She refused to do so based on the fact that it was against her religion. She was fired on the grounds of insubordination. She filed suit.
Federal law requires companies to reasonably accommodate their employees' religions.
It would seem that a reasonable accommodation in this case would be to exempt her from this requirement. On the other hand, an argument could be made that the phrase is not religious, but secular. The U. S. Supreme Court has held in other situations that Christmas is a secular holiday. If I was asked should we fire her for insubordination, I would say no. It's too tough to call.