Supreme Court Of Puerto Rico Adopts The 'Sham Affidavit By Contradiction Doctrine' And Reaffirms That Bona Fide Reorganizations Of Employers Constitute Just Cause For Termination

In what has been a string of recent favorable decisions for employers, the Supreme Court of Puerto Rico recently issued another opinion, this time elaborating on the evidentiary standard for wrongful termination claims under Act No. 80 of May 30, 1978 ("Act 80") after a corporate reorganization. Additionally, and perhaps the most important holding of the opinion, the High Court adopted the sham affidavit doctrine, developed by federal courts, making clear that courts cannot consider a plaintiff's affidavit that contradicts prior deposition testimony in determining whether a genuine controversy of a material fact exists that would preclude entering summary judgment.

The plaintiff in Lugo Montalvo v. Sol Meliá Vacation Club, 2015 T.S.P.R. 159, 194 D.P.R. ___ (2015) filed suit against his former employer alleging national origin discrimination and unjustified dismissal under Act 80. The employer argued that the plaintiff was terminated with just cause as a result of a corporate reorganization in which the plaintiff's department was closed and his position was eliminated. The employer filed a motion for summary judgment primarily based on several of the plaintiff's own admissions during his deposition. As part of his opposition, the plaintiff submitted a sworn statement that contradicted his prior deposition testimony. The lower court denied the motion for summary judgment, finding that there were genuine controversies of material fact. On appeal, the employer argued that the plaintiff's sworn statement was a sham affidavit filed for the sole purpose of creating a controversy of fact, and should not have been considered by the lower court. The Court of Appeals rejected the employer's argument and affirmed the lower court's denial of the motion for summary judgment.

The Supreme Court of Puerto Rico concluded that the lower courts erred in considering the plaintiff's sworn statement. The court recognized two types of sham affidavits: (1) a sham affidavit by omission; and (2) a sham affidavit by contradiction. The sham affidavit by omission consists of a party withholding relevant information during a deposition for the sole purpose of creating an issue of material fact by stating said information by means of an affidavit. The sham affidavit doctrine by omission had been previously adopted by the Supreme Court of Puerto Rico. This time, the Supreme Court adopted the sham affidavit by contradiction doctrine, which applies: (1) when a party has been...