Labor & Employment Law Daily Wrap Up, DISCRIMINATION—9th Cir.: Postmaster who alleged she was targeted based on Chinese ethnicity gets shot at disparate treatment claim, (Feb 27, 2025)

By Kathleen Kapusta, J.D.

The court also remanded the Postmaster’s hostile work environment claim, which had been dismissed for failure to exhaust administrative remedies, for consideration on the merits.

Acknowledging the confusing nature of its case law regarding the fourth element of the test for establishing a prima facie case under Title VII, the Ninth Circuit found the court below erred in concluding that a USPS Postmaster of Chinese ethnicity failed to establish a prima facie case of discrimination because she did not show she was treated less favorably than similarly situated employees. Adopting the fourth element as articulated by many of its sister circuits—that the adverse action occurred under circumstances giving rise to an inference of discrimination—the appeals court found the circumstances presented here—she was demoted and replaced by a white man—was all she needed to show. Accordingly, the court reversed summary judgment against this claim. It also found, contrary to the district court, that she exhausted her administrative remedies for her hostile work environment claim and thus it remanded that claim for consideration of the merits. It affirmed summary judgment, however, as to her retaliation claim (Lui v. DeJoy, No. 23-35378 (9th Cir. Feb. 26, 2025)).

Targeted. The plaintiff began working for the USPS in 1992 and was appointed in 2014 to Postmaster of the Post Office in Shelton, Washington. She claimed that after her appointment, employees began lodging false complaints against her, referred to her as “Asian bitch” and “witch,” and complained that she could not read, speak, or understand English.

She also claimed that during an investigation of one grievance filed against her, she was asked if she “had some personal or intimate relationship” with her supervisor, who was married to an Asian woman, and who also substantiated her complaints. According to the supervisor, he complained to the HR manager that the union representative and others were targeting the Postmaster but rather than investigate his concerns, the HR manager and union rep worked closely together to pursue discipline against the Postmaster.

Demoted. The supervisor also complained to his boss who, in a meeting with the HR manager, said they wanted to remove the Postmaster. The supervisor, instead, suggested a downgrade and his boss and the HR manager then prepared a notice of proposed downgrade for the Postmaster that contained three charges of unacceptable conduct. When the supervisor refused to sign the notice, he was temporarily removed as manager and a new manager signed the notice.

The Postmaster appealed to the Tacoma Postmaster, who relied on the first two charges, but not the third, to confirm the proposed downgrade. The Postmaster was demoted to a Postmaster position at a smaller Post Office with less pay. She was replaced by a white man with less experience who was given the title Officer in Charge. A new Postmaster was assigned two years later.

Lower court proceedings. The Postmaster sued under Title VII, asserting discrimination based on race, sex, and national origin, hostile work environment, and retaliation. The district court granted summary judgment against all claims.

Fourth element. On appeal, the Ninth Circuit first found the lower court erred in holding that the Postmaster failed to establish a prima facie case of discrimination under McDonnell Douglas because she did not show she was treated less favorably than similarly situated employees. It pointed to its 2002 Villiarimo v. Aloha Island Air, Inc. decision in which, in reliance on the U.S. Supreme Court’s decision in St. Mary’s Honor Center v. Hicks, it articulated the elements of a prima facie case, and specifically, as to the fourth element, explained that a plaintiff must show “similarly situated men were treated more favorably, or her position was filled by a man.” In both cases, the court explained, “the fourth part of the prima facie test required only that the position previously occupied by the plaintiff be filled by a person outside the protected class.”

Truncated test. The court noted that some of its cases have truncated the fourth element as articulated in Villiarimoby requiring a showing that similarly situated employees outside the protected class were treated more favorably and leaving out the alternative showing requiring only that the position was filled by a person outside the protected class. Indeed, said the court, the district court relied on the truncated test in requiring that the Postmaster show the person who replaced her was similarly situated.

The district court also found that because she was demoted and not terminated, she could satisfy the fourth element only by showing that she was treated less favorably than a similarly situated employee outside her protected class. “In the view of the district court,” wrote the appeals court, “when an employee is demoted rather than terminated, the employee cannot satisfy the fourth element under McDonnell Douglas by merely showing that her position was filled by another employee outside her protected class.”

Confusing. Acknowledging that its case law on the fourth element is confusing because it has repeatedly cited the truncated version of the test, which is misleading, the court explained that the Postmaster could satisfy the fourth element of her prima facie case merely by showing that she was replaced by someone outside her protected class.

Further, said the court, it was “unaware of any case, in either the Supreme Court or this court, supporting the district court’s distinction between a plaintiff who has been fired and a plaintiff who has been demoted.” Rather, in McDonnell Douglas, the Supreme Court established that a plaintiff could satisfy the fourth element of the prima facie case by showing that “the position remained open and the employer continued to seek applicants from persons of complainant’s qualifications.”

Sister circuits. Pointing out that many of its sister circuits have “articulated the fourth element of the McDonnell-Douglas prima facie test as a catch-all requiring only that the adverse action ‘occurred under circumstances giving rise to an inference of [] discrimination,”’ the court found this “captures the essence of the various formulations of the test we have been applying in our cases, and we adopt it here.”

The court noted that the “similarly situated” articulation of the fourth element, on which the district court relied, was added to account for situations in which plaintiffs could not satisfy the fourth element as articulated in McDonnell Douglas. Showing “such differential treatment is not an additional requirement under the fourth element of McDonnell Douglas,” said the court, but is “instead, an alternative means of satisfying the fourth element.”

Accordingly, the court held that the Postmaster satisfied the fourth element. She was removed from her position, demoted at a lower salary, and replaced by a white man. “Those circumstances,” the court reasoned, “give rise to an inference of discrimination, and that is all she needs to show to satisfy the fourth element.”

Independent adverse action. The court also disagreed with the district court’s conclusion that the Tacoma Postmaster’s “independent investigation” into the Postmaster’s alleged misconduct was sufficient to establish a legitimate, nondiscriminatory reason for the adverse action. There was evidence her investigation into the Postmaster’s alleged misconduct consisted only of a documentary review of the notice of proposed downgrade and the complaints against her. Further, the Tacoma Postmaster credited the written complaints despite the supervisor’s concerns they were motivated by racial animus. At the very least, said the court, there was a fact issue as to whether the Tacoma Postmaster’s review was independent or was influenced by subordinate bias. Accordingly, it reversed summary judgment against the Postmaster’s disparate treatment claim.

Hostile work environment. Turning to the district court’s conclusion that the Postmaster failed to exhaust her administrative remedies for her hostile work environment claim, the appeals court noted that she notified the EEO of her hostile work environment claim within 45 days of the signed notice of proposed downgrade, as required by Title VII. The district court, however, found that this was a discrete adverse employment action rather than an act that formed part of a hostile work environment.

Finding this also could have been part of a hostile work environment, the appeals court observed that after the supervisor refused to sign the proposed notice of downgrade presented to him by the HR director and his boss, he was temporarily removed and a new manager was brought in to sign it. “So far as the record reveals,” said the court, he “had no independent knowledge of the underlying facts and was merely acting as a cat’s paw” for the HR director and the supervisor’s boss. Noting that the notice was part of the actions the Postmaster alleged created a hostile work environment, the court found she exhausted her administrative remedies, and it remanded to the district court to address the merits of the claim.

Retaliation. Affirming summary judgment against her retaliation claim, the court noted that while the Postmaster argued USPS engaged in unlawful retaliation by demoting her based on the third charge of the alleged unacceptable conduct in the proposed notice of downgrade, the Tacoma Postmaster explicitly stated that she did not consider that charge in confirming the downgrade. Nor did the Postmaster claim that the conduct at issue in the other two charges was protected activity. And while she argued that the Tacoma Postmaster’s refusal to rely on the third charge was subterfuge, there was no evidence to support this contention.

The case is No. 23-35378.

Judge: Fletcher, W.

Attorneys: Nolan Lim (Nolan Lim Law Firm) for Dawn Lui. Katie D. Fairchild, Office of the U.S. Attorney, for Louis DeJoy.

Cases: Discrimination NationalOrigin SexDiscrimination RaceDiscrimination Retaliation AlaskaNews ArizonaNews CaliforniaNews HawaiiNews IdahoNews MontanaNews NevadaNews OregonNews WashingtonNews GCNNews