3d Cir. Issues Decision on Cat’s-Paw Theory

In McKenna v. City of Philadelphia, No. 09-3567 (3d Cir. Aug.17, 2011), the Third Circuit affirmed a jury award in favor of a fired Caucasian Philadelphia police officer, who claimed he had been retaliated against for complaining to his supervisor about racially discriminatory treatment of minority officers. The City claimed that even if the supervisor’s conduct was retaliatory, the City was insulated from liability because the termination decision was made by an independent Police Board of Inquiry (“PBI”) after a hearing.

In affirming the verdict, the court cited the recent “cat’s-paw” decision, Staub v. Proctor Hospital, 131 S.Ct. 1186 (2011), in which the U.S. Supreme Court held that, if an action by a biased supervisor is the proximate cause of a worker’s termination, an employer can be held liable even if the supervisor did not make the ultimate decision. Since the supervisor in McKenna had testified at the PBI hearing, the Third Circuit concluded that the jury could reasonably have decided that the supervisor’s retaliatory animus bore a direct and substantial relation to the termination, and the PBI’s decision was not independent and was foreseeable.

The case has special significance for Delaware employers. Delaware recognizes the implied covenant of good faith and fair dealing, including a subcategory that is markedly similar to the cat’s paw theory. In Delaware, if an employee’s employment record is falsified or manipulated by a supervisor in order to bring about the employee’s termination, the employer can be held liable even if the employer is unaware of the supervisor’s animus.

Under the cat’s-paw theory, the supervisor’s animus is actionable only if related to one of the discrimination laws, as in McKenna, where the supervisor retaliated against complaints of race discrimination, in violation of Title VII. In Delaware, the basis of the supervisor’s animus is not so circumscribed. The action of the Delaware supervisor could arise from personal animosity unrelated to discrimination, but if the result is to create a false record in order to procure a termination, and the employer relies on the supervisor’s statements, the employer may be held liable under the implied covenant.

As more cases are decided under the cat’s paw theory, it seems likely that terminated Delaware employees will draw an analogy to the cat’s paw theory and it will become more difficult for employers to avoid liability under the implied covenant theory.