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Is an employer shielded from liability for firing an employee on racially discriminatory grounds if the person who made the termination decision did not know the race of the employee? Not necessarily, says the Tenth Circuit Court of Appeals (which covers Utah). In the following case, the court concluded that an employer can be liable if it fired the employee based on recommendations or misinformation provided by a racially-biased subordinate.
Bottling Company’s Frustration with Employee’s Insubordination Bubbles Over
Stephen Peters, an African-American, worked as a merchandiser for over six year for BCI Coca-Cola Bottling Company (“BCI”) at its Albuquerque, New Mexico facility. As the most senior merchandiser in the district, Peters had the most desirable schedule, with Saturdays and Sundays off and was generally regarded as a “good merchandiser.”
The relationship between Peters and BCI began to fizz on a Friday in September of 2001 when Cesar Grado, BCI’s district sales manager, desperately sought an extra merchandiser to work on Sunday. Grado asked Jeff Katt, Peters’ supervisor, to direct Peters to work on Sunday. However, when Katts told Peters he had to work on Sunday, Peters told Katt that he had plans and couldn’t do it. Allegedly, he also told Katt that he might call in sick.
Frustrated, Grado sought the advice of Pat Edgar in the human resource department in Phoenix who told him that under BCI policy an employee may not call in sick two days in advance and if Peters refused a direct order to work on Sunday, he could be fired for insubordination. Thereafter, Grado talked with Peters over the phone and again ordered him to come to work on Sunday. Peters responded that he had prior plans but refused to disclose what they were and allegedly yelled at Grado. Grado warned him that if he didn’t come to work on Sunday as directed he could be fired. Peters ended the conversation by telling Grado, “[D]o what [you] got to do and I’ll do what I got to do.” Grado then telephoned Edgar to tell her what had transpired. Edgar told Grado that Peters’ defiant conduct amounted to insubordination, but did not make the decision to fire Peters that day.
On Saturday evening, Peters canceled his plans for the next day and went to an urgent care clinic. The doctor diagnosed him with a sinus infection, gave him a prescription, and directed him not to work until Monday. Peters then telephoned Katt and told him that was he sick and couldn’t come in on Sunday. Although Katt paged Grado to tell him that Peters had called in sick, Grado didn’t respond.
On Monday, Edgar held a series of telephone calls with Grado and Sherry Pederson, another HR official in the Albuquerque office to discuss Peters’ conduct. Pederson pulled Peters file and found a disciplinary status notice describing a similar situation where Peters had refused an order to work on his day off. The file did not show, however, that the reason Peters had not worked that day was because he was attending the funeral of his fiancee’s son who had been killed in a car accident.
Edgar, who did not know that Peters was black, decided to fire him based on his conduct on Friday and his apparent track record of insubordination. Although Peters protested when he was fired Tuesday morning that he had called in sick and was directed by his physician not to work, he was dismissed nonetheless.
EEOC’s Case “Fizzles” in District Court
The EEOC filed a race discrimination claim on Peters’ behalf against BCI in federal court on the theory that, even if Edgar was the sole decisionmaker and didn’t know that Peters was black, BCI could be held liable because Grado was biased against blacks and was substantially involved in the firing process. The EEOC presented affidavits from several employees recalling racial comments Grado had made and citing specific examples of incidents in which Grado, who is Hispanic, subjected black employees to greater scrutiny and more serious discipline than Hispanic employees. The EEOC also compared Peters’ case to a similar situation where Grado ordered a Hispanic employee to work on her day off. When she refused and didn’t come in because she celebrated her birthday that day, she wasn’t disciplined at all.
The district court dismissed the case without a trial. It determined that, although the EEOC had raised an issue of fact as to whether Grado was biased against African-Americans, Grado had never officially recommended that Peters be fired and Edgar, who ultimately made the decision, had no knowledge of Peters’ race. The EEOC appealed the case to the Tenth Circuit of the U.S. Court of Appeals.
Bottling Metaphors: The Cat’s Paw and the Rubber Stamp
The Tenth Circuit overturned the decision of the district court and, for the first time, officially endorsed theories of liability based on subordinate bias. The Tenth Circuit noted that other circuit courts have held employers liable for terminating an employee based on the racial bias of an employee with no authority to make personnel decisions using one of two theories with metaphorical names.
The “cat’s paw” doctrine derives its name from a fable, made famous by La Fontaine, in which a monkey convinces an unwitting cat to pull chestnuts from a hot fire. As the cat scalds its paws removing the sizzling chestnuts from the fire, the monkey eats them all up, leaving none for the cat. In an employment discrimination context, “cat’s paw” refers to a situation in which a biased subordinate, who lacks decisionmaking power, uses the formal decisionmaker as a dupe in a deliberate scheme to trigger a discriminatory employment action.
The “rubber stamp” doctrine, as its names suggests, refers to a situation in which the decisionmaker gives perfunctory approval for an adverse employment action explicitly recommended by a biased subordinate.
In endorsing the above theories, the court reasoned that it is proper to hold employers accountable for the actions of biased subordinates because a company’s organizational chart does not always accurately reflect its decisionmaking process. A biased low-level supervisor with no disciplinary authority could orchestrate an employee’s firing by either recommending discharge or by selectively reporting or making up information that serves as the underpinnings for the termination decision. Absent such theories. the court feared that employers would try to evade liability through willful blindness to the reports and recommendations of racially-biased subordinates.
Having decided that it would recognize subordinate bias claims, the court then determined the level of control a biased subordinate must exert over the employment decision for liability to attach. Although courts in some circuits have taken a lenient approach, by holding an employer liable if any influence is exerted, while others have taken a strict approach, by finding an employer liable only where the subordinate exercises complete control over the decisionmaker, the Tenth Circuit Court settled on a compromise approach somewhere between these two extremes. The test the Tenth Circuit adopted is simply whether the biased subordinate’s reports, recommendations, or other acts caused the adverse employment action.
Potential Bias from Beneath Warrants Trial
Applying this test to the facts of the case, the Tenth Circuit concluded that there was a disputed factual issue regarding whether a casual connection existed between Grado’s actions and IBC’s decision to fire Peters, thus meriting a trial. The court noted that Edgar relied exclusively on Grado’s account of the Friday phone conversation in making her decision without conducting an independent inquiry as to what occurred. Therefore, if the jury concluded after trial that Grado’s report was tainted by race discrimination, it could also find that IBC’s explanation that it fired Peters for insubordination during the Friday telephone conversation was pretext for race discrimination. EEOC v BCI Coca-Cola Bottling Co., 2006 WL 1545501 (10th Cir., June 7, 2006).
The Real Thing: There are Two Sides to Every Story
So how does an employer protect against liability resulting from a racially-biased supervisor who complains about a protected employee? The court made it clear that an independent investigation by the decisionmaker would absolve the employer of liability for the subordinate’s racial discrimination. So what must the employer do to conduct an independent investigation? The court stated emphatically that simply pulling and reviewing the employee’s file does not constitute an independent investigation. Instead, the employer must at least ask the employee for his or her version of events in order to defeat the inference that an employment decision was racially discriminatory. Had IBC officials asked Peters for his side of the story prior to firing him, it probably could have avoided going to trial on the race discrimination claim. Although the BCI case may be hard for employers to swallow, it is imperative that employers conduct an independent investigation of the facts leading to the termination of an employee instead of relying solely on the report of a subordinate who later may be accused of racial bias. We recommend that all termination decisions be reviewed by an independent member of management, a disinterested senior Human Resource manager, or your employment counsel to ensure that the decision is free of bias and consistent with the facts uncovered in a thorough investigation.