EQUAL EMPLOYMENT OPPORTUNITY COMMISSION v. U.S. DRY CLEANING SERVICES CORPORATION

Filing 111

ORDER denying Defendant's 74 Motion for Leave to File Amended Answer (see Order for details). Signed by Magistrate Judge Tim A. Baker on 8/13/2014. (SWM)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF INDIANA
INDIANAPOLIS DIVISION

EQUAL EMPLOYMENT OPPORTUNITY
COMMISSION,

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Plaintiff,
vs.
U.S. DRY CLEANING SERVICES
CORPORATION doing business as
TUCHMAN CLEANERS,
Defendant.

No. 1:12-cv-01376-JMS-TAB

ORDER ON DEFENDANT’S MOTION FOR LEAVE TO AMEND
Defendant U.S. Dry Cleaning Services Corporation recently made a startling discovery.
Contrary to his sworn deposition testimony and his employment application, charging party
Brisco Palmer has an extensive criminal history. Defendant first learned about this from a July
21, 2014, criminal background check conducted as part of its trial preparation. The following
day Defendant filed a motion for leave to amend its answer and affirmative defenses [Filing No.
74] to add an after-acquired evidence affirmative defense. The Equal Employment Opportunity
Commission objects to the motion on the grounds it is untimely and futile. [Filing No. 95]. The
Court overrules the EEOC’s timeliness objection, but agrees that the proposed amendment would
be futile and therefore denies Defendant’s motion.
As for timeliness, the EEOC contends that the motion comes more than a year after the
deadline for leave to amend. This is undoubtedly true, but it is likewise true that Defendant filed
the instant motion the day after learning of Palmer’s apparent deception. While Defendant could
have done a background check sooner, it was not unreasonable for Defendant to wait to expend
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the time and resources until trial was imminent. With a September 8 trial date looming,
Defendant conducted a criminal background check July 21. That seems reasonable enough.
Moreover, the EEOC’s claims of surprise and prejudice ring hollow given that it has had ample
opportunity to interview Palmer and carefully explore his criminal background.
As for futility, the EEOC relies on McKennon v. Nashville Banner Publishing Company,
513 U.S. 352 (1995), for the proposition that Palmer’s apparent perjured deposition testimony
and falsified employment application do not support an after-acquired evidence defense.
Defendant promoted Palmer on June 15, 2011, and the EEOC is seeking backpay only for
alleged discrimination in failing to promote Palmer prior to that date. Because Defendant
discovered the basis for an after-acquired evidence defense in July 2014―long after Defendant
promoted Palmer in 2011―the EEOC argues that McKennon makes Palmer’s alleged deceit
irrelevant.
The issue in McKennon was whether an employee discharged in violation of the Age
Discrimination in Employment Act is barred from recovering any relief when, after discharge,
the employer discovers evidence of wrongdoing that would have led to the employee’s
termination on lawful grounds. The Supreme Court held that in general such an employee would
be barred from front pay and reinstatement, but due to the remedial purposes of antidiscrimination law the employee would still be able to recover backpay. McKennon, 513 U.S. at
361-62. “The proper measure of backpay,” wrote Justice Kennedy for a unanimous Court,
“presents a more difficult problem.” Id. at 362.
That problem presents itself in the case at bar, though somewhat differently than in
McKennon. In McKennon, the employer learned of the wrongful acts of plaintiff during her
deposition. The question then was whether these wrongful acts―removing and copying

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confidential company documents and showing them to her husband―would preclude relief
entirely, or if not, what relief might be available. The plaintiff in McKennon had been
terminated allegedly due to her age and sought an award of backpay dating back to her date of
termination.
In contrast, in the case at bar on June 15, 2011, charging party Palmer received the
promotion that he claims Defendant denied him previously due to his race. Defendant
subsequently terminated Palmer in August 2012 for alleged time card falsification. That
termination is not at issue. Defendant discovered the apparently false deposition testimony and
false representation on Palmer’s employment application in July 2014, more than three years
after his promotion and nearly two years after his termination. The parties have stipulated that
only $1,062.03 in backpay is at issue in this case [Filing No. 84, at ECF p. 1], though the EEOC
seeks other damages.
In considering what damages may be recoverable in McKennon, Justice Kennedy wrote,
“The beginning point in the trial court’s formulation of a remedy should be calculation of
backpay from the date of the unlawful discharge to the date the new information was discovered.
In determining the appropriate order for relief, the court can consider taking into account
extraordinary equitable circumstances that affect the legitimate interests of either party.” Id. at
362.
Applying this logic to the instant case, the Court agrees with the EEOC that the afteracquired evidence defense would be futile. The beginning point for the backpay calculation
Justice Kennedy outlined in McKennon does not fit here because Palmer’s June 2011 promotion
cut off backpay well before Defendant first learned of the defense in July 2014. Rather, the
period of backpay would only include the time period prior to June 15, 2011, when Plaintiff

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allegedly should have received the promotion but for the claimed discrimination. Palmer was
then fired in August 2012 and almost another two years passed before Defendant learned of
Palmer’s alleged misrepresentation on his application and that his deposition contained
misstatements. The foregoing facts do not create “extraordinary equitable circumstances” to
permit Defendant to cut and paste an after-acquired evidence defense here. Id. The defense
would be futile.
Nevertheless, this does not mean that the evidence at the heart of this dispute is irrelevant
and that the jury will be precluded from hearing what Defendant claims is Palmer’s “record of
deceiving his former employer and lying under oath.” [Filing No. 106, at ECF p. 1.] It only
means that Defendant cannot avail itself to the after-acquired evidence defense. A hotly disputed
motion in limine pends [Filing No. 93, Filing No. 106] that will help determine the extent to
which such evidence is admissible, irrespective of the after-acquired evidence defense. Those
issues are not before the undersigned and are not addressed in this order, which concludes only
that Defendant’s motion for leave to amend [Filing No. 74] is denied.

08/13/2014
_______________________________
Tim A. Baker
United States Magistrate Judge
Southern District of Indiana

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Distribution:
Kathleen Ann DeLaney
DELANEY & DELANEY LLC
[e-mail]
Mark J. Plantan
DELANEY & DELANEY LLC
[e-mail]
Jo Ann Farnsworth
EEOC
[e-mail]
Aarika D. Mack-Brown
EQUAL EMPLOYMENT OPPORTUNITY COMMISSION
[e-mail]
Laurie A. Young
EQUAL EMPLOYMENT OPPORTUNITY COMMISSION
[e-mail]
Michelle Eisele
EQUAL EMPLOYMENT OPPORTUNITY COMMISSION
[e-mail]

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