governing precedent of this circuit by incorrectly concluding
that an intervening Supreme Court decision has rejected that
precedent.
[35] The governing precedent is Nanty v. Barrows Co.,
660 F.2d 1327 (9th Cir. 1981), which was essentially a
straightforward disparate-treatment case at the liability stage.
Nanty, an Apache, applied for a job as a furniture delivery truck
driver with the Barrows Company. When Nanty arrived at Barrows'
offices to apply, he was told - before providing any
information to the company - that the job had been filled.
Three days later, the company hired two Caucasian drivers. This
court held that Nanty had established a prima facie case of
discrimination as required by the first step of the analytic
framework established in McDonnell Douglas Corp. v.
Green, 411 U.S. 792 (1973). Because Barrows "totally failed"
to articulate any legitimate, nondiscriminatory reason for
rejecting Nanty, his "prima facie showing [was]
sufficient to meet his ultimate burden of proving unlawful
discrimination". 660 F.2d at 1332.
[36] Barrows then argued that Nanty was not as qualified as the
drivers it actually hired, so it would not have hired him even
if it had not discriminated. Therefore, it argued, it
should not be enjoined to hire Nanty despite his proof that
Barrows had discriminated. Because Barrows had summarily rejected
Nanty before he provided any information to the company, any
evidence regarding his qualifications was after-acquired
evidence. 660 F.2d at 1332 ("Barrows knew nothing about Nanty at
the time of the rejection."). The court relied on two Ninth
Circuit cases, League of United Latin American Citizens v.
City of Salinas Fire Dept., 654 F.2d 557 (9th Cir. 1981),
and Marotta v. Usury,[fn1] 629 F.2d 615 (1980), and one
D.C. Circuit case, Day v. Matthews,[fn2] 530 F.2d 1083
(1976), for
Page 766
the proposition that once a plaintiff has proved unlawful discrimination,
the employer must show by clear and convincing evidence that the same
employment decision would have been made even absent the discrimination.
[fn3] The rationale of these cases is that because the defendant's
"unlawful acts have made it difficult to determine what would have
transpired if all parties had acted properly", 660 F.2d at 1353 (quoting
League, 654 F.2d at 559), a high burden of proof should be assigned
to the wrongdoing defendant.
[37] Price Waterhouse v. Hopkins, 490 U.S. 228 (1989),
unlike Nanty, was a mixed-motive employment
discrimination case. Six members of the Court, in three separate
opinions, held that "when a plaintiff . . . proves that [illegal
discrimination] played a motivating part in an employment
decision, the defendant may avoid a finding of liability . . . by
proving by a preponderance of the evidence that it would have
made the same decision" in the absence of the discrimination.
Id. at 258 (opinion of Brennan, J.). The Court overruled
the D.C. Circuit's holding that the employer must make its
showing by clear and convincing evidence in order to avoid
liability.
[38] Congress disagreed with the result in Price
Waterhouse and enacted Section 107 of the Civil Rights Act
of 1991 to change it. 105 Stat. 1071, 1075-76. That law provided
in relevant part that when a plaintiff establishes that illegal
discrimination is a motivating factor in an employment decision,
an employer's proof that the same decision would have been made
in the absence of discrimination does not absolve the employer of
liability but only limits the plaintiff's remedy.
[39] The majority in this case, noting that McKennon did
not specify what standard of proof the employer must meet in an
after-acquired-evidence case at the remedy stage, looks at both
Nanty and Price Waterhouse but chooses the
preponderance standard imposed in the latter, reasoning that the
clear-and-convincing standard imposed by Nanty has been
"thoroughly rejected" by Price Waterhouse. It does so by
concluding that Nanty must have been overruled by the holding in
Price Waterhouse (a mixed-motive case) that a defendant employer
who has been shown to have acted at least in part from an
illegally discriminatory motive need only prove by a
preponderance of the evidence that the same action would have
been taken on the basis of the non-discriminatory motive alone.
[40] The blurring of Nanty and Price Waterhouse
leads to mischief. In Price Waterhouse, the defendant
argued that its employment decision had actually been
made on the basis of multiple motives, and the Court held
that if it could prove that, and if one of those actual multiple
motives was a legitimate nondiscriminatory one, the defendant
could avoid liability. (Of course, after the 1991 amendments, the
defendant could only limit the plaintiff's remedies). In
Nanty, by contrast, the employer articulated no
relevant nondiscriminatory reasons for its employment decision
and therefore left the plaintiff's prima facie case on liability
unrebutted. The court held that the reasons the employer offered
- the applicant's qualifications - were not relevant
because the employer "knew nothing about [them] at the time of
the rejection". 660 F.2d at 1332. In other words, the evidence of
nondiscriminatory motive that the employer offered to justify its
decision was
Page 767
irrelevant to liability because that motive could not have motivated
the decision. The allegedly legitimate motive was only a post hoc
explanation that the employer alleged would have justified the decision.
The motive evidence proffered was after acquired, as in our case, as
contrasted to Price Waterhouse where the legitimate motive was part
of the actual decisional process. In both this case and Nanty, then,
"the issue [at the liability phase] is whether either illegal or legal
motives, but not both, were the `true' motives behind the decision".
NLRB v. Transportation Management Corp., 462 U.S. 393, 400 n.5
(1983). Thus, Nanty not only survived Price Waterhouse but was in
fact never endangered by it, because the two cases addressed different
issues in different types of discrimination suits. The Supreme Court in
McKennon emphasized that mixed-motive cases are not applicable in
the after-acquired evidence context, where "the case comes to [the court]
on the express assumption that an unlawful motive was the sole basis for
the firing." McKennon, ___ U.S. at ___, 115 S. Ct. at 885.
[41] The majority also overlooks the distinction made in Price
Waterhouse between the liability and remedy phases. Justice
Brennan's plurality opinion in Price Waterhouse explains
why the clear-and-convincing standard applies in the
after-acquired-evidence context, where the issue is the proper
remedy, while the preponderance standard applies at the liability
stage:
It is true, as [the plaintiff] emphasizes, that we have
noted the clear distinction between the measure of proof
necessary to establish the fact that petitioner had sustained
some damage and the measure of proof necessary to enable the
jury to fix the amount. . . . Likewise, an Equal Employment
Opportunity Commission (EEOC) regulation does require federal
agencies proved to have violated Title VII to show by clear
and convincing evidence that an individual employee is not
entitled to relief. . . . And finally, it is true that we have
emphasized the importance of make-whole relief for victims of
discrimination. . . . Yet each of these sources deals with the
proper determination of relief rather than with the initial
finding of liability. . . . Because we have held that, by
proving that it would have made the same decision in the
absence of discrimination, the employer may avoid a finding of
liability altogether and not simply avoid certain equitable
relief, these authorities do not help [the plaintiff] to show
why we should elevate the standard of proof for an employer in
this position.
[42] 490 U.S. at 253-54 (internal quotations and citations omitted)
(emphasis added).
[43] The rationale for elevating the standard in cases such as
this one and Nanty, is straightforward. In both mixed-motive
cases (Price Waterhouse) and after-acquired-evidence
cases (this case and Nanty), the court is
forced to determine what an employer would have done if it had
not engaged in illegal discrimination; because it is the
employer's bad act that puts the court to this effort, the
employer bears the burden of proof. But in the cases in the
latter category, the employer who bears this burden has already
been proven to have made an employment decision solely on the
basis of an illegally discriminatory motive. The post hoc
justifications of what such an employer "would have done" if it
had not discriminated are properly viewed with greater suspicion
than the actual, legitimate, partial motives of the employer in a
mixed-motive case. Therefore, the employer's burden in an
after-acquired-evidence case is higher and should be so. Applying
the Nanty standard in this case is the proper course, that
is, if we decide the issue at all.
[44] The majority also points out that Congress, in amending Title
VII in 1991 to reject the liability analysis of Price
Waterhouse, did not disturb that decision's choice of the
preponderance of the evidence standard. Despite some ambiguity, I
think that is probably right. What the majority ignores is that
the relevant sections of the Civil Rights Act of 1991
specifically addressed the mixed-motive case, not the
after-acquired-evidence case; they were a direct response to the
Supreme Court's decision in Price Waterhouse. The report
of the House Committee on Education and Labor indicates that the
Page 768
Act was not intended to affect the holding of Price
Waterhouse that the employer's standard of proof in mixed-motive
cases is the preponderance of the evidence rather than
clear and convincing evidence. H.R. Rep. No. 102-40(I), 102d
Cong., 2d Sess., at 45 n. 39 (1991), reprinted in 1991
U.S.C.C.A.N. 549, 583 n. 39. The report also indicates that
Congress intended "to restore the decisional law in effect in
many of the federal circuits prior to the decision in Price
Waterhouse", and one of the decisions cited in the report is
Nanty (as well as Ostroff, which followed
Nanty). Id. at 48, 46 n. 41, reprinted at 1991
U.S.C.C.A.N. at 586, 584 n. 41. This is completely consistent
with the application of the preponderance standard at the
liability stage and the application of the clear-and-convincing
standard at the remedy stage in after-acquired-evidence cases.
[45] If the issue were properly before the court in this case, I
would follow our precedent and impose the clear-and-convincing
standard. Because the majority reaches out to decide issues that
are not before us, and then decides them wrongly, I dissent.
[fn1] Marotta appears to be the first case in which the
circuit imposed the higher standard of proof. In that case, a
Department of Labor employee sued over discrimination in the
hiring process for a new position in the department. The
Department conceded discrimination at trial, but the district
court held that the defendant proved by clear and convincing
evidence that the plaintiff would not have been hired for the
position even in the absence of discrimination. This court
affirmed the judgment for the employer, holding that "[t]he
District Court properly insisted that a denial of back pay [the
plaintiff had already received, through administrative channels,
priority consideration for, and promotion to, a position in the
same salary grade as that for which he had not been hired because
of the discrimination] required the defendant to establish by
`clear and convincing evidence' that even in the absence of
discrimination the rejected applicant would not have been
selected for the open position. We agree in this respect with
Day v. Matthews, . . . the decision on which the
District Court relied." Id. at 618. At least some of the
evidence on which the defendant relied appears to have been
acquired after it made the employment decision, since it never
interviewed the plaintiff for the job although it did consider
his written application.
[fn2] Day, on which Marotta also relied in
imposing the higher standard, involved an HEW employee who, like
Marotta, alleged discrimination in the filling of an open
position within the department. On appeal, HEW did not contest
the district court's finding that it had discriminated by denying
Day an opportunity to compete on an equal footing, but it argued
that the award of a retroactive promotion and back pay was
improper because Day's qualifications were such that he would not
have gotten the job even in the absence of discrimination. The
court remanded the case, holding that HEW must be given the
opportunity to avoid the retroactive promotion and back pay
remedies by meeting the burden of proving, by clear and
convincing evidence, that Day would not have been selected for
the position in the absence of the discrimination. The
Day court relied on four Fifth Circuit employment
discrimination cases for its holding that the employer must meet
its burden by clear and convincing evidence. Baxter v.
Savannah Sugar Refining Corp., 495 F.2d 437, 444-45 (5th
Cir.), cert. denied, 419 U.S. 1033 (1974); Pettway
v. American Cast Iron Pipe Co., 494 F.2d 211, 259-60 (5th
Cir. 1974); Johnson v. Goodyear Tire & Rubber Co.,
491 F.2d 1364, 1374-80 (5th Cir. 1974); and Cooper v. Allen,
467 F.2d 836, 840 (5th Cir. 1972).
[fn3] Nanty was not the last Ninth Circuit case to
follow that precedent, either. Subsequent cases that imposed the
higher standard include Jauregui v. Glendale, 852 F.2d 1128,
1136-37 (9th Cir. 1988), and Ostroff v. Employment
Exchange, Inc., 683 F.2d 302, 304 (9th Cir. 1982).