Hunton Employment & Labor Perspectives

The EEOC is asking the Ninth Circuit to clarify the U.S. Supreme Court’s new standard for determining the type of harm that constitutes an adverse job action in discrimination cases and to apply that standard or remand the case at issue so the lower court can apply the new standard.

The case pending in the Ninth Circuit Court of Appeals, titled Xu v. Lightsmyth Technologies, Inc., was brought by an Asian-American worker who alleges, among other things, that she was discriminated against when she was transferred within her company from an exempt manager position to a non-exempt role.  Xu’s employer, however, argued that Xu’s transfer came with no cut in pay or benefits and Xu was only transferred to accommodate her request that she be exempted from certain duties because she suffered from an eye condition.  For that reason, Xu’s employer argued Xu suffered no adverse job action. The district court agreed, holding in its May 2023 decision that because Xu did not suffer an adverse job action, she could not sustain a prima facie claim for discrimination. 

Almost a year later, on April 17, 2024, the Supreme Court issued its ruling in Muldrow v. City of St. Louis setting out a new evidentiary standard under Title VII of the Civil Rights Act of 1964, the law that makes it unlawful to discriminate against workers based on various protected characteristics. Under the “some harm” standard, the Supreme Court held that, along with showing discrimination, the “transferee must show some harm respecting an identifiable term or condition of employment.” 

Applying the new evidentiary standard is something several circuits are grappling with in the wake of Muldrow. The Eighth and Third circuits, in particular, have revived some lawsuits after applying the new standard as a more lenient standard for claims to survive. The Ninth Circuit, in turn, heard oral argument in Xu last week (August 20, 2024), including arguments from the U.S. Equal Employment Opportunity Commission (“EEOC”).  The agency charged with applying the laws is asking the Ninth Circuit to use the Xu case to provide guidance on the type of harm that constitutes an adverse job action. The EEOC argued that the district court in Xu applied the wrong standard.

Muldrow v. City of St. Louis

The Supreme Court in Muldrow outlined the evidentiary standard employees must meet when asserting a discriminatory transfer claim against an employer under Title VII.  Before Muldrow, most courts held that an employee had to show a significant employment disadvantage to prevail on a claim that their transfer violated Title VII. 

The Supreme Court, however, rejected the approach explicitly overruling any Circuit Court of Appeals decision that had used a higher “significant,” “material,” or “serious” harm or injury standard.  Instead, the Supreme Court held that an employee must show: (i) the employer’s action was discriminatory, and (ii) that the employee suffered “some harm” respecting an “identifiable term or condition of employment” to state a claim for discrimination under Title VII.  

Xu v. Lightsmyth Technologies, Inc.

 In Xu, the District of Oregon used the higher evidentiary standard that has since been abrogated by the Supreme Court, according to lawyers for the EEOC.  The EEOC, in its amicus curiae brief, asked the Ninth Circuit to remand the case for a determination by the district court in light of the Muldrow decision.  During the 20-minute oral argument, the EEOC noted that the panel could provide further guidance by applying Muldrow to the facts of the Xu case but, in any event, the panel should acknowledge the “changed nature” of the evidentiary standard.

The Ninth Circuit panel peppered both sides with questions about what constitutes an adverse employment action in the case, seeming to focus on the fact that Xu’s job transfer did not include a pay cut or otherwise negatively impact her benefits and working conditions. Xu’s attorney argued that the changed position was less prestigious, while her employer argued that the transfer was not a demotion and was, instead, designed to accommodate her alleged disability.

The panel took the case under submission.