This Littler Lightbulb highlights some of the more significant employment law developments at the U.S. Supreme Court and federal courts of appeal in the last month.

At the Supreme Court

• Supreme Court Rejects Requirement that Lateral Transferees Show “Significant” Harm in Title VII Claims

In Muldrow v. City of St. Louis, 144 S. Ct. 967 (2024), the Supreme Court resolved a circuit split on the degree of harm required to show discrimination in employee transfers. Rejecting the Eighth Circuit’s requirement, and similar requirements by other appellate courts, that a plaintiff establish that a transfer caused “significant” employment disadvantage to have a viable claim under Title VII, the Supreme Court held a plaintiff “need not show that the injury satisfies a significance test.” Still, “an employee must show some harm from a forced transfer to prevail in a Title VII suit,” the Court stated.

The plaintiff in Muldrow, a female plainclothes police officer who investigated public corruption and human trafficking cases and received various perks as a Task Force Officer with the FBI, was transferred to a uniformed job and replaced with a male who, her supervisor said, was a better fit for the “very dangerous” work. The plaintiff sued the city alleging sex discrimination under Title VII and claimed that, although her rank and pay remained the same, the transfer resulted in a loss of “material benefits,” including her weekday work schedule, her FBI status, and the car that came with it. The Eighth Circuit affirmed the district court’s grant of summary judgment to the city because the plaintiff failed to show that the transfer caused her a “materially significant disadvantage.”

The Supreme Court vacated the Eighth Circuit decision finding “the text of Title VII imposes no such requirement.” While the language of the statute requires the plaintiff show some “disadvantageous” change in the terms or conditions of employment as a result of a transfer, the Court held, the text does not require a transferee show that the harm incurred was “significant.”  Justices concurring in the judgment but not in the opinion of the Court argued that the requirement that a plaintiff must show “some harm” as a result of a transfer was unclear and would lead to further litigation.  See further case analysis here.

• Supreme Court Holds Workers Do Not Have to Be in the Transportation Industry to be Exempt from Arbitration Under the FAA

In Bissonnette v. Lepage Bakeries Park St., LLC, 144 S. Ct. 905 (2024), the Supreme Court held that distributors for a baked goods company were transportation workers, exempt from coverage under the Federal Arbitration Act (FAA).  In so doing, the Court reversed the Second Circuit, which upheld the district court’s dismissal of the case in favor of arbitration pursuant to the FAA on the grounds that the distributors, whose jobs included not only delivering goods, but also ordering the goods, advertising, setting up promotional displays, stocking shelves, and replacing expired products, were “in the bakery industry,” and not transportation workers.

The Court considered whether a transportation worker must work for a company in the transportation industry to be exempt from arbitration under the FAA.  “We conclude that there is no such requirement,” the Court held. In response to concerns that the exemption “would sweep too broadly without an implied transportation-industry requirement,” the Supreme Court held that to be exempt a worker “must at least play a direct and ‘necessary role in the free flow of goods’ across borders.” 

The Court left open several issues for consideration by the district court including whether the persons making the claim are transportation workers or engaged in interstate commerce.  Further analysis of the case and practical considerations for employers can be found here.

In the Federal Appellate Courts

• Ninth Circuit Holds FAA Transportation Worker Exemption Does Not Apply to Companies

Another case involving the exemption from arbitration under the FAA, Fli-Lo Falcon, LLC v. Amazon.com, Inc., 97 F.4th 1190 (9th Cir. 2024), involved a dispute between a large e-commerce company and the companies it contracted with to provide delivery services.  Three of the delivery service companies filed a class action complaint in federal court arguing that they were exempt from the Federal Arbitration Act (FAA) based on the transportation worker exemption, despite having entered into delivery service agreements that provided for arbitration of disputes arising out of the agreements.  The district court granted the company’s motion to compel arbitration and dismissed the case. The plaintiffs appealed and the Ninth Circuit affirmed the district court’s decision.

Examining the application of the transportation worker exemption under the FAA, the Ninth Circuit asked two questions: “First, can business entities like plaintiffs qualify as a ‘class of worker’ engaged in foreign or interstate commerce? And second, can a commercial contract between two business entities qualify as a ‘contract of employment’?”  Examining prior Supreme Court decisions and the language of the Act, the Ninth Circuit held that plaintiffs were not transportation workers and that “‘contracts of employment’ in the transportation worker exemption do not extend to commercial contracts” like the agreements plaintiffs signed.  As a result, the case was allowed to move forward in arbitration.  Further analysis of the case and practical considerations for employers can be found here. 

• D.C. Circuit Rejects NLRB Driver Surveillance Decision as “Nonsense”

In Stern Produce Company v. NLRB,97 F.4th 1 (D.C. Cir. 2024), the U.S. Court of Appeals for the D.C. Circuit considered whether the employer violated the NLRA when a manager texted a driver telling him to uncover the camera in the cab of his truck. In its decision the NLRB found that the manager’s text gave the driver “the impression that the company was conducting surveillance of him in his pro-union activities” in violation of the NLRA.Rejecting the Board’s reasoning as “nonsense,” the D.C. Circuit noted that the company’s handbook advised employees that they “‘should have no expectation of privacy’ in any information stored or recorded on company systems, including ‘[c]losed-circuit television’ systems, or in any company property, including vehicles.” Most significantly, the handbook informed drivers they had to always keep vehicle dashboard cameras on to prevent unsafe driving and protect drivers from liability for accidents they didn’t cause.Moreover, the court found no evidence that union activity had ever “take[n] place in the small cab of a produce delivery truck.” Thus, the court concluded, “[a]ny assumption a driver in [these] circumstances could have made about being monitored for union-related reasons would have been based not on reasonable inferences, but on ‘speculation.’”

The D.C. Circuit also reversed the NLRB’s decision that a written warning issued to an employee who made a discriminatory comment was based on the employee’s history of union support.The court found that the written warning was consistent with the company’s equal employment opportunity policy and there was insufficient evidence that the company disciplined the employee out of anti-union animus.Littler’s analysis of the D.C. Circuit decision can be found here.

• Eleventh Circuit Affirms Summary Judgment for Employer in Race and National Origin Discrimination Case

Terrell v. Secretary, Department of Veterans Affairs, --- F.4th ----, 2024 WL 1671962, No. 21-14185 (11th Cir. 2024) involved discrimination claims by a Black nurse at a VA hospital who was not selected for the chief nurse position. Following several rounds of applications and interviews, the hospital initially offered the position to a white woman, who did not accept the job, and ultimately offered the position to a Black woman from Grenada. The plaintiff filed suit in federal court alleging race and national origin discrimination. The district court granted summary judgment to the hospital on plaintiff’s race discrimination claim holding that the claim “must fail” because another Black woman was ultimately selected. On appeal, the Eleventh Circuit stated, “[t]he fact that the position was ultimately offered to another individual of the same race does not automatically preclude the plaintiff’s race-discrimination claim, particularly with respect to [a white person’s] initial selection.”

On examination of the facts, however, the Eleventh Circuit concluded that the plaintiff had not establish a “but-for cause” for her non-selection, relying instead on circumstantial evidence. The record indicated that the hospital based its selection on the management experience and certifications of the selected candidates, although the plaintiff was rated slightly higher on the interview score. Affirming summary judgment for the employer, the court stated: “It is not our role to second-guess an employer’s hiring criteria—indeed, an employer may act ‘for a good reason [or] a bad reason’ so long as it is not an unlawful reason….Whether [the hospital’s] preference for management experience and certifications was “good” or “bad,” … it was not race or national-origin discrimination.”