Playing With Cats Has Become More Risky

Everyone would probably agree that kittens are cute, cuddly and playful. But a recent decision of the United States Supreme Court has made playing with cats more risky for employers.

The case in question, Staub v. Proctor Hospital, involved what is known as the "cat's paw theory" of proving employment discrimination. Under this theory, it is generally recognized that an employer can be liable for employment discrimination even when the person who made the adverse employment decision was unbiased if the decision was influenced by the discriminatory acts and animus of a non-decision maker (such as biased reports of misconduct). The decision maker is considered to be the "paw" of the discriminatory cat. Over the years the courts have differed somewhat in their application of this theory.

In March 2009 the U.S. Court of Appeals for the Seventh Circuit (whose jurisdiction includes Indiana and Illinois) issued a decision in Staub reversing a jury's finding in favor of Staub, who claimed he was terminated because of his service as a reservist in violation of the Uniformed Services Employment and Reemployment Rights Act (USERRA). He claimed that his immediate supervisors were biased against and wanted to get rid of him because of his military reserve membership and service, and that they fed false information to a vice president of human resources who relied on that information in deciding to terminate him. Thus, he argued that even though the person who made the termination decision had no animus against him, she was the "cat's paw" of his discriminatorily-motivated supervisors.

The Seventh Circuit, relying on its prior cases on the cat's paw theory, ruled that where the decision maker is not wholly dependent on the biased source of information, but instead conducts her own investigation into the facts relevant to the decision, the employer is not liable for the biased supervisors' communication of misinformation to the decision maker. In this case, the Seventh Circuit noted that the evidence showed that the vice president of human resources did not merely rely on information received from the biased supervisors, but had conducted her own investigation into the events that had transpired and made her decision based on the results of her investigation. Therefore, the Seventh Circuit concluded that the bias of the supervisors was not a motivating factor in Staub's termination, and vacated the jury's verdict for Staub and entered a judgment in favor of the hospital. Staub then sought review in the Supreme Court.

On March 1, 2011 the Supreme Court reversed the Seventh Circuit's decision. It concluded that the Seventh Circuit's standard was too strict. The Supreme Court ruled that even if the decision maker conducts an independent investigation, a supervisor's biased report may still be considered to be a causal factor in the termination decision (and thereby result in liability for the employer) if the investigation takes the biased report into account without determining that the decision was entirely justified separate and apart from the biased supervisor's recommendation. Thus, it appears that even if the decision maker conducts an independent investigation of the matter and discovers other evidence that the decision maker believes supports a basis for termination or some other adverse employment action, if the biased information even partially influences the ultimate decision the employer may be liable for it. The Supreme Court noted that it was expressing no view as to whether the employer would be liable if a co-worker, rather than a supervisor, engaged in biased conduct or acts that influenced the ultimate employment decision.

While it appears from the Supreme Court's opinion that an independent investigation conducted by a decision maker may still be a defense to a "cat's paw theory" of employment discrimination, it is not an absolute defense for the employer. What is not clear is how independent the decision maker's investigation will have to be in order to protect the employer from a cat's paw claim. The precise parameters of the defense are left to be fleshed out through future litigation. Employers would be well advised to train their decision makers to independently investigate and verify information reported to them that may result in adverse employment action being taken, particularly if they have any reason to suspect that the source of the information may have ulterior motives.

Even though the Staub case involved a discrimination claim under USERRA, the same rationale will likely be followed by the courts in Title VII cases given the similarity of the language of the two statutes, and perhaps in cases involving claims under other employment discrimination laws as well.

Byron Myers is a partner at Ice Miller LLP. His primary practice concentration is on labor and employment law matters, including employment discrimination, wrongful discharge and other employment-related litigation. He is a former managing partner of the Firm and former chair of Ice Miller's Employment Litigation Group. Myers frequently lectures at seminars on a wide variety of employment law subjects. If you have labor and employment questions, you can contact Myers at (317) 236-2367 or byron.myers@icemiller.com.

This publication is intended for general information purposes only and does not and is not intended to constitute legal advice.  The reader must consult with legal counsel to determine how laws or decisions discussed herein apply to the reader's specific circumstances.

March 7, 2011