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February 2, 2017
  Ziober v. BLB Resources, Inc.
Headline: The Ninth Circuit joined other circuits in holding that the Uniformed Services Employment and Reemployment Rights Act which institutes employment rights for returning service members does not prohibit required arbitration of claims arising under its provisions.

Areas of Law: Arbitration, Labor Law, Uniformed Services Employment and Reemployment Rights Act

Issue Presented: Whether the Uniformed Services Employment and Reemployment Rights Act prohibits compelled arbitration pursuant to an arbitration clause in a service member's employment contract for claims against his former employer arising under the act.

Brief Summary: Plaintiff-Appellant Kevin Ziober ("Ziober"), a service member of the United States Navy Reserve, signed an agreement with his employer, Defendant-Appellee BLB Resources, Inc. ("BLB Resources"), compelling arbitration of any claims that should arise during the course of his employment or at his termination. Ziober later sued BLB Resources in federal court, claiming a violation of the Uniformed Services Employment and Reemployment Act of 1994 ("USERRA") on the ground he was terminated after notifying his employer that he was being deployed. The district court granted BLB Resources's motion to compel arbitration and dismissed the case holding that the USERRA did not nullify the arbitration agreement. On appeal, the Ninth Circuit panel affirmed, holding there is no indication from the USERRA's text or legislative history that Congress intended to override the Federal Arbitration Act's directive that courts enforce arbitration contracts according to their terms.

Significance: Service-members suing under USERRA can be required to arbitrate claims arising under the act if they entered a compelled arbitration agreement.

Extended Summary: Plaintiff-Appellant Kevin Ziober ("Ziober") was a service member of the United States Navy Reserve. He also worked as an operations director for Defendant-Appellee BLB Resources, Inc. ("BLB Resources"). Soon after joining BLB Resources, Ziober signed a bilateral arbitration agreement with the company that compelled binding arbitration if any dispute arose between Ziober and the company during Ziober's employment or at the time of his termination. Pursuant to the agreement the company would pay all costs for the arbitration and the remedies and discovery available in arbitration would be the same as those afforded by the courts.

The Navy later recalled Ziober into active duty and Ziober gave his employer notice of his upcoming deployment to Afghanistan. On his final day of scheduled employment, BLB Resources told him it would be his last day and that he would no longer be employed with the company upon his return.

After returning from deployment, Ziober sued BLB Resources in federal district court for violating the Uniformed Services Employment and Reemployment Rights Act of 1994 ("USERRA"), which protects reemployment rights of members serving in the armed forces. BLB Resources successfully moved to compel arbitration and the district court dismissed the case, holding that USERRA did not supersede the agreement Ziober signed with his employer.

On appeal, the Ninth Circuit panel considered whether USERRA prohibited the compelled arbitration of disputes arising under the act. The panel based its opinion on an analysis of extensive Supreme Court precedents acknowledging the federal policy supporting arbitration agreements. The panel noted that the only exception to enforcing arbitration agreements as mandated by the Federal Arbitration Act ("FAA") is when this pro-arbitration policy has been superseded by contrary congressional intent in a new statute or act.

USERRA provides, in pertinent part, that, "this chapter supersedes any 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." The panel reasoned that Ziober did not lose any substantive rights protected by the statute and that compelling arbitration did not require him to take any additional steps before vindicating his rights. The only result of compelling arbitration would be the requirement of an arbitral forum rather than a judicial forum.

The panel relied on the Supreme Court's decision in CompuCredit Corp. v. Greenwood, 132 S.Ct. 665 (2012), where the Court rejected the claim that the Credit Repair Organization Act created a procedural right to a lawsuit in court despite the Act's text which appears to contemplate judicial forums. The panel reasoned that nothing in the text of USERRA mentions compelling arbitration and, had Congress intended to prohibit the arbitration of claims under USERRA, Congress could have done so by the use of unmistakable language. Similarly, the panel found no evidence of contrary congressional intent in the act's legislative history. Thus, the panel affirmed the district court's judgment compelling arbitration.

Judge Watford concurred and joined the court's opinion, but discussed the ambiguity of USERRA. Judge Watford asserted that there were two possible interpretations of USERRA, one that prohibits an employee's waiver of his or her right to bring a suit under USERRA in a court, and another that prohibits only waiver of substantive rights under USERRA. Because nothing in the legislative history of the act settles the ambiguity, Judge Watford concurred to avoid a circuit split. He wrote that if Congress intended a contrary result, it could amend the statute.

To read full opinion, please visit:
https://cdn.ca9.uscourts.gov/datastore/opinions/2016/10/14/14-56374.pdf

Panel: Mary H. Murguia and Paul J. Watford, Circuit Judges, and Susan R. Bolton, District Judge.

Argument Date: July 5, 2016

Date of Opinion: October 14, 2016

Docket Number: 14-56374

Decided: Judgment affirmed.

Counsel:
Peter Romer-Friedman (argued) and R. Joseph Barton, Cohen Milstein Sellers & Toll PLLC, Washington, D.C.; Kathryn S. Piscitelli, Orlando, Florida; Thomas G. Jarrard, Law Office of Thomas Jarrard, PLLC, Spokane, Washington; for Plaintiff-Appellant

Lonnie D. Giamela (argued), Jimmie E. Johnson, and Nathan V. Okelberry, Fisher & Phillips LLP, Los Angeles, California, for Defendant-Appellee

Author of Opinion: Judge Murguia

Concurrence: Judge Watford

Case Alert Author: Maria Vittoria

Case Alert Supervisor: Philip L. Merkel

    Posted By: Glenn Koppel @ 02/02/2017 07:02 PM     9th Circuit  

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