Monday, September 19, 2011

Court reinstates enormous judgment in USERRA reinstatement case

The Court of Appeals has sustained a nearly $800,000 judgment in a case alleging that a private employer discriminated against an Air Force reservist who was not given a comparable job after he returned from a post-September 11 commitment. This is a significant USERRA case that examines a number of unique statutory provisions on liability and damages. This is also a wipeout for Wachovia, which appears to lost on all the issues it raised on appeal.Link
The case is Serricchio v. Wachovia Securities, decided on September 13. Wachovia takes it on the chin in this case. Not only did the jury award plaintiff $389,000 in backpay, but it authorized a liquidated damages award in that same amount, and the trial court on top of that ordered plaintiff reinstated to a financial adviser position with certain financial benefits. All because Wachovia denied Serricchio the same or comparable position in violation of the Uniformed Services Employment and Reemployment Rights Act, or USERRA, which offers aggrieved plaintiffs quite a bit in the way of damages and relief for this statutory violation.

The Second Circuit (Pooler, Wesley and Koeltl (D.J.]), issues a series of rulings in this case:

1. The jury could find that Wachovia waited too long to offer plaintiff a position when he returned from military service. Under USERRA, if the plaintiff demands reinstatement, the company has to make prompt and best efforts to do so. The company says that Serricchio did not unconditionally request reinstatement and that his letter to Wachovia said the company was breaking the law and it threatened litigation. But as the Second Circuit notes, the letter also "plainly asked that Serricchio be reinstated, and the fact that it complained about other actions taken by Wachovia does not, under relevant law, negate the fact that it included a demand for reinstatement." These letters are not required to follow any format.

2. The jury could also find that the company did not offer plaintiff a comparable position. Yet, the company did not promptly reply to Serricchio's request for reinstatement, and it did not actually reemploy him for four months. This violates USERRA. As for the comparable position, this is a complicated inquiry. The employer has to predict what the plaintiff's position and duties and compensation would have been (as well as opportunities for advancement) had he not gone off to war. In this case, positions and duties were shifted around at the office, so that when plaintiff came back, he was given a much inferior position with a sharp cut in compensation. "here, the evidence indicated that prior to his activation, Serricchio was responsible for servicing in excess of 130 accounts, and, along with a partner, was responsible for managing in excess of $9 million dollars. By contrast, Wachovia's offer for reemployment consisted of providing Serricchio with a limited number of small accounts, a modest monthly draw that would be offset by any commissions earned, and opportunities for cold calling clients." This offer doesn't cut it under USERRA. The jury could rule in plaintiff's favor, the Court of Appeals says. As he was denied comparable commission-earning opportunities that existed before plaintiff marched off to war, that was also a USERRA violation.

3. The jury also finds that plaintiff was constructively discharged. Plaintiffs lawyers know this is a difficult claim to win at trial. You have to show the plaintiff's working conditions were so intolerable that any reasonable employee would have resigned. More constructive discharge claims wind up in the litigation graveyard than any other. But not here. What makes this case different from the losers is that "the employer had notice of the particular problems with the employment position and took no steps to ameliorate them." The Second Circuit cites an Eighth Circuit case for this proposition. Maybe this gives plaintiffs some additional ammunition in back pay claims. Or maybe instead this concept is unique to USERRA claims. In any event, the jury also could rule in plaintiff's favor on this claim because of (1) Wachovia's unexplained lengthy delay in offering to reinstate plaintiff and (2) he was offered an inferior position (including "cold calling" duties normally given to newcomers) on which he could not support his family. This is enough to show wrongful intent to show constructive discharge.

4. The liquidated damages award was not an abuse of discretion, despite defendant's argument that it acted reasonable and this case includes legal issues of first impression. The USERRA violation was willful in several respects, including the delay reinstatement offer and inferior compensation package, not to mention the constructive discharge. You get liquidated damages for this under USERRA. Nor did the district court abuse its discretion in ordering that Wachovia reinstate plaintiff. Reinstatement the favored remedy in employment cases, and the terms of employment and compensation for plaintiff that the district court ordered were also not an abuse of discretion.

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