The USERRA Does Not Pre-empt An Employment Contract's Arbitration Clause

Federal law favors arbitration of disputes.  While the U.S. Supreme Court has held that statutory claims – including employment-related issues – generally are subject to arbitration, it has not specifically addressed the arbitrability of claims under the Uniformed Services Employment and Re-employment Act (USERRA).  Until recently, in fact, only one federal appellate court had addressed that issue, and had determined that claims related to the USERRA are subject to arbitration, if arbitration is required under a written agreement.  Garrett v. Circuit City Stores, Inc., 449 F.3d 672 (5th Cir. 2006).  Recently, the 6th U.S. Circuit Court of Appeals reached the same conclusion, finding that an optometrist who was called to military duty was required to arbitrate his claims related to demotion and earnings.  Landis v. Pinnacle Eye Care, LLC, 6th Cir., No. 07-6204, August 11, 2008.

Dr. Timothy Landis, an optometrist, brought a law suit against Pinnacle Eye Care alleging employment discrimination based, in part, on his military service.  Landis claimed that when he was called to active duty in Afghanistan, he negotiated certain employment terms that were to go into effect upon his return.  However, neither Landis nor Pinnacle amended Landis’ existing written employment agreement to reflect those terms.  Landis alleged that upon his return from Afghanistan, Pinnacle refused to honor the additional terms; he then filed a lawsuit claiming violation of the USERRA.  The district court granted the company’s motion to stay the law suit, and ordered the matter to arbitration, based upon an arbitration clause in the original agreement.  Landis appealed that decision to the Sixth Circuit, claiming that his rights to proceed under the USERRA would preclude arbitration.

After reviewing the situation, the Sixth Circuit affirmed the lower court’s decision.  It did so based upon the wording of the agreement between Landis and Pinnacle, in which Landis agreed to resolve “any controversy, dispute or disagreement” related to the employment relationship, and which could not otherwise be amicably negotiated, through arbitration. 

While Landis argued that the USERRA pre-empted the arbitration clause, the Sixth Circuit disagreed.  It pointed out the Supreme Court’s view that, although not every statutory claim may be appropriate for arbitration, parties who agree to arbitrate claims should be held to that agreement “unless Congress itself has evinced an intention to preclude waiver of judicial remedies for the statutory rights at issue.”  The Sixth Circuit then addressed the USERRA in some detail, and determined that nothing in the statutory language or legislative history of that Act demonstrated a Congressional intent to preclude arbitration.  The Court also found that arbitration provides a fair opportunity for a claimant to present and prevail on a claim of a USERRA violation and that, therefore, arbitration of such claims is appropriate.

This decision is of interest to both employers and employees, and applies in any situation in which the terms and conditions of a work-related relationship are governed by a written agreement – including, arguably, an independent contractor situation.  Parties to such agreements should be aware of the parameters of dispute resolution included in written agreements, and should be prepared to act consistently with those agreed-upon mechanisms before proceeding to lengthy and expensive litigation.