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Cautionary Signs for Employers: Recent Supreme Court Decisions

Written By: Leslie A. Allen and Abbott Marie Jones*

Christian & Small, LLP

Birmingham, AL

Though it is relatively early in the Term, already the United States Supreme Court has issued two significant employment decisions that signal potentially expanding pitfalls of liability for employers. In January, the Court expanded the scope of persons entitled to protection from retaliation under Title VII1. Thompson v. N. Am. Stainless, LP, 113 S. Ct. 863 (Jan. 24, 2011). In March, the Court expanded the scope of persons whose discriminatory actions and conduct can create liability for employers under the “cat’s paw” theory. Staub v. Proctor Hospital, Case No. 09-400, 2011 WL 691244 (U.S. March 1, 2011). The Court was unanimous in the outcomes of both cases2. Just how far the impact of these new pitfalls will extend remains to be seen in subsequent cases.

I.   Thompson – Potential Liability for Retaliation by Association

Thompson v. North American involved Title VII’s anti-retaliation provision, which provides that “[i]t shall be an unlawful employment practice for an employer to discriminate against any of his employees . . . because he has made a charge” under Title VII. 42 U.S.C. § 2000e-3(a). The employer in that case, North American Stainless, LP (“NAS”) terminated Eric Thompson three weeks after it received notice that Thompson’s fiancée, also an employee of NAS, filed a charge of sex discrimination with the Equal Employment Opportunity Commission (the “EEOC”). After his termination, Thompson filed his own EEOC charge and subsequently sued NAS, alleging that NAS violated the antiretaliation provision of Title VII by terminating him three weeks after learning that his fiancée had filed an EEOC charge. NAS contended that it terminated him for performance reasons.

The Eastern District of Kentucky granted summary judgment to NAS after determining that Title VII did not permit third party retaliation claims. Sitting en banc, the Sixth Circuit affirmed, reasoning that, because Thompson did not engage in any statutorily protected activity, either on his own or on behalf of his fiancée, he was not among “the class of persons for whom Congress created a retaliation cause of action.” Thompson, 113 S. Ct. at 867. The Supreme Court granted certiorari and considered two questions, both of which it answered in the affirmative: First, did NAS’s firing of Thompson constitute unlawful discrimination? Second, if it did, does Title VII grant Thompson a cause of action?

With regard to the first issue, the Court had “little difficulty concluding that, if the facts alleged by Thompson are true, then NAS’s firing of Thompson violated Title VII.” Id. (citing Burlington N. & S.F.R. Co. v. White, 548 U.S. 53 (2006)).

Readily finding that Thompson had alleged unlawful retaliation, the Court found the second issue of standing to be “[t]he more difficult question” in the case. Id. at 869. In determining whether Thompson was entitled to sue NAS for its alleged violation of Title VII, the Court reasoned that Title VII standing was more narrow than the standing provision in Article III of the U.S. Constitution but broader than the position advocated by NAS, limited to only the employee who engaged in the protected activity. Id. at 869-870. Accordingly, the Court adopted a “zone of interests” standard, which confers standing to those who fall within the zone of interests sought to be protected by the statutory provision at issue. Id. at 870 (citing Lujan v. Nat’l Wildlife Fed’n, 497 U.S. 871 (1990)).

Applying that test, the Court held that Thompson fell within the zone of interests protected by Title VII and, therefore, had standing to sue. He was an employee of NAS, and Title VII’s purpose is to protect employees from the unlawful actions of their employers. Moreover, Thompson was not an “accidental victim” of the retaliation because hurting him was actually the unlawful act by which NAS punished his fiancée. Thompson, 131 S. Ct. at 870. In short, Thompson was afforded Title VII’s anti-retaliation protections because of his close and well known association with the employee whom NAS sought to punish for filing an EEOC charge, not because of any protected activity in which he actually engaged.

II.  Staub – Potential Liability for Discrimination by Non-Decision Makers who Influence Employment Decisions

This case involves the Uniformed Services Employment and Reemployment Act (“USERRA”), which makes it unlawful to discriminate against an employee because of his membership in the military or his performance of military duties, if the military service is “a motivating factor in the employer’s action.” See 38 U.S.C. § § 4311 (a), (c). Although at first glance, the case seemingly has limited application, USERRA is actually very similar to Title VII, which prohibits employment discrimination on the basis of race, color, religion, sex or national origin, where any one of those factors “was a motivating factor for any employment practice, even though other factors also motivated the practice.” 42 U.S.C. §§ 2000e-2(a), (m). Thus, Staub likely will have a broader impact on employment discrimination cases decided under federal laws with similar language, not only on USERRA cases alone.

Vincent Staub, a member of the U.S. Army Reserve, worked as an angiography technician with Proctor Hospital until he was terminated in 2004. During his employment, his supervisors were openly hostile to his military obligations and indicated to Staub’s co-workers their desire to “get rid of him.” Staub, 2011 WL 691244, at *2.

In January 2004, one of Staub’s supervisors gave him a “Corrective Action” disciplinary warning, which the evidence indicated was motivated by discriminatory animus. A few months later, the supervisor reported to the Hospital’s vice president of human resources that Staub had violated the directive by leaving his desk without informing a supervisor. Relying in part on the supervisors report and in part on his own review of Staub’s personnel file, the vice president of human resources decided to fire Staub.

Staub unsuccessfully challenged his firing through the Hospital’s grievance process and ultimately sued the Hospital under USERRA, claiming that his discharge was motivated by hostility to his obligations as a military reservist. The jury agreed and awarded Staub damages. The Seventh Circuit reversed, holding that the Hospital was entitled to judgment as a matter of law because the decision maker had relied on more than the report of the supervisor in making her decision. The Supreme Court granted certiorari to consider whether an employer may be liable for employment discrimination based on the discriminatory animus of a supervisor who influenced, but did not make, the ultimate employment decision. Id. Prior to Staub, the circuits had been applying different standards when considering so-called “cat’s paw” cases.

Reversing the Seventh Circuit, the Supreme Court upheld the “cat’s paw” theory of liability but clarified the circumstances when it is properly imposed: “if a supervisor performs an act motivated by antimilitary animus that is intended by the supervisor to cause an adverse employment action, and if that act is a proximate cause of the ultimate employment action, then the employer is liable under USERRA.” Id. at *6 (emphasis in original).

Notwithstanding the Court’s resolution of the issue of the “cat’s paw” theory of liability, a number of questions remain after Staub. First, the Court remanded the case for the Seventh Circuit to determine whether the difference between the Court’s standard for liability and the jury instruction, which only required a finding that military status was a motivating factor in the discharge decision, was harmless error or mandated a new trial. Additionally, the Court specifically left open the question of whether “cat’s paw” liability could be imposed if a co-worker, rather than a supervisor, committed the discriminatory act that influenced the ultimate employment decision. What is now clear after Staub is that, if a supervisor has unlawful bias against an employee and intentionally influences an employment decision, the employer can be held liable, even if someone else within the organization carried out the decision; the bias does not have to be held by the one with the ultimate decision-making authority.

CONCLUSION

Truly understanding the impact of these decisions will be a challenging task left for courts and juries in future cases, as they test the limits of these holdings in different facts and circumstances. Without question, however, these decisions at a minimum raise issues that employers and those advising employers should consider carefully when making employment decisions.


1Title VII is an anti-discrimination statute that prohibits discrimination on the basis of race, color, religion, sex and national origin with respect to compensation, terms, conditions or privileges of employment and also discriminatory practices that would deprive any individual of employment opportunities or otherwise adversely affect his status as an employee. See 42 U.S.C. § 2000e-2(a).
2In Staub, two justices agreed with the result but concurred in the judgment based on different reasoning than relied on in the opinion. Staub, 2011 WL 691244, at *7.

*Leslie and Abbott are attorneys with Christian & Small LLP in Birmingham, Alabama. Leslie is a member of the business and commercial litigation, health care, and labor and employment practice groups. Abbott is a member of the appellate, post-verdict, and briefing practice group.

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