In a case of first impression, the Seventh Circuit U.S. Court of Appeals has determined that an individual who recommended termination, but did not make the termination decision, may be held personally liable under 42 U.S.C. ý 1981 under a "cat's paw" theory of liability. Smith v. Bray, No. 1:09-cv-3615 (7th Cir., May 24, 2012). Section 1981 prohibits racial discrimination in the making, performance, and termination of contracts, including at-will employment, and has historically been used to pursue individual liability against decisionmakers. Now, race discrimination plaintiffs in the Seventh Circuit have an additional basis under Section 1981 to sue managers, human resources professionals and other individuals who may not have been the actual decisionmakers, but who participated in the decision making process.
Darryl Smith was a technician for Equistar Chemicals, LP. He alleges that he endured egregious racial discrimination and harassment by his supervisor, James Bianchetta, and complained about it to the human resources manager, Denise Bray. Eventually, Smith went on short-term disability for work-related stress. His request for an extension of disability was denied by the third-party carrier based on insufficient information from Smith's doctor. When Smith did not return to work thereafter, the plant manager, Richard Pergason, instructed Bray to seek permission from corporate headquarters to terminate Smith. Smith was terminated on August 4, 2006 for being absent without leave since June 21, 2006 in violation of company policy.
Smith sued Equistar, Bianchetta, and Bray alleging race discrimination and retaliation in violation of Section 1981. Equistar went into bankruptcy, precluding Smith's suit against it; Smith proceeded against Bray and Bianchetta. Bianchetta settled with Smith and was dismissed from the lawsuit. Bray was granted summary judgment. Smith appealed Bray's dismissal to the Seventh Circuit, claiming that there was sufficient evidence that Bray caused his termination in retaliation for his complaints of race discrimination.
The Seventh Circuit first held that an individual can be sued personally under Section 1981 under a "cat's paw" theory of liability, whereby a subordinate with discriminatory motive intentionally causes an unknowing superior to take adverse action against an employee for a discriminatory or retaliatory reason. (The theory derives from a fable wherein a manipulative monkey convinces a gullible cat to pull chestnuts out of a hot fire, burning the cat's paw in the process while the monkey gobbles up all the chestnuts.) Thus, "cat's paw" permits a finding of liability against an individual with discriminatory or retaliatory motive who did not make the adverse employment decision, but who provided input or a recommendation to the decisionmaker who did.
Although Bray did not have authority to terminate Smith, she spoke with Pergason about Smith a number of times in the time period preceding Smith's termination and prepared the termination report for Pergason. She also regularly participated in discipline decisions. The court determined that there was sufficient evidence to determine that Bray participated in the termination decision, and could be liable as the "malicious monkey" under the cat's paw theory. However, the court found insufficient evidence that Bray acted with retaliatory motive and affirmed the district court's granting of summary judgment for Bray. Bray's day-to-day responsibilities as human resources manager necessarily involved her in many aspects of Smith's employment. Smith's allegations that Bray rebuffed his attempts to speak with her, did not investigate his complaints, and that his termination closely followed his complaints, were not enough to create a genuine issue of material fact as to whether Bray's personal motives were retaliatory.
While this case may give even veteran managers and human resources professionals pause, personal liability is not new either under Section 1981 or many state and local statutes. The emergence of a new avenue for plaintiffs to pursue individual liability under a cat's paw theory, even against non-decisionmakers, serves as a reminder that human resources should not be "rubber-stamping" termination and discipline decisions. Meticulous documentation, following protocol, prompt and thorough investigations based on objective findings, and other cornerstones of good management and HR practices are critically important now more than ever.© 2013 Schiff Hardin LLP