Supreme Court Expands Employee Rights

U.S. Supreme Court rulings in two recent cases further advance the rights of employees in disputes with employers, continuing a long-term trend in federal law on employment discrimination. Both cases—Staub v. Proctor Hospital (No. 09-400) and Thompson v. North American Stainless (No. 09-291)—interpret Title VII of the U.S. Civil Rights Act, and Staub also deals with the Uniformed Services Employment and Reemployment Rights Act of 1994.

In the Staub case, which has also come to be known as the "Cat’s Paw" decision, the court considered whether an employer has engaged in unlawful discrimination if a decision to fire an employee is based in part on personal animus by a lower-level supervisor. In an 8-0 decision (Justice Elena Kagan took no part in the case), the high court found that Proctor Hospital in Peoria, Ill., fired Vincent Staub as an angiography technician due to his work in the Army Reserve, which took him away from his hospital job and angered his bosses. His two immediate supervisors brought false charges against him in order to get Staub fired, and took those allegations to their supervisor, who fired Staub.

Staub sued the hospital under the 1994 act and won a jury verdict. But the Seventh Circuit appeals court reversed the jury, and Staub appealed to the Supreme Court. In ruling for Staub, Justice Antonin Scalia wrote, "An employer’s authority to reward, punish or dismiss is often allocated among multiple agents. The one who makes the ultimate decision does so on the basis of performance assessments by other supervisors." The court added that it is well established in law "that the decision maker’s exercise of judgment does not prevent the earlier agent’s action from being the proximate cause of the harm." While Staub sued under the military legislation, Scalia noted that the wording of that law is similar to the language of Title VII, the law that generally governs employment discrimination cases.

In his majority opinion, Scalia noted that the appeals court had used the term "cat’s paw case." In a footnote, Scalia explains that the term comes from an Aesop fable. "In the fable," says Scalia, "a monkey induces a cat by flattery to extract roasting chestnuts from the fire. After the cat has done so, burning its paws in the process, the monkey makes off with the chestnuts and leaves the cat with nothing."

The Staub decision has produced a heavy volume of commentary from the employment bar. Here are some extracts:

• Mark J. Chumley of Keating Muething & Klekamp commented, "I recently criticized the Supreme Court for issuing employment law decisions that seem designed to create additional litigation rather than resolving issues and simplifying the law. The cat’s paw case seems to have the same problem. The court introduces concepts of agency law and negligence into the analysis of employment law issues."
• Ryan Gibson of Stoel Rives wrote, "While Staub opens the door wider to discrimination cases under the cat’s paw theory, the case offers some guidance on what employers can do to minimize exposure from these claims. Most obviously, ultimate decision makers cannot simply rely on recommendations from subordinates, but should conduct a thorough and independent investigation into the facts underlying the employment action. The subtext of Staub suggests the HR manager’s investigation was far from adequate—she merely reviewed the personnel file and consulted another HR employee, but largely relied on the (hostile) supervisor’s accusation that Staub had, in fact, violated a workplace rule."
• Shane Munoz of Ford & Harrison noted, "The court’s decision potentially expands the scope of liability under the ‘cat’s paw’ theory. Thus, it is more important than ever for employers to conduct thorough and independent investigations of discrimination allegations and properly document those investigations."

In Thompson, somewhat more conventional than the cat’s paw decision, the court ruled unanimously that Eric Thompson has standing to sue North American Stainless (NAS) based on his claim that he was fired because his fiancé, Miriam Regaldo, had filed a sex discrimination case against the company with the U.S. Equal Employment Opportunity Commission (EEOC) under Title VII. The ruling was 8-0, with Kagan taking no part in the case. The court held, "If the facts Thompson alleges are true, his firing by NAS constituted unlawful retaliation."

The case serves to put more detail into the scope of the antidiscrimination law and the meaning of the term "person aggrieved." It also sends much the same message as Staub about the need for employers to carefully investigate and document adverse actions against employees.

The Sixth Circuit appeals court had rejected Thompson’s claim, ruling that Regaldo’s status as his fiancé was not a close enough relationship to trigger the law. Again writing for the majority, Scalia concluded that the language in the law prohibits an employer from actions that "well might have dissuaded a reasonable worker from making or supporting a charge of discrimination." In that context, the court concluded: "We think it obvious that a reasonable worker might be dissuaded from engaging in protected activity if she knew that her fiancé would be fired."

But the Thompson decision does not define what lawyers like to described as a "bright line" for determining what relationship triggers standing for a claim of employer retaliation. The court said that "firing a close family member will almost always meet [the test of the law], and inflicting a milder reprisal on a mere acquaintance will almost never do so, but beyond that we are reluctant to generalize. The significance of any given act of retaliation will often depend upon the particular circumstances."

In a commentary following the Thompson decision, William C. Martucci, Jennifer K. Oldvaer, and Alison Spinden of the Shook Hardy & Bacon law firm observed, "Although the court found that a person’s fiancé is a ‘person aggrieved’ within the meaning of Title VII, the new boundaries of the definition are unclear. . . . Given this lack of clarity, and the expansion that Thompson represents, the Thompson decision will likely result in increased retaliation claims, which were already at a historic high in 2010. In an effort to mitigate such a result, it is more important than ever for employers to thoroughly conduct workplace investigations and to be able to articulate sound business justifications for any adverse employment actions."

It didn’t take long for the Thompson case to make itself felt. Just over a month after the Supreme Court decision, the U.S. District Court for the Northern District of Florida cited Thompson in a case involving a married couple who worked for two different companies that had a business relationship. The husband worked for a contractor for a nursing home and the wife worked for the health care company. When she was fired, she alleged it was because of a disability and filed charges with the state employment protection agency and the federal EEOC. The husband then alleged that he came under pressure from his employer when her former employer asked that he be fired. He sued his employer and the nursing home. In allowing the case to go forward, Judge Richard Smoak cited Thompson, writing, "It is easy to conclude that a reasonable worker might be dissuaded from engaging in protected activity if she knew that her husband would be fired by his employer. See Thompson at 868."

To read U.S. Supreme Court decisions, access the court’s web site.

—Kennedy Maize is MANAGING POWER’s executive editor.