                                                                                                                           Opinions of the United
1995 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit


7-20-1995

Mardell v Harleysville
Precedential or Non-Precedential:

Docket 93-3258




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Recommended Citation
"Mardell v Harleysville" (1995). 1995 Decisions. Paper 189.
http://digitalcommons.law.villanova.edu/thirdcircuit_1995/189


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                                                      FOR PUBLICATION


                     UNITED STATES COURT OF APPEALS
                         FOR THE THIRD CIRCUIT

                            _________________

                               NO. 93-3258
                            _________________

                             NANCY MARDELL,

                                       Appellant

                                   v.

                  HARLEYSVILLE LIFE INSURANCE COMPANY,
                       a Pennsylvania Corporation

                        (D.C. Civ. No. 91-01493)

              Present: BECKER, NYGAARD, Circuit Judges, and
                          YOHN, District Judge.1

                         (Filed July 20, 1995)
               _________________________________________

                OPINION OF THE COURT SUR REMAND FROM THE
                       UNITED STATES SUPREME COURT
               _________________________________________


PER CURIAM.

              This case is before us on remand from the United States

Supreme Court in light of its recent opinion in McKennon v.

Nashville Banner Publishing Co., 115 S. Ct. 879 (1995).       Our

original opinion, Mardell v. Harleysville Life Insurance Co., 31

F.3d 1221 (3d Cir. 1994), is almost entirely consistent with

McKennon.2     However, it does vary in one important respect:      the

1
  Honorable William H. Yohn, Jr., United States District Judge for
   the Eastern District of Pennsylvania, sitting by designation.
2
 Plaintiff Nancy Mardell brought this Title VII claim alleging
that she was discharged because of her gender and age. During

                                   2
calculation of back pay.   In Mardell we concluded that, to ensure

that the plaintiff was returned to the position she would have

been in but for the discrimination, backpay should be awarded for

the period from the discharge until judgment unless the employer

could “somehow insulate its illegal actions from its discovery of

the unfavorable evidence.”   Id. at 1238-40.   McKennon, to the

contrary, decided that, absent extraordinary circumstances,

discovery Harleysville learned that she had misrepresented
certain background information on her résumé and job application,
and moved for summary judgment on the ground that the company
would never have hired her and, in fact, would have fired her had
it known of the misrepresentations. The district court granted
defendant’s motion based on the “after-acquired evidence,” but we
reversed, holding that Harleysville could not introduce the
evidence “substantively for the purpose of defending against
liability.” 31 F.2d at 1238. We also concluded that the after-
acquired evidence may be relevant at the remedies stage of the
proceedings. We noted that if the employer could prove that the
plaintiff would have been fired had it known about the newly-
discovered wrongdoing, equitable relief, such as reinstatement,
might be barred if “particularly invasive of the employer’s
‘traditional management prerogatives.’” 31 F.3d at 1239-40.
          McKennon too held that after-acquired evidence would
not provide an employer a complete defense to liability on a
plaintiff’s claim that she was discharged in violation of federal
anti-discrimination laws. The Court reasoned (as had we) that:
(1) barring all relief for violations of Title VII or the ADEA
would undermine the key objectives of those statutes: deterrence
of illegal discrimination and compensation to plaintiffs injured
by such discrimination, 115 S. Ct. at 884-85; and (2) although an
“essential element” in determining whether the employer violated
federal law is “the employer’s motives in ordering the
discharge,” id. at 885, after-acquired evidence is not relevant
to that question since the wrongdoing revealed by the evidence
was not discovered until after the discharge, see id. (“The
employer could not have been motivated by knowledge it did not
have . . . [at the time the plaintiff was discharged].”). The
Court also ruled, as had we, that after-acquired evidence may be
used to limit the remedies available to a plaintiff where the
employer can “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.” Id. at 886-87.


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backpay runs only until the date that the employer discovered the

conduct for which it would have fired the employee.    Needless to

say, we are bound by McKennon.

           Accordingly, while we reaffirm and reinstate our

original opinion and judgment in all other respects, we will

vacate the portion of the opinion and judgment that deals with

backpay.   Inasmuch as our original opinion and judgment reversed

the grant of summary judgment and McKennon in essence affirms on

this point, the case will be remanded for trial (and such further

discovery or pretrial proceedings as the district court shall

deem appropriate).3   With respect to backpay, the district court

should be guided by McKennon.    In particular, if Harleysville

proves that it would have terminated the plaintiff’s employment

for the reason revealed by the after-acquired evidence,4 see

Shattuck v. Kinetic Concepts, Inc., 49 F.3d 1106, 1108-09 (5th

Cir. 1995) (“would have fired” standard, rather than “would not

have hired” standard, applies to after-acquired evidence of

résumé fraud in discriminatory discharge case); see also Wehr v.

3
 We decline plaintiff’s invitation to tell the district court how
to manage the case on remand.    While bifurcation may sometimes
be advisable as a vehicle to insure that after     -acquired
evidence not be improperly used during the liability phase, in
other cases cautionary instructions or stipulations may render it
unnecessary. We do, however, agree with plaintiff that the
district court would be well advised to permit further discovery
on the résumé fraud issue, on which the defendant of course bears
the burden of proof during the remedies phase.
4
 In the absence of a record, we will not opine on plaintiff’s
contentions as to the type or quantum of evidence (such as a
policy or custom) that Harleysville must adduce to establish that
it would in fact have fired her upon discovering her résumé
fraud, preferring to leave that issue to the district court in
the first instance.

                                 4
Ryans Family Steak House, Inc., 49 F.3d 1150, 1154 n.5 (6th Cir.

1995), backpay should run from the discharge to the time that the

wrongdoing was discovered, although truly exceptional

circumstances may be considered in fashioning appropriate

relief.5

           Finally, we recognize that Harleysville maintains that

no remand is necessary, since it contends that this court may

properly grant summary judgment in its favor.   Relying on United

States v. Burke, 504 U.S. 229, 112 S.Ct. 1867 (1992), which held

that recoveries for Title VII backpay awards prior to the 1991

Civil Rights Act may not be excluded from gross income as

“damages received . . . on account of personal injuries,” id. at

242, 112 S. Ct. at 1874 (internal quotation marks omitted),

Harleysville suggests that where an employee had engaged in

résumé fraud, the resulting “employment contract” is voidable

under the doctrine of fraud in the inducement, and therefore that

in litigation such as this, the former employee is entitled to no


5
We make no effort at this juncture to adumbrate the contours of
the “extraordinary equitable circumstances” doctrine, see
McKennon, 115 S. Ct. at 886. The district court will have to
explore that subject, if presented by an appropriate record, on
remand. Concomitantly, we also decline Harleysville’s invitation
to balance the equities “and address the proper boundaries of the
equitable relief” here, or to “use this case to indicate how the
differing equities of résumé fraud and on-the-job misconduct
affect the remedies available to plaintiffs.” Instead, we simply
note that the Supreme Court did not limit the general principles
articulated in McKennon to cases involving on-the-job misconduct,
instead using the broader term “wrongdoing” as well as listing
both types of after-acquired evidence cases (résumé fraud cases
and cases of on-the-job misconduct) -- without distinguishing
between them -- when it noted the split among the circuits, see
McKennon, 115 S. Ct. at 883. See also infra.


                                5
damages whatsoever.   However, the protections of Title VII and

the ADEA are grounded not in a plaintiff’s “right” to a

particular job but in a federal proscription of discrimination in

employment, see Mardell, 31 F.3d at 1232-33 & nn.19-20.

          One purpose of Title VII is “to make persons whole for

injuries suffered on account of unlawful employment

discrimination,” Albemarle Paper Co. v. Moody, 422 U.S. 405, 418,

95 S. Ct. 2362, 2372 (1975) (emphasis supplied), and as this

court explained in its initial opinion in this case, “[a] victim

of discrimination suffers a dehumanizing injury as real as, and

often of far more severe and lasting harm than, a blow to the

jaw,” Mardell, 31 F.3d at 1232.       Furthermore, the Supreme Court

explained in McKennon that “an absolute rule barring any recovery

of back pay [where there is after-acquired evidence of wrongdoing

by the employee] would undermine the ADEA’s objective of forcing

employers to consider and examine their motivations, and of

penalizing them for employment decisions that spring from

discrimination.”    115 S. Ct. at 886.    We therefore reject

defendant’s Burke argument, which contravenes the letter and the

spirit of McKennon, Title VII, and the ADEA, and will remand this
case to the district court for further proceedings consistent

with the opinion.




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