SCOTUS Cat's Paw Decision Bad News for Employers

The big news in employment law this week was the Supreme Court’s decision in Staub v. Proctor Hospital, the so-called “cat’s paw” case.  For those of you not familiar with the term, the cat’s paw theory holds an employer liable for the discriminatory animus of a manager who played no role in the adverse employment decision but exerted some influence over the actual decision maker.  For example, an assistant manager who has discriminatory animus may influence his manager who has no discriminatory animus to terminate an employee.  Under the cat’s paw theory the company could be held liable since the assistant manager influenced the decision to terminate.  Staub v. Proctor Hospital considered the question of whether this is a legitimate theory of liability in discrimination cases.

Unfortunately for employers, the answer is a resounding yes.  The Supreme Court held: “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.”  The Hospital had raised the most obvious and logical argument, i.e. that the employer should not be liable unless the actual decision maker was motivated by discriminatory animus.  The Court responded:

Proctor errs in contending that an employer is not liable unless the de facto decision maker is motivated by discriminatory animus.  So long as the earlier agent intended, for discriminatory reasons, that the adverse action occur, he has the scienter required for USERRA liability.  Moreover, it is axiomatic under tort law that the decision maker’s exercise of judgment does not prevent the earlier agent’s action from being the proximate cause of the harm.

The Court limited its holding to USERRA but noted that USERRA’s “motivating factor” causation standard is “very similar to Title VII.”  Thus, it is reasonable to expect this decision to be applied to Title VII claims and ADA claims.  The ADEA requires “but for” causation so age discrimination claims should be outside the four corners of this decision.

I recently criticized the Supreme Court for issuing employment law decisions that seem designed to create additional litigation rather than resolving issues and simplifying the law.  The cat’s paw case seems to have the same problem.  The Court introduces concepts of agency law and negligence into the analysis of employment law issues.  These concepts always require a fact specific analysis and are seldom able to be resolved by courts at the summary judgment stage, meaning employers will be exposed to more jury trials.  On a practical level, plaintiff’s attorneys would be remiss if they do not include cat’s paw allegations in most cases going forward.  This will afford them an opportunity to not only examine the decision maker’s motives but to search throughout a company’s management team for someone (anyone) who arguably had discriminatory animus and argue that that individual somehow influenced the ultimate decision maker.  At the very least, the scope of discovery just significantly expanded and as anyone who has defended discrimination litigation knows, discovery is expensive.

What can employers do in response to this decision?  The Court seemed to offer one avenue for employers to avoid liability.  The Hospital argued that the ultimate decision maker’s independent investigation (and rejection) of the employee’s allegation of discriminatory animus should negate the effect of the prior discrimination.  The Court rejected a hard and fast rule, stating:

As we have already acknowledged, the requirement that the biased supervisor’s action be a causal factor of the ultimate employment action incorporates the traditional tort-law concept of proximate cause. . . .  Thus, if the employer’s investigation results in an adverse action for reasons unrelated to the supervisor’s original biased action (by the terms of USERRA it is the employer’s burden to establish that), then the employer will not be liable.  But the supervisor’s biased report may remain a causal factor if the independent investigation takes it into account without determining that the adverse action was, apart from the supervisor’s recommendation, entirely justified.

It is not practical to conduct an independent investigation in every termination, particularly for large employers.  However, in those terminations involving employees who have made past complaints of discrimination, employers should consider an independent investigation as a means to avoid cat’s paw liability.

The Supreme Court remanded the case to the Seventh Circuit for application of the new rule so it will be interesting to see exactly what the lower court does with it.  However, it will likely require a good deal more litigation before the cat’s paw theory of liability is well defined and predictable. 



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