Four years ago, in Staub v. Proctor Hosp., 562 U.S. 411 (2011), the U.S. Supreme Court affirmed the “cat’s paw” theory of employment discrimination that had originally been named by the Court of Appeals for the Seventh Circuit. The theory – that a discriminatory manager without decision-making power could corrupt the employment-related judgment of a non-discriminatory decision-maker such that the ultimate employment action was discriminatory – buoyed employee-side employment attorneys and deflated employer-side attorneys.
In part, the reaction of the employment bar to the Supreme Court’s affirmance of the theory came from its seemingly expansive scope. While the Court required “some direct relation between the injury asserted and the injurious conduct alleged,” a relation that was not “too remote, purely contingent, or indirect,” the Court also found that even an independent investigation by the non-discriminatory decision-maker could still be tainted if the investigation took into account the biased manager’s information “without determining that the adverse action was, apart from the [biased] recommendation, entirely justified.” Id. at 419 and 421. The Court left what seemed to be only a narrow avenue for employers to argue that the cat’s paw theory does not apply where a decision-maker conducts an investigation independent of the information received from the biased manager.
John J. Kalter (Minnesota 1994) is one of the founding members of SBRK Law Group and practices management-side employment and labor law. He counsels employers regarding all aspects of employment and labor law and litigates such matters in state and federal agencies and courts.
This narrow avenue was recently explored by the Court of Appeals for the Seventh Circuit in Woods v. City of Berwyn, Case No. 13-3766 (7th Cir. 2015), in which, after analyzing the independent investigation exception, the court affirmed a grant of summary judgment on behalf of the employer. Woods involved claims of ADA and ADEA discrimination and FMLA and workers’ compensation retaliation related to the plaintiff’s employment termination. The plaintiff, an Illinois firefighter, was terminated by the Board of Fire and Police Commission (Board) after charges related to his alleged threats against the fire department were recommended and referred to the Board by his supervisor, the fire chief. The plaintiff argued that the fire chief’s termination recommendation was motivated, not by the alleged threats, but by discriminatory and retaliatory animus and, therefore, the claims of discrimination and retaliation were supported by a cat’s paw theory of liability. In effect, the plaintiff argued that his biased fire chief caused the non-discriminatory Board to terminate his employment for discriminatory reasons.
Prior to the plaintiff’s termination, however, the Board conducted a hearing on the charges that had been referred to it by the fire chief. As described by the Seventh Circuit:
The Board conducted a full trial with attorneys, opening statement and closing arguments, direct and cross-examination of witnesses, including [the plaintiff], objections and the introduction of evidence. The hearing included decisions made by the Board that went [the plaintiff’s] way and others that did not. Indeed, the Board did not just take the Statement of Charges at face value, thereby delegating its fact-finding to the potentially biased [fire chief]. Rather, the Board conducted its own fact-finding proceeding. These facts weigh in favor of finding that the Board’s hearing broke the causal chain.
Id. While the court indicated that a formal adversarial procedure does not automatically break the cat’s paw chain of causation, in this case, the Board did not rely on facts presented by the allegedly biased fire chief. Instead, it relied on the eyewitness testimony of a co-worker who directly heard and contemporaneously took notes related to the plaintiff’s alleged threats. In fact, the court found significant the fact that the fire chief did not testify regarding the conversation in which the threats were alleged to have been made. As the court stated, “In other words, the Board made its determination without relying on any of [the fire chief’s] statements or actions. This shows the Board was not an unwitting dupe and did not rely on [the fire chief] to reach its decision.” Id.
The Seventh Circuit’s decision in favor of the employer in this case is instructive. First, the court rejected the argument that just because a biased manager sets a decision-maker’s investigation in motion, there is no way to break the chain of causation between the discriminatory manager and the adverse employment decision. Rather, the court reiterated its previous holdings that “a meaningful and independent investigation of the information being supplied by the biased employee” can break the chain of discriminatory causation. Id. Second, the case demonstrates that, where investigations by decision-makers are carried out using firsthand evidence, including eyewitness accounts, unrelated to the allegedly biased manager, the cat’s paw chain of bias can be broken. Third, while the case relied upon a “full trial” by the Board to find that the chain of bias was broken, it did not indicate that such a formal process was always necessary. In fact, the Seventh Circuit specifically indicated that, by this case, it was not attempting to “outline a universal framework” for cat’s paw cases. Id.
The Woods decision thus reiterates to employers the need for decision-makers to conduct independent investigations – free of the influence of the referring manager – when taking adverse employment actions based upon the initial recommendation of such a manager. While the Seventh Circuit does not dictate full-blown hearings, like the one that occurred in Woods, until the Seventh Circuit enunciates a “universal framework,” employers would be wise to build in elements of such hearings in the decision-making process to attempt to break the causal chain. These elements start with the creation of a process by which the decision-maker engages in its own fact-finding independent of the referring manager. Independent witness interviews or testimony and an opportunity for the accused employee to be heard and present his or her side of the story directly to the decision-maker are likely similar hallmarks of an investigation that breaks the chain of the cat’s paw theory. While these hints are instructive, both sides of the employment bar wait, however, for a more comprehensive articulation of the ways in which an independent investigation can break the chain of this type of proximate cause liability.