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Employer’s omission of deployed service member from list of employees provided to successor employer as a part of asset sale did not violate USERRA

August 27th, 2012  |  Cynthia L. Hackerott

An employer’s omission of Arkansas Army National Guard member, who was deployed in Iraq at the time, from a list of employees provided to a successor employer as a part of the asset sale did not constitute actionable discrimination in violation of USERRA, a federal district court in Arkansas has ruled. The employer demonstrated by a preponderance of the evidence that, regardless of whether the employee was fired because of his military service, he would not have been included on the list of employees provided to the successor employer as a part of the asset sale. Therefore, the employer would have taken the same action, regardless of the employee’s military service, and the court could not conclude that this omission proximately caused an adverse employment action. (Dorris v TXD Services, LP, DArk, 96 EPD ¶44,581)

While on active military duty, employee gets word he has been terminated. The employee began working for TXD Services, LP (TXD), on February 7, 2007. He was on active duty in connection with Operation Iraqi Freedom from October 1, 2007, until February 2009. While he was at training, his wife notified him that he had received in the mail a letter informing him of his rights under the Consolidated Omnibus Budget Reconciliation Act (COBRA). That notice, dated October 19, 2007, indicated that the event that triggered COBRA rights was “Termination of Employment.” Upon learning of the COBRA letter, the employee alleged he called TXD’s Morrilton, Arkansas, office and was informed “we were told you were let go because you weren’t showing up to work.” After explaining that he had not quit but instead had been activated into uniformed service, he was referred him to the company’s Dallas-Fort Worth office. When he called the Dallas-Fort Worth office, he was told his file said he had been “terminated for not showing up to work.”

Successor employer takes over. While the employee was on active duty, TXD sold substantially all of its assets to Foxxe Energy Holdings, LLC (Foxxe), and by February 1, 2008, TXD was no longer a going concern. As a part of the asset sale, TXD provided Foxxe with a list of TXD’s current employees. Foxxe agreed to use reasonable efforts to offer employment to them and did in fact interview the employees on the list. The employee, who was not mentioned on that list, returned from active duty in or around December 2008, having served approximately 15 months. He claimed he was ready to return to civilian work in December 2008, although it is undisputed that he was on active duty until February 2009. When he returned, he pursued employment with Foxxe, and in April 2009, approximately two months after the end of his tour of duty, he began to work for Foxxe at the site where he had previously been employed with TXD.

Evidence of discrimination. After explaining in a footnote its conclusion that the statutory changed-circumstances defense to reemployment set out in 38 U.S.C. Section 4312 does not apply to discrimination claims under 38 U.S.C. Section 4311, the court analyzed the employee’s claim that  he was fired by TXD because of his military service. First, the court found the employee presented a factual issue as to whether TXD fired him for his military service. The court clarified it was not persuaded that the COBRA letter, in itself, constituted discrimination on the part of TXD because TXD did not generate the letter. The “termination of employment” language was derived from the COBRA statutes, not from TXD or the USERRA. Even if TXD characterized the employee as a “terminated” employee, that also would not be outcome determinative because the Department of Labor’s USERRA regulations regarding health plan coverage make clear that, even if the employee is characterized as “terminated,” he is still entitled to non-seniority rights and benefits as if he were simply on furlough or leave of absence.

The employee, nevertheless, presented other evidence that supported his discrimination claim. He asserted he was told twice by TXD personnel he was terminated for failing to report for work. Internal TXD paperwork indicated that he quit his job, without noting that he left his position to report for active duty. These communications occurred and the documents were generated in close proximity to his deployment.

Although prima facie case established, employee failed to show military service bias was the motivating factor in the employment actions at issue. However, even though the employee presented a prima facie case as to whether he was terminated due to his military service, TXD established by a preponderance of the evidence that the actions it took would have been taken in the absence of his military status. The employee claimed that he was entitled to be on the roll of employees that TXD provided to Foxxe at the time of the asset sale so that, when he returned, he would immediately receive reasonable consideration from Foxxe as a potential employee. However, the court, was not persuaded. The employee argued that because TXD considered him a fired employee, as opposed to an employee serving a long-term military commitment, TXD did not include him on the list. But the evidence did not support this contention. Rather, it indicated that regardless of whether he was considered a fired employee or an employee serving a long-term military commitment, he would not have been included on the list of TXD employees provided to Foxxe.

The applicable Department of Labor regulations state that during uniformed service, the employee is “deemed to be on furlough or leave of absence” and is “entitled to the non-seniority rights and benefits generally provided to employees on furlough or leave,” the court explained. Here, it was undisputed that TXD did not consider individuals who were absent from employment due to a long-term military commitment to be current or active employees. Consequently, in communications with third parties, TXD would not have included individuals serving long-term military commitments in any roster of current employees. Thus, while the employee was on active long-term military duty, TXD would not have considered him an active or current employee, and he would not have made the list provided by TXD to Foxxe. As such, TXD’s actions did violate USERRA. Moreover, the plaintiff did not offer any evidence to show that TXD allowed similarly situated employees on leave of absence or furlough to remain on any list of TXD’s active or current employees.

In addition, the fact that the employee had  “to go through an application process” when he applied to Foxxe did not create liability as to TXD under USERRA because the statute provides that an employee whose period of service exceeds 180 days must notify the employer of his intent to return by submitting an application for reemployment with the employer not later than 90 days after the completion of the period of service.

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