Rarely has the maxim “hard cases make bad law” found greater application than in the Second Circuit Court of Appeals’ recent decision to expand the “cat’s paw” doctrine adopted by the Supreme Court of the United States in 2011. Under the cat’s paw doctrine, an employer may be liable for discrimination or retaliation if it is unwittingly manipulated into taking an adverse employment action against an employee by a coworker with a discriminatory or retaliatory motive. Vasquez v. Empress Ambulance Service, Inc., 15-3239-cv (Aug. 29, 2016). In a case involving a motion to dismiss under Rule 12(b)(6) of the Federal Rules of Civil Procedure, which requires the court to take all complaint allegations as true, the Vasquez court created a substantial new investigative obligation for employers based on nightmarish—but untested—factual allegations involving an ostensibly villainous employer. The employer, Empress Ambulance, allegedly had allowed a victim of sexual harassment to be framed by her tormentor, resulting in the victim’s discharge.
The plaintiff, Andrea Vasquez, alleged that she had received obscene photos and text messages from a nonmanagement coworker, Tyrell Gray, seeking to harass her into a sexual relationship. Vasquez claimed that when Gray learned she intended to report his behavior to management, Gray retaliated by (a) doctoring text exchanges to make it appear that Vasquez had willingly participated in a romantic relationship with him and (b) providing the doctored text messages to management, along with a “racy” photo, which Gray claimed Vasquez had sent him. As a result, Vasquez’s harassment complaint to management appeared at first blush to be a false claim based on a consensual sexual relationship, and Empress terminated her employment.
According to Vasquez’s complaint, management not only refused to check Vasquez’s phone texts against Gray’s printed text messages, but also accepted that the photo Gray claimed was of Vasquez was in fact Vasquez, even though the person in the photo was not identifiable as Vasquez. As a result, according to Vasquez, Empress allowed itself to be used as a “cat’s paw” to achieve Gray’s retaliatory intent against Vasquez.
The Second Circuit’s Decision
The Second Circuit ruled that, accepting Vasquez’s allegations as true, Vasquez could pursue a claim that Empress had unlawfully retaliated against her in violation of Title VII of the Civil Rights Act of 1964 by terminating her employment because she had raised a complaint of sexual harassment. In so doing, the Second Circuit answered a question left open by the Supreme Court when it adopted the cat’s paw theory. In Staub v. Proctor Hospital (2011), the Court ruled that employers may be liable for unlawful discrimination when they discharge an employee based on manipulation by a manager who has a discriminatory motive, even if the decision-makers were unbiased.
According to the Second Circuit, “general principles of agency law” support the extension of the cat’s paw doctrine espoused in Staub to nonmanagerial coworkers of the target of the cat’s paw scheme. While Vasquez is a retaliation case, its logic requires application of the doctrine in ordinary discrimination cases – for example, if an employer discharges a minority employee for timecard fraud without knowing that the employee was framed by a coworker based on racial animosity.
Misplaced Reliance on Ellerth?
To extend cat’s paw liability to the actions of nonmanagerial employees, the Vasquez court relied on the Supreme Court’s decision in Burlington Indus., Inc. v. Ellerth (1998). In Ellerth, the Supreme Court relied on agency principles to relieve an employer of monetary responsibility for harassment by nonmanager employees when the employer could prove it had not behaved negligently by failing to protect the harassment victim under the employer’s harassment policy. In Ellerth, and in Vasquez as well, such failures would generally take the form of failing to factor in additional information about which the employer knew or should have known.
The court’s reliance on the Ellerth framework is arguably flawed. The Ellerth doctrine did not involve an extension of new liability. Prior to Ellerth, it was already widely known that an employer was legally responsible for the actions of a nonmanagerial employee in creating an unlawfully abusive environment for a victim of sexual harassment. Ellerth merely confirmed that an employer was not automatically liable in such circumstances, creating a method for an employer to avoid liability if it has affirmatively provided and enforced a policy to protect employees from sexual harassment by coworkers. In other words, Ellerth protects an employer from liability when it can demonstrate it acted in a prudent and reasonable manner.
In contrast, Vasquez creates liability where before there was none. For decades, employment discrimination and retaliation plaintiffs have had an obligation to demonstrate an unlawful intent on the part of their employers. In adopting a negligence standard for such claims, the Second Circuit has changed the meaning of the entire framework of employment discrimination laws, opening the door for a brand new source of discrimination claims: managers who fail to affirmatively investigate whether discriminatory conduct is occurring in the workplace. The natural consequence of Vasquez is to ask what an employer’s obligations are in questioning coworkers and/or assessing the validity of documentation.
Possible Consequences of Vasquez
Vasquez is all the more worrisome, then, because it provides no guidance about how far an employer’s investigative duty goes. While most employers wisely avoid rash disciplinary decisions and require a deliberative consideration of the circumstances of disciplinary action, employers still want to know how much evaluation is legally required. In the circumstances of Vasquez itself, had the employer accepted Vasquez’s request to examine her phone in addition to Gray’s phone, the employer would either have been confronted with a credibility contest between the two employees or a forensic examination of both phones to attempt to resolve that contest. If the results of an investigation turn entirely on a credibility determination, can an employer ever be safe from a claim that its decision was the result of malevolent manipulation by a biased coworker?
Vasquez is not limited to discharges; any adverse decision by an employer is arguably subject to this type of second-guessing. When an employee does not get a promotion or a raise, or when an employee receives an unfavorable performance review, the question must follow: Did a nonmanagerial coworker play a role in the decision, and if so, is the employer confident that person did not have a discriminatory or retaliatory motive that might subject the employer to a legal challenge?
As a practical matter, Vasquez puts employers in the position of (1) conducting at least a moderate inquiry into any significant adverse action against an employee, and (2) seriously considering any evidence offered by the employee that the action resulted from a discriminatory or retaliatory motive. Employers may want to begin by asking the following questions in their investigations:
- Which coworkers of the employee were involved in reaching the decision?
- Is there any indication that anyone involved in the decision harbored animosity toward the employee?
- Has the employee offered any credible evidence that the decision was based on an unfair motive or on false or erroneous factual conclusions?
- Is it possible that such false or erroneous conclusions stem from a discriminatory or retaliatory motive relating to the employee’s membership in a protected class under the law?
In addition to asking these questions, employers may want to carefully document the investigative steps they have taken. Such documentation may become critical evidence that later demonstrates that the employer acted prudently and reasonably in relying on coworkers to establish the basis for an adverse employment action.