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By: Employee Replaced by White Male Coupled With Employer’s Poor Investigation Fuels Disparate Treatment Claim

In Lui v. DeJoy, the Ninth Circuit held that a woman of Chinese ethnicity’s demotion, when coupled with a white male replacing her position, gave rise to an inference of discrimination. The employer’s investigation into the demotion and the employee’s related complaints lacked depth and independence and therefore was insufficient to show a legitimate, nondiscriminatory reason for the demotion.

Factual Background

Dawn Lui, a woman of Chinese ethnicity, worked for the United States Postal Service (“USPS”) since 1992 and was promoted to Postmaster of the Shelton, Washington Post Office in 2014. After her promotion, Lui alleged that she was targeted with false complaints related to her sex, race, and national origin. Lui’s supervisor reported his concerns about Lui’s treatment to Human Resources and alleged that the HR Manager worked closely with one of Lui’s alleged perpetrators to pursue discipline against Lui. USPS asked Lui’s supervisor to demote Lui based on “Unacceptable Conduct[.]”He refused because he believed the allegations were false. USPS replaced Lui’s supervisor with a manager who approved Lui’s demotion. USPS then replaced Lui with a white man.

Lui internally appealed her demotion to Karen Bacon, the Tacoma Postmaster. Bacon’s investigation consisted of a documentary review of HR’s demotion decision and written complaints by other employees about Lui. Bacon affirmed the demotion. Lui filed suit against USPS alleging a hostile work environment; discrimination based on race, color, sex, national origin, and age; and retaliation. The district court granted summary judgment against Lui on all of her claims.

The Ninth Circuit’s Ruling

The Ninth Circuit reversed the district court’s grant of summary judgment on Lui’s disparate treatment claim.

Demotion Coupled with White Male Replacement Shows Inference of Discrimination

The Ninth Circuit held that Lui’s showing that she was: (1) demoted from her position at a lower salary and (2) replaced by a white man gave “rise to an inference of discrimination, and that is all she needs to show to satisfy the fourth element” of her prima facie discrimination claim.

To establish a prima facie case of discrimination the plaintiff must show that: (1) she belongs to a protected class; (2) she was qualified for the position; (3) she was subjected to an adverse employment action; and (4) that the position remained open and was ultimately filled by a person outside her protected class. The parties disputed only the fourth element. The Ninth Circuit explained that Lui properly satisfied the fourth element “merely by showing that she was replaced by someone outside her protected class.”

Bacon’s Investigation Did Not Establish Legitimate, Nondiscriminatory Reason for the Demotion

The Ninth Circuit also held that USPS’s investigation into Lui’s demotion did not satisfy USPS’s burden to show a legitimate, nondiscriminatory reason for the adverse employment action. The court pointed out that USPS (1) heard no live testimony; (2) never met any of the employees who submitted complaints about Lui; and (3) credited their written complaints even after Lui’s supervisor raised concerns that their complaints were motivated by racial animus. Under those circumstances, the court held that USPS’s investigation failed to establish that the demotion was an independent decision or the result of bias.

Takeaways for Employers

The court’s ruling emphasizes two critical elements of employment decision-making. First, recognizing the importance of employment decisions that raise an inference of discrimination, and having independent evidentiary support for the decision. Second, ensuring that there are strong, in-depth, independent investigations of employee discrimination complaints. When both of these issues arise, companies should proceed carefully and make sure their decisions are supported at each step.

If you have questions about your organization’s employee investigations or need assistance reviewing your policies, please contact one of our experienced labor and employment CDF attorneys.