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7th Circuit Holds That Cat’s Paw Theory Supports Individual Liability Under §1981

Smith v. Bray, No. 11-1935 (7th Cir. May 24, 2012): 7th Circuit Holds That Cat’s Paw Theory Supports Individual Liability Under §1981 Resulting in an Expansion of Individual Liability.

On May 24, 2012, the Seventh Circuit held that an individual employee with a retaliatory motive may be individually liable under § 1981 through the “cat’s paw” [1] theory for causing the employer to retaliate against an employee. Although individual employees may not be held liable for discrimination or retaliation under Title VII, they may be held personally liable under 42 U.S.C. § 1981-a federal statute that prohibits racial discrimination and retaliation in contractual relationships, including at-will employment. Prior to this decision, the court only recognized the “cat’s paw” theory of employer liability under Title VII, which permits a finding of employer liability where an employee, with discriminatory bias, provides information or input to the employer that may have influenced the adverse employment action.

In Smith v. Bray, Darrel Smith sued his former employer, human resources manager, and supervisor who allegedly engaged in making severe racial statements in the workplace. Smith sued the human resources manager, Denise Bray, claiming that Bray conspired with his former supervisor to retaliate against him for complaining about race harassment. Smith dropped the employer from the lawsuit after it filed bankruptcy and was discharged from its pre-filing debts. He settled his claim against his supervisor, leaving Bray as the only remaining defendant. Both parties filed motions for summary judgment. The district court granted Bray’s motion, and Smith appealed.

Smith claimed that Bray had retaliated against him for making complaints of racial harassment because she ignored his complaints, and persuaded her bosses, who were the final decision-makers, to fire him. The issue was whether the “cat’s paw” theory which the court had found supported liability against an employer based on the retaliatory motivated acts of a non-decision-maker also imposes liability on the non-decision-maker. The Seventh Circuit found that a subordinate employee acting with retaliatory motive may be held individually liable under Section 1981 for causing the employer to retaliate against another employee. In other words, Bray (the “monkey”) may be held personally liable for causing Smith to be fired.

The court, however, ultimately held that the evidence did not support a finding of liability against Bray. Although Bray provided information to the decision-makers, there was no evidence showing that Bray had a retaliatory intent. To show liability, there needs to be an improper motivation.

The Seventh Circuit’s holding opens the door for employees to bring discrimination and retaliation claims against not only the employer but the human resources personnel as well. Decision-makers will be wise to ensure that they receive non-biased information before taking adverse action against an employee. A thorough, objective and well documented investigation should provide all defendants reasonable support that the adverse employment action was based on legitimate non-discriminatory or retaliatory reasons opposed to unlawful retaliation or discrimination.

[1] The “cat’s paw” theory derives its name from a fable in which a monkey convinces a cat to pull chestnuts out of a hot fire. While the cat burns its paws, the monkey gobbles up the chestnuts leaving none for the cat.

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