[authors: Gwen Morales and Mike Warner]

The Seventh Circuit Court of Appeals recently concluded, in an issue of first impression, that an employee who does not directly make the decision to terminate another employee, but who influences that decision on the basis of an impermissible bias, may be held individually liable under 42 U.S.C. § 1981 in a subsequent lawsuit.

The plaintiff in this case, Smith v. Bray, was Darrel Smith, who formerly worked as process technician at an Equistar Chemicals plant in Morris, Illinois. After he was terminated, Smith brought suit against his employer and two individual employees – James Bianchetta, his immediate supervisor, and Denise Bray, a human resources manager. By the time the suit was filed, however, both Equistar and its parent company had filed for bankruptcy protection and were consequently discharged from any liability to Smith. As a result the suit proceeded against Bianchetta and Bray only, in their individual capacities. Although individual employees cannot be held personally liable for discrimination or retaliation under Title VII, an individual may be held personally liable under Section 1981, which prohibits race discrimination in contractual relationships such as employment and under which Smith’s suit was brought.

Bianchetta, according to Smith, was the primary wrongdoer; he allegedly fought with Smith, subjected him to weekly racist tirades, left garbage and feces in his locker, and then, after Smith retained a lawyer, warned him in no uncertain terms that Smith would be sorry for doing so. Smith settled his discrimination and retaliation claims against Bianchetta, leaving Bray as the only defendant.

Smith’s claims against Bray were not, like those against Bianchetta, based on alleged direct discrimination or retaliation. Rather, Smith claimed that Bray, although not the final decision-maker with regard to his termination, had retaliated against him for his complaints of harassment by persuading her bosses, who were the final decision-makers, to terminate him.

This type of claim– that a subordinate employee caused her superior, the actual decision-maker, to take an adverse action against another employee based on impermissible retaliatory motive or discriminatory animus – is known as the “cat’s paw” theory of liability. The cat’s paw theory of liability is well-established in the Seventh and other circuits, and has been recently endorsed by the Supreme Court. It has, however, traditionally been applied as a theory to support holding an employer liable based on the impermissibly motivated acts of a subordinate employee.

The Seventh Circuit found that under a “cat’s paw” theory, a subordinate employee acting with retaliatory motive may be held individually liable under Section 1981 for causing the employer to retaliate against another employee. In other words, it concluded that Bray herself could, as a legal matter, be held personally liable for causing Smith to be fired.

The court ultimately held, however, that the evidence did not support a finding of liability against Bray. Although the evidence indicated that she did indeed cause Smith to be fired, there was no evidence that she did so based on an impermissible motive to retaliate against him.

Although in many respects, the analysis of discrimination claims under Section 1981 parallels that of claims brought under Title VII, the Seventh Circuit’s opinion highlights an important difference in the relief available under those two statutes. In doing so, it opens the door for future plaintiffs to assert discrimination and retaliation claims not only against their employers, but also against human resources personnel or other individuals who play a role in the decision-making process. Although Smith’s claims were dismissed in this instance, this case highlights the risk that individual managers may face when making employment decisions and highlights the need for individuals who make or influence employment decisions to make sure that their input into employment decisions is free from unlawful bias or the appearance of bias.