On August 29, 2016, the U.S. Court of Appeals for the Second Circuit issued Vasquez v. Empress Ambulance Service, Inc., — F.3d —, No. 15-3239-CV, 2016 WL 4501673 (2d Cir. Aug. 29, 2016), holding that an employer may be held liable for a low-level employee’s animus under the cat’s paw theory of liability if the employer’s own negligence allows that animus to result in adverse employment action against another employee.

Andrea Vasquez worked as an emergency medical technician for Empress Ambulance Service, Inc. (“Empress”). From July of 2013, to January of 2014, she was subjected to unwanted “romantic overtures” by Tyrell Gray, a dispatcher employed by Empress. Ms. Vasquez rejected Mr. Gray’s advances. One night, in January of 2014, while both were on duty, Mr. Gray sent Ms. Vasquez a picture of his genitalia via text message. Ms. Vasquez informed Empress’s field supervisor about Mr. Gray’s conduct, and the supervisor instructed her to file a formal complaint, which she did. She then met with another Empress supervisor and a member of Empress’s human resources department, Elizabeth Shepard. They thanked Ms. Vasquez for filing the complaint and told her Empress would not tolerate Mr. Gray’s actions. Ms. Vasquez offered to show them the photo Mr. Gray had sent, but they declined to view the image. Mr. Gray, meanwhile, began fabricating a text-message conversation in an attempt to persuade Empress’s management that he and Ms. Vasquez had been engaged in a consensual sexual relationship. He took screen shots of text messages from someone with whom he had been sexting, printed the screen shots, and presented them to management as messages between himself and Ms. Vasquez.

Later that same day, Ms. Vasquez met with her union representative, Empress’s owner, and Ms. Shepard to discuss the incident. At the meeting, Ms. Vasquez was informed that management had seen and considered Mr. Gray’s printouts and concluded that she and Mr. Gray were “having an inappropriate sexual relationship.” Management told Ms. Vasquez that they “knew the truth,” and that Mr. Gray had shown them a “racy self-taken photo” that she had sent to Mr. Gray. Management said they knew it was Ms. Vasquez in the photo, despite the fact that only a fraction of the person’s face was visible. Ms. Vasquez vehemently denied all of the allegations and insisted that Mr. Gray was lying. Nonetheless, Ms. Vasquez was terminated for engaging in sexual harassment. Mr. Gray was terminated for sending sexually explicit text messages.

Ms. Vasquez sued Empress under Title VII and analogous New York Law, alleging Empress terminated her in retaliation for complaining about sexual harassment. Empress moved to dismiss for failure to state a claim. The district court granted the motion, concluding that, although Ms. Vasquez had sufficiently alleged facts from which a retaliatory intent could be inferred, Mr. Gray’s retaliatory intent could not be imputed to Empress under the cat’s paw theory in part because he did not occupy a “position of confidence within Empress” nor did he play a “meaningful role” in Empress’s decision to terminate Ms. Vasquez. Vasquez v. Empress Ambulance Serv., Inc., No. 14 Civ. 8387, at *11, *17–19 (S.D.N.Y. Aug. 26, 2015). The Second Circuit reversed and, for the first time, explicitly endorsed the cat’s paw theory of liability for retaliation under Title VII. Empress, 2016 WL 4501673, at *11 (“[W]e now hold that the ‘cat’s paw’ theory may be used to support recovery for claims of retaliation in violation of Title VII.”).

Employers know well that courts for years have been applying the cat’s paw theory in retaliation cases. Courts have allowed plaintiffs to proceed under the theory, however, only when the adverse action on the part of the employer is based on the retaliatory animus of an employee’s supervisor or a decision-maker, not when the adverse action is based on a low-level employee or co-worker’s animus. Indeed, as the Court in Empress notes, the Supreme Court in Staub v. Proctor Hospital, “‘express[ed] no view as to whether the employer would be liable if a co-worker, rather than a supervisor, committed a discriminatory act that influenced the ultimate employment decision.’” Id. (alteration in original) (emphasis added) (quoting Staub, 562 U.S. at 422). Thus, the Second Circuit had to “determine in the first instance under what circumstances the ‘cat’s paw’ approach will render an employer responsible for the animus of a low-level employee who works alongside the victim.” Id.

Relying in large part on “general principles of agency law,” the Court held that “an employer may be held liable for an employee’s animus under a ‘cat’s paw’ theory, regardless of the employee’s role within the organization, if the employer’s own negligence gives effect to the employee’s animus and causes the victim to suffer an adverse employment action.” Id. at *8. Stated differently, “when an employer in effect adopts an employee’s unlawful animus by acting negligently with respect to the information provided by the employee, and thereby affords that biased employee an outsize role in its own employment decision, [ ] the employee’s motivation [can] be imputed to the employer and used to support a claim under Title VII.” Id. at *7 (emphasis in original).

How was Empress negligent? According to the Court, Empress bought Mr. Gray’s story hook, line, and sinker—“to the exclusion of all other evidence”—and refused to consider contrary evidence offered by Ms. Vasquez. Id. at *6. By not conducting a “reasonable investigation” Empress “caused [Mr.] Gray’s accusations to form the sole basis for Empress’s decision to terminate [Ms.] Vasquez.” Id. (emphasis added). “Thus, as a result of Empress’s negligence, [Mr.] Gray achieved a ‘meaningful,’ and indeed decisive, role in [Ms.] Vazquez’s termination.” Id. In short, Mr. Gray “became the entire case against [Ms.] Vasquez.” Id.

The Court stressed that its holding should not be read to imply that employers may be held liable under the cat’s paw theory “simply because [the employer] acts on information provided by a biased co-worker.” Id. The central focus has been and will continue to be “what motivated the employer” rather than whether the allegations against the plaintiff are true. Id. (internal quotation marks and citation omitted). “Thus, an employer who, non-negligently and in good faith, relies on a false . . . report of an employee who acted out of unlawful animus cannot, under this ‘cat’s paw’ theory, be held accountable for or said to have been ‘motivated’ by the employee’s animus.” Id.

The take away from Empress is straightforward: negligence is the touchstone. Employers must conduct a reasonable investigation into accusations of employee misconduct, and employers should refrain from taking adverse action against an employee without considering both sides of the story. These practices must be adhered to irrespective of the accusers role or position in the company. Finally, although Empress only controls courts in Connecticut, New York, and Vermont, the First Circuit has similarly held that an employer may be held liable under Title VII where it “acts negligently by allowing [a] co-worker’s acts to achieve their desired effect though [the employer] knows (or reasonably should know) of the discriminatory motivation.” Velazquez-Perez v. Developers Diversified Realty Corp., 753 F.3d 265, 274 (1st Cir. 2014). Decisions by the First Circuit are binding in Maine, Massachusetts, New Hampshire, Puerto Rico, and Rhode Island.