WASHINGTON—The U.S. Supreme Court's decision upholding what's known as the “cat's paw” theory of liability could make it far more difficult for employers to win dismissal of cases alleging job-related discrimination.

As a result of last week's unanimous ruling in Vincent E. Staub vs. Proctor Hospital, employers will have to conduct a thorough investigation before taking an adverse job action to be sure that no one in a chain of command acted with a discriminatory motive, experts say (see box).

The cat's paw theory is that an employer may be held liable for employment discrimination, even if the decisionmaker is not motivated by bias. It derives from a 17th Century fable in which a monkey persuades a cat to pull chestnuts out of a fire, then takes all the chestnuts.

“As understood today, a cat's paw is...'one used by another to accomplish his purposes,'” the 7th U.S. Circuit Court of Appeals said in describing the liability theory.

According to the Supreme Court's decision, Mr. Staub, an angiography technician at Proctor Hospital in Peoria, Ill., was a member of the U.S. Army Reserve, which required him to attend drills one weekend per month and train full-time two to three weeks a year.

Two superiors reportedly were hostile to his military obligations and one allegedly made a false complaint to the hospital's vp of human resources, who partially relied on that report to terminate Mr. Staub in 2004.

He sued the hospital under the Uniformed Services Employment and Reemployment Rights Act of 1994, alleging his discharge was motivated by hostility to his military obligations. A jury found that military status was a motivating factor in his discharge and awarded him $56,640 in damages.

However, the 7th Circuit dismissed the suit, stating a cat's paw case could not succeed unless the nondecisionmaker exercised such “singular influence” over the decisionmaker that the decision to terminate was the product of “blind reliance,” which it said was not the case here.

“Because the undisputed evidence established that (the HR vp) was not wholly dependent on the advice of (the supervisor), the (7th Circuit) held that Proctor was entitled to judgment,” the Supreme Court said.

However, the Supreme Court overturned the appeals court.

Proctor “contends that the employer is not liable unless the de facto decisionmaker...is motivated by discriminatory animus,” the high court said. However, “if a supervisor performs an act motivated by an anti-military animus that is intended by the supervisor to cause an adverse employment action, and if that act is a proximate cause of the ultimate employment action, then the employer is liable under USERRA,” the Supreme Court ruled.

The court ruled 8-0 in the case, with Justices Samuel A. Alito Jr. and Clarence Thomas supporting a concurring opinion. Justice Elena Kagan, who submitted an amicus brief urging the court to hear the case while she was U.S. solicitor general, took no part in the decision.

The high court remanded the case to the 7th Circuit with instructions to decide whether to reinstate the jury verdict or to order a new trial, because “the jury instruction did not hew precisely to the rule we adopt today,” the high court ruled.

Julie L. Galassi, Mr. Staub's attorney and a partner with Hasselberg, Rock, Bell & Kuppler L.L.P. in Peoria, Ill., said she is optimistic the case will “fully meet the new Supreme Court test and that the jury verdict will be reinstated.”

The hospital's attorney could not be reached for comment.

Observers said the ruling applies to USERRA cases as well as litigation under Title VII of the Civil Rights Act of 1964.

Philip M. Berkowitz, a shareholder with law firm Littler Mendelson P.C. in New York, said the court held “that if someone has a discriminatory animus” and “puts in place a process the end of which is that an employee is discharged, or suffers any adverse employment consequence, then the fact that he kept his discriminatory animus a secret can't be used as defense by the employer.” The employer is still liable, Mr. Berkowitz said.

“The problem is, the persons who are making the ultimate decisions in most cases are not going to be aware” if individuals making the recommendation are acting out of bias, said Edward A. Brill, a partner with law firm Proskauer Rose L.L.P. in New York. “Simply conducting an independent investigation is not enough to cleanse the decision of the bias of the lower level supervisors.”

He said, “The dilemma for employers is how to ensure that, to the extent possible, that decisions that are made, particularly in large organizations...will be bias-free.”

“The Supreme Court has really held employers' feet to the fire,” said Mr. Berkowitz. The ruling “creates uncertainty and puts employers in a real bind,” he said. “It's a difficult decision for employers and a troubling one.”

The ruling will make it far more difficult for employers to win summary judgments because courts will have to consider individual facts of each case, experts say.

“You now have a very good likelihood you're going to have fact issues, and when you inject fact issues that may not necessarily have been there before in these cases, you're looking at the potential evisceration of summary judgment in employment cases...which is really a frightening proposition,” said Jonathan T. Hyman, a partner with law firm Kohrman Jackson & Krantz P.L.L. in Cleveland

Jeffrey D. Polsky, a partner with law firm Fox Rothschild L.L.P. in San Francisco, said even a case involving a single employee plaintiff easily could cost more than $100,000 to bring to trial, and it is not unusual for costs to reach several hundred thousand dollars—even if an employer ultimately is vindicated.

“It's a tough decision for employers,” said Marc E. Alifanz, an associate with law firm Stoel Rives L.L.P. in Portland, Ore. “It's going to be yet another avenue in which there's going to be a lower standard for plaintiffs in employment cases to state their claim, no question about that.”

Observers say employers must now wait to see how the lower courts interpret the opinion in practical terms.

“It might be that the 7th Circuit gives us some guidance,” which “can be helpful,” said Michael W. Fox, a shareholder with law firm Ogletree, Deakins, Nash, Smoak & Stewart P.C. in Austin, Texas.

Meanwhile, however, the ruling “adds another twist to what is already one of the most convoluted and complex bodies of law,” said Mr. Fox.