The Seventh Circuit’s recent decision in Reed v. Columbia St. Mary’s Hospital contains a noteworthy discussion of timeliness requirements for pleading affirmative defenses.
Reed, a troubled individual with several disabilities, went to Columbia St. Mary’s Hospital in Milwaukee, seeking help warding off suicidal thoughts. What happened during her four-day stay is disputed. But Reed later filed suit, alleging that the hospital discriminated against her in violation of the Americans with Disabilities Act, the Rehabilitation Act, and state law. The hospital denied Reed’s allegations and filed affirmative defenses to her complaints. However, the hospital did not claim a religious exemption from the ADA in its responsive pleadings.
Title III of the ADA prohibits “public accommodations,” including hospitals, from discriminating against individuals with disabilities. However, Title III exempts “religious organizations” and “entities controlled by religious organizations, including places of worship.” 42 U.S.C. § 12187. This religious exemption is an affirmative defense, because it assumes that, even if the plaintiff can prove her claim, the exemption may still defeat liability.
After the parties conducted discovery, the hospital moved for summary judgment. Only then, for the first time, did it assert that the religious exemption shielded it from liability on Reed’s ADA claim. The district court granted summary judgment for the hospital on the federal claims and declined to exercise supplemental jurisdiction over the state claim. In so doing, the district court accepted the hospital’s late assertion of the ADA religious exemption. The district court reasoned that (1) the exemption is not expressly listed in Federal Rule of Civil Procedure 8(c), so it was not clear that failure to assert the defense in the answer constituted waiver, and (2) Reed had adequate notice of the hospital’s possible reliance on the defense based on a specific exchange between the hospital’s counsel and a witness during a deposition.
The Seventh Circuit reversed the district court’s decision. It began by confirming that even an affirmative defense not listed in Rule 8(c) must still be pleaded if the defendant bears the burden of proof on an issue under state law or if (as here) “the defense does not controvert the plaintiff’s proof.” Reed, slip op. at 7. This requirement exists “to avoid surprise and undue prejudice to the plaintiff by providing her notice and the opportunity to demonstrate why the defense should not prevail.” Id.
Having set forth a clear “rule,” the court explains it should not be rigidly applied. Instead, courts should enforce forfeiture for failure to assert an affirmative defense in an answer “only if the plaintiff is harmed by the defendant’s delay in asserting [the defense].” Id. at 8. Thus, courts have discretion to allow amendments that add affirmative defenses not initially pleaded. For example, a defendant may uncover a possible defense to liability during discovery. In such a case, if the defendant promptly alerts the parties and the court of his intent to pursue the defense, it would be reasonable for the court to permit it. However, courts should also consider whether the belated assertion would cause unreasonable delay or make the litigation more costly.
Applying these principles, the Seventh Circuit deemed the district court’s decision to let the hospital assert the religious exemption for the first time at the summary judgment stage was not only unreasonable but also an abuse of discretion. First, the hospital knew, from the outset of litigation, all of the facts relevant to the exemption; therefore, the affirmative defense needed to be pleaded in the initial answer. Second, the Seventh Circuit dismissed the district court’s conclusion that Reed had notice of the defense based on an exchange at a deposition; according to the appellate court, this truncated exchange with a witness did not compare to “a lawyer’s statement that the party intends to assert a defense.” Id. at 13. Finally, the Seventh Circuit determined that the delay was prejudicial. Because the defense was first asserted after discovery had closed, both parties (particularly Reed) had spent time and money investigating what they reasonably expected the issues to be; allowing the religious exemption to be invoked as a “last-minute defense” would raise new factual and legal issues, increasing the cost of litigation and prejudicing Reed, who had no reasonable notice that the defense would be raised. Id. at 16.
The Seventh Circuit suggested that the outcome may have been different had the hospital offered some explanation for the delay in asserting the defense and/or the prejudice to Reed been minimal. However, this decision demonstrates that the belt-and-suspenders approach is best: defendants should plead all possible affirmative defenses in their answers, promptly seek to amend those answers when any additional defenses reveal themselves in the course of litigation, and be prepared to explain any delay in asserting those defenses.