8th CIRCUIT FINDS EMPLOYER MAY HAVE VIOLATED USERRA

John GarnerLegislative Updates, Resources

The United States Court of Appeals For the Eighth Circuit has reversed a trial court’s decision in a case that involved the Uniformed Services Employment and Reemployment Rights Act (USERRA).  The 8th Circuit sent the case back down to a lower court to determine if the employer violated an employee’s rights while on military leave.

The case is Jonathan Dorris v. TXD Services.

Jonathan Dorris, a member of the Arkansas Army National Guard, appealed the district court’s grant of summary judgment dismissing his claim that TXD Services violated USERRA when it terminated him while he was deployed on active duty in Iraq.  The legal basis of the claim changed during the summary judgment process.  The 8th Circuit concluded the modified claim turns on one or more essential facts that the summary judgment record simply does not address.  Accordingly, it reversed the grant of summary judgment and remanded the case for further proceedings.

Dorris began working for TXD in early 2007.  In April, Dorris received Warning Orders that he would be mobilized within six months in connection with Operation Iraqi Freedom.  He notified his direct supervisors and TXD’s human resources department.  Dorris worked for TXD until September 11, 2007.  He served on active duty in Iraq for approximately 12 months beginning in January 2008.

In October 2007, Dorris received a letter from TXD advising that he was eligible for Continuation Coverage under COBRA and identifying the triggering event as “Termination of Employment.”  His wife called and told Dorris he had been fired.  Understandably alarmed, Dorris called the TXD human resources.  He was told in two calls that he had been “terminated for not showing up to work.”  Dorris requested that managing partner Joe Poe contact him, but he never did.

While Dorris was on active duty in Iraq TXD sold its assets to Foxxe Energy Holdings.  The sale contract included as an exhibit a listing of all personnel currently employed by TXD.  The contract further provided that Foxxe would use reasonable efforts to offer employment to those individuals listed who Foxxe determined in its sole discretion are qualified and necessary to operate and manage the equipment.  In what became the crucial issue in this lawsuit, TXD did not place Dorris’s name on that list. Following the asset sale to Foxxe, TXD ceased to operate as a going concern.

Dorris returned to the United States on temporary leave in August 2008 and learned that Foxxe hired “all” of TXD’s employees, and that no unemployment claims were asserted against TXD following the sale.  The Army wrote Foxxe a letter to make it aware of Dorris’s situation, stating that, had there been no change of hands between organizations, Sgt. Dorris would have been entitled to reemployment due to wrongful termination.  Dorris returned to the United States and was ready to resume work on December 15, 2008. Dorris contended he contacted both TXD and Foxxe seeking reemployment.  In April 2009, Dorris was hired by Foxxe to the same position he had held at TXD.

Dorris filed this lawsuit in November 2010.  The complaint alleged that TXD violated Plaintiff’s rights under USERRA by firing Dorris while he was deployed on active duty.  TXD moved for summary judgment, arguing that Dorris had no claim because TXD had been out of business for months.

Counsel for Dorris filed a brief opposing the motion for summary judgment that explained that he was bringing a discrimination claim, not a failure to reinstate claim.  Dorris argued (i) he was fired in October 2007 while on active duty in Iraq, (ii) TXD’s assertion that he quit was pretextual, and therefore (iii) he had a submissible claim that TXD violated USERRA’s anti-discrimination provision.  TXD’s sale of assets to Foxxe cannot excuse his firing, Dorris argued.  The brief claimed he was entitled to be on the list of all personnel currently employed by TXD so that when he returned, he would immediately receive reasonable consideration from Foxxe as a potential employee.

In response, TXD’s brief argued that whether Dorris quit or was fired was immaterial.  TXD submitted an affidavit by Poe saying that TXD did not consider individuals who were absent from employment due to a long-term military commitment to be current or active employees.

The district court granted summary judgment on any claim that TXD violated its reemployment obligation (a ruling Dorris did not appeal).  The court acknowledged that whether Dorris was fired or quit in October 2007 was a disputed issue of fact but concluded this issue did not control whether Dorris was included on the list of TXD employees provided to Foxxe.

On appeal, Dorris argued the grant of summary judgment must be reversed because there was sufficient evidence for a reasonable jury to find that his military service was a motivating factor in TXD’s decision to fire him in October 2007. Like the district court the 8th Circuit concluded this is a not an issue of material fact.  Whether TXD regarded Dorris as fired while he was serving on active duty in Iraq did not affect TXD’s legal obligations under USERRA, such as the duty to reemploy him upon completion of his military service.  TXD did not violate its duty to reemploy Dorris because it went out of business while he was on leave.  The pertinent issue is whether TXD violated its USERRA obligations to Dorris while he was on leave by not including him on the list of TXD employees provided to Foxxe.

When an employee is on leave to perform military service, his right to benefits not determined by seniority that are guaranteed by USERRA is not dependent on how the employer characterizes the employee’s status during a period of service.

TXD claimed that being on the list was not a benefit of employment; rather, Dorris was not eligible to be on the list because he was not a current or active employee at the time Foxxe took over operations.

Dorris presented evidence that most if not all active TXD employees were hired by Foxxe following the asset sale, permitting the inference that being on the asset sale’s personnel list provided employees a meaningful advantage or benefit.  But on this record, whether Dorris was denied a benefit of employment when TXD did not include him on the asset sale list is a disputed issue of material fact.

The remaining question was whether, if the list was a benefit not determined by seniority, TXD failed to comply with USERRA because it denied Dorris a benefit generally provided to employees having similar seniority, status, and pay who were on furlough or leave of absence under a contract [or] policy established while Dorris was performing military service.  TXD submitted Poe’s affidavit reciting that no employee absent because of long-term military leave was on the list.  That general policy would tend to show the absence of personal animus against Dorris for being on military leave.  But Poe’s affidavit did not address whether TXD also excluded (or would have excluded) from the personnel list employees who were then on long-term leave for reasons other than military service.

The district court resolved the issue in TXD’s favor because Dorris had not offered any evidence that TXD allowed employees on leave of absence or furlough to remain on any list of active or current employees.  In other words, the district court determined that a plaintiff claiming denial of a benefit while serving on long-term military duty has both the burden of persuasion and the burden of producing evidence relevant to whether the employer treated plaintiff the same as all employees on comparable non-military leaves.  The 8th Circuit said the burden shifted to TXD to show that the same action would have been taken in the absence of military service.

This case should serve as a reminder to all employers of their duty not to discriminate against employees on military leave.

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