This Littler Lightbulb highlights some recent labor and employment law developments at the U.S. Supreme Court and federal courts of appeal.

At the Supreme Court

Previously Approved Visa Petitions Revoked by USCIS Are Not Appealable to Federal Court

In a decision that will impact employment of individuals whose visa petitions have been revoked, in Bouarfa v. Mayorkas, No. 23-583 (Dec. 10, 2024), the U.S. Supreme Court held that USCIS revocation of a previously approved visa petition is not reviewable in federal court. “Congress granted the Secretary [of Homeland Security] broad authority to revoke an approved visa petition ‘at any time, for what he deems to be good and sufficient cause.’ Such a revocation is thus ‘in the discretion of’ the agency,” the Supreme Court stated.

Supreme Court to Decide Standard of Proof to Determine Whether an Employee is Exempt Under the FLSA

On November 5, 2024, the U.S. Supreme Court heard oral argument in E.M.D. Sales, Inc. v. Carrera, No. 23-217, which involved a split among the circuits regarding the standard to be applied in determining whether an employee is exempt from the overtime requirements of the FLSA. The case involved an employer’s appeal of a Fourth Circuit decision, which required employers to establish by clear and convincing evidence that employees are exempt. The Fourth Circuit decision contrasted with the decisions of six other appellate courts that held employers are only required to demonstrate exemption by a preponderance of the evidence. A decision by the Court is expected in Spring 2025.

In the Federal Appellate Courts

Third Circuit Dismisses Claims by Job Applicant Whose Employment Offer Was Rescinded After Positive Cannabis Test

Zanetich v. WalMart Stores East Inc., __ F.4th __ (3rd Cir. 2024), involved claims under New Jersey’s Cannabis Regulatory, Enforcement Assistance, and Marketplace Modernization Act by a job applicant whose offer of employment was rescinded after he tested positive for cannabis. The applicant claimed the company violated two provisions of the statute: The prohibition of an adverse employment action because a person “does or does not smoke, vape, aerosolize or otherwise use cannabis items”; and the protection of employees from adverse employment actions based solely on a positive drug test for cannabis. The district court dismissed the claims and the plaintiff appealed.

In reviewing the plaintiff’s claims, the Third Circuit first considered whether the prohibition of an adverse employment action based on a person’s use of cannabis creates a private cause of action by cannabis users. In making that determination, the court considered whether the plaintiff “is a member of the class for whose special benefit the statute was enacted.” It concluded that “[b]y protecting both users and non-users of cannabis, this provision sweeps very broadly, as every member of the public is either a cannabis user or a cannabis non-user. And without an unmistakable textual focus on cannabis users in particular, this provision does not confer a special benefit on any particular class.” As to the statutory provision that “shields employees from adverse employment actions based solely on a positive drug test for cannabis,” the court pointed out that “the clause by its own terms applies only to current employees – not prospective employees.” For all these reasons, the Third Circuit upheld the dismissal of the case by the district court.

Seventh Circuit Vacates NLRB’s Finding That Employee Was Terminated Because of Protected Activity

The plaintiff in Capitol Street Surgery Center LLC v. NLRB, __ F.4th __ (7th Cir. 2024), a radiology technologist (RT), claimed that he was terminated from employment at a surgical clinic because of his protected labor activity in violation of section 8(a)(1) of the NLRA. At a staff meeting the plaintiff, along with several other RTs, complained about having a nurse, rather than an RT, operate an imaging device. When the plaintiff was fired from employment two weeks later, he filed an unfair labor practice charge with the NLRB, claiming he was fired because of his protected activity. Following a hearing, the NLRB affirmed the administrative law judge’s finding in favor of the plaintiff, and the employer appealed to the Seventh Circuit.

On appeal, the Seventh Circuit identified the elements required to prove adverse action in violation of section 8(a) of the NLRA: “(1) the employee engaged in a protected activity; (2) the employer’s decisionmaker knew of the employee’s protected activity; and (3) the decisionmaker took adverse action against the employee because of animus or hostility toward his protected activity.” In this case the parties agreed that the employee’s comments at the staff meeting were a protected activity. However, the court found, the clinic’s administrator, who made the decision to terminate the plaintiff’s employment, was not at the staff meeting and did not know of the plaintiff’s comment, so the plaintiff could not establish that element of a section 8(a) violation. In addition, although the plaintiff questioned the motive for his employment termination, citing a prior Seventh Circuit decision, the court stated: “‘An employer is not required to give reasons when it fires its employees.’ [The employer] was free to fire [the employee] for a good reason, a bad reason, or no reason at all; under the NLRA, it was only prohibited from doing so because of his protected activity. Without evidence, direct or circumstantial, that [the decisionmaker] knew of [the employee’s] protected activity, the agency’s case fails.”

Accordingly, the Seventh Circuit vacated the NLRB’s decision and order, and denied the petition for enforcement.

Third Circuit Rejects NLRB’s Thryv Compensatory Damages Remedy

NLRB v. Starbucks Corp, No. 23-1953 (3d Cir. 2024), involved an appeal of the Board’s order that, among other things, required the employer to “compensate [the terminated employees] for any direct or foreseeable pecuniary harms incurred as a result of the unlawful adverse actions against them,” in accordance with its decision in Thryv, Inc., 372 NLRB No. 22 (Dec. 13, 2022). Siding with the employer on the issue, the Third Circuit held that the Board’s order exceeded its authority under the NLRA, agreeing with the company that the Thryv remedy, granting “consequential damages,” was “not an equitable concept but instead a legal principle typically preserved for juries in court.” The NLRA, the court held, limits the Board’s remedial authority to equitable, not legal, relief. “[T]hat relief cannot exceed what the employer unlawfully withheld.”¹

Second Circuit Affirms Summary Judgment in Indian Surgeon’s Claims of Discrimination and Retaliation Under Title VII

In Trivedi v. St. Peter’s Health Partners Medical Associates PC, __ F.4th __ (2d Cir. 2024), an Indian bariatric surgeon filed suit in federal court alleging the medical group he worked for discriminated against him, and he was harassed, terminated, and retaliated against in violation of title VII because he is “Indian with a brown complexion.”

In support of his discrimination claim the plaintiff asserted that the medical group refused to provide him with a second surgeon to ensure he had back-up coverage, while providing a back-up surgeon for a co-worker who was Caucasian. While both employees were bariatric surgeons, the Second Circuit found, they were not similarly situated. They worked at different locations, in different private medical offices, different hospitals, and different cities. To establish a prima facie case of discrimination by showing disparate treatment among similarly situated employees, the comparators must be similarly situated “in all material respects,” the court stated.

The plaintiff also claimed his employer allowed harassment by co-workers because of his race and color, although he conceded that he had never heard comments on his race or color, either directly or indirectly. “Such pure speculation is insufficient to meet even the minimal burden of a prima facie case,” the Second Circuit held. Similarly, the court found the plaintiff failed to provide evidence supporting an inference of discrimination in the decision by the medical group’s management committee to terminate his employment. The Second Circuit also rejected the plaintiff’s retaliation claim, finding no causal connection between his complaints of discrimination and harassment and his termination.

Fifth Circuit Backs Employer in ADEA Retaliation Case

The plaintiff in Hall v. UiPath Inc., __ F.4th __ (5th Cir. 2024), was hired by a software company when he was 62 years old. He was subsequently terminated for poor performance after having been placed on a performance improvement plan, following which he submitted an internal complaint of age discrimination. Shortly thereafter, the plaintiff began employment with a company that was a partner of his prior employer, selling and implementing its software products to end-user companies. As part of his role for his new employer, the plaintiff frequently reached out to his colleagues at his former employer soliciting their business. His persistent communication prompted an email from his prior supervisor, telling the plaintiff’s new employer that she preferred the plaintiff not work in her territories. The plaintiff was then terminated from employment by his new employer, who stated that the termination decision was not prompted by his former employer. Rather, the plaintiff did not mesh well with his new team and could not leverage his connections as expected, which was problematic in light of how much he was earning.

The plaintiff sued his former employer for retaliation under the ADEA, claiming his age discrimination complaint to his former employer caused his termination at his new employer. The district court granted summary judgment for the former employer finding there was no causal link between the plaintiff’s protected activity (his age discrimination complaint) and its subsequent adverse employment action (texting the plaintiff’s new employer), and that he didn’t rebut the stated nondiscriminatory reasons for his former employer’s negative reference to his new employer. On appeal, the Fifth Circuit affirmed the district court’s decision, finding that the plaintiff did not adequately challenge the district court’s findings.²

Second Circuit Affirms Dismissal of ERISA Breach of Fiduciary Duty Claim

Singh v. Deloitte LLP, __ F.4th __ (2d Cir. 2024) was a putative class action by retirement plan participants alleging their employer’s retirement plan administrators breached their fiduciary duty in violation of ERISA. The plan fiduciaries, they alleged, failed to adequately manage the retirement plan’s recordkeeping and administrative fees, which resulted in the payment of excessive fees by plan participants. They claimed that “the Plan could have obtained recordkeeping services that were comparable to or superior to the typical services provided by the Plan’s recordkeeper at a lower cost.” The district court granted the employer’s motion to dismiss, finding the complaint “lacked sufficient factual allegations regarding the type and quality of recordkeeping services provided by the Plan and its allegedly less-expensive comparators.” The Second Circuit agreed, citing numerous deficiencies in the plaintiffs’ allegations, including their failure to compare total recordkeeping costs, comprising both direct and indirect fees, and omitting the indirect fees from the allegations. The plaintiffs also failed to compare the plans using the same dates. And, most significantly, the plaintiffs failed to compare the services rendered by the plans. Thus, the court concluded, plaintiffs failed to plausibly allege a breach of fiduciary duty.