Supreme Court rules employer can be liable under USERRA for terminating employee even though actual decision-maker not motivated by anti-military animus

Staub v. Proctor Hospital, No. 09-400 (U.S. Mar. 1, 2011)

Abstract: In an 8-0 decision, the U.S. Supreme Court has ruled that an employer can be held liable under the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA) for terminating an employee who is a U.S. Army reservist, even though the de facto decisionmaker had no anti-military animus.  Specifically, the employer can be liable in cases where the supervisors motivated by anti-military animus take actions that are intended to cause an adverse employment action, and those actions are a proximate cause of the ultimate employment action.  The Court rejected the employer’s contention that an employer is not liable unless the de facto decision-maker is motivated by discriminatory animus. It also rejected the employer’s argument that a decision-maker’s independent investigation, and rejection, of an employee’s discriminatory animus allegations should negate the effect of the prior discrimination.

The Court held that the U.S. Court of Appeals for the Seventh Circuit (IL, IN, WI) erred in holding that the employer was entitled to judgment as a matter of law. It, therefore, reversed and remanded the case to Seventh Circuit with instructions that it consider whether the variance in the jury instruction given at trial and the rule adopted by the Court was harmless error or should mandate a new trial. Justice Scalia delivered the Court’s opinion, joined by Chief Justice Roberts and Justices Kennedy, Ginsburg, Breyer, and Sotomayor. Justice Alito, joined by Justice Thomas, filed an opinion concurring in the judgment. Justice Kagan took no part in the consideration or decision of the case.

Facts/Issues: Vincent Staub filed suit for employment discrimination under USERRA after being fired, saying two supervisors in his department disliked his military obligations and gave him warnings that led to his termination. Although the disciplinary warnings were issued by the supervisors, the decision to terminate Staub was made by the employer’s vice president of human resources (VPHR), who harbored no anti-military animus against Staub and was unaware of the supervisors’ animus. A federal district court jury returned a judgment for Staub and awarded damages. However, the Seventh Circuit reversed the jury’s judgment, holding that the employer was entitled to judgment as a matter of law because the decision-maker (VPHR) had relied on more than the supervisors’ advice in making her decision. The issue raised in the suit was whether an employer can be held liable for discrimination when supervisors with an alleged anti-military bias influenced their company to fire a U.S. Army reservist.  The theory of liability relied on by Staub is sometimes referred to as the “cat’s paw” theory.

Ruling Rationale: Key to resolving the issue, said the Court, was construing the meaning of  USERRA’s requirement that discrimination be “a motivating factor” in the adverse employment action. It rejected the employer’s contention that the “employer is not liable unless the de facto decision-maker (the technical decision-maker or the agent for whom he is the ‘cat’s paw’) is motivated by discriminatory animus.” Instead, the Court found that “[s]o long as the agent intends, for discriminatory reasons, that the adverse action occur, he has the scienter [guilty knowledge] required to be liable under USERRA.”

The Court also rejected the employer’s argument that “even if the decision-maker’s mere exercise of independent judgment does not suffice to negate the effect of the prior discrimination, at least the decision-maker’s independent investigation (and rejection) of the employee’s allegations of discriminatory animus ought to do so.” It declined “to adopt such a hard-and-fast rule,” noting  that “the requirement that the biased supervisor’s action be a causal factor of the ultimate employment action incorporates the traditional tort-law concept of proximate cause.” The Court stated: “We are aware of no principle in tort or agency law under which an employer’s mere conduct of an independent investigation has a claim-preclusive effect [and] [n]or do we think the independent investigation somehow relieves the employer of ‘fault.’”

The Court then addressed the objections to its reasoning raised by Justice Alito in his concurring opinion. In regard to his claim that an “employer should be held liable only when it ‘should be regarded as having delegated part of the decision-making power’ to the biased supervisor,” the Court responded that  “if the independent investigation relies on facts provided by the biased supervisor—as is necessary in any case of cat’s-paw liability—then the employer (either directly or through the ultimate decision-maker) will have effectively delegated the fact-finding portion of the investigation to the biased supervisor.”

Rejecting Alito’s suggestion that the biased supervisor is analogous to a witness at a bench trial, the Court pointed out that a “mere witness is not an actor in the events that are the subject of the trial.” The “biased supervisor and the ultimate decision-maker, however, acted as agents of the entity that the [employee] seeks to hold liable; each of them possessed supervisory authority delegated by their employer and exercised it in the interest of their employer.” The majority concluded that it was not required to adoption an independent investigation defense that appears nowhere in the text of the statute.

Staub v. Proctor Hospital, No. 09-400 (U.S. Mar. 1, 2011)

[Editor's Note: In November 2010, Courthouse News Service reported that the U.S. Supreme Court had heard oral argument in the Staub v. Proctor Hospital case. As the editor's note reports, NSBA filed an amicus brief  in support of the employer. The brief, which was written by NSBA senior staff attorney Lisa Soronen, argued: (1) the Court should reject the "cat’s paw" theory of liability altogether, as the practical realities of school district operations make it unreasonable to impute the unsanctioned, discriminatory motivation of subordinates to school boards; (2) requiring school boards to investigate discriminatory motivation on the part of informing subordinates as the only means to avoid liability is unsupported by USERRA and imposes unproductive and counterproductive burdens on school boards; and (3) if the Court adopts the "cat’s paw" theory of liability, it should provide school boards with a workable defense. A summary of the article is available below.

After the Court's decision, Ms. Soronen notes that Justice Alito appears to agree with one approach argued in NSBA's amicus brief. NSBA suggested in its brief that if the Court adopted the “cat’s paw” theory of liability it should also provide employers with an affirmative defense. According to NSBA, under two of the Court's precedents, Ellerth and Faragher, employers should be able to escape liability if they relied on the advice of biased subordinates where they (1) exercised reasonable care to prevent and promptly correct any discriminatory behavior; and (2) the plaintiff unreasonably failed to take advantage of any preventive or corrective opportunities provided by the employer.  Justice Alito, in his concurring opinion joined by Justice Thomas, agreed stating:  “[My interpretation of the statute] would also encourage employers to establish internal grievance procedures similar to those that have been adopted following our decisions in Burlington Industries, Inc. v. Ellerth, 524 U. S. 742 (1998), and Faragher v. Boca Raton, 524 U. S. 775 (1998). Such procedures would often provide relief for employees without the need for litigation, and they would provide protection for employers who proceed in good faith.”]

NSBA Legal Clips archives on Staub oral argument

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