United States: Negligent Employers May Be Held Liable For A Non-Supervisory Employee's Discriminatory Actions Under "Cat's Paw" Theory Says Second Circuit

Last Updated: January 4 2017
Article by Michael S. Arnold and Robert Sheridan

The Second Circuit recently adopted the "Cat's Paw" theory of liability in Title VII cases. This was hardly a surprise as other Circuit Courts had done the same after the United States Supreme Court endorsed Cat's Paw in a USERRA case. But the Second Circuit went even further, allowing for the use of the Cat's Paw argument in Title VII retaliation cases and in cases where a non-supervisory employee's discriminatory actions lead the employer to take an adverse employment action against that employee's co-worker. Until now, Cat's Paw had mostly focused on employer liability based on the actions of misbehaving supervisors in hostile work environment cases. The decision puts additional pressure on employers to identify and eliminate discriminatory behavior in their workplaces. This post will briefly examine the Cat's Paw doctrine and explain how the Second Circuit's expanded its use in Vasquez v. Empress Ambulance Service, Inc., No. 15-3239 (2d Cir. Aug. 29, 2016).

What is the "Cat's Paw" Theory of Liability?

The employment law etymology leads us to a decision by Judge Richard Posner (Shager v. Upjohn Co., 913 F.2d 398 (7th Cir. 1990)), in which he coined the term "Cat's Paw," which is a reference to an Aesop's fable where a monkey convinces a naïve cat to retrieve roasting chestnuts from a fire for their "mutual satisfaction." Only moments after the cat retrieves the delicacy, the monkey devours them, leaving the cat with a burnt paw and no chestnuts for his trouble. In the employment law context, the employer (the cat), who has no discriminatory motive, rubber stamps an adverse employment action against an employee based on information provided to the employer by the supervisor (the monkey), who does have a discriminatory motive. Because the employer permits itself to be used "as a conduit" of the supervisor's prejudice, and because the supervisor is acting as an agent of the employer, it allows for liability to be imputed to the employer.

The Second Circuit Adopts Cat's Paw in Vasquez

In Vasquez, the plaintiff alleged that a co-worker subjected her to vulgar text messages and other romantic solicitations. She complained to HR who investigated, although they did not review the scandalous text messages the plaintiff had offered to show them. The co-worker, plaintiff alleged, knew she was going to complain and he quickly fabricated additional text messages, replete with a photo-shopped racy picture of someone he said was the plaintiff and which he later showed to the company as proof that she initiated and consented to the sexual relationship. The plaintiff vehemently denied his version of the story and again offered to show the company her co-worker's texts to corroborate her allegations, but the company again declined to review them, and fired the plaintiff for sexual harassment. A lawsuit ensued, but the lower court dismissed the case on the basis that the company could not be held liable for the co-worker's retaliatory behavior.

Upon review, however, the Second Circuit Court of Appeals reversed relying on the Cat's Paw theory of liability. It noted that the Supreme Court in Staub v. Proctor Hospital (2011) endorsed the Cat's Paw theory of liability, but that involved a USERRA case (discrimination against an individual serving or who had served in the military). Since then however, multiple Circuit Courts have extended the Cat's Paw's reach to Title VII cases and the Second Circuit decided to join them.

The Second Circuit Also Extends Cat's Paw's Reach

The Second Circuit also went two steps further. First, it extended Cat's Paw to Title VII retaliation cases, because doing so, it said, was consistent with Circuit precedent stating that a plaintiff can succeed where he or she can show that bias played a meaningful role in the decisionmaking process even if the actual decisionmaker was not biased.

Second, the Second Circuit made the Cat's Paw theory of liability available where a co-worker, rather than a supervisor, plays the role of the manipulative monkey. This is an issue that the Supreme Court specifically did not address in Staub. The Second Circuit did so under general principles of agency law and held that an employer can be held liable where its own negligence gives effect to the retaliatory intent of a co-worker – even a low-level one. In so holding, the Second Circuit looked to the First Circuit's decision in Velazquez-Perez v. Developers Diversified Realty Corp (2014), which allowed for employer liability based on a co-worker's discriminatory actions in a quid pro quo sexual harassment case. In other words, the Second Circuit was saying that if the employer knows or should have known about the co-worker's discriminatory animus and gives effect to it, it could be held liable.

The Second Circuit went on to find that the company, as alleged in the complaint, could have negligently given effect to the co-workers discriminatory animus, because it: (1) accepted the co-worker's explanation without question (including the manufactured "evidence," which upon closer inspection did not necessarily show the plaintiff as the individual in the picture); (2) failed to credit the Plaintiff's explanation or examine her text messages (which would have discredited the co-worker's doctored texts and photo); and (3) based its entire decision on the co-worker's explanation and evidence, thereby adopting his retaliatory animus. As the court explained, "[the Plaintiff] can recover against [the company because the company] was itself negligent in allowing [the co-worker's] false allegations, and the retaliatory intent behind them, to achieve their desired end."

Takeaways from Vasquez

  • Though the Vasquez decision is only controlling precedent in the Second Circuit, the Cat's Paw theory of liability is gaining momentum and the traditional line of demarcation between the non-supervisory employee and management may be blurring. As noted above, we've seen it applied in the First Circuit Court of Appeals. We've also seen it applied in the Eastern District of Pennsylvania and in the Northern District of Illinois. A Western District of Tennessee court declined to do so.
  • Employers will not be held liable simply on the basis of information provided by a biased co-worker. An employer can mistakenly and in good faith rely on the biased co-worker's false report as long as it does so in a non-negligent manner. The negligence showing is critical because it shows that the employer effectively adopted the co-worker's employee's discriminatory animus and allowed it to play a meaningful role in taking the adverse employment action.
  • Companies (and their counsel) should conduct thorough investigations in an impartial, good faith manner. Vasquez cautions against overweighting the explanations of any single party to an investigation, particularly a party, like the co-worker who is accused of wrongdoing and may have a motive to lie.
  • Similarly, while companies investigating misconduct should move swiftly, they should take the time necessary to consider the motivations of those involved and the reliability of marshalled evidence. As Vasquez demonstrates, rash decisions can have expensive consequences.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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Michael S. Arnold
Robert Sheridan
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