Cat's Paw: Headache for Employers and In-House Counsel

It's tough being an employee. But these days, being an employer can be no picnic either. In fact, it could be a potential mine-field of litigation.

Recent cases, including Woods v. City of Berwyn in the Seventh Circuit, have given employers pause when thinking of letting that certain employee go "for cause."

Cat's Paw Theory

The cat's paw potentially makes an employer liable for the termination or suspension of an employee due to the discriminatory bias of employee. This is even the case if the employer was not aware of the discriminatory bias of the employee. For employers, that's scary.

Staub v. Proctor Hospital

Before recent times, federal courts generally applied the "blind reliance" rule to cat's paw theory claims -- the theory being that a supervisor had to have a "singular influence" over the terminating officer or employer. That was the case in Brewer v. Board of Trustees by the Seventh Circuit.

In March of 2011, things got a lot hairier for employers when SCOTUS ruled in Staub that "if a supervisor performs an act that is motivated by an unlawful animus that is intended to cause an adverse employment action, and that act is a proximate cause of the ultimate unemployment action, then the employer is liable."

Do you see something scary? This rule omits any mention of actual causation between the supervisor's animus and the eventual termination of the employee. You'll find those bone chilling words at the bottom of page 10 in the SCOTUS opinion.

And if you're not wetting yourself, then you must not have any employees. In house counsel should know this well: Staub threw open the doors to potential employment discrimination claims.

Glimmers in the Fog

Fortunately, a handful of cases have been decided at the circuit level that clarify SCOTUS's rather expansive ruling. Here are a couple that all in house should consider reading:

• Sixth Circuit, Chattman v. Toho Tenax America, Inc.: A black employee was terminated at suggestion of his white HR supervisor for horseplay, even though such behavior was rather commonplace in the environment. The white HR supervisor lied about other managers agreeing with the termination recommendation and provided cherry picked details to his employer. The court ruled that the investigation was not "unrelated" to the HR supervisor's actions; and that a reasonable jury could find that those actions were a "proximate cause of the adverse decision."
• Seventh Circuit, Woods v. City of Berwyn: Two coworkers firefighters recount an earlier conversation to a supervisor where one account hold that one employee voiced violent intent. The supervisor conducted apparent due diligence and sought a mental health report. The supervisor recommended his termination to the board; and the board eventually did fire him. Plaintiff alleged that the board rubber stamped his termination. But the Seventh Circuit said that the facts demonstrated that the board was not an "unwitting dupe" and that the board's own investigation broke the "chain of causation" from negative influence to termination.

The above cases specifically address the issue of causation.

The moral under Chattman? Advise your client never to take an HR's report at face value. Employers should take the time to investigate and compile their own report. This will be an independent basis of the termination. vet all sources.

The moral under Woods? Again, employers guard themselves by diligently conducting their own investigation of the supervisor's claims and recommendations. Woods is helpful in that it uses the "chain of causation" imagery to guide the decision of client/employers. It emphasizes that the supervisor's negative influence must be completely a non-factor in actual cause of the termination.

Supervisors v. Co-workers?

Other cat's paw cases are currently pending in the circuits, and the debate continues as to whether or not cat's paw extends to employees rather than simply employers. SCOTUS has offered no opinion regarding this issue, but it's clear that the different circuits do not agree.

Many federal district courts have decided that cat's paw should not extend to co-workers, including the Eastern District of New York, which held in Abdelhadi v. New York that the "biased individual must be a supervisor of the plaintiff."

But other federal courts -- District and Appellate -- have allowed the application to co-workers. The Seventh Circuit has adopted this approach and there are rumblings that this trend will continue to the Ninth Circuit.

Grand Takeaways

In-house attorneys owe it to their clients to navigate through the pitfalls of this fast emerging area of employment discrimination law. Cat's paw cases have ballooned in recent years. Employees look to them as victories for the little guy -- but there is another side to this victory: uncertainty and the weakening of the causation element that may incentivize more and more employers to contract out work in order to minimize employment headache.

Related Resources:

• United States Supreme Court Approves "Cat's Paw" Theory of Liability (Pennsylvania Labor Employment Blog)
• A Double Bench-Slapping and Appellate Advocacy Basics (FindLaw's U.S. Fifth Circuit Blog)
• McKenna v. City of Philadelphia (FindLaw's U.S. Third Circuit Blog)