The US Supreme Court acknowledged the cat's paw theory of liability in Staub v. Procter Hospital, where an employer can be held liable for an adverse employment action by an unbiased individual if that individual was influenced by the discriminatory bias of another agent of the employer. The key issue in Abdelhabi v. The City of New York was whether alleged discriminatory animus of a non-supervisor could support a cat's paw theory of liability..

Omar Abdelhadi, an observant muslim of Middle Eastern descent, was hired by the Department of Correction (DOC) as a probationary officer in June 2005. He requested and was granted religious accommodation, including every other Friday off for Islamic prayer observation and permission to "carry a lite beard for Islamic beliefs." As a probationary DOC officer, he was granted permission by DOC to purchase, and did purchase, a personal firearm for on- and off-duty use. Later that year, two New York Police Department (NYPD) officers informed Martin Horn, the head of DOC at the time, that Abdelhabi was being investigated as part of an ongoing counterterrorism investigation. The officers told Horn that Abdelhabi had made specific comments about wishing to engage in jihad. In January of 2007, they provided Horn with a memorandum detailing specific comments he made to this effect between February 11, 2004 and June 2, 2005, including that "he does not care about the Corrections department, and that all he wants is guns." The statements were taken from conversations recorded by the NYPD during the course of their investigation.

Horn ordered a confidential internal investigation to ensure DOC could rely on the statements, and was assured by an undercover officer who alleged that he heard Abdelhadi make the statements. Following the investigation, another DOC employee, Richard White, Deputy Commissioner for Investigations and Trials, prepared a confidential memorandum recommending Abdelhadi's termination. The memorandum focused on the alleged statements Abdelhadi had made, but also noted that his "attendance issue" also justified termination. DOC's General Counsel also told Horn that Abdelhadi's termination was warranted by the information DOC had. She also noted his attendance was problematic. Horn decided to terminate Abdelhadi, and he was terminated on March 20th, 2007. He was not given a reason for his termination.

Abdelhadi sued the City of New York and Horn in the US District Court for the Eastern District of New York. He alleged he was unlawfully terminated on ethnic and religious grounds and alleged two theories of discrimination: (1) disparate treatment and (2) cat's paw liability.

Addressing Abdelhadi's cat's paw liability theory, the court analyzed whether the cat's paw theory could apply where the parties with the alleged discriminatory bias, the NYPD officers, were not Abdelhabi's supervisors or necessarily even co-workers. The court noted several limiting principles in Staub:

The court held that holding the employer liable for unsolicited comments by employees of one agency to decision-makers in another agency was beyond the scope of liability contemplated by Staub. It also noted that Abdelhabi could not show that the NYPD officers specifically intended their report to cause his termination, particularly because the reported comments by Abdelhabi were all made prior to his hire by DOC. Accordingly, the court ruled that Abdelhabi had failed to make a case for cat's paw liability. The court also dismissed Abdelhadi's disparate treatment claims on unrelated grounds.

Although Staub creates a new theory of liability for employers nationally, employers can point to this case to argue that only bias by supervisors should be considered in a case alleging cat's paw liability. Regardless, in light of Staub, employers should recall that best practices when taking an adverse employment action include requiring a privileged document that:

Employers should also always conduct an independent investigation when there is any concern about discriminatory bias. For more information, see Practice Note, Handling Employment-Related Internal Investigations.