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TENNESSEE COURT OF APPEALS ADOPTS RULE ALLOWING AFTER-ACQUIRED EVIDENCE TO PROVE GROUNDS FOR TERMINATION
by J. Bartlett Quinn
On October 29, 2004, the Tennessee Court of Appeals ruled that an employer may use after-acquired evidence¹ to prove that an individual was terminated lawfully when he/she files a wrongful discharge claim under Tennessee law. Teter v. Republic Parking System, Inc., 2004 W.L. 2419082, Tenn. Ct. App., Oct. 29, 2004. In this case of first impression in Tennessee, the court held that the employer must show by clear and convincing evidence that the wrongdoing was so severe that the employee would have been discharged on that ground alone if it had been known to the employer at the time of the termination. This decision is important to Tennessee employers as it establishes an employer’s right to use after-acquired evidence to defend claims of wrongful discharge under Tennessee law, and it establishes the parameters within which an employer may use after-acquired evidence.
Facts
At the time of his termination, plaintiff was a successful vice president for the defendant in its parking business. The terms of plaintiff’s employment were set forth in an employment agreement which provided for a healthy six-figure annual salary, ample bonus opportunities, and a generous severance pay if he was terminated for anything other than “gross misconduct.” Defendant attempted to change plaintiff’s job responsibilities and other terms and conditions of his employment agreement.
When negotiations between the parties broke down, the defendant changed the locks on all of its executive offices, preventing plaintiff from accessing them. The defendant's CEO sent plaintiff a memorandum outlining the failed negotiations and stating that “…we should part company and get on with life.” After receiving the memorandum, plaintiff began cleaning out his office. The next day, an employee of defendant company noticed that the central processing unit (“CPU”) of plaintiff’s computer was missing. When plaintiff finally returned the CPU, he claimed that he had merely been attempting to delete some personal files. In truth, however, an analysis of the CPU revealed that plaintiff had used the computer to access numerous pornographic websites during regular business hours.
Plaintiff filed suit in the Chancery Court for Hamilton County seeking damages for wrongful discharge. In defending the claim, Defendant cited its discovery that plaintiff had been viewing pornography at work and contended that it would have terminated him for this misconduct if it had learned of it earlier. When, despite the defendant's argument, the trial court granted a summary judgment in favor of the plaintiff for an amount in excess of $700,000.00, the defendant appealed.
Unable to find legal precedent in Tennessee, the trial court relied heavily on a decision from the Supreme Court of South Carolina in which that court held that after-acquired evidence should only be allowed when certain limitations are put in place to prevent abuse by employers.² In that case, the court restricted the use of after-acquired evidence to instances where an employer could prove that the wrongdoing was significant enough to warrant termination on those grounds alone had it been known at the time of employee's discharge. Lewis further ruled that this proof must be established not by a preponderance of the evidence, but by clear and convincing evidence. Adopting the Lewis standard, the trial court in Teter concluded that the defendant had not proved by clear and convincing evidence that the plaintiff would have been fired for downloading pornography and therefore refused to consider the after-acquired evidence.
Agreeing with the trial court's analytical approach to this issue and its adoption of the Lewis standard, the Tennessee Court of Appeals affirmed the trial court's ruling. Ironically, therefore, the decision to recognize the use of after-acquired evidence in Tennessee to defend an employment lawsuit arose in a case in which the Court actually prevented the defendant from utilizing that sort of evidence.
Conclusion
The Teter decision recognizes the availability of the after-acquired defense to wrongful discharge claims in Tennessee, a defense previously only available to employers sued for wrongful discharge under federal discrimination statutes. It is important to remember, however, that after-acquired evidence is admissible only if the employer can establish, by clear and convincing evidence, that the employee would have been discharged on that basis alone had it been known to the employer at the time of the termination. While the Teter decision does not tell us what evidence is required to satisfy the "clear and convincing" standard, the Tennessee Supreme Court has previously ruled that evidence is considered to be clear and convincing when "there is no serious or substantial doubt about the correctness of the conclusions drawn from the evidence."³
Employers should see this case as another reminder of the importance of adopting and consistently enforcing written workplace rules and policies. To increase the likelihood that you will be able to utilize after-acquired evidence as a defense to a claim for wrongful discharge, we recommend that you:
- Develop and adopt clear and unambiguous policies identifying what you consider to be unacceptable workplace behavior and the discipline which will result for violations of those policies
- Give your employees notice of these policies at the time of their enactment and regularly thereafter (through employee meetings or other avenues)
- Apply the policies consistently to all employees.
If you have any questions regarding the Teter case or need assistance with the creation, implementation or consistent application of workplace policies, or methods for effectively communicating your policies to your employees, please contact any member of our Labor and Employment Group.
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