Dawn Lui is a woman of Chinese ethnicity. She began working for the U.S. Postal Service (USPS) in 1992. By 2014, she became Postmaster of the Post Office in Shelton, WA. Employees then began targeting Lui with a series of false complaints, grievances, and slurs.
After an investigation into the employee grievances, Lui received a notice of Unacceptable Conduct that charged her with: 1) threatening a carrier to get him to accept a schedule change; and 2) throwing a clipboard and kicking packages and boxes. The notice demoted her to a lower-paying position. USPS replaced Lui with a white man.
Lui then filed a discrimination complaint, appealed her demotion to the Merit Systems Board, and sued USPS in U.S. District Court. Lui’s lawsuit alleged Title VII claims for: disparate treatment; hostile work environment (HWE); and retaliation. USPS moved for summary judgment. The district court granted USPS’s motion in full. Lui timely appealed.
The Ninth Circuit reversed the district court as to the disparate treatment and HWE claims, and upheld the district court on the retaliation claim.
As to the disparate treatment claim, the Ninth Circuit determined that an employee could satisfy the fourth element of a Title VII prima facie case in any of the following alternative ways: a position remained open and the employer continued to seek applicants; or the position was ultimately filed by an employee outside the protected class; or the employee was treated less favorably than similarly situated employees. The Ninth Circuit rejected the district court’s requirement that Lui needed to show both that she was replaced by an employee outside her protected class, and that she was treated less favorably than similarly situated employees.
The Ninth Circuit also found fault with the district court’s conclusion that USPS’s independent investigation met the USPS’ burden of showing a legitimate, non-discriminatory reason for Lui’s demotion. The Court found that Title VII violations may occur even if the ultimate decision-maker has no discriminatory intent, but takes an adverse employment action in reliance on factors infected by another decision-maker’s discriminatory animus. Here, the ultimate decision-maker heard no live testimony. She credited the employee’s written complaints even though she knew that the employees could have been motivated by racial bias. Instead, she based her decision to demote Lui entirely upon information provided by the very individuals that Lui alleged were racially biased. At the very least, the Ninth Circuit determined that there was a genuine dispute of material fact whether the ultimate decision-maker was independent or influenced by subordinate bias.
As to the HWE claim, the Ninth Circuit determined that, contrary to USPS’s argument, Lui’s failure to address administrative exhaustion in her opening brief was at most a forfeiture, not a waiver. The court can review a forfeited issue if the failure to properly raise the issue did not prejudice the opposing party. The record showed that USPS had notice of Lui’s positions and arguments. The Ninth Circuit concluded that Lui exhausted her administrative remedies for her HWE claim.
As to the retaliation claim, the Ninth Circuit affirmed the district court. It found that Lui failed to establish a causal connection between Lui’s actions to bring an employee’s husband into a staff-only area of the Post Office, and USPS’s decision to downgrade her position. The Court affirmed the district court’s grant of summary judgment to USPS on Lui’s retaliation claim.
The Ninth Circuit remanded for the district court to address the merits of Lui’s disparate treatment and hostile work environment claims.
Lui v. DeJoy, 129 F.4th 770 (9th 2025).