Supreme Court’s “Cat’s Paw” Decision Leaves Employers Scratching Their Heads

March 24, 2011

The U.S. Supreme Court recently issued its much anticipated “cat’s paw” decision in Staub v. Proctor Hospital (No. 09-400, March 1, 2011), holding that employers may be open to liability despite conducting independent investigations of proposed employment actions, where the final decision makers relied in part on facts from a biased supervisor.

The effect of this decision can already be seen in several cases in the last two weeks, where employers’ motions for summary judgment have been denied. The decision also left many questions unanswered for employers, and is yet another example of how bad facts can often lead to bad case law.

Cat’s paw is a reference to a French fable where a monkey convinces a cat to pull chestnuts from a fire, resulting in the cat burning its paw. Applied to employment claims, the cat’s paw theory of liability involves plaintiff claims that otherwise valid employment actions undertaken by an employer are improperly influenced by an individual in the decision chain who possesses discriminatory motives.

In Staub, Mr. Staub was an angiography technician who sued his employer, Proctor Hospital, under the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA), alleging he was terminated because of his service in the U.S. Army Reserve. A jury found in his favor. However, the U.S. Court of Appeals for the 7th Circuit reversed, finding that while Staubs’ immediate supervisor demonstrated an anti-military bias (in comments and actions), the actual decision maker – the vice president of human resources – had conducted her own investigation prior to making the termination decision. That court, following existing 7th Circuit precedent, held that because the biased supervisor did not exercise “singular influence” over the actual decision maker, the hospital had established that the vice president made an independent decision in the absence of any evidence she was biased.

The Supreme Court reversed, in a decision that (1) ignored the higher burden of proof employers traditionally face in USERRA cases; and (2) failed to mention the deference normally given to a jury verdict. Relying on traditional agency principles, Justice Scalia’s opinion found that if the discriminatory animus of Staub’s supervisor was “a causal factor” in the ultimate discrimination decision, the employer could be liable despite the undisputed evidence that the vice president of human resources conducted her own independent investigation before making the termination decision.

The court additionally held that an “independent investigation,” an undefined term, would not necessarily protect the employer from liability if the decision maker relied on facts provided by the biased supervisor. Unfortunately, the court does not provide any discussion as to the factors to be considered in determining if the decision maker’s investigation is sufficiently “independent” or how to measure the influence required before a biased supervisor’s influence can become actionable under the cat’s paw theory.

For further information regarding the effect of the Staub decision and potential changes to HR investigation procedures and documentation necessary to address the same, please contact the author or any other member of McGuireWoods’ Labor & Employment Group.