Non-Decision-Maker Bias & Discrimination Liability Under Cat’s Paw Theory in Supreme Court’s Staub v. Proctor Hospital Decision. Part II — Commentary
By Beth Hanson, with George Lenard
In Part I last week, we introduced and explained the Supreme Court’s February 28 “cat’s paw” ruling in favor of the plaintiff in Staub v. Proctor Hospital . This week, we look at how commentators analyze and assess the ruling and its consequences.
Table of Contents
The Cat’s Paw Fable Applied in Staub
The history of the term “cat’s paw” dates back to a 17th century fable, “ The Monkey and the Cat .”
In the fable, the monkey persuades the cat to put its paws into the fire to retrieve chestnuts. The cat burns its paws and the monkey eats all the chestnuts.
Monkey is to Cat as Biased Supervisor is to Employer
Applied to discrimination law, the monkey is a biased supervisor, and the cat the employer, acting through an unbiased decision-maker.
The employer (cat) is unwittingly tricked into taking adverse action against an employee based on “inaccurate, incomplete or misleading information” supplied by the non-decision-making supervisor (monkey).
The supervisor achieves his or her goal, but the employer, like the cat in the fable, may get its “paws burned” by incurring legal liability for its decision-maker’s reliance on biased information.
According to the Supreme Court in Staub, employer liability under a cat’s paw theory is possible when a biased non-decision-making supervisor’s acts proximately cause an adverse employment action such as termination, provided the supervisor intended to cause the adverse action.
How Big Of A Win for Employees Is Staub ?
Is Staub Part of a New Trend of Pro-Employee Rulings From the Supreme Court ?
Tom Starner suggested in a Human Resource Executive Online article that “it seems the Supreme Court [...] currently has it in for employers.”
In Thompson v. North American Stainless LP earlier this month, the Court upheld a retaliation discrimination claim 8-0. The Thompson ruling provided the possibility of extending retaliation protection to third parties such as fiancés who themselves had not engaged in any protected opposition to discrimination.
The Court similarly decided Staub v. Proctor Hospital 8-0 in favor of the plaintiff. The Staub ruling provides that employers can be liable for discrimination charges even in circumstances where the decision-maker was unbiased, if the decision-maker relied on input from a biased non-decision-making supervisor.
George’s take:
Two unanimous rulings do not make a trend of decisions favoring employees, but they do suggest that today’s Court does not have an unrelenting pro-business bias, instead seeming to call them as it sees them.
Did the Court Apply an Unstated Sense of Employment “Due Process”?
Gerald Maatman, of Seyfarth & Shaw LLP, is quoted as stating that, rather than being pro-employee, the Court is “pro-interpretation” of the USERRA and “very protective of due process.” The due process protection to which he refers is that he believes “the Court wants a full airing of the issues so everyone gets a fair shake.”
George’s take:
What Maatman seems to be getting at with that statement is that decision-makers should not blindly accept information from supervisors but should give employees an opportunity to tell their side of the story before taking an adverse employment action.
Experts Differ on Staub’s Reach and Impact
Nolo’s Employment Blog sees Staub as a “big win for employees” and “likely to be far-reaching.” Ohio Employer’s Law Blog agrees that Staub was “a broad, sweeping win for employees, which leaves employers with little protection against the discriminatory animus of those who play no role in the decision-making process.” Ohio Employer’s Law Blog also says:
The Court’s holding hinges on ideals such as “intent” and “proximate cause,” which are almost always fact-based inquiries. Because it is very difficult for an employer to win summary judgment on these issues, the Court has turned nearly every “cat’s paw” case into a jury case — an expensive proposition for employers.
Maatman’ assessment of Staub is more balanced. He is quoted as saying that while an employer or HR professional could see the Court’s ruling as a victory for plaintiffs, it’s not a complete victory because:
[T]he Supreme Court recognizes there are ways in which an employer can protect itself against potential lawsuits in similar situations. The Court doesn’t say what to do [...] but [that ...] if an employer undertakes some fresh fact-finding, and doesn’t rely solely on a supervisor with animus, that is a different situation.
Similarly taking a more mixed view of Staub’s impact is Dennis Duffy, chair of the labor and employment practice at Baker Botts LLP. Duffy is quoted saying: “It’s a victory of sorts, in the sense that cat’s paw is recognized, [but] the court erected a couple of barriers to finding liability.”
A comment on Workplace Prof Blog expresses the belief that this ruling will not reach as far as plaiuitiffs’ lawyers would hope:
The requirement that the ultimate adverse employment action be the subordinate’s goal seems to allow for lots of situations in which subordinate supervisory conduct (within the scope of emp’t) “because of X” can lead to adverse action and yet the employer can escape liability.
This assessment suggests that there is still a loophole for employers’ to leap through in order to avoid being liable for a decision. The non-decision-making supervisor in Staub clearly intended that adverse employment action be taken. However, there may be cases where a supervisor does not intend the ultimate adverse action when taking a biased action such as unfairly administering discipline (e.g., the supervisor may merely intend to favor white employees, not cause the black plaintiff to be fired).
Michael Fox puts Staub in context, describing the perfect storm that led to this undeniably pro-employee decision:
This is another case where not only bad facts, but a bad procedural background made it an unfavorable case for employers. The Court was faced with a case where the appellate court had reversed a jury verdict, which meant that all facts had to be construed in the most favorable of light to the employee. Also the fact that it was a USERRA case, here a military reservist, is not the best context in today’s world with two wars and numerous military personnel being asked for extraordinary measures . . . .
Fox also assesses the impact of Staub this way:
It is almost certain that there will be many more “Staub cat’s paw cases” after today’s decision than we have dealt with before.
Proponents will argue that this is not so, that it is only those that rise to the high level of proximate cause that are at issue. But those who do, probably do not deal with day to day employment litigation where every opportunity to raise a fact issue is yet another arrow in the plaintiff’s quiver. Today, I am afraid, at least until courts below fill in the gaps, the Court has created more complexity and less certainty.
George’s take:
I’m usually reluctant to predict how big an impact a Supreme Court employment law decision will have, since I believe many such cases are relatively narrow and thus come and go without a large and lasting impact on the everyday litigation of employment claims.
However, I feel differently about Staub because I think “cat’s paw” allegations could be raised in many cases. Reliance on input from non-decision-making supervisors is the rule, not the exception. On the other hand, I have a little more confidence than Ohio Employer’s Law Blog that federal judges will find ways, within the Staub framework, to eliminate weak cat’s paw claims on summary judgment, so such cases will not all become jury cases.
I agree with Maatman and Duffy that Staub is not completely one-sided, and that smart, prudent employers will find ways to reduce their exposure to cat’s paw claims.
Application of Staub to Title VII
According to Law360 , the consensus among attorneys is that the rationale behind the Court’s ruling can be applied to cat’s paw cases that are brought to Court not only under USERRA (such as Staub ), which prohibits discrimination based on military service, but also under Title VII. The principles of the ruling could readily be transferred to the types of discrimination covered by Title VII, such as discrimination based on race or gender, “since the relevant language in the USERRA and Title VII is identical.” In Staub, the Court expressly noted this identity of language, as if to discourage any attempts to limit Staub‘s holding to USERRA.
Though the Workplace Prof Blog agreed that it was the “hope” of the ruling that it would spread to Title VII and other discrimination statutes, the blog was cautious about the limits of the ruling, mentioning Gross v. FBL Financial Services, Inc., under which the age discrimination “standard of causation” is different than the “motivating factor” one forming the basis for the Staub decision.
Non-Decisionmaker Bias Issues Left Open by Staub Cat’s Paw Ruling
Many commentators have noted several issues left open by Staub.
Citing Dennis Duffy of Baker Botts LLP, an article by Ben James in Law 360 states the Court in Staub:
[D]id not foreclose the possibility that an employer’s independent review of a complaining employee’s allegations of discriminatory animus might curtail liability, but it also didn’t provide clear guidance as to under what circumstances such an investigation would protect an employer.
James also notes:
The Supreme Court also took no position on whether the employer would be liable if a co-worker, not a supervisor, committed a discriminatory act which influenced an ultimate employment decision.
Janie Schulman of Morrison & Foerster raised another open question for future cat’s paw rulings:
[W]hether the employer would have had an affirmative defense if plaintiff Stuab had not taken advantage of Proctor’s grievance process.
How Can Employers Attempt to Avoid Liability For Non-Decision-Making Supervisors’ Bias?
Good Basic HR Policies and Procedures Should Help Employers Guard Against Cat’s Paw Liability.
Gerald Maatman sounded a confident note, suggesting that cat’s paw liability would be less of a concern for employers with good HR policies and procedures in place:
[T]he Court’s decision [in Staub] could lead to increased use of review panels or independent reviews of termination decisions — and . . . that’s a good thing.
If you have facts why this person should be terminated, you can create a system to make sound non-discriminatory decisions . . . . At the end of the day, the goal is to make good decisions on performance-related reasons.
The Court is saying maybe there is a better way than relying on a supervisor, and we are going to put you through your paces and make this a more exacting process” . . . .
Maatman says he has worked with employers who have used such processes for many years.
They have to do the right thing because the talent investment is there. . . .
George’s take:
Maatman’s last point is critical — terminating employees is costly in terms of talent replacement (recruiting, hiring and training costs), as well as an act that always creates some legal exposure, however frivolous a claim may seem. So aside from fear of a cat’s paw claim per se, there are ample reasons for employers to have in place adequate checks and balances surrounding such decisions.
Start With Clearly Communicated Disciplinary Rules and Procedures, and Appropriate Training.
Chuck Baldwin of Ogletree Deakins advised that employers must have comprehensive written disciplinary rules:
One of the disputed facts in this case was the existence of a company rule relied on by the employer to terminate Staub. Obviously, employers need to have all rules that could lead to discipline in writing and be able to prove that their written rules are provided to employees. Written receipts for work rules are a simple and effective manner of proof.
George’s take:
These rules should also include a strong non-discrimination policy, with a complaint and investigation procedure. The emphasis on independent investigations resulting from the Staub decision, as discussed below, parallels that applicable to defense of harassment claims.
Therefore, Staub underlines the importance of re-examining anti-harassment policies and complaint/investigation procedures, which most employers initially implemented specifically for sexual harassment only. These policies and procedures should already have been clarified to extend to other forms of harassment, given the growth in such claims. Now, it would be advisable to ensure that they also clearly encompass other types of discrimination claims. Alternatively, a separate policy could address such claims.
Take the Non-Decision-Making Supervisor’s Investigation with a Grain of Salt.
Mindy Caterine, a partner at Fisher & Phillips, put the employer’s post-Staub obligation quite simply:
What HR will have to do when they terminate someone is be even more careful . . . . They just can’t take the word of the supervisor, [but] have to look into the matter and uncover a real reason beyond the supervisor’s decision.
Conduct a Truly Independent, Thorough Investigation.
Troutman Sanders LLP and many others opined that “proper investigations are the best defense against ‘cat’s paw’ claims,” indicating that the employer in Staub could have done much better in investigating the facts leading to Staub’s termination and thus possibly avoided liability.
A sufficient investigation by an employer should involve more than reviewing a personnel file and listening to a (possibly discriminatory) supervisor’s perspective, according to Ryan Gibson of Stoel Rives LLP. Yet this is essentially all the decision-maker did before terminating Staub.
In a National Law Review article, Judy K. Jetelina, Lon R. Williams Jr. and James H. Kizziar Jr. describe a twofold inquiry:
[E]mployers will now need to determine [1] whether the employee claims that his supervisors were discriminating against him on the basis of his protected class and [2] whether the adverse employment action can be justified on some basis other than the information/report from the employee’s supervisor.
Troutman Sanders suggested a thorough interview with the employee as a means of uncovering any underlying complaints of discrimination. Such an interview could also help develop independent evidence supporting the supervisor’s recommendation, such as if the employee made even partial admissions.
Give the Employee an Opportunity to Challenge Past Discipline and Air Any Complaints of Supervisory Discrimination.
Part of an independent investigation is giving the employee the “due process” of being informed of the impending adverse decision and the opportunity to tell their side of the story.
Letting the employee know of any past discipline and information provided by non-decision-making supervisors that will be used to support an adverse employment action will make this a “speak now or forever hold your peace” moment — if an employee fails to raise discrimination allegations in such an interview, it will be hard for them to credibly do so later.
They need not be directly asked about discrimination; if they have such a concern, it should come out during a discussion of the past discipline and other information the employer is relying on.
Seek Additional Information.
In addition to interviewing the employee, an independent investigation should include interviewing the non-decision-making supervisor to probe the basis for their disciplinary actions and recommendations and seeking documents and witnesses that would independently corroborate the supervisor’s statements.
Reconsider Reliance on a Stale Disciplinary History.
Sometimes it is necessary or helpful to rely on a long list of incidents of misconduct or poor work performance by an employee, making a “last straw” argument that it was the cumulative record that justified a termination, not just the final incident.
Staub now adds a risk to this strategy: that one or more of the prior incidents can be challenged as having been the result of a discriminatory supervisory writeup. These prior incidents may have occurred sufficiently long ago that it will be difficult to investigate — witnesses may have moved on, memories faded, etc.
Thus, management should consider relying solely on the “last straw” incident, or at least only a few of the most recent ones, and then carefully investigating and documenting those. This approach must be weighed against the desirability of being able to show gradual application of a sequence of progressive discipline, which favors citing a more complete disciplinary record.
Don’t Lose Sight of The Conventional Disparate Treatment Defense.
When a relatively novel theory such as cat’s paw comes along, it is all too easy to lose sight of the power of the tried-and-true defenses and the role they may still play.
An e-mail alert sent to members of the ABA’s Labor and Employment Law section may be the only commentary to date that examines the interaction between cat’s paw allegations and the typical defense to a disparate treatment claim –- that discipline was imposed evenhandedly, without regard to any protected characteristics. This “Hot Topic” alert states:
The Staub case involved allegations of egregious conduct . . . seldom present in the workplace: supervisory employees who openly expressed hostility toward and a desire to cause the firing of a member of a protected class, and who took action that ultimately resulted in achieving that goal.
But what will be the result in the more typical case where the link between discriminatory animus and the ultimate outcome is not so obvious? [P]eople’s motivations generally are not as transparent as they were in this case. . . .
It was in recognition of this lack of transparency that the Supreme Court created the McDonnell-Douglas disparate treatment paradigm for circumstantial proof of discrimination. Under this paradigm, consistency (or inconsistency) of discipline regardless of protected characteristic often plays a central role.
The ABA “Hot Topic” alert continues on this topic:
[M]anagers and human resources professionals regularly rely on performance evaluations and prior disciplinary history . . . . In light of Staub, however, this practice may expose employers to discrimination claims if the affected employee alleges that one of the underlying events was motivated by discrimination. In those instances, the allegedly biased warning or evaluation may be a causal factor unless the employer “determin[es] that the adverse action was, apart from the supervisor’s recommendation, entirely justified.” Presumably, where an employer can show that it has taken similar actions against other employees, this evidence would be sufficient to show that a warning, for example, was “entirely justified” . . . .
George’s take:
If the allegedly biased non-decision-making supervisor in fact treats employees fairly, without regard to protected characteristics, even if the supervisor allegedly made discriminatory statements, the bias evidenced by such statements did not proximately cause the ultimate adverse employment decision made by the neutral decision-maker.
While the tort-law-based proximate cause analysis applied by the Court in Staub is novel, the underlying factual/legal issue is familiar: Is there sufficient evidence that the challenged adverse action occurred because of the employee’s protected characteristic rather than for the legitimate, nondiscriminatory reasons claimed by the employer?
In defending a case involving allegations that a supervisor made some kind of discriminatory remark, I normally would take a three-pronged approach:
- The supervisor didn’t say that.
- The supervisor didn’t make the decision.
- The decision was for legitimate nondiscriminatory reasons that were not a pretext to cover up for bias; this is seen in the evidence of even-handed discipline (or lack of evidence of a pattern of disparate treatment in discipline).
Staub may weaken point 2 in some cases, but doesn’t seem to me to affect points 1 and 3.
I suspect that, at least in dealing with the EEOC, point 3 is the one most likely to be persuasive. EEOC investigations normally look for comparative disciplinary evidence; it is the information most likely to be requested in a follow-up from the agency if omitted from the statement of position, in my experience.
What Is The Best Chain of Authority for Making Adverse Employment Decisions?
According to the ABA’s “Hot Topic” alert, ultimately Staub’s impact is to “prevent employers from insulating themselves against liability for discrimination by inserting an extra layer of decision-makers between biased supervisors and ultimately adverse actions.” The employer, the ABA said, should be liable for discrimination in cases where biased non-decision-making supervisors have an ability to affect the decision.
George’s take:
Having dealt with many cases in which there have been allegations of discriminatory remarks by supervisors, I have long felt that it is best for adverse employment decisions, particularly termination, to be made only by higher-level decision-makers. I had three rationales: (1) improving objectivity; (2) effectively providing a “second opinion” for what may be rash, emotional, or biased supervisory recommendations; and (3) allowing the employer to distance itself from the alleged discriminatory remarks by contending that any supervisory bias is irrelevant since the supervisor was not the decision-maker.
Staub weakens the third rationale, although not entirely, since intent and proximate cause must still being established. The other two rationales seem unaffected. Therefore, I stand by my recommendation of use of higher-level decision-makers, whether higher up in an organizational division or department or through the HR function. It is always helpful if the decision-maker is someone who normally has no contact with the employees about whom the decisions are made, so that allegations of discriminatory remarks, etc. to the employee by the decision-maker are easily rebutted on that basis.
Conclusion
Employees have further protection as a result of the Court’s ruling in Staub. Now, it is up to employers to rethink and revise employment policies and practices so as to minimize the likelihood of discrimination and maximize the defensibility of adverse employment decisions in light of this ruling.
