When a manager makes an employment decision without considering the protected characteristics of those involved, we would ordinarily think that, almost by definition, a plaintiff could not make out a claim of intentional discrimination. But what if the pure-hearted manager relied in part on information provided by another manager who harbored a secret bias? Does the "unbiased" decision thereby become the fruit of a poisonous tree and a basis for employer liability?

That thorny problem divided the lower federal courts for years. Twice, the Supreme Court granted certiorari to set rules for dealing with so-called "cat's paw" cases, but in both instances, the cases settled before a decision could be rendered.

Last week, however, the Supreme Court held in Staub v. Proctor Hospital that an employer may be liable when an adverse action is taken by an otherwise unbiased decision-maker if biased information from another supervisor "proximately caused" the action.

The Court struck down the most restrictive (or employer friendly) formulation of the "cat's paw" theory that had previously been adopted in the lower courts, but left many questions unanswered about how the doctrine will work in practice. The Court addressed the issue in a case involving the Uniformed Services Employment and Reemployment Rights Act of 1994 ("USERRA"), a statute that is rarely the subject of litigation, but the opinion will almost certainly be cited as precedent in cases arising under Title VII and at least some other federal nondiscrimination statutes.

Biased Information Relayed

Staub worked as a technician for Proctor Hospital and simultaneously served as a member of the Army Reserves. His reserve status required him to attend weekend drills once each month, and to train fulltime for two to three weeks each year.

When Staub received a disciplinary warning from his immediate supervisor for violating a hospital rule, he alleged that it was the result of his supervisor's well-known animus towards his military service obligations and as part of an attempt to "get rid of" him. Later, when Staub failed to comply with the terms of this discipline, the violation was reported up-the-line by this supervisor. He was ultimately terminated.

Staub did not claim that the terminating senior supervisor bore animus towards Staub's military service and, in fact, the record showed that the senior supervisor had independently reviewed Staub's personnel file (which included the biased report of Staub's discipline made by his immediate boss) before making any decisions. After this independent review, the senior manager decided to terminate Staub.

USERRA Makes Military Service A Protected Characteristic

Staub filed suit in federal district court, alleging that he was discriminatorily terminated in violation of USERRA. USERRA makes it illegal for employers to "den[y] initial employment, reemployment, retention in employment, promotion, or any benefit of employment by an employer on the basis of" that person's membership or "obligation to perform service in a uniformed service." 38 U.S.C. § 4311(a) (emphasis added). The "uniformed service" obligations protected by the statute encompass "the Armed Forces, the Army National Guard and the Air National Guard when engaged in active duty for training, inactive duty training, or full-time National Guard duty, the commissioned corps of the Public Health Service, and any other category of persons designated by the President in time of war or national emergency." 38 U.S.C. § 4303(16).

A plaintiff proves a violation of USERRA by showing that his or her "membership [in a uniformed service was] a motivating factor in the employer's [adverse] action, unless the employer can prove that the action would have been taken in the absence of such membership." Id. § 4311(c) (emphasis added). As the Court noted in its opinion, this language tracks very closely to that of Title VII and some other federal antidiscrimination statutes.

A jury found for Staub and awarded him damages. On appeal, the United States Court of Appeals for the Seventh Circuit reversed, holding that, because the biased information in the file did not have a "singular influence" on the ultimate decision-maker, no liability could be imputed to the employer under a "cat's paw" theory.

The Court Strikes Down The "Singular Influence" Test, Applying Common Law Principles

The Court granted review to reconcile the varied "cat's paw" standards that had been adopted by the lower courts. As Justice Scalia wrote in his opinion for the majority, the Court was charged with construing the statutory phrase "motivating factor in the employer's action" in the circumstance where the actual decision-maker was not the supervisor bearing animus towards the employee by reason of his protected characteristic. As it has before in construing other federal anti discrimination statutes, the Court applied principles from "the background of general tort . . . and agency law" to interpret the meaning of the statute.

The Court first rejected the notion that an employer can only be held liable if the decision-maker himself is actually motivated by a discriminatory animus. The "exercise of judgment by the decision maker does not prevent the earlier agent's action (and hence the earlier agent's discriminatory animus) from being the proximate cause of the harm." Instead, "[s]o long as the [biased] agent intends, for discriminatory reasons, that the adverse action occur, he has the scienter required to be liable under USERRA." A contrary rule would insulate an employer from liability merely by having an agent somewhere else in the company review the employee's file (loaded with discriminatory negative marks) and "decide" to terminate the employee independently of the animus-bearing supervisor.

The Court also rejected the notion that, even if the decision-maker's mere exercise of independent judgment will not suffice to negate the effect of earlier discrimination by another supervisor, nevertheless the employer is always insulated from liability when the decision-maker performs an independent investigation and rejects the employee's allegations of discriminatory animus. The Court refused to adopt a "hard-and-fast rule" supporting such a defense. The Court held, instead, that "if the employer's investigation results in an adverse action [towards the plaintiff] for reasons unrelated to the supervisor's original biased action . . . then the employer will not be liable." But, if the decision maker takes the biased report into account without determining that the adverse action was "entirely justified" on separate grounds from the animus-tinged reasons, then "the . . . biased report may remain a causal factor."

The Court's Holding Is Limited

The Court noted two important limits on its holding: First, the Court pointed out in a footnote that it was dealing only with the classic "cat's paw" scenario, where a supervisor influences the decisionmaker. The Court "express[ed] no view as to whether the employer would be liable if a co-worker, rather than a supervisor, committed a discriminatory act that influenced the ultimate employment decision."

Second, the Court expressed no view as to how the case would have been decided had Staub not taken advantage of Proctor's internal grievance process. In prior cases, the Court has extended much greater protection to employers when they have functioning complaint procedures the plaintiff failed to utilize. Staub, however, had used Proctor's procedures without success. In the future, employers will surely distinguish Staub on this ground, and thus this open question will continue to confront the lower courts.

Practical Conclusions: Staub's Reach May Be Less Than Might Be Suspected At First, And It Will Generate Lower Court Disputes Over Its Interpretation

Nothing in Staub suggests that employers should abandon or change current best practices. Although an employer's impartial internal review of important personnel decisions, such as discharges, will not always provide an iron-clad defense to liability as might have been the case in some circuits prior to Staub, it is still good practice. Independent review may disclose irregularities in process or inadequate consideration of the substance of such important decisions. Moreover, independent review may yet provide a potent defense in some cases, depending on the facts. Finally, the employer's power to persuade a fact finder — either that no animus was present or that the same decision would have been made anyway — will continue to be enhanced by that sort of review.

Indeed, after waiting for years and two prior aborted trips to the Supreme Court, uncertainties about the reach of the cat's paw doctrine will remain. The decision teaches less than might at first be imagined.

First, as noted the Court expressly refused to draw bright lines on when an employer's independent investigation can operate as a firewall between biased information and employer liability. The most that can be said with certainty is that such an investigation will sometimes, but not always, be a powerful defense.

Second, the Court expressly refused to evaluate the impact of biased input provided by nonsupervisors, and similar questions will be raised when the information comes from supervisors outside the supervisory chain of command.

Third, the Staub decision is not controlling in ADEA cases, where the confusing array of pre-Staub rules previously adopted by the courts of appeals will continue to be debated. That is because, unlike USERRA and Title VII, the ADEA cases do not turn on a "motivating factor" test but on the far more restrictive "but for" causation test.

Finally, Justice Alito argued in his concurrence that the majority's approach failed to encourage employers to "establish internal grievance procedures similar to those that have been adopted following our decisions in Burlington Industries, Inc. v. Ellerth, [and] Faragher v. Boca Raton[.]" While the majority refused to decide the Faragher/Ellerth issues, it nevertheless highlighted the necessity of having such internal grievance procedures. Because complaint procedures are commonplace, only further litigation will illuminate the degree to which those procedures will help insulate employers from the full reach of Staub.

The content of this article does not constitute legal advice and should not be relied on in that way. Specific advice should be sought about your specific circumstances.