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 clarifies Requirements for whistleblowers filing claims under the Sarbanes-Oxley Act

Resolving a circuit split, on February 8, 2024, the Court issued its opinion in Murray v. UBS Securities, LLC, holding that a whistleblower need not prove that the employer acted with “retaliatory intent” in order to obtain the protections of the Sarbanes-Oxley Act of 2002 (“SOX”).  Rather, the plaintiff in a SOX case need prove only that their protected whistleblowing activity was a “contributing factor” in their termination, after which the defendant must prove it would have terminated the plaintiff even absent the protected activity to defeat the claim. Further analysis of the case and practical considerations for employers can be found here.

In the Federal Appellate Courts

• Fifth Circuit Remands Case Challenging DOL Independent Contractor Rule

The Fifth Circuit remanded Coalition for Workforce Innovation v. Su, No. 22-40316 (5th Cir 2024)¹ to the district court that had rejected the DOL’s prior 2021 independent contractor rule. Following an appeal of that decision by the DOL, the Fifth Circuit granted the DOL’s unopposed motion for a stay to allow the agency to complete a new rulemaking process. On January 10, 2024, the DOL published a final rule that superseded the one challenged. On February 19, 2024, the Fifth Circuit granted the motion of the coalition of business groups to remand the case to the district court. The business groups will now be able to amend their lawsuit against the previous rule to challenge the new rule.

• Ninth Circuit Holds the Whistleblower Anti-retaliation Provisions in the Sarbanes-Oxley and Dodd-Frank Acts Do Not Apply Outside the U.S.

In Daramola v. Oracle Am., Inc., 92 F.4th 833 (9th Cir. 2024), a Canadian employee working in Canada for a Canadian subsidiary of a U.S. computer technology corporation was removed from his position and received a downgraded performance rating after he reported what he believed was fraud to the company and the Securities and Exchange Commission (SEC). He filed suit in federal court in California claiming the company violated the whistleblower anti-retaliation provisions in the Sarbanes-Oxley and Dodd-Frank Acts.  The district court dismissed the claims, finding the anti-retaliation provisions of the two statutes did not apply in this case because the plaintiff’s principal worksite was in Canada and the statutes did not apply outside the United States.

On appeal, the Ninth Circuit agreed. Applying the “longstanding principle of American law that legislation of Congress, unless a contrary intent appears, is meant to apply only within the territorial jurisdiction of the United States,” the court noted that every court to have considered the issue has held that the anti-retaliation provisions of the two statutes do not apply extraterritorially, citing decisions in the D.C., First, and Second Circuits.  In assessing the facts of the case, the court observed that “[t]here may be some situations in which the relationship between an employee who works overseas and the parent company in the United States is so intertwined that a domestic application of [the whistleblower antiretaliation provisions] may be viable.”  In this case, the plaintiff argued, his employer was a wholly owned subsidiary of a U.S. corporation; he regularly accessed the company’s U.S. servers; his supervisors were in the United States; he worked with U.S. employees and U.S. customers; and he submitted his timesheets to the company’s U.S. office. Nevertheless, the Ninth Circuit concluded, the plaintiff’s employment was in Canada, where he worked at all times, emphasizing that he had signed an employment contract stating that Canadian law would govern his employment, and that he sent his formal resignation to the HR department in Canada.  As a result, his claims were therefore not viable.

• Sixth Circuit Assesses Requirements for Racially Hostile Work Environment and Discrimination Claims

Ogbonna-McGruder v. Austin Peay State University, 91 F.4th 833 (6th Cir. 2024), involved claims by an African American university professor that she was subject to a hostile work environment and discriminated against based on her race and her opposition to the discrimination. In support of her hostile work environment claim the plaintiff alleged that the college dean instructed her to move to the basement, scolded her in front of a white faculty member, and denigrated her teaching abilities during a video call, and that the department chair stated she was not qualified to teach political science courses. The district court dismissed the plaintiff’s hostile work environment claim because she did not allege that any harassment she experienced was “specifically due to [her] race,” and that even if she had, the alleged harassment was not sufficiently severe or pervasive to constitute a hostile work environment.  On appeal, the Sixth Circuit agreed.

In determining the severity and pervasiveness of alleged harassment in a hostile work environment claim, the Sixth Circuit stated, the court must consider the totality of circumstances, including “the frequency of the discriminatory conduct; its severity; whether it [was] physically threatening or humiliating, or a mere offensive utterance; and whether it unreasonably interfere[d] with an employee’s performance.” In this case, the court noted, the alleged harassment occurred over a period of approximately two and a half years, which the court held was “too infrequent to demonstrate that her workplace was ‘permeated with’ ridicule and insult.” Moreover, the court found comments about the plaintiff’s teaching abilities and qualifications, “while undoubtedly offensive, are not sufficiently serious to constitute severe harassment,” noting that the plaintiff did not allege that the harassment was physically threatening. In sum, the Sixth Circuit concluded, plaintiff’s “conclusory assertions that defendants’ actions ‘unreasonably interfered with [her] work performance,’ without alleging supporting factual allegations, is insufficient for purposes of a motion to dismiss.”  For the same reasons, the court affirmed the plaintiff’s retaliatory hostile work environment claim, distinguishing an Eleventh Circuit decision holding that a plaintiff is only required to prove that her employer’s conduct would cause a reasonable worker to be dissuaded from filing or supporting a complaint of racial discrimination.

As to her racial discrimination claims, the court found that the plaintiff failed to allege that any adverse employment actions she experienced were racially motivated. The Sixth Circuit stated that plaintiff’s claim that she was replaced by a White adjunct professor to teach a course was insufficient because she did not allege that she was replaced “because of her race, or that she was otherwise similarly situated to the Caucasian professor who replaced her.” . Accordingly, the Sixth Circuit affirmed dismissal of plaintiff’s discrimination claims.

• First Circuit and Eighth Circuit Examine Pretext in the Context of Race Discrimination Claims

In Boykin v. Genzyme Therapeutic Prods., LP, 2024 U.S. App. LEXIS 3766 (1st Cir. 2024), an African American male, who was a senior site planning manager at a biopharmaceutical company, claimed that he was discriminated against because of his race when he was given a performance rating of 3 on the company’s 9-block performance matrix. The district court granted summary judgment, finding the company had established a legitimate nondiscriminatory reason for the performance review and that the plaintiff failed to show the reason was pretextual, and the plaintiff appealed.

On appeal, the First Circuit noted the performance issues that surfaced prior to the plaintiff's performance review.  Based on these issues and plaintiff’s tendency to “lose focus” on his basic tasks, his direct manager recommended that plaintiff be given a 3 rating on his end-of-year performance evaluation. However, in communicating the review to the plaintiff, the manager stated that he initially gave the plaintiff a rating of 5, but that his superior instructed him to reduce the rating to a 3, allegedly explaining that his superior believed the plaintiff was "making too much money."  In support of his discrimination claim, plaintiff argued that the only reason the superior would have rejected the direct manager’s suggestion that plaintiff be rated a 5, given his “lack of direct knowledge” of plaintiff's performance, would be racial prejudice, and that what the superior meant when he said that the plaintiff was making too much money was that he “made too much money for a Black manager." Assessing these claims, the First Circuit concluded that “the plaintiff reads the record through rose-colored glasses… not backed by the ‘definite, competent evidence’” required to survive summary judgment. “[T]he plaintiff not only puts words into [the superior’s] mouth but also ignores the possibility that [he] was simply proffering a legitimate and nondiscriminatory view that the plaintiff's performance at work did not justify such a salary.”  Thus, the First Circuit affirmed summary judgment, concluding that there was no evidence from which a rational jury could infer that plaintiff’s performance rating was a pretext for race discrimination.

The Eighth Circuit also addressed pretext in the context of a race discrimination claim by a Black employee in Collins v. Kansas City Missouri Public School District, 92 F. 4th 770 (8th Cir. 2024).  The plaintiff in that case, who was a school district "attendance ambassador," was terminated for fraudulently altering students’ attendance records. In support of his claim that he was terminated because of his race in violation of Title VII the plaintiff argued that the reasons given for his termination were pretextual, and that a white employee who allegedly engaged in the same conduct was not terminated. The court noted that “‘[a] common approach’ for showing that an employer's claimed reason for termination is a pretext for unlawful discrimination ‘is to introduce evidence that the employer treated similarly-situated employees in a disparate manner.’" Describing the standard for establishing that employees are similarly situated as rigorous, the Eighth Circuit stated that the plaintiff must show the employees have the same supervisor, “have been subject to the same standards, and engaged in the same conduct without any mitigating or distinguishing circumstances." The plaintiff in this case failed to satisfy those requirements, the court held, affirming summary judgment for the employer.

• Eleventh Circuit Addresses Standard of Proof in ADA Cases

When most of her job duties were automated and her position was no longer needed, the plaintiff in Akridge v. Alfa Ins. Co., 2024 U.S. App. LEXIS 3731, 2024 WL 652747 (11th Cir. 2024), was terminated from employment. She filed suit in federal court claiming that her employer, which was self-insured and paid the healthcare costs of its employees, terminated her employment in violation of the ADA to avoid paying healthcare costs related to her medical condition, multiple sclerosis.  In support of her claim the plaintiff asserted that several non-disabled employees who she claimed were similarly situated were not terminated. The district court granted summary judgment to the employer after determining that none of plaintiff’s comparators were similarly situated and there was insufficient evidence that the decisionmakers knew her healthcare costs.

Among the key issues on appeal was the standard of proof required in ADA cases. To begin, the Eleventh Circuit stated, “our Court has long understood the ADA as imposing a ‘but-for’ causation standard – that is, an adverse employment action would not have occurred but for the plaintiff’s disability.  We agree with our sister circuits and hold that the switch from ‘because of’ to ‘on the basis of’ in the 2008 amendment to the ADA did not change or affect its but-for causation standard.”  In response to a dissenting opinion, the Eleventh Circuit clarified that there can be more than one but-for cause for an adverse employment action, and an “ADA claimant need only show that her disability was one such cause, i.e., one ‘determinative . . . decision-making factor.’”

Next, the court addressed the plaintiff’s claim that the reasons given for her termination were pretextual and that the true reason for her termination was her high healthcare costs. Affirming the district court’s decision granting summary judgment to the employer, the Eleventh Circuit concluded that the plaintiff offered only conjecture and speculation that the decisionmakers knew of her healthcare costs and terminated her employment based on this information.

• Seventh Circuit:  Accommodation Not Required for Bonus Activities Unrelated to Essential Job Functions

Bruno v. Wells-Armstrong, 2024 U.S. App. LEXIS 4180, 2024 WL 737300 (7th Cir. 2024) involved a long-term firefighter who returned to work following the occurrence of a serious heart condition.  The employee, who did not have a college degree, was offered an employment contract that provided for additional compensation if he enrolled in college courses. Based on his doctor’s advice that he discontinue taking courses, the employee asked that, as an accommodation under the ADA, the education condition be removed from the contract. When the city refused, the employee submitted his retirement paperwork and filed suit in federal court claiming disability discrimination under the ADA.  The U.S. District Court for the Central District of Illinois granted summary judgment for the employer and the plaintiff appealed.

Rejecting the plaintiff’s failure to accommodate claim, the Seventh Circuit found the plaintiff’s request to waive the education condition was not a request for a reasonable accommodation that would enable him to perform his essential job functions, but rather was just a request for an unearned pay increase. Accordingly, refusal to waive the educational condition for a pay increase, the court concluded, was not a violation of the ADA. The court also rejected, for lack of evidence, the plaintiff’s claims that the reason for the city’s denial of his salary increase was pretextual, and that he was retaliated against for continued contact with another firefighter who had filed sex discrimination claims against the city. For all these reasons, the court affirmed the decision of the district court granting summary judgment for the employer.