Wednesday, March 2, 2011

US Supreme Court Adopts "Cat's-Paw" Theory In Military Discrimination Case

In Staub v. Proctor Hospital, decided on March 1, 2011, the U.S. Supreme Court held, in the context of a case involving an employer's alleged violation of the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA), 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." The significance of this opinion is two-fold: First, the Court through this opinion has explicitly sanctioned the applicability of "cat's-paw" theories of liability in an employment discrimination context. Second, there is nothing in the language of this decision that would suggest that the Court's analysis in this case is strictly confined to cases arising under USERRA. To the contrary, the Court itself acknowledges in the majority opinion that the operative statutory language of the USERRA, which prohibits an employer from denying employment or the benefits of employment to any person on the basis of that individual's membership in or obligation to a branch of the military, is "very similar to Title VII." As such, employees can now rely on this decision to advance "cat's-paw" theories of liability against employers in the traditional discrimination cases arising under Title VII.

In this case, Vincent Staub worked as a medical technician for Proctor Hospital under 2004 when he was terminated for allegedly violating a "Corrective Action" disciplinary warning that had been placed in his employment file by his supervisors, Janice Mulally and Michael Korenchuk.

While employed at Proctor, Staub was a member of the U.S. Army Reserve, which required him to attend drill one weekend per month and to train full time for two to three weeks per year. At Staub's subsequent employment discrimination trial, the jury determined that both Mulally and Korenchuk were hostile to Staub's military obligations. Specifically, Mulally had scheduled Staub for additional shifts without notice so that he would "pay back the department for everyone else having to bend over backwards to cover his schedule for the Reserves," and Mulally had also informed one of Staub's co-workers that Staubs's "military duty had been a strain on the department," and asked that co-worker to help her "get rid of" Staub. Korenchuk referred to Staub's obligations to the Reserves as "a bunch of smoking and joking and a waste of taxpayers' money," and was aware that Mulally was "out to get" Staub.

In January of 2004, Mulally issued Staub a "Corrective Action" disciplinary warning for purportedly violating a company rule that required him to stay in his work area whenever he was not seeing a patient. This warning required Staub to report to either Mulally or Korenchuk when he had no patients or when his patient testing was completed. Staub contended at trial that the company rule allegedly invoked by Mulally did not exist, and that even if it did, he did not violate it.

On April 2, 2004, one of Staub's co-workers complained to Proctor's vice-president of human resources, Linda Buck, and to Proctor's chief operating officer, Garrett McGowan, about Staub's unavailability and abruptness. McGowan directed Korenchuk and Buck to create a plan that would "solve Staub's availability problems." Before such a plan could be put in place, however, Korenchuk informed Buck that Staub had left his desk without informing a supervisor, in violation of his January Corrective Action notice. Relying upon this accusation (which Staub contended was entirely false), Buck reviewed Staub's personnel file and terminated him. Staub's termination notice stated that Staub had been terminated for violating the directive contained in Mulally's January Corrective Action notice.

Staub challenged his termination through Proctor's internal grievance procedures. Staub contended that his termination was improper because Mulally had fabricated the allegation underpinning the January Corrective Action notice due to her hostility towards his military obligations. Buck did not follow up with Mulally with respect to Staub's allegation, and did not reverse Staub's termination.

Staub then sued Proctor claiming a violation of the USERRA, alleging that his termination was illegal as it was motivated by hostility towards his U.S. Army Reserve obligations. Specifically, Staub argued that although Buck herself (who had actually terminated Staub), held no such hostility, Mulally and Korenchuk clearly did, and that "their actions influenced Buck's ultimate employment decision." Staub's claim proceeded to a jury trial, where the jury found in his favor and awarded him $57,640.00 in damages.

On appeal, the Seventh Circuit Court of Appeals reversed, holding that a "cat's-paw" theory of liability, such as the one that Staub had advanced in this case, could not be maintained unless the non-decisionmaker had exercised "singular influence," over the actual decisionmaker so that the decision to terminate was the "product of blind reliance." The Seventh Circuit held that since the evidence in this case showed that Buck was not "wholly dependent" upon either Mulally's or Korenchuk's advice, Staub had no cause of action under USERRA.

In a unanimous decision with two Justices concurring in the judgment, the Supreme Court reversed. The Court noted recognized that when creating a tort action under federal law, Congress "adopts the background of general tort law," including the concept of "proximate cause." In claims for intentional torts, for example, the Court noted that in order to be found liable, an individual must intend not only "the act itself," but "the consequences of the act." Therefore, adopting these tenets and applying them to the operative language of the USERRA statute, 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." As such, in order to prevail in such actions, a plaintiff cannot hold an employer liable simply by showing that the ultimate decisionmaker relied upon information that was (unbeknownst to the decisionmaker) prompted by discrimination. Rather, the plaintiff must prove that the originator of that discriminatory information created the information with the intent that such information would cause the plaintiff to suffer an adverse employment action.

The Court rejected Proctor's suggestion that the Court adopt a rule that a decisionmaker's independent investigation and rejection of an employee's allegations of discriminatory animus can insulate an employer from liability, as such an action would negate the effects of any prior discrimination. The Court held that "we are aware of no principle in tort or agency law under which an employer's mere conduct of an independent investigation has a claim-preclusive effect. 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." The Court also rejected Justice Alito's suggestion that an employer should be held liable only when it "should be regarded as having delegated part of the decisionmaking power to the biased supervisor."

While it reversed the decision of the Seventh Circuit, the Court explicitly left two questions unanswered: First, the Court expressed no opinion as to whether an employer could be held liable under such a "cat's-paw" theory of liability if a co-worker, rather than a supervisor, committed a discriminatory action that influenced a subsequent adverse employment action. Second, the Court acknowledged that in this case, Staub took advantage of Proctor's internal grievance procedures after having been terminated, but refused to comment on whether Proctor would enjoy an affirmative defense to liability had Staub not done so. Therefore, one is likely to see these issues being litigated in the lower courts in the future.

You can read the Supreme Court's full opinion in Staub v. Proctor here: http://www.supremecourt.gov/opinions/10pdf/09-400.pdf