Supreme Court Sharpens 'Cat's Paw' Liability

In its recent unanimous decision in Staub v. Proctor Hospital, 131 S.Ct. 45 (2010), the U.S. Supreme Court both recognized the concept of “cat's paw” liability in employment discrimination cases ' where a biased non'decision-maker acts to bring about the termination of an employee by improperly influencing an unbiased decision-maker ' and sharpened its claws. In its opinion, which was the first time the Supreme Court had addressed the issue since a 1990 Seventh Circuit decision coined the term ' the court upheld cat's paw liability as a viable theory and struck down a commonly accepted exception. As a result, Staub has significant implications for all employers ' and greatly increases potential liability.

Previous Cat's Paw Precedent

In its 1990 ruling in Shager v. Upjohn Co., 913 F.2d 398, (7th Cir. 1990), the Seventh Circuit first recognized the “cat's paw” theory of liability. To establish a cat's paw case under Seventh Circuit standards, a plaintiff had to show that the non'decision-maker exerted “singular influence” over the decision-maker in order to harm the plaintiff for discriminatory reasons. Even though the non'decision-maker may lack formal authority to take adverse action, the employer is still liable. However, to prevent this theory from “spiraling out of control,” the Seventh Circuit developed an exception. If a decision-maker conducts an independent investigation into the facts and is not “wholly dependent” on the improper influence, the employer is not liable. Thus, so long as the decision-maker did not simply take the non'decision-maker's word for it, any resulting action is to be respected as a product of unbiased analysis.

In practice, this independent investigation exception made it difficult for plaintiffs to establish cat's paw liability. For instance, in Brewer v. Bd. Of Trustees of Univ. of Illinois, 479 F.3d 908 (7th Cir. 2007), there was evidence that the non'decisionmaker supervisor called the plaintiff employee a racially derogatory name and secretly allowed him to modify his parking tag, knowing that this was strictly prohibited and would result in his termination. The plaintiff was then in fact terminated for having a modified parking tag. The Seventh Circuit held there was no liability, however, because there was an unbiased, independent decision-maker who “looked into the situation for herself” and “did not simply rely on” what the biased supervisor told her.

It was against this backdrop of lower court precedent, then, that the Supreme Court was asked to consider the validity and scope of cat's paw liability in Staub.

The Facts and Lower Court's Findings

Plaintiff Staub, a U.S. Army reservist, worked for defendant Proctor Hospital as an angiography technologist. As a part-time soldier, Staub regularly requested time off to attend mandatory reserve duties, which included drill and training sessions and active duty. While Staub had a history of certain insubordinate behavior, his supervisors, Janice Mulally and Michael Korenchuk, grew increasingly irritated by him, in part due to his military leave requests. Mulally, who handled the department's scheduling, would place Staub on weekend shifts knowing it would create conflicts with his drill schedule. She had also made it clear to Staub's coworkers that she wanted to “get rid of him.” On Jan. 27, 2004, Mullaly issued Staub a written warning accusing him of further insubordinate behavior (which Staub denied) ' failing to respond to a request for assistance by the general diagnostics unit of his department. This warning also prohibited Staub from leaving his work area without informing Korenchuk or Mulally. About four months later, Proctor's Vice-President of Human Resources, Linda Buck, terminated Staub for violating this instruction when Korenchuk informed her that Staub left his work area without informing a supervisor (which Staub also denied), in violation of the Jan. 27 write-up. In making the termination decision, Buck also reviewed Staub's personnel file and considered prior coworker complaints.

Following his termination, Staub filed a grievance pursuant to Proctor's grievance procedure. He insisted that Mulally's Jan. 27 write-up ' containing the command he allegedly violated ' was fabricated by Mulally because she was out to get him for being in the Reserves. Buck did not investigate this claim. Instead, she maintained her initial decision that Staub should be fired for insubordination.

Staub sued Proctor for discrimination under the Uniformed Services Employment and Reemployment Rights Act, 38 U.S.C. ' 4301 et seq. (USERRA), alleging his termination was due to his association with the military. Staub admitted that Buck harbored no military-based animus. He claimed instead that, due to Staub's military status, Mulally and Korenchuk fed Buck misinformation to get him fired. Because Buck relied on this allegedly false information without sufficiently vetting it, Staub contended that she was a mere cat's paw for Mulally and Korenchuk and thus, their improper influences should be imputed to Proctor. The case went to trial and the jury returned a verdict in Staub's favor, awarding him $57,640 in damages.

On appeal, the Seventh Circuit reversed the jury award and held that Proctor was entitled to judgment in its favor. The court held that there was insufficient evidence to support a verdict against Proctor based on the cat's paw theory, because Buck did not “blind[ly] rel[y]” on the improper influences of Mulally and Korenchuk. Buck conducted her own investigation and did not simply rubberstamp Mulally's or Korenchuk's recommendations. While the court agreed that Buck's investigation “ could have been more robust,” she was not “'wholly dependent on a single source of information'” and took enough independent investigatory action to avoid cat's paw liability.

The Supreme Court Decision

In Staub, the Supreme Court was asked to consider the circumstances under which an employer may be liable under the cat's paw theory. In addressing this question, the court ignored the standards for cat's paw liability established over the years in lower federal court decisions. Instead, it applied only traditional intentional tort analysis: Did Mulally and Korenchuk intend the consequences of their actions ' Staub's termination ' for discriminatory reasons, and were their actions a proximate cause for his termination? Because there was evidence that Mulally and Korenchuk: 1) intended for Proctor to get “rid of” Staub; 2) were motivated by hostility toward Staub's military obligations; and 3) proximately caused Buck's termination decision, the Court found that the Seventh Circuit erred in holding that Proctor was entitled to judgment.

The Seventh Circuit's hard-and-fast rule of no liability where the unbiased decision-maker conducts an independent investigation was inapplicable under the Supreme Court's analysis. The Court explained that, under traditional tort analysis, such an investigation does not necessarily mean no liability because it does not prevent Mulally and Korenchuk's actions from being the proximate causes of Staub's termination. “[I]t is common for injuries to have multiple proximate causes,” wrote Justice Scalia in his opinion. “Proximate cause requires only 'some direct relation between the injury asserted and the injurious conduct alleged,' and excludes only those 'link[s] that are too remote.'” The Court determined that an unbiased decision-maker's exercise of independent judgment does not “automatically render[] the link to the supervisor's bias 'remote.'”

However, the Court did point out that where the independent investigation results in an adverse action “for reasons unrelated to the supervisor's original biased action,” the employer is not liable. But if the independent investigation takes “into account” a supervisor's biased report “without determining that the adverse action was, apart from the supervisor's recommendation, entirely justified,” that biased report may remain a causal factor to support employer liability.

Implications of Staub: Avoiding Cat's Paw Liability

While the Staub decision addressed employer liability for discrimination under USERRA, it presumably will apply to other similar types of claims, including Title VII employment discrimination claims. Given this expansive impact and the Court's ruling, employers are now more than ever at risk of incurring cat's paw liability for the biased actions of non'decision-makers. While independent investigations and decision-making are still critical to defend against liability, they no longer automatically prevent liability where unlawful biases of a non'decision-making supervisor are present. Moreover, no longer is it a matter of not “blindly relying” on biased supervisory reports. After Staub, if such reports are merely “taken into account” in the ultimate decision to take adverse action, there may be a sufficient causal connection for employer liability. Where such unlawful biases are present, employers must now ensure that any subsequent adverse action is, “apart from the supervisor's recommendation, entirely justified.”

Accordingly, employers must ensure that all terminations and other adverse actions are fully vetted. This means that, as an initial matter, any suggested action by a supervisor should be supported ' to the extent possible ' by sufficient documentation. It is the responsibility of the company to ensure that all disciplinary reports, performance evaluations, misconduct incidents or other reasons for taking action are accurately recorded. One approach, albeit infeasible for many employers, would be to require all supervisors to submit each disciplinary document to Human Resources for review and comment at the time of the disciplinary issue. If the company opts not to take this approach, Human Resources should complete an independent investigation of disciplinary issues when any subsequent adverse action is recommended based on prior discipline. This is especially critical when the recommended action is based on subjective assessments of an employee's ability or conduct (e.g., the employee is not a “team player”). The independent investigator should discuss such assessments with current and past supervisors, and carefully review all related incidents and details to confirm they are fair. However, even termination recommendations based on objective data (e.g., sales numbers) should be investigated to confirm that the data is accurate and that the company has taken the same action in the past based on similar facts.

In addition to ensuring that the company's documentation accurately reflects the rationale for the recommended adverse action, Human Resources' independent investigations should also confirm that taking the adverse action would be a consistent application of the company's prior practice. To confirm such consistent application, Human Resources should identify comparable employees who were treated the same way under similar circumstances. Human Resources should also ensure there is proper documentation to reflect such similar treatment.

Employers should conduct independent investigations regardless of whether there has been a report of supervisory bias. As with the employee in Staub, most employees do not assert bias until after a decision to take adverse action has been made. Where unlawful supervisory animus is discovered, the supervisor should be disciplined in accordance with the company's policies and practices. Moreover, any report, discipline, warning or other item prepared by the biased supervisor should be disregarded in making the ultimate decision to take adverse action. If Human Resources cannot entirely justify the suggested adverse action without relying on biased information, the company should defer the adverse action. Alternatively, if termination is justified based on incidents wholly separate from any biased reports, employers should carefully document such decisions to demonstrate that actions were based solely on the unbiased information.

Finally, the Supreme Court pointed out that it was not addressing whether the biased reports of a co-worker, rather than a supervisor, would lead to the same result. However, given the Court's broad tort analysis for cat's paw liability, a co-worker's biased reports could potentially lead to employer liability if such reports have a sufficient causal connection to the decision to take adverse action, assuming other tort elements are satisfied. For instance, suppose a company terminates an employee after a co-worker falsely reports that the employee engaged in improper behavior in front of customers. If the co-worker made the false report due to the fact that he wanted the employee fired because she is female, such improper action may be imputed to the company under the Staub analysis. Accordingly, co-worker reports, as with any other incidents and information supporting a recommendation to terminate, should likewise be fully vetted to confirm their legitimacy prior to initiating any such action.

Stacey L. Smiricky is a partner in the Employment and Labor Practice Group of Wildman, Harrold, Allen & Dixon LLP (Chicago). She can be reached at [email protected] or 312-201-2502. Theresa M. Van Vuren is an associate in the same department, and can be reached at [email protected] or 312-201-2199.

In its recent unanimous decision in Staub v. Proctor Hospital , 131 S.Ct. 45 (2010), the U.S. Supreme Court both recognized the concept of “cat's paw” liability in employment discrimination cases ' where a biased non'decision-maker acts to bring about the termination of an employee by improperly influencing an unbiased decision-maker ' and sharpened its claws. In its opinion, which was the first time the Supreme Court had addressed the issue since a 1990 Seventh Circuit decision coined the term ' the court upheld cat's paw liability as a viable theory and struck down a commonly accepted exception. As a result, Staub has significant implications for all employers ' and greatly increases potential liability.

Previous Cat's Paw Precedent

In its 1990 ruling in Shager v. Upjohn Co. , 913 F.2d 398, (7th Cir. 1990), the Seventh Circuit first recognized the “cat's paw” theory of liability. To establish a cat's paw case under Seventh Circuit standards, a plaintiff had to show that the non'decision-maker exerted “singular influence” over the decision-maker in order to harm the plaintiff for discriminatory reasons. Even though the non'decision-maker may lack formal authority to take adverse action, the employer is still liable. However, to prevent this theory from “spiraling out of control,” the Seventh Circuit developed an exception. If a decision-maker conducts an independent investigation into the facts and is not “wholly dependent” on the improper influence, the employer is not liable. Thus, so long as the decision-maker did not simply take the non'decision-maker's word for it, any resulting action is to be respected as a product of unbiased analysis.

In practice, this independent investigation exception made it difficult for plaintiffs to establish cat's paw liability. For instance, in Brewer v. Bd. Of Trustees of Univ. of Illinois , 479 F.3d 908 (7th Cir. 2007), there was evidence that the non'decisionmaker supervisor called the plaintiff employee a racially derogatory name and secretly allowed him to modify his parking tag, knowing that this was strictly prohibited and would result in his termination. The plaintiff was then in fact terminated for having a modified parking tag. The Seventh Circuit held there was no liability, however, because there was an unbiased, independent decision-maker who “looked into the situation for herself” and “did not simply rely on” what the biased supervisor told her.

It was against this backdrop of lower court precedent, then, that the Supreme Court was asked to consider the validity and scope of cat's paw liability in Staub.

The Facts and Lower Court's Findings

Plaintiff Staub, a U.S. Army reservist, worked for defendant Proctor Hospital as an angiography technologist. As a part-time soldier, Staub regularly requested time off to attend mandatory reserve duties, which included drill and training sessions and active duty. While Staub had a history of certain insubordinate behavior, his supervisors, Janice Mulally and Michael Korenchuk, grew increasingly irritated by him, in part due to his military leave requests. Mulally, who handled the department's scheduling, would place Staub on weekend shifts knowing it would create conflicts with his drill schedule. She had also made it clear to Staub's coworkers that she wanted to “get rid of him.” On Jan. 27, 2004, Mullaly issued Staub a written warning accusing him of further insubordinate behavior (which Staub denied) ' failing to respond to a request for assistance by the general diagnostics unit of his department. This warning also prohibited Staub from leaving his work area without informing Korenchuk or Mulally. About four months later, Proctor's Vice-President of Human Resources, Linda Buck, terminated Staub for violating this instruction when Korenchuk informed her that Staub left his work area without informing a supervisor (which Staub also denied), in violation of the Jan. 27 write-up. In making the termination decision, Buck also reviewed Staub's personnel file and considered prior coworker complaints.

Following his termination, Staub filed a grievance pursuant to Proctor's grievance procedure. He insisted that Mulally's Jan. 27 write-up ' containing the command he allegedly violated ' was fabricated by Mulally because she was out to get him for being in the Reserves. Buck did not investigate this claim. Instead, she maintained her initial decision that Staub should be fired for insubordination.

Staub sued Proctor for discrimination under the Uniformed Services Employment and Reemployment Rights Act, 38 U.S.C. ' 4301 et seq. (USERRA), alleging his termination was due to his association with the military. Staub admitted that Buck harbored no military-based animus. He claimed instead that, due to Staub's military status, Mulally and Korenchuk fed Buck misinformation to get him fired. Because Buck relied on this allegedly false information without sufficiently vetting it, Staub contended that she was a mere cat's paw for Mulally and Korenchuk and thus, their improper influences should be imputed to Proctor. The case went to trial and the jury returned a verdict in Staub's favor, awarding him $57,640 in damages.

On appeal, the Seventh Circuit reversed the jury award and held that Proctor was entitled to judgment in its favor. The court held that there was insufficient evidence to support a verdict against Proctor based on the cat's paw theory, because Buck did not “blind[ly] rel[y]” on the improper influences of Mulally and Korenchuk. Buck conducted her own investigation and did not simply rubberstamp Mulally's or Korenchuk's recommendations. While the court agreed that Buck's investigation “ could have been more robust,” she was not “'wholly dependent on a single source of information'” and took enough independent investigatory action to avoid cat's paw liability.

The Supreme Court Decision

In Staub, the Supreme Court was asked to consider the circumstances under which an employer may be liable under the cat's paw theory. In addressing this question, the court ignored the standards for cat's paw liability established over the years in lower federal court decisions. Instead, it applied only traditional intentional tort analysis: Did Mulally and Korenchuk intend the consequences of their actions ' Staub's termination ' for discriminatory reasons, and were their actions a proximate cause for his termination? Because there was evidence that Mulally and Korenchuk: 1) intended for Proctor to get “rid of” Staub; 2) were motivated by hostility toward Staub's military obligations; and 3) proximately caused Buck's termination decision, the Court found that the Seventh Circuit erred in holding that Proctor was entitled to judgment.

The Seventh Circuit's hard-and-fast rule of no liability where the unbiased decision-maker conducts an independent investigation was inapplicable under the Supreme Court's analysis. The Court explained that, under traditional tort analysis, such an investigation does not necessarily mean no liability because it does not prevent Mulally and Korenchuk's actions from being the proximate causes of Staub's termination. “[I]t is common for injuries to have multiple proximate causes,” wrote Justice Scalia in his opinion. “Proximate cause requires only 'some direct relation between the injury asserted and the injurious conduct alleged,' and excludes only those 'link[s] that are too remote.'” The Court determined that an unbiased decision-maker's exercise of independent judgment does not “automatically render[] the link to the supervisor's bias 'remote.'”

However, the Court did point out that where the independent investigation results in an adverse action “for reasons unrelated to the supervisor's original biased action,” the employer is not liable. But if the independent investigation takes “into account” a supervisor's biased report “without determining that the adverse action was, apart from the supervisor's recommendation, entirely justified,” that biased report may remain a causal factor to support employer liability.

Implications of Staub: Avoiding Cat's Paw Liability

While the Staub decision addressed employer liability for discrimination under USERRA, it presumably will apply to other similar types of claims, including Title VII employment discrimination claims. Given this expansive impact and the Court's ruling, employers are now more than ever at risk of incurring cat's paw liability for the biased actions of non'decision-makers. While independent investigations and decision-making are still critical to defend against liability, they no longer automatically prevent liability where unlawful biases of a non'decision-making supervisor are present. Moreover, no longer is it a matter of not “blindly relying” on biased supervisory reports. After Staub, if such reports are merely “taken into account” in the ultimate decision to take adverse action, there may be a sufficient causal connection for employer liability. Where such unlawful biases are present, employers must now ensure that any subsequent adverse action is, “apart from the supervisor's recommendation, entirely justified.”

Accordingly, employers must ensure that all terminations and other adverse actions are fully vetted. This means that, as an initial matter, any suggested action by a supervisor should be supported ' to the extent possible ' by sufficient documentation. It is the responsibility of the company to ensure that all disciplinary reports, performance evaluations, misconduct incidents or other reasons for taking action are accurately recorded. One approach, albeit infeasible for many employers, would be to require all supervisors to submit each disciplinary document to Human Resources for review and comment at the time of the disciplinary issue. If the company opts not to take this approach, Human Resources should complete an independent investigation of disciplinary issues when any subsequent adverse action is recommended based on prior discipline. This is especially critical when the recommended action is based on subjective assessments of an employee's ability or conduct (e.g., the employee is not a “team player”). The independent investigator should discuss such assessments with current and past supervisors, and carefully review all related incidents and details to confirm they are fair. However, even termination recommendations based on objective data (e.g., sales numbers) should be investigated to confirm that the data is accurate and that the company has taken the same action in the past based on similar facts.

In addition to ensuring that the company's documentation accurately reflects the rationale for the recommended adverse action, Human Resources' independent investigations should also confirm that taking the adverse action would be a consistent application of the company's prior practice. To confirm such consistent application, Human Resources should identify comparable employees who were treated the same way under similar circumstances. Human Resources should also ensure there is proper documentation to reflect such similar treatment.

Employers should conduct independent investigations regardless of whether there has been a report of supervisory bias. As with the employee in Staub, most employees do not assert bias until after a decision to take adverse action has been made. Where unlawful supervisory animus is discovered, the supervisor should be disciplined in accordance with the company's policies and practices. Moreover, any report, discipline, warning or other item prepared by the biased supervisor should be disregarded in making the ultimate decision to take adverse action. If Human Resources cannot entirely justify the suggested adverse action without relying on biased information, the company should defer the adverse action. Alternatively, if termination is justified based on incidents wholly separate from any biased reports, employers should carefully document such decisions to demonstrate that actions were based solely on the unbiased information.

Finally, the Supreme Court pointed out that it was not addressing whether the biased reports of a co-worker, rather than a supervisor, would lead to the same result. However, given the Court's broad tort analysis for cat's paw liability, a co-worker's biased reports could potentially lead to employer liability if such reports have a sufficient causal connection to the decision to take adverse action, assuming other tort elements are satisfied. For instance, suppose a company terminates an employee after a co-worker falsely reports that the employee engaged in improper behavior in front of customers. If the co-worker made the false report due to the fact that he wanted the employee fired because she is female, such improper action may be imputed to the company under the Staub analysis. Accordingly, co-worker reports, as with any other incidents and information supporting a recommendation to terminate, should likewise be fully vetted to confirm their legitimacy prior to initiating any such action.

Stacey L. Smiricky is a partner in the Employment and Labor Practice Group of Wildman, Harrold, Allen & Dixon LLP (Chicago). She can be reached at [email protected] or 312-201-2502. Theresa M. Van Vuren is an associate in the same department, and can be reached at [email protected] or 312-201-2199.