High Court Ruling Creates New Liability for Employers

March 2, 2011 (PLANSPONSOR.com) – The U.S. Supreme Court has overturned an appellate court decision that an army reservist’s firing was not discriminatory.

At issue in the case was whether the termination of Vincent E. Staub by Proctor Hospital resulted from bias of managers other than the one that made the firing decision, in violation of the Uniformed Services Employment and Reemployment Rights Act (see High Court Mulls Taking USERRA Appeal).   

The high court said Proctor erred in contending that an employer is not liable unless the de facto decision-maker is motivated by discriminatory animus. “So long as the earlier agent intended, for discriminatory reasons, that the adverse action occur, he has the scienter required for USERRA liability. Moreover, it is axiomatic under tort law that the decision-maker’s exercise of judgment does not prevent the earlier agent’s action from being the proximate cause of the harm,” the justices wrote.  

The court also concluded that Proctor also erred in arguing that a decision-maker’s independent investigation, and rejection, of an employee’s discriminatory animus allegations should negate the effect of the prior discrimination.    

According to the National Law Journal, in Staub v. Proctor Hospital, Staub, an angiography technician at the hospital, was a member of the U.S. Army Reserve. His reserve duties required him to attend drill one weekend per month and to train full time for two to three weeks per year. His immediate supervisor and her supervisor were hostile to Staub’s military obligations. The news report said they made that hostility known to him and co-workers through comments, by scheduling Staub for additional shifts without notice, and filing false disciplinary warnings in his file.

In 2004, Proctor’s vice president for human relations, relying on an accusation by Staub’s supervisor and after reviewing his personnel report, fired him. Staub sued under USERRA, charging that his firing was motivated by hostility to his reservist obligations.

A jury agreed with Staub and awarded him $57,640 in damages. However, according to the National Law Journal, the 7th U.S. Circuit Court of Appeals reversed, ruling that the case could not succeed unless the non-decision-maker — Staub’s supervisors — exercised “singular influence” over the actual decision-maker, such that the decision to fire him was the product of “blind reliance.” Because the hospital vice president was not wholly dependent on Staub’s supervisors’ advice, the appellate court held the hospital was not liable. 

In its opinion, the Supreme Court said the 7th Circuit erred in holding that Proctor was entitled to judgment as a matter of law. Both Staub’s supervisor and her supervisor acted within the scope of their employment when they took the actions that allegedly caused the HR manager to fire Staub.  

The court said there was also evidence that their actions were motivated by hostility toward Staub’s military obligations, and that those actions were causal factors underlying the HR manager’s decision. Finally, there was evidence that both Mulally and Korenchuk had the specific intent to cause Staub’s termination.   

The 7th Circuit is to consider in the first instance whether the variance between the jury instruction given at trial and the rule adopted here was harmless error or should mandate a new trial.

The Supreme Court opinion is here.