Court’s Recent Spin On After-Acquired Evidence May Be Good for Employers!

The Second Circuit recently sided with Fujifilm Medical Systems USA Inc. and held that Fujifilm could use evidence obtained after an executive was terminated to confirm a nondiscriminatory reason for firing him. The case was brought against the Company by a former executive vice president, John J. Weber, alleging that he was terminated because he was not Japanese. The Second Circuit upheld a lower court’s decision to admit, for limited purposes, evidence pertaining to irregularities in a financing agreement struck while he was serving as executive vice president. The Second Circuit delved into after-acquired evidence issues and such issues are generally not addressed in employment discrimination cases at the appeals court level.

The use of “after-acquired” evidence has generally been limited to the damages phase of a litigation.  Indeed this issue of whether after-acquired evidence should be a defense in employment discrimination litigation was partially resolved in 1995 in a unanimous decision by the United States Supreme Court – McKennon v. Nashville Banner Publishing Co.. The Supreme Court held that application of the after–acquired evidence defense was generally limited to reducing a plaintiff’s damages and other relief and was not a complete bar to a claim for employment discrimination.  So the case law that has developed over the years since McKennon regarding the issue has allowed employers to use “after-acquired” evidence only to limit their potential damages, in certain instances, even if they have been found liable for discriminating against an employee.

There aren’t many appellate court rulings on the admissibility of after-acquired evidence with regards to the issue of liability and showing nondiscriminatory reason. Thus, this Second Circuit ruling is certainly a rare appellate decision on “after-acquired” evidence and may open new doors for employers’ defense.