Supreme Court Rules That Employer Is Liable under USERRA for Discriminatory Acts of Supervisors if They Factually and Proximately Caused the Adverse Employment Action
By Glen Nager and Victoria Dorfman, Jones Day
The Uniformed Services Employment and Reemployment Rights Act (USERRA) provides that "[a] person who is a member of ... a uniformed service shall not be denied initial employment, reemployment, retention in employment, promotion, or any benefit of employment by an employer on the basis of that membership." 38 U.S.C. § 4311(a). USERRA further states that "[a]n employer shall be considered to have engaged in actions prohibited ... under subsection (a), if the person's membership ... is a motivating factor in the employer's action, unless the employer can prove that the action would have been taken in the absence of such membership." §4311(c). USERRA defines an "employer" as "any person, ... or other entity that pays salary or wages for work performed or that has control over employment opportunities, including - (i) a person, institution, organization, or other entity to whom the employer has delegated the performance of employment-related responsibilities ...." 38 U.S.C. § 4303(4).
Courts of Appeals had been divided over the proper standard for imposing liability on employers based on discriminatory intent of subordinate employees who influence but do not make the ultimate employment decision. That issue arose not only in USERRA context, but also under Title VII and other anti-discriminatory employment statutes. This issue first reached the Supreme Court in 2006 in BCI Coca-Cola v. EEOC, in the context of Title VII litigation. The National Chamber Litigation Center (NCLC), with Jones Day as co-counsel, filed an amicus brief in that case, but the case was dismissed. In Staub v. Proctor Hospital, No. 09-400, the Supreme Court reached and resolved this issue.
This suit was filed by Vincent Staub, who while employed at Proctor Hospital continued to serve in the United States Army Reserve. Both his immediate supervisor, Mulally, and Mulally's supervisor, Korenchuk, were hostile to his military service. Mulally issued Staub a disciplinary warning. After receiving a report from Korenchuk that Staub had violated the Corrective Action, Proctor's vice president of human resources, Buck, reviewed Staub's personnel file and fired him. Staub filed a formal grievance, contending that Mulally, hostile to his military obligations, had fabricated the allegation underlying the warning. Buck nevertheless stood by her decision. Staub filed a suit under USERRA, claiming as the basis for liability that Buck, herself without animus, was influenced by Mullaly's and Korenchuk's antimilitary animus. A jury found Proctor liable and awarded Staub damages. The Seventh Circuit reversed, holding that Proctor was entitled to judgment as a matter of law because the decisionmaker had relied on more than Mulally's and Korenchuk's advice in making her decision.
Earlier this week, in Staub v. Proctor Hospital, the Supreme Court held that if a supervisor performs an act motivated by antimilitary animus that is intended by the supervisor to cause an adverse employment action, and if that act is a proximate cause of the ultimate employment action, then the employer is liable under USERRA. This holding clarified the framework for evaluating discrimination claims hinging on animus of supervisors that were not themselves responsible for the ultimate adverse employment action.
The Supreme Court Decision
Writing for the Staub majority, Justice Scalia "start[ed] from the premise that when Congress creates a federal tort it adopts the background of general tort law." Slip Op. 5. The Court noted that intentional torts such as the one here "generally require that the actor intend 'the consequences' of an act,' not simply 'the act itself.'" Id. at 5. The Court held that "[s]o long as the agent intends, for discriminatory reasons, that the adverse action occur, he has the scienter required to be liable under USERRA." Id. at 7. The Court emphasized that "it is axiomatic under tort law that the exercise of judgment by the decisionmaker does not prevent the earlier agent's action (and hence the earlier agent's discriminatory animus) from being the proximate cause of the harm." Id. at 7.
The Court made it clear, however, that, in light of the background of tort law, to hold an employer liable the biased supervisor's action must be both the factual and proximate cause of the adverse employment action. Id. at 9 ("The requirement that be a causal factor of the ultimate employment action incorporates the traditional tort-law concept of proximate cause."). As the Court noted, proximate cause requires "some direct relation between the injury asserted and the injurious conduct alleged," and excludes those "link[s] that are too remote, purely contingent, or indirect." Id. at 7. The Court however held that an independent investigation, which Proctor claimed Buck engaged in before terminating Staub, does not automatically indicate lack of proximate cause. Rather, the Court explained, only "if the employer's investigation results in an adverse action for reasons unrelated to the supervisor's original biased action, then the employer will not be liable." Id. And the Court clarified that the burden is on the employer to make that showing. Id. The Court cautioned that "the supervisor's biased report may remain a causal factor if the independent investigation takes it into account without determining that the adverse action was, apart from the supervisor's recommendation, entirely justified." Id. at 9. The Court also "observe[d] that Staub took advantage of Proctor's grievance process," but "express[ed] no view as to whether Proctor would have an affirmative defense if he did not." Id.
Similarly, relying on background principles of agency, the Court limited its holding to the situations where "the supervisor acts within the scope of his employment, or when the supervisor acts outside the scope of his employment and liability would be imputed to the employer under traditional agency principles." Id. at 10 n.4 (citing Burlington Industries, Inc. v. Ellerth, 524 U. S. 742, 758 (1998)). The Court did not decide whether the employer would be liable for co-workers' discriminatory acts that influenced the ultimate decision-maker. Id.
In sum, the Court held "that if a supervisor performs an act motivated by antimilitary animus that is intendedby the supervisor to cause an adverse employment action, and if that act is a proximate cause of the ultimate employment action, then the employer is liable under USERRA." Id. at 10.
Applying the framework to the facts of this case, the Court held that the Seventh Circuit erred in holding that Proctor was entitled to judgment as a matter of law. "Both Mulally and Korenchuk acted within the scope of their employment when they took the actions that allegedly caused Buck to fire Staub." Id. at 11. The Court also observed that their actions were motivated by hostility toward Staub's military obligations, and that those actions were causal factors underlying Buck's decision. Finally, the Court noted that there was evidence that both Mulally and Korenchuk specifically intended to cause Staub's termination. The Court ordered the Seventh Circuit to consider in the first instance whether the variance between the jury instruction given at trial and the rule it adopted was harmless error or should mandate a new trial. Id. at 12.
In a concurring opinion, Justice Alito, joined by Justice Thomas, explained that he would have reversed the Seventh Circuit on the basis of the statutory text, not principles of agency and tort law. Slip Op. at 1. Justice Alito would have held that "motivating factor" means that petitioner, "in order to recover, was required to show that discrimination motivated that action," that is, the termination from employment. Id. at 2. Justice Alito would not impose liability "where the officer with formal decisionmaking responsibility ... undertakes a reasonable investigation and finds insufficient evidence to dispute the accuracy of that information." Id. Justice Alito believed that such an interpretation would encourage employers to establish internal grievance procedures. Id. at 3 (citing Burlington Industries, Inc. v. Ellerth, 524 U. S. 742 (1998), and Faragher v. Boca Raton, 524 U. S. 775 (1998)). Justice Alito warned that "[t]he Court's holding will impose liability unfairly on employers" who try "to comply with the law, and it may have the perverse effect of discouraging employers from hiring applicants who are members of the Reserves or the National Guard." Id. Justice Kagan did not participate in the case.
The Practical Effect
This case was of great interest and importance to employers because of the many antidiscrimination laws, containing provisions similar to USERRA, governing employment relationships. Although the Court reversed the Seventh Circuit, it nonetheless adopted, at least in part, the framework urged by NCLC: that consistent with common law principles of agency and causation, adjusted appropriately to reflect the policy concerns of the organic laws in issue, employers are liable only for discriminatory acts that actually and proximately cause an adverse employment action. To be sure, the Court did not accept the bright-line rule that the NCLC suggested - that where the actual employment decision is made by a non-biased actor guided by and adhering to reasonable anti-discrimination policies and procedures, proximate cause is lacking. The Court did observe, however, that "if the employer's investigation results in an adverse action for reasons unrelated to the supervisor's original biased action, then the employer will not be liable." It is also important to note that the Court did not validate Petitioner's attempts to establish a strict liability regime that would penalize employers for any discriminatory acts that arguably have a factual connection to an adverse employment action.
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Glen Nager and Victoria Dorfman, both of Jones Day, served as co-counsel with NCLC on the Chamber's amicus brief in this case. For further information, please contact Glen at (202) 879-5464 or Victoria at (212) 326-3410.
The National Chamber Litigation Center is the leading voice of business in the courts. For more information about this and other NCLC litigation, please contact Shane Kawka, (202) 463-5337, skawka@uschamber.com.
