United States Supreme Court Decides “Cat’s Paw” Theory of Liability in Staub v. Proctor Hospital

It is now clear that an employer may be held liable for unlawful discrimination when it unwittingly terminates an employee based on a supervisor’s recommendation or false allegations motivated by discriminatory animus. The United States Supreme Court, in Staub v. Proctor Hospital, No. 09-400, 562 U.S. _ (March 1, 2011), has just resolved a split in the lower courts over the reach of the so-called "cat’s paw" theory of liability, which gets its name from the 17th century fable by French poet Jean de La Fontaine. In the fable, a monkey convinces a cat to remove chestnuts from a fire. The cat complies, pulling out the chestnuts one at a time, burning its paw in the process, as the monkey feasts on the chestnuts. In the employment context, the "cat’s paw" refers to a situation in which a biased subordinate employee, who lacks decision-making authority, uses the final decisionmaker as a dupe to trigger a discriminatory employment action. In Staub, the Court held that if the decision to terminate is based in whole or in part on the malicious recommendation or false allegations from a supervisor who has discriminatory motives, the employer can be held liable under federal statutes that prohibit employment discrimination.

Although the Supreme Court’s decision arose out of an employee’s claim under the Uniformed Services Employment and Reemployment Rights Act (USERRA), the Court’s holding will likely be applied with equal force to Title VII discrimination cases, given Title VII’s similar statutory language, which the Court itself noted. In light of this decision, employers should ensure that ultimate decisionmakers do not simply rubberstamp the recommendations of immediate supervisors, but instead attempt to verify that a legitimate reason for discipline or termination exists and that immediate managers are not pursuing discipline because of bias. To the extent possible, employers should also investigate an employee’s claim of discrimination prior to implementing a termination decision.

Background

In Staub, an Army Reservist sued his employer for military discrimination under USERRA after he was terminated by the Vice President of Human Resources (the decisionmaker) for allegedly violating a disciplinary warning. Staub did not contend that the decisionmaker was motivated by hostility towards his military obligations. Rather, he claimed that his managers were motivated by such hostility, and that the decisionmaker was influenced by their actions. A jury found the employer liable and awarded Staub damages. The Seventh Circuit reversed, concluding that the employer was entitled to judgment as a matter of law because the decisionmaker had relied on more than the allegedly biased managers’ advice in making her decision.

In so holding, the Seventh Circuit joined the Fourth Circuit in taking a narrow approach to the cat’s paw theory, holding that if the final decisionmaker’s motive is pure, an employer cannot be held liable for a subordinate’s alleged bias. Other federal circuit courts had taken a more lenient view, upholding cat’s paw claims where a terminated employee could prove that a biased worker "influenced" or "played a role" in the final decision, or that the biased supervisor "caused" the ultimate decisionmaker’s action.

The Supreme Court’s Decision

In an 8-0 decision, the Supreme Court reversed the Seventh Circuit and resolved the circuit split. In the majority opinion, by Justice Scalia, the Court held that "if a supervisor performs an act motivated by antimilitary animus that is intended by the supervisor to cause an adverse employment action, and if that act is a proximate cause of the ultimate employment action, then the employer is liable under USERRA." In the instant case, both of plaintiff’s supervisors acted within the scope of their employment when they took actions that allegedly caused the decisionmaker to fire Staub, and there was evidence that their actions were motivated by hostility towards Staub’s military obligations and were causal factors underlying the decisionmaker’s decision. There was also evidence that Staub’s supervisors had the specific intent to cause Staub’s termination.

The Court arrived at its holding through an analysis of general tort and agency law. The Court explained that the agent had the scienter required for USERRA liability so long as the earlier agent intended, for discriminatory reasons, for the adverse action to occur. Moreover, the decisionmaker’s exercise of judgment does not prevent the earlier agent’s action from being a proximate cause of the harm. Nor can the ultimate decisionmaker’s judgment be deemed a "superseding cause" of the harm. The Court reasoned that to conclude otherwise would have the "improbable consequence" that if an employer isolated a personnel official and vested the decision to take adverse employment action in that official upon review of the employee’s personnel file, then the employer would be "effectively shielded from discriminatory acts and recommendations of supervisors that were designed and intended to produce the adverse action." According to the Court, "[t]hat seems to us an implausible meaning of the text, and one that is not compelled by its words."

The Court also rejected the employer’s argument that a decisionmaker’s independent investigation of the employee’s allegations of discriminatory animus should provide an absolute affirmative defense, stating: "Nor do we think the independent investigation somehow relieves the employer of ‘fault.’ The employer is at fault because one of its agents committed an action based on discriminatory animus that was intended to cause, and did in fact cause, an adverse employment decision." However, the Court explained that if the employer’s investigation resulted in an adverse action for reasons unrelated to the supervisor’s original biased action, then the employer would not be liable.

Justice Alito filed a separate concurring opinion, with which Justice Thomas joined, in which he opined that the same decision could have been reached based on the statutory text rather than on principles of agency and tort law "that do not speak directly to the question presented here." The majority rejected Justice Alito’s contention that they had strayed from the statutory text.

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