Ninth Circuit Revives Employee’s Title VII Discrimination Claims, Clarifies Requirements

Complaints and Grievances Filed Against Lui

Dawn Lui, a woman of Chinese ethnicity, had worked for the United States Postal Service (USPS) since 1992 and had been a postmaster (the head of an individual post office) since 2004. In 2014, she was appointed as the postmaster of the post office in Shelton, Washington.

Lui, along with her supervisor, Charles Roberts, claimed that employees in the Shelton post office began targeting her with a series of false complaints and grievances after her appointment as the Shelton Postmaster because of her race, gender and national origin. Workers at the post office allegedly referred to her as “Asian b----,” “witch” and other names. One employee’s sworn declaration submitted in the lawsuit stated he heard “more than once … the complaint/rumor that [Lui] can’t read or speak English and doesn’t understand it.”

Roberts informed her that the other post office employees didn’t like her because she was Chinese and made other comments to her about other employees being racist between 2017 and 2019. Lui also claimed that during the investigation of one of the submitted grievances, she was subjected to a “humiliating interview” in which she was asked if she had an intimate relationship with her supervisor, which Lui attributed to the investigator’s knowledge that Roberts was married to an Asian woman.

Roberts raised concerns about Lui’s treatment with Human Resources Manager Alexis Delgado, who was responsible for investigating the complaints filed against Lui, informing Delgado that she was being targeted based on her race and gender. Rather than investigate Roberts’ concerns, Delgado allegedly worked closely with a union representative to pursue disciplinary action against Lui, even inviting a union representative to a disciplinary meeting regarding Lui, though it didn’t involve union matters.

Management Ignores Discrimination Complaints, Holds Disciplinary Meeting

Roberts requested a meeting with his direct supervisor, Darrell Stoke, with the intention of reporting Delgado’s conduct. Stoke, however, invited Delgado to the meeting, making it impossible for Roberts to raise his concerns. At the meeting, Stoke and Delgado told Roberts that they wanted Lui removed from the USPS and wanted him to support their decision. Pressured to provide an alternative or be moved to another position himself, Roberts recommended a downgrade for Lui, which he believed saved her position.

In October 2019, Delgado and Stoke prepared a notice proposing to downgrade Lui to Postmaster of a smaller post office, with less compensation, in Roy, Washington. They presented the notice to Roberts for his signature, but he refused to sign because he believed the allegations against Lui were false and based on racial animus.

The notice contained three charges of “unacceptable conduct,” alleging that Lui:

• Threatened a carrier to get him to accept a schedule change that did not comply with the carrier’s union contract.
• Threw a clipboard on the ground and kicked packages and boxes that were on the workroom floor.
• Brought an employee’s husband into a staff-only area of the post office while investigating the husband’s complaint that another postal employee had sexually harassed his wife.

After Roberts refused to sign the notice, he was temporarily replaced as operations manager at the Shelton post office, and his replacement signed the notice.

USPS Demotes Lui

During the month following the notice of proposed downgrade, Lui filed an informal discrimination complaint through USPS’ Equal Employment Opportunity (EEO) system alleging a hostile work environment and discrimination based on race, color, sex, national origin and age. While pursuing the EEO complaint, she appealed the notice of proposed downgrade to Tacoma Postmaster Karen Bacon in December 2019.

Roberts allegedly told Bacon on several occasions that he thought racial bias was behind Delgado and the other employees’ grievances against Lui. Seemingly, no action was taken to investigate those concerns as Bacon, in February 2020, signed off on the downgrade based on the notice and written complaints from the allegedly biased employees without any further inquiry.

Lui was replaced as head of the Shelton post office by a new “officer in charge,” a less experienced white man. A new Postmaster was officially assigned to Shelton about two years after Lui was demoted.

Lui Files Lawsuit

Lui filed her Title VII lawsuit in federal district court for disparate treatment discrimination, hostile work environment harassment and retaliation. The district court granted summary judgment in favor of USPS on all of Lui’s claims, preventing the case from proceeding to a jury trial. On appeal, the Ninth Circuit reversed the lower court’s ruling on the disparate treatment and hostile work environment claims, focusing much of its analysis on the disparate treatment claim.

An “Inference of Discrimination” Is All That’s Needed to Establish Lui’s Claim

When an employee brings a claim for disparate treatment discrimination, they are arguing that they were treated differently than others specifically because of their protected class/characteristic (e.g., race, gender, ethnicity, etc.). In reviewing these cases, courts will first look to see if the plaintiff firmly established their discrimination claim, referred to as the prima facie case.

A critical issue in this case is whether Lui sufficiently established her discrimination claim. To do so, the district court required Lui to show four things:

• She was part of a protected class;
• Qualified for the position;
• Suffered an adverse action; and
• That USPS treated a similarly situated employee outside of her protected class more favorably. 

The district court found that Lui failed to establish the fourth element. The court expected Lui to show that the individual(s) that replaced her had engaged in the same or similar conduct that she was alleged to have committed and for which she was demoted (i.e., threatening a carrier to accept a schedule change, kicking boxes in the mailroom, etc.) and yet were treated more favorably. Lui didn’t present any such evidence, so the court ruled in favor of USPS.

The Ninth Circuit determined, however, that the district court was relying on prior cases that the Ninth Circuit, admittedly, referred to as “confusing.” After untangling the language of its prior decisions, the Ninth Circuit concluded that Lui could also satisfy the fourth element by simply showing that she was replaced by someone outside her protected class.

The court then went a little further and adopted what it referred to as the “catch-all” version of the test used by other federal courts, under which an employee simply must show that the adverse action occurred “under circumstances giving rise to an inference of discrimination.” In the Ninth Circuit’s view, Lui met this burden because she was removed from her position, demoted to a position with a lower salary and replaced by a white man. Those circumstances “give rise to an inference of discrimination, and that is all she needs to show to satisfy the fourth element.”

Lui’s Demotion: Legitimate Decision or Influenced By Discriminatory Bias?

After establishing that Lui had a valid discrimination claim, the court turned to the issue of whether USPS had a legitimate, nondiscriminatory reason for her demotion, which could serve to rebut the inference of discrimination.

Under Title VII, an employer may be liable for discrimination when the ultimate decision maker, lacking discriminatory intent, takes an adverse employment action based on information from those with discriminatory intent. Lui argued that Bacon’s decision to approve her demotion violated the law because it was influenced by the discriminatory bias of Stoke, Delgado and other employees who, according to Lui, targeted her with false complaints and grievances because of her race, gender and ethnicity. The district court, however, concluded that Bacon’s “independent investigation” into Lui’s alleged misconduct was sufficient to serve as a legitimate, nondiscriminatory reason for the demotion.

The Ninth Circuit disagreed. Based on the record, the Ninth Circuit concluded that a jury could find that Bacon’s decision was not actually independent and that a biased subordinate was involved in the decision-making process.

The Ninth Circuit pointed out that Bacon’s investigation consisted of a review of the proposed notice of downgrade and the complaints of the employees at the Shelton post office. She didn’t interview anyone involved or otherwise hear any live testimony. She gave credit to the written complaints, even after hearing Roberts’ concerns that the complaints were motivated by racial animus. In other words, she based her decision on documents containing information provided by the very individuals that Lui and Roberts alleged to have racial bias against Lui. The Ninth Circuit concluded that was enough to reverse the district court’s ruling and send the question to a jury.

A Hostile Work Environment

The district court granted USPS’s motion for summary judgment on Lui’s hostile work environment claim based on a procedural issue and didn’t analyze the claim itself. The Ninth Circuit, however, reversed the ruling and directed the district court to consider the merits of the claim.

Now that the district court must confront the factual allegations of the case, it’s hard to imagine the court ruling for USPS. Based on the evidence submitted, Lui allegedly endured racist comments and name-calling from multiple employees from 2017 through 2019. Additionally, there was evidence that the complaints and grievances made against Lui were motivated by racial animus.

It seems plausible that the court would conclude there is a triable issue on whether the conduct was severe or pervasive enough to constitute a hostile work environment and send the claim to a jury. In fact, that’s exactly what the federal magistrate judge working on the case recommended to the district court, concluding that genuine questions of material facts remain as to the hostile work environment claim and the district court should deny USPS’s motion for summary judgment on the issue.

Employer Takeaways

This case offers some important takeaways for employers:

• Always respond promptly when someone complains of harassing conduct. A common theme among harassment cases that make their way through the courts is a lack of appropriate response to employees’ harassment complaints and/or harassing or abusive conduct. In this case, when concerns about Lui being targeted because of her race and gender were brought to the HR Manager, the HR Manager seemingly did nothing, opting instead to pursue discipline against Lui. Employers, however, have an obligation to promptly respond to harassment complaints. Even if they don’t think the conduct amounts to harassment, once an employee makes a complaint, employers should address it promptly.
• Train supervisors on how to report harassment and abusive conduct. Supervisors cannot ignore complaints of harassment, discrimination or retaliation and should be trained on their duty to report such complaints. Additionally, they should be trained to notice and report this type of conduct, regardless of whether they receive a complaint. Here, Lui’s supervisor tried to voice his concerns to the HR Manager that the complaints against Lui were motivated by racial bias. That’s good. The evidence, however, indicates he heard racist comments about Lui for up to two years prior to raising the issue, and nothing in the record shows he reported that to HR — that’s not good! California employers should ensure that supervisors are up to date on the state’s required harassment prevention training, which covers obligations around reporting and responding to harassment complaints and harassing and/or abusive conduct.
• Carefully consider your adverse action decisions and ensure you can justify them. As the Ninth Circuit clarified in this case, plaintiffs have a low bar when establishing discrimination claims. All that’s needed are alleged circumstances that create an “inference of discrimination.” Lui, alleging discrimination based on race, gender and ethnicity, was demoted and replaced by a white man. That’s enough to establish her claim. Employers have the opportunity, however, to counter those types of inferences. That’s why it’s critical for employers to be able to justify their decisions and show the adverse action was taken for a legitimate, nondiscriminatory reason, which may include, for example, documenting the events and disciplinary process that led to the adverse action.
• Decision makers considering adverse employment actions should take steps to ensure the information they rely on isn’t influenced by discriminatory bias. Employers may still be liable for discrimination even if the person deciding to take an adverse action has no discriminatory motive when they rely on input from individuals that do have a discriminatory motive. Here, Bacon was told that the complaints and grievances against Lui were motivated by racial bias, but she relied only on that information when making her decision. She didn’t investigate or take any additional steps to determine the veracity of the complaints against Lui or Roberts’ concerns that they were motivated by bias. A better course likely would have been to follow up on the suspect complaints with additional inquiries and investigation to get a more accurate picture of what occurred.