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Seventh Circuit Decides "Cat's Paw" Legal Theory Can Create Liability for Non-Decision Makers of Company Under Discrimination Law!

July 2012

By: Nancy E. Joerg, Esq.

On May 24, 2012, the U.S. Court of Appeals for the Seventh Circuit decided in Smith v. Bray [No. 11-1935 (7 th Cir. May 24, 2012)] - for the very first time - that an employee who does not directly make the actual decision to fire another employee, but who influences that firing decision on the basis of illegal and discriminatory bias, may still be held individually liable under 42 U.S.C. § 1981, pursuant to the "cat's paw" legal theory.

BACKGROUND OF THE CAT'S PAW LEGAL THEORY: The "cat's paw" legal theory derives its name from the fanciful 17 th century fable in which a clever monkey manipulated an unsuspecting cat, by flattery, into unwisely grabbing roasting chestnuts from a fire. The poor victimized cat burned its paws while the triumphant monkey dined on the delicious chestnuts and never got burned.

In the employment law setting, the cat's paw legal theory of liability has been used to refer to the situation in which an employer is held liable for discrimination when the employer relies on a subordinate's biased report and then takes an adverse employment action against another employee (based on the subordinate's bias).

SMITH'S TERMINATION: In Smith v. Bray, the Plaintiff (Darrel Smith) worked as a process technician at a company in Morris, Illinois. Smith, a Black employee, complained to the company's Human Resource Department that his White supervisor and some of his White co-workers frequently made racist statements in the workplace. The company did not discipline any of the alleged racists for the remarks. Eventually, the Plant Manager fired Smith (claiming that he was fired for his unauthorized absences from work - not because he made complaints of racism to the Human Resource Department). Smith brought a discrimination lawsuit under the cat's paw theory against the company, the White supervisor, and the company's Human Resource Manager (Denise Bray).

SMITH ARGUED THAT HR MANAGER SHOULD BE HELD LIABLE FOR HIS DISCHARGE:Smith argued that Denise Bray should be held liable for Smith's discharge pursuant to the cat's paw theory. According to Smith, Bray (the tricky monkey in this case), although not the final decision-maker with regard to Smith's termination, had retaliated against Smith for his complaints of harassment. Furthermore, Smith argued that Bray had persuaded her bosses, who were the final decision-makers, to terminate Smith.

CAT'S PAW THEORY ALSO APPLIES TO NON-DECISION MAKER: In favor of Bray as a Defendant, the Northern District Court of Illinois found against Smith's claim because Bray did not actually participate in the termination of Smith. However, on appeal, the U.S. Court of Appeals for the Seventh Circuit carefully explained that Smith's claim failed at the Northern District Court below only because of lack of evidence of a retaliatory motive by Bray (and not because the cat's paw theory would not apply to a non-decision maker). The court noted that there is no reason why the cat (employer) should get burned but not the malicious monkey (i.e. Bray).

Smith presented sufficient evidence that Bray (the monkey) influenced the company (the cat) to fire Smith. Ultimately, Smith's claim failed because there was, according to the Seventh Circuit Court of Appeals, no admissible evidence to establish that Bray had racial animus or retaliatory motive.

SIGNIFICANT EXPANSION OF INDIVIDUAL LIABILITY FOR EMPLOYEES: The Smith v. Bray decision substantially expands the list of potential defendants to those employees who participate in adverse employment action and act with a discriminatory or retaliatory motive. Lawsuits under Section 1981 (a federal discrimination law) allow for individual liability and they carry a relatively long four year statute of limitations. Additionally, Section 1981 allows for uncapped damage awards and does not require that a plaintiff exhaust his/her administrative remedies before filing a lawsuit in court.

EMPLOYERS NEED DOCUMENTATION TO SHOW TERMINATIONS ARE SUPPORTED BY LEGITIMAE BUSINESS REASONS: Companies may now find their human resources department officials and supervisors dragged into lawsuits even if such employees have no authority to fire the plaintiff. The Smith v. Bray decision underlines the need for companies to conduct thorough investigations before firing employees, being careful to document that any terminations are supported by legitimate business reasons. Those reasons should be spelled out in detail (not just some vague and meaningless clichés).

Questions or concerns? Call Attorney Nancy E. Joerg of Wessels Sherman's St. Charles, Illinois office: 630-377-1554 or email her at najoerg@wesselssherman.com.