U.S. Court of Appeals, Third Circuit
filed: July 20, 1995.
NANCY MARDELL, APPELLANT
HARLEYSVILLE LIFE INSURANCE COMPANY, A PENNSYLVANIA CORPORATION
(D.C. Civ. No. 91-01493).
Present: Becker, Nygaard, Circuit Judges, and Yohn, District Judge.*fn*
Opinion OF THE COURT SUR REMAND FROM THE UNITED STATES SUPREME COURT
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., 130 L. Ed. 2d 852, 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.*fn1 However, it does vary in one important respect: the 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, 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).*fn2 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,*fn3 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 resume fraud in discriminatory discharge case); see also Wehr v. Ryan's Family Steak Houses, 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.*fn4
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, 119 L. Ed. 2d 34 (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 resume 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 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, 45 L. Ed. 2d 280 (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.