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Supreme Court Adopts "Cat's Paw" Theory of Liability in Staub v. Proctor Hospital

by Martin Salcedo, Esq. - The Human Equation on 7/6/2011
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From The Monkey and the Cat, Jean de la Fontaine

No more are the princes, by flattery paid
For furnishing help in a different trade,
And burning their fingers to bring
More power to some mightier king.

Some time ago, we posed the following question to our readers: Can an employer be held liable under Title VII of the Civil Rights Act (Title VII) for racial discrimination even though the actual decision-maker did not know that the employee was being fired because he was African American?

Those with excellent memories will recall that various appellate courts facing the question held that under the subordinate bias theory of liability, also known as the "cat's paw" or "rubber stamp" doctrines, an employer can be held liable under Title VII even though the actual decision-maker was not aware that the employee was a member of a protected class.

Now, years later, the validity of the "cat's paw" theory of liability has been approved by the Supreme Court of the United States in Staub v. Proctor Hospital.

Although prior cases dealing with the "cat's paw" theory of liability often involved Title VII, the Staub case involved the Uniformed Services Employment and Reemployment Rights Act (USERRA). Under the USERRA, a person who is a member of, or who has an obligation to perform service in a uniformed service, shall not be denied initial employment, reemployment, retention in employment, promotion, or any benefit of employment by an employer on the basis of that membership or obligation. An employer shall be considered to have violated the USERRA if the employee's membership is a motivating factor in the employer's action.

Vincent Staub, an angiography technician employed by Proctor Hospital, was a member of the United States Army Reserve. Both of Staub's immediate supervisors were hostile to his military obligations and deliberately made things difficult for Staub. These supervisors eventually reported Staub to the vice president of human resources, who reviewed Staub's personnel file and ultimately fired Staub. Staub's lawsuit contends that even though the vice president of human resources showed no hostility toward Staub, he was fired because the two hostile supervisors improperly influenced the vice president to terminate Staub's employment.

A jury awarded Staub $57,640 in damages after finding that Staub's military status was a motivating factor in the hospital's decision. Believing that the "cat's paw" theory did not apply in Staub's case because the vice president of human resources was not "singularly influenced" by Staub's supervisors, the Seventh Circuit reversed the jury's decision. Since the vice president actually reviewed Staub's personnel file before firing him, the appellate court did not believe the decision to terminate Staub was the product of the vice president's blind reliance on Staub's supervisors, thereby precluding applicability of the "cat's paw" theory of liability. The Supreme Court disagreed.

In reviewing Staub's case, the Supreme Court noted that the central difficulty involves the phrase "motivating factor in the employer's action." When the company official who makes the decision to take an adverse employment action is personally acting out of unlawful hostility, a motivating factor obviously exists. The problem, the Court admits, arises when that official has no discriminatory animus but is influenced by previous company action that is the product of a discriminatory animus in someone else.

After briefly discussing the possibility of using general agency principles to hold the employer liable, the Court addressed the problem, and ultimately found a solution, by resorting to the principles of causation and proximate cause to satisfy the USERRA's "motivating factor" requirement.

Based on its analysis and application of these principles, 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 reaching its decision, the Court rejected the hospital's argument that the decision-maker's independent investigation (and rejection) of the employee's allegations of discriminatory animus ought to negate the "motivating factor" requirement The Court declined to adopt such a hard-and-fast rule.

According to the Court, the hospital's view would have the improbable consequence that if an employer isolates a personnel official from an employee's supervisors, vests the decision to take adverse employment actions in that official, and asks that official to review the employee's personnel file before taking the adverse action, then the employer will be effectively shielded from discriminatory acts and recommendations of supervisors that were designed and intended to produce the adverse action. Such a consequence, according to the Court, is not permitted by the USERRA.

The Court ultimately sent Staub's case back to the Seventh Circuit because it is unclear whether the jury's verdict should be reinstated or whether Proctor is entitled to a new trial. During Staub's trial, it was not possible for the jury instructions to reflect the Court's opinion (since it did not exist at the time). Rather, the jury instructions required only that the jury find that "military status was a motivating factor in the hospital's decision to discharge Staub. Whether the variance between the instruction and the Court's new rule was harmless error or should mandate a new trial is a matter for the Seventh Circuit to consider.

As mentioned by the Court, the "motivating factor" standard is found in other employment-related laws. Consequently, plaintiffs will undoubtedly try to rely on Staub to support claims of discrimination brought under other laws, such as Title VII. Therefore, employers should heed the lesson in Staub regardless of which law may be applicable in any given case.

So, in light of this decision, how can an employer avoid being held liable under the subordinate bias a/k/a "cat's paw" theory of liability? Investigate. Hear both sides of the story rather than taking the subordinate's recommendation as gospel, because simply asking the employee for his/her version of the events may operate to defeat liability.

Ultimately, by conducting an adequate and independent investigation of the purported reasons for taking an adverse action against an employee, in good faith, prior to actually taking any adverse employment action, employers can protect against inadvertent, though still improper, violations of equal employment opportunity laws, which can be just as costly as intentional ones.

If you would like to learn about additional strategies for avoiding costly employment-related liability, please contact us.

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