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May 18, 2006
Court Rules Arbitration Agreement Enforceable under USERRA

The U.S. Court of Appeals for the Fifth Circuit has ruled that an arbitration agreement is enforceable in disputes involving the Uniformed Services Employment and Reemployment Rights Act (USERRA).

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In the case, Michael Garrett filed a lawsuit against Circuit City Stores, alleging the company violated USERRA by firing him because he was a member of the Marine Reserves.

The company argued that an arbitration agreement prevented Garrett from suing the company in court. The company's arbitration agreement provided that claims arising out of termination of employment would be settled by binding arbitration, enforceable by and subject to the Federal Arbitration Act. Circuit City asked a district court to dismiss the lawsuit and compel arbitration.

Garrett argued that USERRA precludes the enforcement of a binding arbitration agreement, and the district court agreed. The company then appealed the ruling before the U.S. Court of Appeals for the Fifth Circuit, which covers Louisiana, Mississippi, and Tennessee.

In arguing his case, Garrett claimed that USERRA guarantees him a right to a federal court trial. However, the appeals court disagreed and said the arbitration agreement is enforceable.

"On the contrary, USERRA provides several means for the resolution of disputes, and there is no guarantee of a federal forum for aggrieved employees," the court wrote.

In reversing the lower court's ruling, the appeals court also said that Garrett failed to show that arbitration under Circuit City 's rules would prevent him from having a fair opportunity to present his claims.

The appeals court sent the case back to the lower court for proceedings consistent with the ruling.


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