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August 10, 2006
USERRA Is Still in the Spotlight

As increasing numbers of U.S. employees are sent to fight in Iraq, and are staying for longer periods of time, the Uniformed Services Employment and Reemployment Rights Act (USERRA) continues to evolve. In this case, a Marine Corps reserve officer tested in court a particular aspect of the law, ultimately receiving a ruling that may guide other courts.

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What happened. Michael Garrett joined Circuit City Stores at a Texas location in 1994. The following year, the chain adopted a nationwide policy for dispute resolution­--an agreement that all charges and complaints about employment would be submitted to binding arbitration. Garrett signed his acknowledgment of receiving the notice and did not opt out of the policy during the 30-day period when that was possible. But between December 2002 and March 2003, military personnel began preparing for the Iraq war. Garrett by then was managing a Dallas regional service center, but he claimed his supervisors, knowing his reserve status, began criticizing and disciplining him.

Fired in March 2003, he charged his pending military duty was the only reason. Rather than using the chain's arbitration program, however, he sued his former employer. A judge in federal district court ruled that USERRA superseded Circuit City's alternative dispute resolution agreement, and the chain appealed to the 5th Circuit, which covers Louisiana, Mississippi, and Texas.

What the court said. Garrett argued that the language of USERRA specifies that it supersedes any agreement that would limit "any right or benefit" under the law. But appellate judges didn't see it that way. There is a distinction, they said, between substantive and procedural rights. Substantive rights under USERRA relate to compensation and working conditions, not to a particular mode of dispute resolution. Had Congress intended to preserve the right to sue, it would have specified so in the law.

Judges also noted that federal employees must take their complaints of USERRA violations to the Merit Systems Protection Board rather than to court, indicating that alternative methods are permissible under the law. So Garrett must arbitrate his wrongful termination claim. Garrett v. Circuit City Stores, U.S. Court of Appeals for the 5th Circuit, No. 04-11360 (5/11/06).

Point to remember: To our knowledge, this ruling is the first one, at the appellate level at least, on the application of arbitration agreements to USERRA. It sets precedent in the 5th Circuit, and other circuits will review, and are likely to be guided by, its reasoning. In addition, the arbitration agreement in question must be a fair one.

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