Staub v. Proctor Hospital (09-400)

Oral argument: Nov. 2, 2010

Appealed from: United States Court of Appeals for the Seventh Circuit (Mar. 25, 2009)

DISCRIMINATION, EMPLOYER LIABILITY, CAT’S PAW THEORY, USERRA

In 2008, Vincent Staub received a favorable jury verdict in an employment discrimination trial against his former employer, Proctor Hospital. Proctor Hospital appealed to the Seventh Circuit Court of Appeals which reversed the verdict based on the "cat's paw" theory of employer liability. The court held that unless the ultimate decision maker was under the "singular influence" of another employee, only the decision maker's unlawful reasons for adverse employment decisions are actionable. The Supreme Court granted certiorari to decide whether the motivations of other employees who influence employment actions, but do not make the ultimate decision, may be taken into consideration in employment discrimination suits.

Question presented

In what circumstances may an employer be held liable based on the unlawful intent of officials who caused or influenced but did not make the ultimate employment decision?

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Issue

Can the unlawful intent of employees who influence employment actions, but who do not make final decisions or act as a singular influence on the ultimate decision maker, be considered in employment discrimination suits?

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Facts

In 2000, Vincent Staub, a veteran member of the United States Army Reserve, was employed by Proctor Hospital as an angiography technologist. See Staub v. Proctor Hospital, 560 F.3d 647, 651 (7th Cir. 2009). He developed a strained relationship with his supervisor, Janice Mulally, regarding his military reserve duties. See id. at 651. Mulally had an animosity towards Staub's service and duties, often publicly chastising Staub when he requested weekends off for his mandatory reserve duties. See id. at 652. Mulally called these duties "bullshit," scheduled Staub to work on weekends when he needed to attend reservist training, and occasionally made him use vacation time to attend. See id. Staub contacted Michael Korenchuk, the department head, and complained of the treatment. See id. Korenchuk occasionally assisted Staub in these matters, but also stated on a few occasions his own animosity towards Staub's reservist duties. See id.

Staub was employed in a division of the Diagnostic Imaging Department at Proctor Hospital. See Staub, 560 F.3d at 653. The department was divided into two sections. See id. In 2003, Staub and a coworker, Leslie Sweborg, were the only hospital employees qualified to work in the angiography division, and they were also qualified to work in the larger division for noninvasive imaging. See id. Staub was on several occasions told to assist in the noninvasive department when there was no work in the angiography division. See id. There were several complaints about Staub's lack of assistance in the noninvasive imaging division as well as his absence from his workstation during work hours. See id. at 654. Eventually, Mulally implemented a policy that Staub and Sweborg were to report to either her or Korenchuk if they had no work in the angiography division. See id. at 653.

On April 20, 2004, the tension between Staub and his superiors came to a head. See Staub, 560 F.3d at 654. He and Sweborg attempted to report to Korenchuk before going to lunch, but Korenchuk was not in his office, so Staub left a voicemail on Korenchuk's phone and went to lunch. See id. Staub and Sweborg returned to the lab thirty minutes later, and soon thereafter Korenchuk came into the lab and asked Staub to come with him to the office of Linda Buck's, who was the vice president of Human Resources. See id. Korenchuk had gone to Buck's office while Staub was out to lunch and complained that Staub was once again missing from his workstation. See id. Korenchuk did not mention the voicemail, though it is not clear whether he knew about it at the time. See id. Once Staub entered Buck's office, he was fired on the spot. See id. Sweborg was not disciplined, but resigned a few days later. See id. at 655. Buck testified at trial that she based her decision to terminate Staub on Korenchuk's complaint filed earlier that day as well as Staub's employee record and official write-ups. See id. at 654.

At trial, a jury awarded damages to Staub when it found that Staub was unlawfully discriminated against in violation of the Uniformed Services Employment and Reemployment Rights Act (“USERRA”). See Staub, 560 F.3d at 655. USERRA makes it unlawful for employers to take adverse employment actions against military veterans because of an animus towards their status as active or retired veterans. See id. at 658–59. Proctor Hospital appealed to the Seventh Circuit Court of Appeals, which overruled the jury verdict on the basis that only the unlawful intent of the ultimate decision maker could be considered in employment discrimination suits unless the ultimate decision maker was actually a dupe and was under the "singular influence" of another party. See id. at 659. The court found that Buck, the ultimate decision maker, was not under the singular influence of any other employee and that she conducted an independent review of Staub's case. See id.

The Supreme Court granted certiorari in order to decide whether the unlawful intent of employees who influence employment actions, but who do not make final decisions, may be considered in employment discrimination suits. See Staub v. Proctor Hospital, 130 S.Ct. 2089 (2010).

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Discussion

This case will allow the U.S. Supreme Court to settle the question of whether the so-called “cat’s paw” theory of employer liability controls in cases regarding violations of the Uniformed Service Employment and Reemployment Rights Act (“USERRA”). The cat’s paw theory provides for employer liability in cases where the ultimate decision maker did not have an unlawful intent in taking the adverse action, but was strongly influenced by another party that did hold an unlawful intent. See Douglas Ehlke, The Long Reach of the Cat’s Paw. The ruling will affect employers and employees subject to USERRA as well as other federal discrimination statutes.

If the court decides that the cat’s paw theory as interpreted by the Seventh Circuit applies to all USERRA cases, Vincent Staub, along with the American Association of Justice (“AAJ”), argues that employers will be able to make important employment decisions with discriminatory motives and avoid liability if the ultimate decision maker conducts a cursory independent investigation, frustrating government attempts to discover whether unlawful intent was truly a motivating factor. See Brief of Amicus Curiae American Association of Justice (“AAJ”) in Support of Petitioner at 22–24. Further, Staub contends that because this case deals with the standard that is used for other types of discrimination cases for protected classes, it could also make it more difficult to prove cases under any discrimination statute. See Brief for Petitioner, Vincent Staub at 34. The AAJ argues that this will incentivize a corporate structure in which the ultimate decision maker in employment actions will be kept uninformed of the actual reasons for the action to protect the employer. See Brief of AAJ at 9. The AAJ maintains that this will have the effect of reducing the protection for these classes, both within the employer’s administration and in the courts. See id. at 9.

In contrast, Proctor Hospital replies that the cat’s paw theory, as interpreted by the Seventh Circuit, is an appropriate standard for USERRA cases. See Brief for Respondent, Proctor Hospital at 12–13. The Chamber of Commerce agrees and contends that following the cat’s paw theory to impose liability on employers is particularly important in the employment discrimination context because it helps promote the goals of the anti-discrimination statutes. See Brief of Amicus Curiae the U.S. Chamber of Commerce in Support of Respondent at 23. The Chamber of Commerce argues that requiring proximate causation through the cat’s paw theory is necessary to provide incentives for employers to implement measures to prevent discrimination. See id. at 23-24. The Chamber of Commerce points out that the Court has repeatedly acknowledged the importance of requiring proximate causation in discrimination cases and that the cat’s paw theory, in particular, encourages employers to conduct independent investigations before taking adverse employment actions. See id. at 24.

The United States agrees with Staub that the plain language of the statute as well as the accepted principles of agency common law both require that the Supreme Court reject the cat’s paw theory as too constrictive to serve the purpose of protecting non-career military veterans. See Brief of Amicus Curiae the United States in Support of Petitioner at 19–20. The Lawyers’ Committee for Civil Rights brings attention to the fact that Congress explicitly included the words “motivating factor” in the statute to make clear to courts that employer liability is appropriate in “mixed motive” cases. See Brief of Amici Curiae the Lawyers’ Committee for Civil Rights, et al. in Support of Petitioner at 5.

The Equal Employment Advisory Council argues that if the Court decides to expand the cat’s paw theory, it will lead to an unnecessary and large rise in costs for businesses subject to USERRA. See Brief of Amicus Curiae the Equal Employment Advisory Council in Support of Respondent at 22. The group asserts that the standard called for by Staub is unrealistic and would require the employer to investigate the motivations of any employee involved in a corrective action. See id. Other amici, including the National Federation of Independent Businesses and the National School Board Association, argue that the court should not require an independent investigation to separate the unlawful intent of the employee from the final decision. See Brief of Amicus Curiae the National Federation of Independent Businesses in Support of Respondent at 22–23. They contend that an independent decision standard is more appropriate because it would be too costly to conduct an investigation every time a corrective action needs to be taken, plus the independent investigation requirement would create additional litigation to settle the question of how thorough an independent investigation must be. See id. at 17–18; Brief of Amicus Curiae the National School Board Association in Support of Respondent at 18–20.

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Analysis

This case turns on the “cat’s paw” or “singular influence” theory of employer liability as applied by the Seventh Circuit Court of Appeals. The Uniformed Service Employment and Reemployment Rights Act (“USERRA”) is a statute enacted by Congress that was intended to prevent private employers from discriminating against employees who are military veterans. See 38 U.S.C. §§ 4301–4335. Using the cat’s paw theory, the Seventh Circuit held that unless the ultimate decision maker had an unlawful intent in taking an employment action or the decision maker was under the “singular influence” of another employee maintaining an unlawful intent, liability cannot be imputed to the employer. See Staub, 560 F.3d at 656. The court also held that an influence cannot be singular if the final decision maker conducted an independent review before taking any action See id. at 659. The principal argument centers on whether the cat’s paw theory prevents the motivations of employees that contributed to, but did not make, the ultimate decision from being considered in violations of USERRA. See Brief for Petitioner, Vincent Staub at 20–21; Brief for Respondent, Proctor Hospital at 15.

Proximate Causation

Staub points to the jury verdict that found that Staub would not have been fired absent the unlawful intent of Proctor’s employees. See Brief for Petitioner at 49. He argues that the evidence was sufficient for the jury to find that Mulally and Korenchuk were both hostile to Staub’s military service and to infer that Mulally and Korenchuk lied about Staub, withheld exculpatory information, and took other actions in order to cause the adverse employment action. See id. at 50.

Proctor Hospital argues that there must be proximate causation to have a claim against the employer and there was no evidence presented to the jury that supported the inference that Mulally’s and Korenchuk’s animosity towards Staub was the legal cause of the final decision. See Brief for Respondent at 61. The U.S. Chamber of Commerce argues that the concept of an intervening cause also applies in this situation. See Brief of Amicus Curiae the U.S. Chamber of Commerce in Support of Respondent at 20. An intervening cause is an event that prevents the original cause from being considered the legal cause of a harm, in this case because of independent human agency. See id. They believe this concept applies here because Buck checked over Staub’s record and had reasons for firing Staub independent of Korenchuk’s complaint. See id. at 23–24.

Statutory Meaning and Legislative Intent

Staub argues that the cat’s paw theory has no basis in the text of USERRA. See Brief for Petitioner at 35. Staub notes that the term “decision maker” is nowhere to be found within the statute. See id. at 37. Instead, Staub points out that the statute imposes liability on employers and on those to whom employers have given employment-related responsibilities. See id. Staub argues that there must be a compelling reason, either in the text of a statute or in Congress’s intent, for a court to stray from the text of the statute as well as agency common law in the way that the Seventh Circuit did. See id. at 22. Staub contends that Congress could not have intended for the cat’s paw theory to replace ordinary agency law that protects the rights of veterans. See id. at 35–36. He puts forth that any interpretation that goes against Congress’s desire to protect returning veterans would require a stronger basis in the statute or common law. See id.

Proctor Hospital replies that the cat’s paw theory, as interpreted by the Seventh Circuit, is an appropriate standard for USERRA cases. See Brief for Respondent at 12–13. Proctor notes that USERRA not only allows for the employer to be held liable, but for the decision maker to be held personally liable as well. See id. at 54. The hospital argues that this unique aspect of USERRA makes it inappropriate to hold an employer liable for the unlawful intent of an employee who influenced, but did not make the ultimate decision, unless they had singular influence over the decision maker. See id. Proctor also argues that the employees who had an unlawful intent cannot legally cause the employment action when the ultimate decision maker takes steps to independently review the employment action prior to any decision. See id. at 39–40.

Agency Law

Staub notes that the Seventh Circuit did not inquire into whether Mulally and Korenchuk were acting as agents of their employer, which is the norm for agency law. See Brief for Petitioner at 20–21. Instead, according to Staub, the court inquired into the nature of the influence that Mulally and Korenchuk had over the ultimate decision maker. See id. Staub puts forth that the only inquiry should be whether an employee with an unlawful intent influenced the final decision. See id. at 27–28. He notes that decisions in modern corporations can often be divided into a number of tasks which could result in the termination of an employee and that these are all done under the employee-related responsibility delegated by the employer. See id. at 26–27. Staub notes that if a final decision maker makes false claims or releases a fraudulent prospectus, courts do not inquire whether he or she knew about the falsity of the claim but holds the employer liable for those actions. See id. at 34–35. He argues that the concepts that the Seventh Circuit employed are not used in agency common law, and absent compelling reasons, courts should not stray from these concepts. See id. at 36–37. Staub argues that when Congress enacts a statute, it does so with an understanding of the common law framework and expects it to be used unless otherwise stated. See id.

Proctor Hospital replies by stating that USERRA does, in fact, contain unique aspects which justify a departure from agency common law. See Brief for Respondent at 54. The statute holds liable employers who have an anti-military discriminatory intent as a motivating factor of their decision, but it also makes the employee who made the ultimate decision personally liable as well. See id. Proctor further argues that agency law requires that the person who ultimately caused the harm to harbor the unlawful intent. See id. at 54–55. Proctor continues that the doctrine of respondeat superior requires that in a principal/agent relationship, if the agent is not liable, then the principal cannot be either. See id. at 55–56. Proctor argues that Buck had no animus towards Staub and is not liable to him for her decision, while Mulally and Korenchuk are not liable because Buck’s independent investigation made their actions only but-for causes and not the proximate cause of any harm. See id. at 59–60. Proctor concludes that the lack of wrongful action by any agent prevents the principal from being held liable. See id.

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Conclusion

This case will turn on whether the "cat's paw" theory, also known as the "singular influence" theory, controls in employment discrimination suits. Staub argues that the cat's paw theory is too restrictive in that employees can have an employment action taken against them with a motivating factor of unlawful discrimination without any repercussions for the employer. Proctor Hospital argues that USERRA's unique liability scheme requires the ultimate decision maker to hold the unlawful intent and the cat's paw theory creates greater liability for employers. This case will affect not only veterans and employers who are subject to USERRA, but also employers and employees subject to other federal anti-discrimination statutes.

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Authors

Prepared by: Alexander Malahoff

Edited by: Sarah Chon

Additional Sources

· Supreme Court Insider, Debra S. Katz and Michael A. Filoromo III: Commentary: Will Justices Claw at 'Cat's Paw' Theory of Employer Liability? (Sept. 22, 2010)

· Equal Justice Society, Keith Kamusagi: EJS Joins Lawyers’ Committee in Filing Brief with U.S. Supreme Court in Staub v. Proctor Hospital (July 14, 2010)

· Hernblawg: The Cat’s Paw (May 6, 2010)

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