USERRA Claims Are Subject to Arbitration

Originally published by Thomas J. Crane.

Arbitration of legal disputes has become so common that now it has even invaded the Uniformed Services Employment and Reemployment Rights Act of 1994 (USERRA). Navy Lt. Kevin Ziober filed suit against his former employer after it fired him. BLB Resources, Inc. fired him on his last day of work before just before he deployed to Afghanistan in 2012. Lt. Ziober was a Naval Reservist. Lt. Ziober filed suit. But, the employer, a real estate management company in California, invoked the arbitration agreement he had signed. See Military Times report here. The lieutenant argued before the Ninth Circuit that the history of the USERRA indicated that Congress had intended that the USERRA be exempt from arbitration. The Ninth Circuit Court of Appeals did not agree.

The plaintiff pointed to the clause in the USERRA that prohibits the waiver any right the consumer might have under the statute. But, replied the Ninth Circuit, the Supreme Court addressed essentially the same clause in the Credit Repair Organizations Act in CompuCredit Corp. v. Greenwood, 132 S.Ct. 665 (2012). In the CompuCredit case, the Supreme Court held that the Federal Arbitration Act merely provided a different forum. It did not waive any right to pursue a claim. The employee also argued that the courts afforded liberal interpretation for veterans. The court did not disagree, but in agreeing to arbitration, the veteran did not give up any rights. See decision here.

In dissent, Judge Watford, pointed out that the USERRA does not follow the provisions of the Credit Repair Organizations Act closely enough. The USERRA, he pointed out, prohibits any contract that would limit any right under the USERRA. The right to sue in federal court is one such right. Unlike the Age Discrimination in Employment Act and other statutes, the USERRA includes the right to sue and also includes a non-waiver provision. This is the only employment statute to be considered for arbitration that contains both a provision conferring the right to file a suit and a non-waiver provision.

As I have mentioned previously on this forum, the premise that arbitration is just another forum is false. At least one study has found institutional bias in favor of repeat players in the arbitral system. Employers will be repeat players, not employees. The right we give up in signing those agreements is the right to a system over which we have some degree of control. In theory, if a judge performs badly, we can vote him out or vote out of office. Or, we could vote out of the office the president who appointed that particular judge. But, in arbitration, we have no control over who becomes an arbitrator. We do not have a vote.

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