Supreme Court Considers "Cat's Paw" Theory

The Supreme Court recently granted certiorari in Staub v. Proctor Hospital (09-400). It will hear and decide the case during its term opening in early October. The central question the Supreme Court will address is in what circumstances an employer may be held liable for unlawful discriminatory motives and actions by someone other than the decision maker. This theory of recovery is known as the “cat’s paw theory” and is taken from the 17th Century fable by French poet Jean de La Fontaine. In Fontaine’s fable, a shrewd monkey convinces a cat to steal chestnuts from a fire. While the cat burns her paw in the process, the monkey enjoys the fruits of the cat’s labor by eating all the chestnuts.

In employment law, “cat’s paw” typically arises under Title VII, the primary law related to workplace discrimination. In the Staub case, however, the theory arose under the Uniformed Services Employment and Reemployment Rights Act (USERRA). After an amicus brief by then Solicitor General Elena Kagan, and now, interestingly, a Supreme Court justice, the Court decided the Staub case is an ideal vehicle to address the lower courts’ inconsistent application of the law in “cat’s paw” cases.

Vincent Staub, a member of the Army Reserves, worked as an angiogram technician at Proctor Hospital in Peoria, Illinois. As a member of the Reserves, he attended required occasional weekend training in addition to two-week training during the summer. Staub’s supervisor, Janice Mulally, grew annoyed with Staub’s Reserve commitments. She frequently criticized the Reserves and intentionally scheduled him on weekends when he had training. In the weeks preceding his termination, Mulally disciplined Staub for “insubordinate behavior.” Considering Mulally’s dislike of Staub, the allegations were questionable. Despite this, the Vice President of Human Resources terminated Staub.

At the trial court, Staub asserted the decision maker adopted Mulally’s animus and, therefore, the decision would not have been made if not for Mulally’s discriminatory animus. The jury returned a verdict favoring Staub and awarded him $57,640. On appeal, the Seventh Circuit reversed and remanded the decision and held the “cat’s paw” theory only attributes the discriminatory animus of the non-decision maker to the decision maker when the non-decision maker is the only influence on the decision-maker. The Seventh Circuit ruled that evidence of “singular influence” of the non-decision maker and “blind reliance” by the decision-maker is necessary in “cat’s paw” cases. The Seventh Circuit found clear evidence showed while Mulally did influence the decision-maker, the decision-maker also relied on other information including Staub’s reputation for being a difficult employee and his history of discipline prior to Mulally’s supervision. Furthermore, the Seventh Circuit found the trial court erred in allowing the case to proceed to trial because the trial court should have determined whether the non-decision maker was the singular influence on the decision maker before determining whether the non-decision maker held discriminatory animus. Staub’s attorney contested this decision on the basis that it fails to hold employers accountable when several factors lead to the adverse employment action, including discriminatory opinions from those the decision-maker consults before making the ultimate decision.

The Seventh Circuit essentially articulated a very narrow interpretation of the “cat’s paw” theory by requiring singular influence by the non-decision maker. We do not know how the Supreme Court will decide the case but some speculate that, given its ideological composition, the Supreme Court likely will affirm the Seventh Circuit opinion. Check back here for regular updates.

Update: Wal-Mart Appeals Million Plaintiffs' Class Action

You may remember our May 13^th post here about the Ninth Circuit ruling that a class action lawsuit against Wal-Mart, involving over 1 million plaintiffs, could proceed to trial. As predicted, Wal-Mart has appealed to the Supreme Court to overturn the ruling. As a brief refresher, the class action lawsuit, Dukes v. Wal-Mart, claims that Wal-Mart and Sam’s Club systematically discriminated against their female employees by paying them less than male employees, and offering females fewer and less frequent promotional opportunities. At issue is not whether the discrimination occurred, but whether over a million people will be allowed to make this collective claim through a class-action lawsuit, rather than individually or in smaller groups.

Wal-Mart’s main argument is based on the grounds that the proposed class of plaintiffs is far too large and individualized to qualify. In its petition to the Supreme Court, Wal-Mart argued, “the class is larger than the active-duty personnel in the Army, Navy, Air Force, Marines and Coast Guard combined – making it the largest employment class action in history by several orders of magnitude.” It also argued that the Ninth Circuit contradicted earlier Supreme Court and appeals courts’ decisions, and that it improperly frees the plaintiffs of the burden to prove each individual plaintiff had been directly injured by Wal-Mart’s practices.

Some legal experts suggest that if the Supreme Court sides with the plaintiffs and lets the lawsuit proceed as is, it could cost Wal-Mart over $1 billion in damages. Furthermore, the implications for future class action certification procedures will be very far reaching. It is unknown whether the Supreme Court will decide to hear the case, but we will keep you updated. Check back in late Fall for more information.

United States Supreme Court Issues Key Disparate Impact Ruling

Yesterday, the United States Supreme Court issued a key decision in a disparate impact case involving written exams in the City of Chicago firefighter application process. In a unanimous decision written by Justice Scalia, the Supreme Court discussed an issue of high importance to employers.

In 1995, the City of Chicago required all firefighter applicants take a written examination. The City announced in January 1996 that it would draw random candidates from the applicants that scored at least 89 out of 100 points. These applicants were designated as "well qualified." Applicants scoring between 65 and 88 were designated as "qualified" and were told they would be kept on an eligibility list. Any applicants that scored below 65 were informed they failed the exam and would not be considered for any firefighter positions. In March 1997, a group of black applicants that scored in the "qualified" range filed Charges of Discrimination with the EEOC and received Notices of Right to Sue. They ultimately filed suit and the lower court certified their lawsuit as a class action. The firefighters prevailed at the lower court level. On appeal, the Seventh Circuit reversed the lower court's decision and found the lawsuit was untimely because the earliest EEOC Charge of Discrimination was filed more than 300 days after the January 1996 decision to sort the test scores into three categories. The firefighters appealed to the Supreme Court.

As an initial matter (and as pointed out by Justice Scalia in the opinion), Title VII of the Civil Rights Act of 1964 prohibits employers from using practices (even if those practices are on their face non-discriminatory) that cause a disparate impact on the basis of race. Tests such as those at issue in this case are often the impetus for disparate impact cases. Title VII also requires plaintiffs to file a Charge of Discrimination within 300 days of the complained-of act prior to filing a lawsuit. The firefighters in this case argued that each time the City used the test scores to make a hiring decision, a new disparate impact cause of action accrued which began the 300 day deadline. The City argued the January 1996 decision to sort the scores was the only relevant date for disparate impact purposes and that each hiring decision thereafter was not a new discriminatory act because the City was only implementing the prior January 1996 decision.

The Supreme Court held that each hiring decision gave rise to a new disparate impact claim. The Court based this decision on the language in Title VII itself that states a plaintiff establishes a disparate impact claim when he or she shows an employer "uses a particular employment practice that causes a disparate impact." The Court said the City's exclusion of applicants (based on test scores) in each round of selection was a "use" as defined by Title VII. Thus, each hiring decision started the 300 day clock and the firefighters in this case timely filed Charges of Discrimination.

So what should employers take away from this key decision? It is important for any employer that utilizes tests and other similar employment practices that may create a disparate impact on its employees to constantly re-evaluate those practices and their impacts. An employer cannot avoid a lawsuit simply by relying on the fact the practice was implemented years ago. If an employer still makes decisions based on the practice at issue, each new decision gives rise to a potential cause of action. Employers, make sure your practices are sound and stay diligent and up to date.

UPDATE: Supreme Court Hears Arguments Regarding Workplace Privacy

At the end of last year we asked whether an employee should have an expectation of privacy regarding emails, text messages, etc. that were received and sent on company-owned equipment (previous post). The majority of reader responses favored the employers' right to monitor employees' communication. Luckily we should have an answer to this question from the Supreme Court in June. According to one report, the Justices appear to side with the employer. However, this same report indicated Chief Justice Roberts criticized the employer's decision to look at the text messages. Until June though, we can continue the right of privacy debate.

What is Your Expectation of Privacy in the Workplace?

Recently the U.S. Supreme Court was asked to determine if an employee has the right to prevent an employer from viewing the employee's text messages sent or received on an employer-issued pager. Here is an article discussing the case. It is fair to say most people (from low-level employees to corporate executives) have sent or received personal correspondence during work, whether it was a telephone call, email, fax, or text message. When you sent or received that correspondence, what was your expectation of privacy? Does your answer change if your employer provides you a written policy stating your employer may record and view all correspondence sent or received on company-owned property? How do you think the U.S. Supreme Court will decide? Post your comments and answers below. We will continue to track this case and see how your responses correspond with the Supreme Court's decision.

Big Win for Employers

On June 18, 2009, the United States Supreme Court issued a decision which gave employers a big win in the employment litigation arena. In Gross v. FBL Financial Services, Inc., No. 08-441, the Supreme Court addressed mixed-motive cases of age discrimination under the Age Discrimination in Employment Act ("ADEA").

Mixed-motive employment cases are cases in which an employee alleges he suffered an adverse employment action because of both permissible and impermissible considerations. In the Gross case, the Plaintiff alleged at trial that he was reassigned and demoted at least in part on his age. The trial court instructed the jury that it must return a verdict for the Plaintiff if the Plaintiff proved that age was a motivating factor in the Defendant's decision to demote the Plaintiff. The jury then found for the Plaintiff. After the Eighth Circuit Court of Appeals reversed the decision (requiring the Plaintiff prove age was the motivating factor), the Supreme Court granted review.

The Supreme Court, in a majority opinion authored by Justice Clarence Thomas and in which Chief Justice John Roberts, Justice Antonin Scalia, Justice Samuel Alito, and Justice Anthony Kennedy joined, vacated the Court of Appeals decision and held a plaintiff bringing an ADEA disparate treatment claim must prove, by a preponderance of the evidence, that age was the "but-for" cause of the challeneged adverse employment action.

You may be asking why the Supreme Court vacated the Court of Appeals decision when it appears the two were in agreement. Why not simply affirm the Court of Appeals decision? The Court of Appeals decision held the trial court incorrectly instructed the jury under the standard established in Price Waterhouse v. Hopkins, 490 U.S. 228 (1989). In a move sharply criticized by Justice John Paul Stevens in his dissent, Justice Thomas' opinion held the Court of Appeals was in error because a Price Waterhouse jury instruction is never proper in an ADEA case.

In the majority opinion, the Supreme Court held interpretation of the ADEA is not governed by Title VII decisions such as Price Waterhouse because Title VII is materially different with respect to the relevant burden of persuasion. Specifically, Justice Thomas stated "[u]nlike Title VII, the ADEA's text does not provide that a plaintiff may establish discrimination by showing that age was simply a motivating factor." Justice Thomas also pointed out Congress never added such a provision to the ADEA when it amended Title VII, "even though [Congress] contemporaneously amended the ADEA in several ways..."

Moving forward, therefore, "[t]o establish a disparate-treatment claim under the plain language of the ADEA...a plaintiff must prove that age was the 'but-for' cause of the employer's adverse decision." Furthermore, "the plaintiff retains the burden of persuasion to establish that age was the 'but-for' cause of the employer's adverse action."

Whatever your belief regarding the soundness of this opinion, employers certainly benefit greatly. This decision also firmly settles the law regarding mixed-motive analysis in ADEA cases (joining the previously-settled law in Title VII cases). The unanswered areas, though, are ADA cases, as well as state discrimination claims and Section 1981 race discrimination and retaliation claims. It looks like we just may be headed to overtime...

A No-Win Situation

The United States Supreme Court heard arguments yesterday in the case of Ricci v. DeStefano (click here for a transcript of the oral arguments). The case stems from a decision by the city of New Haven, Connecticut to throw out the results of a fire department promotion exam because too few minorities passed. As a result, a group of 20 white firefighters sued the city for race discrimination under Title VII of the Civil Rights Act of 1964.

The importance of this impending decision and its far-reaching effects resulted in coverage by, among other media outlets, MSNBC and CNN.

While the city argues it risked a disparate impact race discrimination suit by the minority firefighters if it carried out the promotions based on the test results, the white firefighters claim the city intentionally discriminated against them by refusing to promote them on the basis of race. To put it bluntly, and as Justice David Souter stated during oral arguments yesterday, the city is left "in a damned if you do, damned if you don't situation."

If the city carried out the promotions, the minority employees could have sued under Title VII for race discrimination alleging the test created a "disparate impact" due to alleged flaws in the tests that caused minorities to score lower on the tests than white employees. However, since the city threw out the test and the promotions because no minorities would be promoted, the white firefighters argue the city made an employment decision based on race (i.e. intentional discrimination). Both sides make a compelling case.

As you can imagine, this case is being closely watched and has garnered interest from numerous advocacy and business groups. These groups, and all of us really, want to know how far the Court will go in allowing race to be used as a consideration in filling jobs.

While a decision is not expected for a few months, it appears there currently is an ideological split on the Court with Justice Anthony Kennedy as the crucial swing vote. Many insiders believe Justice Kennedy will side with the white firefighters, leading to a 5-4 decision in their favor.

So where does that leave employers? For the time being, without an answer. The best hope is clear guidance from the United States Supreme Court this summer. We'll be sure to update you on their decision as soon as it is released and let you know the impact of that decision on your business.