On May 24, 2012, the United States Court of Appeals for the Seventh Circuit decided for the first time in Smith v. Bray that an employee may be held individually liable for retaliation in violation of 42 U.S.C. ß 1981 ("Section 1981") pursuant to the "cat's paw" theory. This theory, which the United States Supreme Court embraced in 2011, derives its name from a 17th-century fable in which a devious monkey dupes an unsuspecting cat to grab roasting chestnuts from a fire. According to the fable, the cat burns its paw while the monkey happily dines on the chestnuts unscathed. In the employment context, the cat's paw theory has traditionally permitted an employee to sue his or her employer for discrimination or retaliation when the final decision-maker is influenced by a subordinate employee with a discriminatory or retaliatory motive.
Now, the monkey may get burned, too. As discussed below, the Seventh Circuit's decision opens the door for disgruntled employees to sue their co-workers – not just their employers – who intentionally influence the employer to take an adverse employment action.
What Happened in Smith v. Bray
The plaintiff, Darrel Smith, worked as a process technician at Equistar Chemicals, LP ("Equistar") in Morris, Illinois. Smith, who is African-American, complained on several occasions to Equistar's human resources department that his white supervisor, Jim Bianchetta, and some of his white co-workers frequently made racist statements within the workplace. Neither Bianchetta nor any of Smith's co-workers were disciplined for the alleged remarks, and, after consulting with Bray, Equistar's plant manager eventually terminated Smith for unauthorized absences from work.
Smith initially filed claims under the cat's paw theory against Equistar, Bianchetta, and Bray for discrimination and retaliation in violation of Section 1981 – a federal statute which prohibits racial discrimination and retaliation in contractual relationships, including at-will employment. Smith later dropped Equistar from the lawsuit after the company filed for bankruptcy protection and settled his claim against Bianchetta, leaving Bray as the only remaining defendant. Smith argued that Bray should be held liable for his discharge pursuant to the cat's paw theory because she helped persuade Equistar to terminate his employment in retaliation for his prior complaints of racial harassment.
The Northern District of Illinois disagreed, holding that Smith did not present sufficient evidence that Bray either participated in the termination of Smith's employment or acted with a retaliatory motive. On appeal, the Seventh Circuit affirmed the lower court's decision, but it carefully explained that Smith's claim failed only for lack of evidence of a retaliatory motive and not because the cat's paw theory would not apply to a non-decision-maker. The Court held that allowing for individual liability was "a matter of basic fairness" insofar as there is no reason why the "hapless cat" should get burned "but not the malicious monkey." Smith presented sufficient evidence that Bray influenced Equistar to terminate his employment, but his claim ultimately failed because, according to the Court, there was no admissible evidence to establish that Bray shared Bianchetta's racial animus or retaliatory motive.
The defendants in employment discrimination and retaliation lawsuits are typically the corporate employer and, in cases under Section 1981, the individual who made the decision to take an adverse employment action against the plaintiff. The Bray decision substantially expands the list of potential defendants to any employee who (a) participated in the adverse employment action and (b) acted with a discriminatory or retaliatory motive. Employers may now find their human resources department personnel and first-level supervisors dragged into Section 1981 lawsuits, even if such employees had no authority to terminate the plaintiff's employment.
This expansion of individual liability under Section 1981 is significant because of the differences between Section 1981 and other federal anti-discrimination statutes. For example, unlike Title VII of the Civil Rights Act of 1964, which generally prohibits all discrimination, retaliation, and harassment in the work-place, Section 1981 allows for individual liability. Additionally, Section 1981 carries a relatively lengthy four-year statute of limitations, allows for uncapped damages awards, and does not require that a plaintiff exhaust his or her administrative remedies before filing a lawsuit in court. In light of Bray, plaintiffs may pursue more Section 1981 claims against their co-workers, especially when the circumstances preclude or substantially limit a damages award from their employer.
The Seventh Circuit's willingness to apply the cat's paw theory to non-decision-makers illustrates the need for employers to conduct thorough and objective investigations before taking an adverse employment action against an employee. By doing so, the non-decision-maker will be well-positioned to show that he or she did not play a causal role in the decision to terminate or otherwise discipline the plaintiff. Moreover, even if the non-decision-maker was substantially involved in the employer's decision, the results of a complete investigation should allow all defendants to show that the adverse employment action was supported by legitimate reasons as opposed to unlawful discrimination or retaliation.
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