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November 29, 1999


The opinion of the court was delivered by: Bucklo, District Judge.


Perry Jones and Robert Skaletsky filed this age discrimination lawsuit after they were fired from their positions as auditors at the City Colleges of Chicago (the "City Colleges") in 1995. Both Messrs. Jones and Skaletsky and the City Colleges filed motions in limine and other pretrial motions, some of which require discussion. I also discuss the admissibility of several exhibits in dispute at this stage of the case.


Defendants argue, first, that testimony as to Mr. Jones' gambling habits is relevant to an after-acquired evidence defense. See McKennon v. Nashville Banner Publishing Co., 513 U.S. 352, 115 S.Ct. 879, 130 L.Ed.2d 852 (1995). After-acquired evidence of an employee's misconduct may limit his damages. As the Seventh Circuit summarizes this defense, "[a]n employer may be found liable for employment discrimination, but if the employer later — typically in discovery — turns up evidence of employee wrongdoing which would have led to the employee's discharge, then the employee's right to back pay is limited to the period before the discovery of this after-acquired evidence." Sheehan v. Donlen Corp., 173 F.3d 1039, 1047 (7th Cir. 1999). City Colleges discovered the evidence of Mr. Jones' gambling in or around September 1999, so, since the trial date is in November 1999, not much money is at stake.

City Colleges argues that Mr. Jones would not have been hired, if his gambling career had been known at the time, or that if it had been discovered while he worked for City Colleges, he would have been fired. It contends that Jones (1) committed "application fraud" because he did not disclose that he left Arthur Anderson to become a full time gambler rather than for the less striking and more conventional reasons noted on his application form, and (2) that Mr. Jones violated the City Colleges Ethics policy providing that "no information shall be withheld from, or false information supplied to, [City Colleges] by any employee." Accordingly, City Colleges says, that would cut off his damages from September 1999 when it became aware of the information.

But first, City Colleges has waived the after-acquired evidence defense by not raising it in the pleadings. The defense is an affirmative defense. See McKennon, 513 U.S. at 362-63, 115 S.Ct. 879. Failure to plead an affirmative defense results in a waiver of that defense. Bank Leumi LeIsrael, B.M. v. Lee, 928 F.2d 232, 235 (7th Cir. 1991); Fed.R.Civ.P. 8(c) (A party must "set forth affirmatively" any "matter constituting an avoidance or affirmative defense."). City Colleges complains that it could not have pled the defense until it acquired the information in September 1999, but this was after the date for discovery had closed. City Colleges does not allege any discovery abuse here, and in fact there is no particular reason to think that there was any.

City Colleges also contends that the "same loss" affirmative defense it did plead in its Answer (its "Tenth Defense") would be sufficient to put the plaintiff on notice of an after-acquired evidence defense. This is not true. The defense reads that the plaintiffs "would have suffered the same loss of employment in any event as a result of their poor job performance." Poor job performance is not the same as misleading an employer or even violating an employer's Ethical Standards by omitting facts from an employment application. It is not in the ballpark, or even in the neighborhood of those reasons, and so pleading poor job performance would not put the plaintiff on notice. Moreover City Colleges itself does not contend that Mr. Jones' gambling in fact interfered with his job performance or deny that at the time of the contested Tax Court testimony, Mr. Jones' performance evaluations were excellent.

But even if City Colleges had not waived the after-acquired evidence defense, it would not be able to make out the defense and so is not entitled to offer in evidence the facts relating to Mr. Jones' gambling, since there is nothing else that has been properly pled to which this highly prejudicial evidence might be relevant. In order to make out the defense, City Colleges must show by a preponderance of the evidence that the after-acquired evidence would have led to Mr. Jones' termination. See McKennon, 513 U.S. at 362-63, 115 S.Ct. 879. The Seventh Circuit states that "`the inquiry focuses on the employer's actual employment practices, not just the standards established in its employee manuals, and reflects a recognition that employers often say they will discharge employees for certain misconduct while in practice they do not.' In absence of further evidence that the policy actually would have been applied, [the employer's] adversion to its stated policy is therefore insufficient to carry its burden of persuasion on the after-acquired evidence defense." Sheehan, 173 F.3d 1039, 1047-48 (internal citations omitted) (a case involving omissions from an employment application). "Proving that the same decision would have been justified . . . is not the same as proving that the same decision would have been made." Price Waterhouse v. Hopkins, 490 U.S. 228, 252, 109 S.Ct. 1775, 104 L.Ed.2d 268 (1989) (internal citations omitted).

City Colleges offers no evidence that it has ever refused to hire someone, or that it has ever fired anyone, because he omitted something from an employment application. It does offer the testimony of a supervisor who says that Mr. Jones would have been fired or not hired had City Colleges known of the omission, but a party's "self-serving remarks standing alone are insufficient," Tyler v. Runyon, 70 F.3d 458, 468 (7th Cir. 1995). "Self-serving statements do not `shed any light on whether the employer honestly based its employment decision on [the relevant] . . . considerations,'" Adusumilli v. City of Chicago, 164 F.3d 353, 363 (7th Cir. 1998) (internal citations omitted), and even less do they illuminate whether the employer would have done so in a hypothetical circumstances. Accord Haywood v. North Am. Van Lines, Inc., 121 F.3d 1066, 1071 (7th Cir. 1997). Therefore, evidence regarding Mr. Jones' gambling is not admissible.


City Colleges wishes to enter into evidence several pieces of what it concedes to be hearsay under the business records exception to the hearsay rule. This provides that a "memorandum, report [or] record" which would otherwise be excluded as hearsay may be admitted if it is "made at or near the time" by "a person with knowledge . . . in the course of a regularly conducted business activity," as long as "it was the regular practice of that business activity to make" such records, unless there is some indication of "lack of trustworthiness." Fed.R.Evid. 803(6). That is, the record must be (1) a contemporaneous (2) record of a business activity, (3) which is regularly conducted, and (4) recorded as a matter of regular practice, (5) by or based on information from a person with knowledge, and (6) which has indicia of reliability. See Wheeler v. Sims, 951 F.2d 796, 802 (7th Cir. 1992).

City Colleges wishes to admit, first, the personal file notes pertaining to Messrs. Jones and Skaletsky's job performance by their supervisor, Mr. Darnell Leavell. These contemporaneous notes were apparently written for Mr. Leavell's own reference and placed in his file without being shown to Messrs. Jones and Skaletsky or anyone else. I am not satisfied, first, that these are business records for the purposes of Rule 803(6). City Colleges does not show that making personal file notes about employees' performance was a regularly conducted business practice or that such evaluations were recorded as a matter of regular practice. The fact that Mr. Leavell made such notes with respect to the plaintiffs in particular does not help. The memoranda were "not created with the kind of regularity or routine which gives business records their inherent reliability. . . . [but] obviously to memorialize [something] . . . that Mr. [Leavell] may have been concerned could have some litigation potential to it." Pierce v. Atchison, Topeka, and Santa Fe Ry. Co., 110 F.3d 431, 444 (7th Cir. 1997).

Neither do the memoranda have indicia of reliability. Reliability may be established by such factors as systematic checking, habits of precision on the part of the keeper, reliance by others on the records, or a duty to record accurately. Weinstein's Federal Evidence ยง 803.11[3], at 803-66 (1999). Mr Leavell's notes were not systematically checked by anyone else; nothing indicates that he has any special habits of precision or that anyone else relied on these records; and he was under no duty to record that information accurately. Indeed, ...

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