Employees Can Be Personally Liable for Retaliation Under "Cat's Paw" Theory

Employees alleging race discrimination under an old federal law, 42 U.S.C. § 1981, may bring claims against supervisors, managers, and human resource professionals who intentionally cause a decision-maker to take an adverse action against that employee in retaliation for protected activity. In a case of first impression, the United States Court of Appeals for the Seventh Circuit held that the cat’s paw theory can support individual liability under § 1981 for an employee who intentionally causes an employer to retaliate against another employee. Smith v. Bray, No. 11-1935 (7th Cir., May 24, 2012). Section 1981, enacted by the Civil Rights Act of 1866, is a federal statute that protects the rights of all persons to make and enforce contracts, including the making, performance, modification, and termination of contracts and enjoyment of all benefits, privileges, terms, and conditions of the contractual relationship.

The cat’s paw theory is named after a fable in which a monkey convinces a cat to pull chestnuts out of a hot fire. As the cat burns his paw pulling the chestnuts from the fire, the monkey gobbles them up for himself, leaving the cat with none. In the law of employment discrimination, the cat’s paw theory applies when a biased subordinate, who lacks decision-making authority, uses the formal decision-maker as a dupe in a scheme to trigger a discriminatory employment action.

As we advised previously in Foley’s Legal News: Employment Law Update for March 7, 2011, the United States Supreme Court has already endorsed the cat’s paw theory in Staub v. Proctor 131 S. Ct. 1186 (2011) in a claim brought under the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA). The Supreme Court held that the employer is liable for the discrimination of a supervisor who is not the ultimate decision-maker, if the supervisor’s discrimination is a proximate cause of the adverse employment action.

In Smith, the employee claimed that he was subjected to egregious harassment based on his race from his immediate supervisor and fired in retaliation for complaining about the harassment. Because the employer was bankrupt, the employee sued the employees allegedly responsible for the harassment, including his former supervisor and a human resources manager whom the employee claimed conspired with the supervisor to retaliate against him.

The court discussed the cat’s paw theory under Title VII, § 1981 and § 1983 (a statute similar to § 1981) and noted that the same standards govern intentional discrimination under all three. The court stated, “It logically follows that an individual can be liable under § 1981 for retaliatory conduct that would expose her employer to liability under Title VII or § 1981.” The court further stated, “It also makes sense as a matter of basic fairness: Why should the ‘hapless cat’ (or at least his employer) get burned but not the malicious ‘monkey’?” Note that the ruling applies to § 1981 cases that are based on race and national origin discrimination and does not extend to other protected categories like sex and religion that are covered by Title VII.

In order to establish a claim of retaliation, a plaintiff must show that he engaged in protected activity, he suffered an adverse employment action, and that the protected activity caused that adverse action. The court determined the plaintiff presented enough evidence to create a genuine issue of fact as to whether the human resources manager intentionally helped cause his termination. The employee’s retaliation claim failed, however, because the court determined that there was insufficient evidence that the human resources manager acted with a retaliatory motive. The court affirmed judgment in favor of the human resources manager.

Given this additional avenue of liability for employees to pursue against other employees, it is incumbent upon decision-makers to conduct a thorough review of the facts leading to an employee’s termination and follow up on claims of improper bias. Decision-makers should avoid merely “rubber-stamping” the recommendation of a subordinate. If a protected category or a protected activity is implicated, the employer should thoroughly review the termination recommendation and conduct an independent investigation to confirm the termination is sufficiently justified and documented.