California Jury Instruction CACI 2506 Limitation on Remedies—After-Acquired Evidence

New September 2003; Revised June 2016, December 2016, May 2019

Nakase Wade | California Business Lawyers & Corporate Lawyers

The doctrine of after-acquired evidence refers to an employer’s discovery, after an allegedly wrongful termination of employment or refusal to hire, of information that would have justified a lawful termination or refusal to hire. (Salas v. Sierra Chemical Co. (2014) 59 Cal.4th 407, 428 [173 Cal.Rptr.3d 689, 327 P.3d 797].)

There is some uncertainty as to whether or not it is an equitable doctrine. (Compare Thompson v. Tracor Flight Systems, Inc. (2001) 86 Cal.App.4th 1156, 1173 [104 Cal.Rptr.2d 95] [doctrine is the basis for an equitable defense related to the traditional defense of “unclean hands,” italics added] with Salas, supra, 59 Cal.4th at p. 428 [omitting “equitable”].) If it is an equitable doctrine, then the fact-finding in the elements of the instruction would be only advisory to the court, or the elements could be found by the court itself as the trier of fact. (See Thompson, supra, 86 Cal.App.4th at p. 1173; see also Hoopes v. Dolan (2008) 168 Cal.App.4th 146, 156 [85 Cal.Rptr.3d 337] [jury’s factual findings are purely advisory because, on equitable causes of action, the judge is the proper fact finder].)

After-acquired evidence is not a complete defense to liability, but may foreclose otherwise available remedies. (Salas, supra, 59 Cal.4th at pp. 430−431.) Give the optional last paragraph if the court decides to allow the jury to award damages or to make a finding on damages. Add the last sentence of the paragraph if the date on which the defendant discovered the after-acquired evidence is contested.

After-acquired evidence cases must be distinguished from mixed motive cases in which the employer at the time of the employment action has two or more motives, at least one of which is unlawful. (See Salas supra, 59 Cal.4th at p. 430; CACI No. 2512, Limitation on Remedies—Same Decision.)

•“In general, the after-acquired-evidence doctrine shields an employer from liability or limits available relief where, after a termination, the employer learns for the first time about employee wrongdoing that would have led to the discharge in any event. Employee wrongdoing in after-acquired-evidence cases generally falls into one of two categories: (1) misrepresentations on a resume or job application; or (2) posthire, on-the-job misconduct.” (Camp v. Jeffer, Mangels, Butler & Marmaro (1995) 35 Cal.App.4th 620, 632 [41 Cal.Rptr.2d 329].)

•“The after-acquired-evidence doctrine serves as a complete or partial defense to an employee’s claim of wrongful discharge … To invoke this doctrine, ‘… the employer must 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” … [T]he employer … must show that such a firing would have taken place as a matter of “settled” company policy.’ ” (Murillo v. Rite Stuff Foods, Inc. (1998) 65 Cal.App.4th 833, 842, 845–846 [77 Cal.Rptr.2d 12], internal citations omitted.)

•“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 v. Nashville Banner Publishing Co. (1995) 513 U.S. 352, 362–363 [115 S.Ct. 879, 130 L.Ed.2d 852].)

•“Courts must tread carefully in applying the after-acquired-evidence doctrine to discrimination claims … . Where, as here, the discriminatory conduct was pervasive during the term of employment, therefore, it would not be sound public policy to bar recovery for injuries suffered while employed. In applying the after-acquired-evidence doctrine, the equities between employer and employee can be balanced by barring all portions of the employment discrimination claim tied to the employee’s discharge.” (Murillo, supra, 65 Cal.App.4th at pp. 849–850.)

•“As the Supreme Court recognized in McKennon, the use of after-acquired evidence must ‘take due account of the lawful prerogatives of the employer in the usual course of its business and the corresponding equities that it has arising from the employee’s wrongdoing.’ We appreciate that the facts in McKennon … presented a situation where balancing the equities should permit a finding of employer liability—to reinforce the importance of antidiscrimination laws—while limiting an employee’s damages—to take account of an employer’s business prerogatives. However, the equities compel a different result where an employee who is disqualified from employment by government-imposed requirements nevertheless obtains a job by misrepresenting the pertinent qualifications. In such a situation, the employee should have no recourse for an alleged wrongful termination of employment.” (Camp, supra, 35 Cal.App.4th at pp. 637–638, internal citation omitted.)

•“We decline to adopt a blanket rule that material falsification of an employment application is a complete defense to a claim that the employer, while still unaware of the falsification, terminated the employment in violation of the employee’s legal rights.” (Cooper v. Rykoff-Sexton, Inc. (1994) 24 Cal.App.4th 614, 617 [29 Cal.Rptr.2d 642].)

•“The doctrine [of after-acquired evidence] is the basis for an equitable defense related to the traditional defense of ‘unclean hands’ … [¶] In the present case, there were conflicts in the evidence concerning respondent’s actions, her motivations, and the possible consequences of her actions within appellant’s disciplinary system. The trial court submitted those factual questions to the jury for resolution and then used the resulting special verdict as the basis for concluding appellant was not entitled to equitable reduction of the damages award.” (Thompson, supra, 86 Cal.App.4th at p. 1173.)

•“By definition, after-acquired evidence is not known to the employer at the time of the allegedly unlawful termination or refusal to hire. In after-acquired evidence cases, the employer’s alleged wrongful act in violation of the FEHA’s strong public policy precedes the employer’s discovery of information that would have justified the employer’s decision. To allow such after-acquired evidence to be a complete defense would eviscerate the public policies embodied in the FEHA by allowing an employer to engage in invidious employment discrimination with total impunity.” (Salas, supra, 59 Cal.4th at p. 430.)

•“In after-acquired evidence cases, therefore, both the employee’s rights and the employer’s prerogatives deserve recognition. The relative equities will vary from case to case, depending on the nature and consequences of any wrongdoing on either side, a circumstance that counsels against rigidity in fashioning appropriate remedies in those actions where an employer relies on after-acquired evidence to defeat an employee’s FEHA claims.” (Salas, supra, 59 Cal.4th at p. 430.)

•“Generally, the employee’s remedies should not afford compensation for loss of employment during the period after the employer’s discovery of the evidence relating to the employee’s wrongdoing. When the employer shows that information acquired after the employee’s claim has been made would have led to a lawful discharge or other employment action, remedies such as reinstatement, promotion, and pay for periods after the employer learned of such information would be ‘inequitable and pointless,’ as they grant remedial relief for a period during which the plaintiff employee was no longer in the defendant’s employment and had no right to such employment.” (Salas, supra, 59 Cal.4th at pp. 430−431.)

•The remedial relief generally should compensate the employee for loss of employment from the date of wrongful discharge or refusal to hire to the date on which the employer acquired information of the employee’s wrongdoing or ineligibility for employment. Fashioning remedies based on the relative equities of the parties prevents the employer from violating California’s FEHA with impunity while also preventing an employee or job applicant from obtaining lost wages compensation for a period during which the employee or applicant would not in any event have been employed by the employer. In an appropriate case, it would also prevent an employee from recovering any lost wages when the employee’s wrongdoing is particularly egregious.” (Salas, supra, 59 Cal.4th at p. 431, footnote omitted.)