Plant-based protein food producer Myrtle Greens has formally requested a court to shift the legal and financial burden of an ongoing hiring discrimination lawsuit to its third-party staffing provider, arguing that the contractor is contractually obligated to defend and indemnify the food manufacturer against claims arising from recruitment and screening processes. The litigation, which centers on a job applicant who was denied a delivery position following a positive drug test for marijuana, highlights the growing friction between corporate drug policies and the expanding legal protections for cannabis users in various jurisdictions.
The lawsuit was initiated by a prospective employee who alleges that Myrtle Greens and its staffing partner violated employment laws by rescinding a job offer solely based on the presence of tetrahydrocannabinol (THC) in a pre-employment screening. Myrtle Greens, however, contends that it does not directly manage the hiring, vetting, or testing of the personnel provided by the staffing firm. According to the company’s recent legal filing, the service agreement between the two entities contains a robust indemnification clause that requires the staffing agency to hold Myrtle Greens harmless for any legal disputes resulting from the agency’s human resources practices.
The Core Dispute: Testing for THC in a Legal Era
The legal battle underscores a significant challenge for modern employers: the reconciliation of workplace safety standards with changing state laws. While the specific jurisdiction of this case involves Myrtle Greens’ operations, the broader context is shaped by a nationwide shift in how courts and legislatures view off-duty cannabis use. In many states, recent statutes have limited the ability of employers to take adverse action against employees for testing positive for marijuana, provided the use occurs outside of working hours and the individual is not impaired on the job.
In this specific instance, the plaintiff was seeking a role as a delivery driver. The intersection of delivery services and drug testing is particularly complex. Federal Department of Transportation (DOT) regulations generally mandate strict drug-free requirements for commercial drivers, often superseding state-level cannabis protections. However, for non-CDL (Commercial Driver’s License) delivery roles, the legal ground is much more volatile. The plaintiff argues that as a resident of a state where adult-use cannabis is legal, his positive test should not have been a disqualifying factor for a non-safety-sensitive role.
Myrtle Greens maintains that it was not the entity that conducted the test nor the entity that made the final decision to withdraw the offer. By filing this motion, the produce company seeks to distance itself from the operational failures of the staffing firm, asserting that the firm failed to ensure its hiring protocols were compliant with the latest local labor laws.
Chronology of the Litigation
To understand the current legal standing, it is necessary to examine the timeline of events leading up to the August 21, 2026, filing:
- January 2025: Myrtle Greens enters into a multi-year service agreement with a third-party staffing firm to provide logistics and delivery personnel for its expanding plant-based protein distribution network. The contract includes specific language regarding "Defense and Indemnification," requiring the agency to ensure all hiring practices meet state and federal standards.
- February 2026: The plaintiff applies for a delivery driver position through the staffing agency’s portal. After a successful initial interview, a conditional offer of employment is extended, pending a routine background check and toxicology screen.
- March 2026: The toxicology screen returns a positive result for THC. The staffing agency notifies the plaintiff that the offer has been rescinded.
- May 2026: The plaintiff files a civil lawsuit against both Myrtle Greens and the staffing agency, alleging discrimination under the state’s Fair Employment Practices Act and specific cannabis protection statutes.
- July 2026: Myrtle Greens issues a formal demand to the staffing agency to take over the defense of the lawsuit and provide indemnification. The agency reportedly refuses, citing that Myrtle Greens set the "drug-free workplace" policy.
- August 21, 2026: Myrtle Greens files its motion in court, seeking a declaratory judgment that the staffing firm owes a duty to defend and indemnify the food producer.
Contractual Obligations: Indemnity and the Duty to Defend
The crux of Myrtle Greens’ argument rests on the distinction between the "duty to defend" and the "duty to indemnify." In commercial law, the duty to defend is generally broader than the duty to indemnify. It requires one party to pay for the other’s legal counsel from the moment a lawsuit is filed that potentially falls within the scope of their agreement.
Myrtle Greens argues that because the staffing agency was the "employer of record" and responsible for the administration of the drug test, any error in the application of that test—or the legal interpretation of its results—falls squarely on the agency’s shoulders. The produce company asserts that it relied on the agency’s expertise to navigate the complex landscape of employment law.
"The agreement was clear," a spokesperson for Myrtle Greens’ legal team stated in a brief press release. "We contracted for a service that included compliant HR management. If the staffing firm failed to keep pace with evolving cannabis legislation, that is a breach of their professional obligation to us as their client."
Supporting Data: Drug Testing and the Plant-Based Industry
The case comes at a time when the plant-based protein industry is seeing rapid growth, leading to a surge in hiring for logistics and distribution roles. According to market data from 2025, the plant-based meat sector is projected to reach a valuation of $25 billion by 2030, with a compound annual growth rate (CAGR) of 12.5%. Companies like Myrtle Greens are scaling quickly, often relying on third-party agencies to manage the influx of labor needs.
Simultaneously, data from Quest Diagnostics and other major testing laboratories show a significant trend in workplace drug screening. In 2024 and 2025, the rate of positive drug tests for marijuana in the general U.S. workforce reached a two-decade high. However, the data also shows that an increasing number of companies are removing THC from their standard "5-panel" drug screens for non-safety-sensitive positions to avoid the exact type of litigation Myrtle Greens is currently facing.
Furthermore, a 2025 survey of human resources professionals found that 42% of mid-sized companies have transitioned to "joint-employer" models with staffing agencies specifically to mitigate the risks of employment litigation. However, as this case demonstrates, those protections are only as strong as the indemnification clauses within the contracts and the willingness of the parties to honor them.
Official Responses and Legal Perspectives
The staffing firm at the center of the dispute has yet to file its formal response to the August 21 motion. However, sources close to the firm suggest their defense will likely hinge on the argument that Myrtle Greens maintained "de facto" control over hiring standards. In joint-employer disputes, if the client company (Myrtle Greens) dictates the specific criteria for disqualification—such as a "zero-tolerance" drug policy—the staffing agency may argue that it was merely following the client’s instructions, thereby nullifying the indemnity clause.
Legal analysts suggest that this case could serve as a bellwether for how "duty to defend" clauses are interpreted in the age of legalized cannabis. "We are seeing a collision between traditional contract law and modern social policy," said Sarah Jenkins, an employment law expert not involved in the case. "If the court finds that the staffing agency is responsible for the defense, it will put massive pressure on the staffing industry to strictly vet the drug policies of their clients against local laws."
Broader Impact and Implications
The outcome of this motion will have significant implications for the "Produce and Plant-Based Food" sector, as well as the broader logistics industry. If Myrtle Greens is successful, it will reinforce the ability of corporations to offload the legal risks of hiring to specialized agencies. This would likely lead to higher premiums for staffing services as agencies account for the increased liability.
Conversely, if the court denies the motion, it will serve as a warning to companies that they cannot fully insulate themselves from the consequences of discriminatory hiring practices simply by using a middleman. It would require companies like Myrtle Greens to take a more active role in auditing the HR practices of their contractors.
Furthermore, the case highlights the urgent need for clearer federal guidance on cannabis and employment. As long as marijuana remains a Schedule I substance at the federal level while being legal in dozens of states, the "gray area" regarding drug testing for delivery and transportation roles will continue to produce costly litigation.
For Myrtle Greens, the stakes are not just financial but also reputational. As a producer of plant-based protein, the company markets itself on values of health, sustainability, and modern ethics. Being embroiled in a discrimination suit over cannabis—a substance often associated with the same demographic that consumes plant-based proteins—presents a brand alignment challenge that the company is eager to resolve.
As the court deliberates on the motion for defense and indemnification, the industry will be watching closely. The decision will likely influence how future service agreements are drafted and how drug testing protocols are implemented across the supply chain in an era where the definition of a "compliant" workplace is constantly shifting.
