Garrett v. Circuit City Stores, Inc.

• Decision Date: 11 May 2006
• Docket Number: No. 04-11360.,04-11360.
• Citation: 449 F.3d 672
• Parties: Michael T. GARRETT, Plaintiff-Appellee, v. CIRCUIT CITY STORES, INC., Defendant-Appellant.
• Court: U.S. Court of Appeals — Fifth Circuit

449 F.3d 672

Michael T. GARRETT, Plaintiff-Appellee, v. CIRCUIT CITY STORES, INC., Defendant-Appellant.

No. 04-11360.

United States Court of Appeals, Fifth Circuit.

May 11, 2006.

Robert E. Goodman, Jr. (argued), Dallas, TX, for Garrett.

John Gray Harrison (argued), Lela Rosalee Loriane Pickell, Ogletree, Deakins, Nash, Smoak & Stewart, Dallas, TX, for Defendant-Appellant.

Christopher Herbert Hahn, Vinson & Elkins, Austin, TX, for Texas Employment Law Council, Amicus Curiae.

John S. Odom, Jr., Jones, Odom, Davis & Politz, Shreveport, LA, for Reserve Officers Ass'n, Amicus Curiae.

Appeal from the United States District Court for the Northern District of Texas.

Before JONES, Chief Judge, and KING and DENNIS, Circuit Judges.

EDITH H. JONES, Chief Judge:

The issue in this case is whether a provision of the Uniformed Services Employment and Reemployment Rights Act ("USERRA"), 38 U.S.C. § 4302(b), which protects the employment rights of members of the armed forces, precludes the enforcement of individual contracts to arbitrate such disputes. We hold that it does not. Accordingly, we reverse the district court's contrary conclusion.

I. BACKGROUND

Appellee Garrett was hired by Circuit City in 1994, while he was a member of the Marine Reserves. In 1995, Circuit City adopted an "Associate Issue Resolution Program" consisting of a nationwide policy for resolving employment-related disputes. When the Associate Issue Resolution Program was implemented, each associate, including Garrett, received a copy of a receipt form, an Associate Issue Resolution Handbook, a Dispute Resolution Rules and Procedures ("Arbitration Rules"), and an Arbitration Opt-Out Form. Garrett acknowledged, in writing, his receipt of the policy information, and did not opt-out of the arbitration provision within the thirty-day time period allowed under the policy.

Garrett alleges that between December 2002 and March 2003, as the American military was preparing for combat in Iraq, he began to receive unjustified criticism and discipline from his supervisors. In March 2003, Garrett was fired, an action he attributes solely to his status as a Marine Reserve Officer.

Garrett sued under USERRA, and the district court agreed with his contention that § 4302(b) of USERRA overrides the enforcement of the arbitration agreement. Circuit City has appealed from the court's judgment denying its motion to compel arbitration.

II. DISCUSSION

This Court reviews de novo a district court's ruling on a motion to compel arbitration. Am. Heritage Life Ins. Co. v. Lang, 321 F.3d 533, 536 (5th Cir.2003).

The arbitration agreement between Garrett and Circuit City provided that claims arising out of cessation of employment would be settled by final and binding arbitration, enforceable by and subject to the Federal Arbitration Act ("FAA"), 9 U.S.C. § 1 et seq. To determine whether the agreement between the parties is enforceable, we first review the Supreme Court's arbitration decisions, and then construe USERRA.

The FAA was enacted "to reverse the longstanding judicial hostility to arbitration agreements . . . and to place arbitration agreements upon the same footing as other contracts." Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 24, 111 S.Ct. 1647, 1651, 114 L.Ed.2d 26 (1991). The FAA states that written arbitration agreements are "valid, irrevocable, and enforceable, save upon such grounds as exist at law or in equity for the revocation of any contract." 9 U.S.C. § 2. The Court has reinforced the strong federal policy favoring arbitration. Mitsubishi, 473 U.S. at 626-27, 105 S.Ct. at 3353-54. Accordingly, once a party makes an agreement to arbitrate, that party is held to arbitration "unless Congress itself has evinced an intention to preclude a waiver of judicial remedies for the statutory rights at issue." Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 626-27, 105 S.Ct. 3346, 3353-54, 87 L.Ed.2d 444 (1985). Garrett bears the burden to prove that Congress intended to preclude a waiver of a judicial forum for USERRA claims. See Gilmer, 500 U.S. at 26, 111 S.Ct. at 1652.

In Gilmer, the Supreme Court considered the favored status of arbitration in the employment context when an individual subject to an arbitration agreement alleged a violation of federal discrimination statutes. Gilmer, 500 U.S. at 23, 111 S.Ct. at 1650. The Court held that statutory discrimination claims under the Age Discrimination in Employment Act were subject to mandatory arbitration under the FAA. Id. at 35, 111 S.Ct. at 1657. In so holding, the Court clarified several issues concerning the FAA's application: (1) "It is by now clear that statutory claims may be the subject of an arbitration agreement, enforceable pursuant to FAA," id. at 26, 111 S.Ct. at 1652; (2) although arbitration involves submission to an alternate, nonjudicial forum, it does not require a party to forego substantive rights afforded by the particular statute, id.; (3) arbitration is not inconsistent with the important social policies being addressed by federal statutes, id. at 28, 111 S.Ct. at 1653; and (4) limited discovery provisions are nevertheless sufficient to allow a fair opportunity to present discrimination claims, id. at 31, 111 S.Ct. at 1654-55.

The Court also distinguished between an employer/employee agreement enforceable pursuant to the FAA and union collective bargaining agreements. Id. at 33-34, 111 S.Ct. at 1656. Although both agreements may include arbitration provisions, they may require different treatment under federal law. Id. at 34-35, 111 S.Ct. at 1656-57. When all employees in a unit are represented by a union, the collective interest of the bargaining unit may impinge upon individual substantive rights. Id. To that end, pre-Gilmer decisions reflected a concern for "the tension between collective representation and individual statutory rights." Id. at 35, 111 S.Ct. at 1657. The Court stated, however, that such tension is not present in the enforcement of individual agreements between an employee and the employer. See id.

Finally, Gilmer elaborated on the difference between substantive rights conferred by Congress, such as the prohibition of age discrimination, which must be preserved, even in the arbitral forum, and procedural rights, which include choice of forum and may be waived without running afoul of the substantive intent of Congress. Id. at 26, 111 S.Ct. at 1652.¹

Because the parties agreed to arbitrate the dispute at issue,² the agreement is enforceable unless Garrett can demonstrate that Congress intended to preclude arbitration. See Mitsubishi, 473 U.S. at 626-27, 105 S.Ct. at 1353-54. Congressional intent "will be discoverable in the text of [USERRA], its legislative history, or an `inherent conflict' between arbitration and [USERRA]'s underlying purposes." Gilmer, 500 U.S. at 26, 111 S.Ct. at 1652.

1. Text of USERRA

USERRA's antidiscrimination provision prohibits an employer from denying initial employment, reemployment, or any other benefit of employment to a person on the basis of membership in a uniformed service, application for membership, performance of service, application for service, or obligation of service. 38 U.S.C. § 4311(a). Garrett contends, and the district court agreed, that § 4302(b) of USERRA precludes binding arbitration in stating:

This chapter supersedes any State law (including any local law or ordinance), contract, agreement, policy, plan, practice or other matter that reduces, limits, or eliminates in any manner any right or benefit provided by this chapter, including the establishment of additional prerequisites to the exercise of any such right or the receipt of any such benefit.

According to Garrett, a "right or benefit provided by" USERRA is a plaintiff's right to bring suit in federal court. Indeed, USERRA provides two methods for a protected person to enforce substantive rights against a private employer. A person may file a complaint with the Secretary of Labor (who will investigate and attempt to resolve the complaint) and request that the Secretary refer the matter to the Attorney General for further prosecution. 38 U.S.C. § 4323(a)(1). Alternatively, a person may pursue a civil action in federal court, forgoing all agency participation. 38 U.S.C. § 4323(a)(2).³ In this case, Garrett chose the second method.

It is not evident from the statutory language that Congress intended to preclude arbitration by simply granting the possibility of a federal judicial forum. As noted above, the Supreme Court has held that "by agreeing to arbitrate a statutory claim, a party does not forgo the substantive rights afforded by the statute; it only submits to their resolution in an arbitral, rather than a judicial forum." Mitsubishi, 473 U.S. at 626-27, 105 S.Ct. at 1353-54. In cases involving the Sherman Act,⁴ the Securities Exchange Act of 1934,⁵ the civil protections of the Racketeer Influenced and Corrupt Organizations Act (RICO),⁶ and the Securities Act of 1933,⁷ the Court has held substantive statutory rights enforceable through arbitration. With this in mind, it is significant that Section 4302(b) does not mention mandatory arbitration or the FAA, notwithstanding that the Gilmer decision, issued only three years before enactment of § 4302(b), extended mandatory arbitration to employment agreements. When Congress enacts laws, it is presumed to be aware of all pertinent judgments and opinions of the judicial branch. United States v. Barlow, 41 F.3d 935, 943 (5th Cir.1994). Congress was on notice of Gilmer in 1994 but did not speak to the issue in the text of § 4302(b). The text of § 4302(b) is not a clear expression of Congressional intent concerning the arbitration of servicemembers' employment disputes.⁸

When properly interpreted, § 4302(b) can be harmonized with the FAA and mandatory arbitration. Its operation and meaning turn, in part, on the terms "right or benefit provided by this chapter." The purpose of...