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USERRA Claims Can Be Subject to Mandatory Arbitration Agreements


Ziober v. BLB Resources, Inc. - Ninth Circuit Court of Appeals


Facts:  Kevin Ziober ("Ziober") worked as an operations director for BLB Resources, Inc. ("BLB").  About six months after joining BLB, Ziober signed an agreement that required the arbitration of legal disputes.  Ziober, who served in the United States Navy Reserve, was recalled into active duty to serve in Afghanistan.  On his last day of scheduled work, BLB apparently told him that he would not have a job upon his return from active duty.

Ziober subsequently filed suit against BLB in April 2014 upon his return from Afghanistan on the grounds that he was allegedly terminated from his job after providing notice of his deployment to Afghanistan as part of the United States Navy Reserve.  Ziober alleged violations of the Uniformed Services Employment and Reemployment Act of 1994 ("USERRA").  BLB moved to compel arbitration based upon the agreement signed by Ziober.  The district court granted the motion and held that USERRA did not invalidate or supersede the arbitration agreement.  Ziober subsequently appealed the ruling.

Holding:  At the outset, the Ninth Circuit Court of Appeals held that a liberal policy existed that favored arbitration agreements.  With that being said, an exception to the "arbitration mandate" exists when the mandate "has been 'overridden by a contrary congressional command.'"  In order to overcome this mandate, the party that is challenging the arbitration bears the burden of proof.

In this instance, Ziober argued that the plain text and legislative history of USERRA demonstrated that Congress intended to preclude compelled arbitration of claims that arose under this Act.  Although a provision stated that USERRA superseded any "contract, agreement, policy, plan, practice or other matter" that reduced, limited, or eliminated any right or benefit of the Act, the Ninth Circuit was not swayed that arbitration could not be binding on the parties.  Although prior courts had held that Congress did not want USERRA plaintiffs to be forced "to submit to arbitration, mediation, or any grievance produced as a prerequisite to filing suit, that did not prohibit an individual arbitration agreement between an employer and an employee such as the one at issue.

The Court then turned to the legislative history of USERRA and noted that the limited legislative history available for analysis did not provide Ziober with much support.  Although Congress expressed a concern over forcing an employee to take an additional step before bringing suit, that concern did not reach individual agreements to arbitrate like the one at issue in this case. 

Judgment:  The Ninth Circuit Court of Appeals affirmed the lower court's ruling and held that USERRA does not prohibit the compelled arbitration of claims arising under that Act.

The Takeaway:  Every once in a while, I come across an interesting USERRA case...and this was no exception.  I think it is important to note that the Ninth Circuit acknowledged that it is possible that Congress did not want "members of our armed forces to submit to binding, coercive arbitration agreements."  However, since the plain language of USERRA did not bar arbitration of these claims (and the legislative history of the Act did not support this argument), the Ninth Circuit had no grounds to agree with Ziober's arguments.  

I will point readers to the concurring opinion filed in this case in which Judge Watford suggested the issue was "open to debate", but ultimately did not think it would be prudent to create a split among circuits on the issue.  Not necessarily much for Ziober (or another claimant bringing a similar case) to rely upon...but this is certainly an issue I could see coming up again.

Majority Opinion Judge:  Judge Murguia

Date:  October 14, 2016

Opinion:  hr.cch.com/eld/ZioberBLB101416.pdf

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