The Fifth U.S. Circuit Court of Appeals has held that claims under the Uniformed Services Employment and Reemployment Rights Act are subject to arbitration in accordance with employment-related individual arbitration agreements.
The Fifth U.S. Circuit Court of Appeals has held that claims under the Uniformed Services Employment and Reemployment Rights Act (USERRA) are subject to arbitration in accordance with employment-related individual arbitration agreements. See Garrett v. Circuit City Stores, Inc. (5th Cir. 2006).
In this case, the employee, Garrett, signed an agreement as part of his employment, which stated that any claim arising from the termination of his employment would be settled by final and binding arbitration. Garrett was a member of the Marine Reserves and claims he was subject to unjustified criticism and discipline and ultimately discharged because of his status as a Marine Reserve officer. Garrett sued Circuit City in federal court, claiming his discharge violated USERRA. Circuit City filed a motion to compel Garrett to arbitrate his claim, in accordance with the arbitration agreement he signed. The trial court denied Circuit City's motion and the Fifth Circuit reversed this decision, finding USERRA claims are subject to arbitration.
USERRA prohibits employers from denying employment, reemployment, or any other benefit of employment to a person on the basis of membership or application for membership in the uniformed services, or the performance or obligations of service. Additionally, USERRA states that it "supersedes any state law . . . contract, agreement, policy, plan, practice or other matter that reduces, limits or eliminates . . . any right or benefit provided by [USERRA], including the establishment of additional prerequisites to the exercise of any such right or the receipt of any such benefit."
The Fifth Circuit held that this provision does not preclude arbitration of USERRA claims because the substantive rights and benefits defined under USERRA do not include the right to sue in federal court. Additionally, the court found no Congressional intent to preclude arbitration of USERRA claims, rejecting Garrett's argument that the legislative history indicates such an intent. The court noted that the legislative history is scant and relies on cases addressing grievance procedures in collective bargaining agreements, not individual arbitration agreements.
The court also noted that the arbitration procedures in this case provide Garrett a fair opportunity to present a USERRA claim. Here, the procedures provide for discovery, subpoenas, and the presentation of evidence and authorize the arbitrator to award all relief available under the law. Thus, Garrett failed to show that arbitration would deny him a fair opportunity to present his claims. Accordingly, the court held that arbitration is not inconsistent with effective vindication of USERRA rights.
Employers' Bottom Line
This decision is the first federal appeals court decision to address the arbitrability of USERRA claims. Previously, at least one federal trial court held that USERRA claims are not subject to arbitration. (Lopez v. Dillard's, Inc. (D. Kan. 2005)). It is not clear whether other federal appeals courts will follow the decision in Garrett. However, the decision is good news for employers in those states covered by the Fifth Circuit (Louisiana, Texas and Mississippi) seeking to enforce arbitration agreements against employees asserting USERRA claims.
If you have any questions regarding this decision or your rights or obligations under USERRA, please contact John Lowrie,
jlowrie@fordharrison.com, (303) 592-8866, or the Ford & Harrison attorney with whom you usually work.