Rehabilitation Act Retaliation Claims: After Gross, is the Causation Standard But-For or Motivating Factor?

   

Recently, the First Circuit, Judge Selya writing for the panel, held in Palmquist v. Shinseki, No. 11-2110, 2012 U.S. App. LEXIS 16028 (1st Cir. Aug. 2, 2012) that the but-for causation standard applies to retaliation claims brought under the Rehabilitation Act.  In doing so, the court focused on the language of the statute, noting that while the Rehabilitation Act adopts the remedial scheme of Title VII, it does not adopt Title VII’s motivating factor causation standard.  Instead, the Rehabilitation Act borrows its causation standard from the ADA, which states that no person shall retaliate against an individual “because such individual has opposed any [discriminatory] act or practice.” 42 U.S.C. § 12203(a).  As the Supreme Court in Gross v. FBL Fin. Servs., Inc., 557 U.S. 167 (2009) had construed similar language in the ADEA to require but-for causation, the First Circuit found that compelling.  The ADEA language that the Gross court construed states that it is unlawful to discriminate against an individual “because of such individual’s age.” 29 U.S.C. § 623(a)(1).  The First Circuit noted that those circuits that have analyzed the causation standard in the ADA, have split as to whether the motivating factor or the but-for causation standard applies.  For Circuit Courts holding that ADA cases are determined by the but-for causation standard, see Lewis v. Humboldt Acquis. Corp., 681 F.3d 312, 317-22 (6th Cir. 2012) (en banc) (holding that but-for causation is required to establish liability under the ADA and that Title VII’s mixed-motive remedies are not available to ADA plaintiffs); Serwatka v. Rockwell Automation, Inc., 591 F.3d 957, 961-64 (7th Cir. 2010) (same).  For Circuit Courts which have instead held that the motivating factor standard applies in ADA cases, see Belk v. Sw. Bell Tel. Co., 194 F.3d 946, 950 (8th Cir. 1999) (using 42 U.S.C. § 2000e-2(m) in ADA cases); Baird ex rel. Baird v. Rose, 192 F.3d 462, 470 (4th Cir. 1999) (same); Buchanan v. City of San Antonio, 85 F.3d 196, 200 (5th Cir. 1996) (same).  With respect to the above opinions of the Fourth, Fifth, and Eighth Circuits applying the motivating factor standard, Judge Selya characterizes plaintiff’s reliance on these cases as “hawking” these cases, and states that none of them are persuasive because they all predate Gross; whereas the Seventh Circuit’s opinion in Serwatka and the Sixth Circuit’s recent en banc opinion in Lewis discuss the impact of Gross, and conclude that but-for analysis applies.

The First Circuit in Palmquist also rejected plaintiff’s reliance on the Fifth Circuit’s opinion in Smith v. Xerox Corp., 602 F.3d 320 (5th Cir. 2010) in which a panel of that court held that “the Gross court made clear that its focus was on ADEA claims.” Id. at 330.  Judge Selya characterized the Fifth Circuit panel’s rationale as “whistling past the graveyard…” 

It should be noted that, on petition for rehearing in another case before the Fifth Circuit, Nassar v. Univ. of Tex. Sw. Med. Ctr., 688 F.3d 211 (5th Cir. 2012), Judge Jerry Smith wrote a vigorous dissent from the denial of rehearing, arguing that the Fifth Circuit’s opinion in Smith v. Xerox “is wrongly decided and presents a question of exceptional importance in employment law,” and that the Nassar case would be “a good vehicle for fixing that mistake.”

Recently, in Pulczinski v. Trinity Structural Towers, Inc., No. 11-2585, 2012 U.S. App. LEXIS 18494 (8th Cir. Aug. 31, 2012), a panel of the Eighth Circuit, with Judge Colloton writing, expressed “doubts about the vitality of the pre-Gross precedent,” specifically Chalfant v. Titan Distribution, Inc., 475 F.3d 982, 991 (8th Cir. 2007) (court seemed to construe “because of” in the ADA to mean that disability must be a “motivating factor” in the employer’s decision”).

Interestingly, section 5(a)(1) of ADA Amendments Act of 2008 (ADAAA) amended a portion of the ADA which may be relevant to this issue.  Specifically, that section of the ADAAA, in relevant part, struck the ADA’s prior language prohibiting discrimination “because of” an individual’s disability, and replaced that language with “on the basis of disability.”  (The full text of the relevant amendments is available on the EEOC’s website, here.)  Whether this change in the ADA’s language will have any relevance on the applicable causation standard applied in ADA cases is not entirely clear.  For example, a footnote in the Seventh Circuit’s opinion in Serwatka, cited above, took note of this amendment, but simply concluded that “[w]hether ‘on the basis of’ means anything different from ‘because of,’ and whether this or any other revision to the statute matters in terms of the viability of a mixed-motive claim under the ADA, are not questions that we need to consider in this appeal.” 591 F.3d at 961 n.1.  Similarly, in the Fifth Circuit’s opinion in Lewis, cited above, the Court noted this change in language in the ADAAA, but given the fact that the relevant facts of the case predated these amendments, the Court simply noted that “the amended law does not cover this lawsuit.” 681 F.3d at 315.  See also Gard v. United States Dep’t of Educ., 752 F. Supp. 2d 30, 36 (D.D.C. 2010)(while holding that the but-for causation standard applies in Rehabilitation Act cases, noting the above amendment in the language of the ADA, and opining that “the language differences between the Rehabilitation Act and the ADA may (or may not) be significant in an ADA case.”)

For an analysis of the related issue of post-Gross court rulings on whether the mixed motive analysis can be applied to FMLA claims, see Phillip K. Miles III, Esq., 3d Circuit Addresses FMLA Issues, Lawffice Space – McQuaide Blasko (Sept. 7, 2012), available here.

On a somewhat related note  on the topic of but-for causation in particular, in Ponce v. Billington, 679 F.3d 840 (D.C. Cir. 2012), the D.C. Circuit considered a Title VII non-selection case, in which the jury in the District Court proceedings below had been instructed that the plaintiff, who had pursued the case under a single-motive theory, had to prove that unlawful discrimination was the “sole reason” for his non-selection.  In upholding the judgment below, a panel of the D.C. Circuit, Judge Tatel writing for the panel, noted the Court’s prior holding in Ginger v. District of Columbia, 572 F.3d 1340, 1345 (D.C. Cir. 2008), which had stated that “a plaintiff may pursue a ‘single-motive case,’ in which he argues race (or another prohibited criterion) was the sole reason for an adverse employment action…” (emphasis added).  In clarifying that holding, the Court stated that “in Ginger, we used ‘sole motive’ as shorthand for but-for cause,” and cited prior holdings of the Court for the proposition that “we never said.. that a plaintiff in a but-for case must show that an adverse employment action occurred solely because of a protected characteristic.” Ponce, 679 F.3d at 846. To further clarify the point, the Court concluded by holding that “nothing in Title VII requires a plaintiff to show that illegal discrimination was the sole cause of an adverse employment action.  And mindful that ‘our words from loose using have lost their edge,’ Ernest Hemingway, Death in the Afternoon 63 (Scribner Classics 1999) (1932), we hereby banish the word ‘sole’ from our Title VII lexicon.” Id.

The Court in Ponce held that reversal would have been in order had the jury instruction stopped with a “sole reason” instruction, with nothing more.  However, the Court found no abuse of discretion, and therefore upheld the district court’s judgment, because the district court had clarified its jury instruction by defining “sole reason” as “but for” causation.

From the Supreme Court on down, the courts for some time now have been focused on causation issues in employment cases.  For a number of our prior posts on these issues, see, e.g., here (application of Gross to FMLA cases);  here, here, and here (causation and other issues in the Supreme Court’s Staub decision); here (the Sixth Circuit’s opinion in Lewis, cited above); here (additional post-Gross causation developments); here (more on causation under the Rehabilitation Act); and here (the Fifth Circuit’s opinion in Smith, cited above).  Thus, employment law practitioners would be well advised to keep a close eye on how this line of case law continues to develop.

Please be sure to visit our website at http://RobertBFitzpatrick.com

Illinois Joins Maryland and Delaware in Banning Requests for Social Media Passwords

As we have previously written, numerous states have proposed legislation intended to prevent employers from demanding access to the social media accounts of employees or job applicants.  Previously only Maryland and Delaware had actually passed such legislation, although as many as fifteen states and the federal government are considering similar legislation.  See Sam Favate “Illinois Becomes Third State to Pass Social Media Privacy Law”, Wall Street Journal Law Blog (Aug. 2, 2012) (available at: http://blogs.wsj.com/law/2012/08/02/illinois-becomes-third-state-to-pass-social-media-privacy-law/?mod=djemlawblog_h).  However, on August 1 Illinois Governor Patrick J. Quinn signed the “Right to Privacy in the Workplace Act” into law, making Illinois the third state to put such legislation on the books.

The Right to Privacy in the Workplace Act provides that:

It shall be unlawful for any employer to request or require any employee or prospective employee to provide any password or other related account information in order to gain access to the employee's or prospective employee's account or profile on a social networking website or to demand access in any manner to an employee's or prospective employee's account or profile on a social networking website.

820 ILCS 55/10(b)(1).  

This prohibition differs somewhat from that found in the Maryland User Name and Password Privacy Protection and Exclusions Act, House Bill 964 (amending Md. Code Ann. Labor & Empl. 3-712), and the Delaware Higher Education Privacy Act, 14 Del. Code 9401 et seq. The Maryland law provides that: “Subject to Paragraph (2) of this subsection, an employer may not request or require that an employee or applicant disclose any user name, password, or other means for accessing a personal account or service through an electronic communications device.”  Among other differences, the Maryland law protects only current employees, while the Illinois law protects both current and prospective employees.  The Delaware law, as its name implies, applies only to “public or nonpublic academic institution[s],” but covers both current students and applicants.  14 Del. Code § 9403(a)-(b).  

Nevertheless, the Illinois law does contain potentially broad carve-outs and omissions.  Of particular note is the fact that the employer is permitted to institute and enforce lawful policies regarding internet use, social networking site use, and electronic mail use.  See 820 ILCS 55/10(b)(1).  More significantly, the Illinois statute provides:

(2) Nothing in this subsection shall limit an employer's right to:

(A) promulgate and maintain lawful workplace policies governing the use of the employer's electronic equipment, including policies regarding Internet use, social networking site use, and electronic mail use; and

(B) monitor usage of the employer's electronic equipment and the employer's electronic mail without requesting or requiring any employee or prospective employee to provide any password or other related account information in order to gain access to the employee's or prospective employee's account or profile on a social networking website.

820 ILCS 55/10(b)(2)(A)-(B).  So, while the employer is prohibited from requiring an employee to provide his or her device, this “exception” appears to make anything the employee does on an employer-provided electronic device or network fair game.    The Maryland law also contains carve-outs regarding employee use of employer devices and the employer’s ability to enforce its policies.  By contrast, the narrower Delaware law provides no such exception.  It contains only a narrow carve-out for investigations of criminal activity or investigations related to an institution’s threat assessment policy.  14 Del. Code § 9405.  

While an individual alleging a violation of the Illinois law may file a complaint with the Illinois Department of Labor which may fine the employer, the Illinois law (like the Maryland and Delaware laws) does not provide for an independent private cause of action in the courts.  Fines under the Illinois law range between $200 and $500 per affected employee, plus costs and reasonable attorneys’ fees.  820 ILCS 55/15(d)(1)-(3).  Although the Delaware law specifically details the actions which public and nonpublic academic institutions might take, it also fails to spell out an explicit penalty for violation of this mandate:

“No public or nonpublic academic institution may discipline, dismiss or otherwise penalize or threaten to  discipline, dismiss or otherwise penalize a student for refusing to disclose any information specified in subsection (a) or (b) of § 9403.  It shall also be unlawful for a public or nonpublic academic institution to fail or refuse to admit any applicant as a result of the applicant’s refusal to disclose any information specified in subsection (a) or (b) of § 9403.” 

14 Del. Code § 9404.  Apart from the fines provided for by the Illinois law, the primary method of enforcement for these laws appears to be a tort action for wrongful termination in violation of public policy.  It remains to be seen whether such an enforcement mechanism is adequate.

These laws often fail to expressly address the much larger issue of employer monitoring of employee behavior on work related electronic devices – an issue of growing consequence in a world where increasing numbers of individuals use one device for both work and personal purposes.  In fact, both the Maryland and Illinois laws contain broad carve-outs for this sort of behavior.  See 820 ILCS 55/10(b)(2)(B); Md. Code Ann. Labor & Empl. 3-712(b)(2), (e).   It remains to be seen whether, and how, this issue will be addressed.  For further information See Martha Neil, Ill. Gov. Signs ‘Facebook Bill’, ABA Journal (Aug. 1. 2012) (available at: http://www.abajournal.com/mobile/article/ill._gov_signs_facebook_bill_as_of_jan._1_employers_who_ask_for_passwords/?utm_source=maestro&utm_medium=email&utm_campaign=daily_email); Eric B. Meyer, Snoop Dog Becomes Snoop Lion! And News of a New Employee Facebook Law, The Employer Handbook (Aug. 2, 2012) (available at: http://www.theemployerhandbook.com/2012/08/illinois-becomes-the-2nd-state.html?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+employmentlaw-blog%2FimGSCom+%28Employment+Law+Blog%29).

Relator's Share Found to be Ordinary Income for Tax Purposes

On July 18, the 9th Circuit, Judge Fletcher, writing for the panel, issued an unsurprising opinion in Alderson v. United States, No. 10-56007, 2012 U.S. App. LEXIS 14680 (9th Cir. July 18, 2012) holding that the relator's qui tam award under the False Claims Act is ordinary income, and cannot be characterized as capital gain.  In Alderson, the relator, who received some $27,105,035 (a 16% share of a $631 million settlement after fees and costs were deducted) filed a tax return reporting his share as ordinary income.  Thereafter, he filed an amended return characterizing it as capital gain, seeking a refund of about $5 million. 

Relator had no case law to support his contention, nor did the government apparently have any case law to support its position that such awards have been consistently treated as ordinary income.  Thus, the court, in a brief opinion, discussed relator's argument that he had exchanged documents, information, and know-how, and that that exchange constituted a "sale or exchange,” for the purposes of capital gains treatment under the tax code.  The Court rejected this argument out of hand, stating: "If Alderson had offered simply to sell or exchange the information to the government in exchange for a sum of money, the government would almost certainly have refused the offer."  The Court went on to state, "In the unlikely event the government accepted the offer, it would have done so based on some authority other than the FCA."

Alderson then argued that the information and papers were a capital asset. Alderson’s position was not entirely unprecedented – trade secrets were found to be a capital asset by the Federal Claims Court in E.I. du Pont de Nemours & Co. v. United States, 288 F.2d 904, 912 (Ct. Cl. 1961).  However, in this case, the Ninth Circuit found that the information and papers were not Alderson’s “property”, as required for treatment as a capital asset, reasoning that Alderson had no legal right to exclude others from the use of the information. 

Finally, Alderson argued that his relator's share itself was a capital asset, contending that the increase in value between 1993 when he filed his FCA case and 2003 when he received his $27,105,035 was a capital gain.  The Court, while recognizing that the share can be property for some purposes and is assignable, found it not to be property, and not a capital asset, as Alderson did not receive his share in return for an "underlying investment of capital."  Moreover, the increase in value was not the sort of "accretion in value" that characterizes a capital gain. 

Accordingly, the Ninth Circuit affirmed the holding of the Central District of California (718 F. Supp. 2d 1186 (Wilson, J), finding the relator's share to be ordinary income).

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Some Banks May Be Able to Edge Plaintiffs Out of State Court

Walter Evans Edge

A little known statute, the Edge Act, provides, in relevant part, as follows:

[A]ll suits of a civil nature at common law or in equity to which any corporation organized under the laws of the United States shall be a party, arising out of transactions involving international or foreign banking, . . . or out of other international or foreign financial operations, . . . shall be deemed to arise under the laws of the United States, and the district courts of the United States shall have original jurisdiction of all such suits; and any defendant in any such suit may, at any time before the trial thereof, remove such suits from a State court into the district court of the United States for the proper district by following the procedure for the removal of causes otherwise provided by law.

12 U.S.C. § 632.

In Sollitt v. KeyCorp, Nos. 09-4143, 10-3408, 2012 Fed. App. 0123N, 2012 U.S. App. LEXIS 1910 (6th Cir. Feb. 1, 2012), the plaintiff filed suit against his former employer, KeyCorp, in state court in Ohio for wrongful termination.  KeyCorp had a foreign currency exchange group, which was divided into two desks, the sales desk and the trading desk.  The sales desk sold foreign currencies, and the trading desk executed trades for the sales.  Plaintiff complained internally that the manager of the sales desk was defrauding customers.  Several months after the plaintiff’s initial complaint, the company installed new software to conduct a company-wide “sweep” of all employee email, scanning for pornography, nudity, or other offensive content.    As a result of the sweep, KeyCorp identified pornographic or offensive material on the accounts of 90 employees and fired 20 of them, including plaintiff.  Plaintiff’s email account revealed over 80 emails containing nude images or other pornographic content, some of which the court described as “extremely graphic.”

As KeyCorp is engaged in “transactions involving international or foreign banking,” it removed Mr. Sollitt’s case to federal court, on the basis of Section 632 of the Edge Act.  The district court, No. 1:09-cv-43, 2009 U.S. Dist. LEXIS 156 (N.D. Ohio Feb. 11, 2009), denied plaintiff’s motion to remand, finding that Mr. Sollitt’s claim for wrongful termination arose out of a transaction involving international or foreign banking, as required by the Edge Act.  The Sixth Circuit, Judge Batchelder, writing for the panel, reversed, finding that although Mr. Sollitt’s allegations involved foreign currency transactions, which are international or foreign banking activities, the case nonetheless did not satisfy the jurisdictional requisite that it arise out of such a transaction. 

The court, recognizing that the issue was not without some ambiguity, stated that the federal courts had divided on the question whether the Edge Act should be interpreted as providing “a broad basis for federal jurisdiction or whether the statute should be read more narrowly.” (quoting New Mexico ex rel. Foy v. Vanderbuilt Capital Advisors, LLC, No. 09-0178, 2009 U.S. Dist LEXIS 105528 (D.N.M. Apr. 13, 2009).  For example, in Pinto v. Bank One Corp., No. 02 Civ. 8477, 2003 U.S. Dist. LEXIS 9348 (S.D.N.Y. June 4, 2003), the court held that the Edge Act’s jurisdictional requisites were satisfied if “any part” of the suit arose out of transactions involving international or foreign banking.  The Sixth Circuit rejected what it characterized as a “limitless” view of the Edge Act’s language, and instead aligned itself with the First Circuit’s holding in Diaz v. Pan American Fed. Savings and Loan Assoc., 635 F.2d 30 (1st Cir. 1980), in which that court declined to read the statue so broadly.  In Diaz, the plaintiff bounced a couple of checks.  Pan American filed criminal charges, and Diaz sued in federal court for malicious prosecution.  The First Circuit declined to find jurisdiction under the Edge Act, holding that the filing of a criminal complaint was not an aspect of “banking” and that, accordingly, Diaz’s claim did not “arise out of” a banking transaction. 

Following the reasoning of the First Circuit, the Sixth found that the firing of the plaintiff was not an aspect of “banking,” and that, accordingly, plaintiff’s claim did not “arise out of” a banking transaction, even though the entire episode could be traced back to the foreign currency transaction. 

Following the reversal by the Sixth Circuit, KeyCorp filed a petition for certiorari, which is currently pending.

Putting aside whether the holdings in Sollitt and Diaz correctly interpret the Edge Act, it has been argued that the Act is unconstitutional. See Elizabeth R. Sheyn, The (Un)Constitutionality of Section 632 of the Edge Act: An Analysis Under Article III and Theories of Protective Jurisdiction, 41 Loy. U. Chi. L.J. 587 (Apr. 8, 2010).

In those courts that have more broadly construed Section 632 of the Edge Act or where there simply is no jurisprudence, the Edge Act can be a weapon in the defense arsenal to remove cases from what many in the defense bar view as a hostile environment, many state courts, to federal district court.

 For those who are curious about the derivation of this statute’s name, the statute is named after its sponsor, then Republican Senator from New Jersey, Walter Evans Edge.  Senator Edge lived an interesting life.  Not only was he a United States Senator for ten years (1919-1929), he was also governor of New Jersey from 1917 to 1919 and then again from 1944 to 1947.  He was a leading supporter of General Eisenhower for the Presidency, our ambassador to France for a period of time, and a newspaper magnate.  Then Senator Edge sponsored what came to be known as the Edge Act, a 1919 amendment to the Federal Reserve Act.

A tip of the hat to Jason Rossiter’s February 1, 2012 article in The Personnel Files Blog for calling this to our attention.

Please be sure to visit our website at http://RobertBFitzpatrick.com

USERRA Still Has No Statute of Limitations

            Recently, the Sixth Circuit handed down a decision, holding that the employer could enter into an agreement with its employees limiting the time within which they could sue on any employment-related claim to six months.  (Hat tip to Molly DiBianca at the Delaware Employment Law Blog).  The case before the Sixth Circuit had been filed under USERRA within three years after the plaintiff had been terminated, allegedly due to his military service in Iraq.  The District Court granted the employer’s motion to dismiss on the ground that the employment agreement required that such USERRA claim be filed within six months of termination, and the Sixth Circuit affirmed.  See Oswald v. BAE Indus., Inc., No. 11-1119, 2012 U.S. App. LEXIS 10005 (6th Cir. May 12, 2012). 

            Now, USERRA is a rather unique statute in many respects – one of which is that it lacks a statute of limitations.  That fact did not preclude the Sixth Circuit from reasoning that, by agreement, employer and employee could create a six-month statute of limitations.  And, as we have blogged earlier (Can an Employer in the Employment Application Shorten the Statute of Limitations for Anti-Discrimination Claims?) here, and (Federal Express Six Month Limitation on Statutes of Limitations in Employment Disputes Approved) here, the courts generally have been approving such agreements in employment cases.  See e.g., Ravenscraft v. BNP Media, Inc., No. 09-C-6617, 2010 U.S. Dist. LEXIS 37919, 2010 WL 1541455, at *1 (N.D. Ill. Apr. 15, 2010); PSC Info Group v. Lason, Inc., 681 F. Supp. 2d 577, 587 (E.D. Pa. 2010); Cole v. Federal Exp. Corp., No. CV-06-3485, 2008 U.S. Dist. LEXIS 71431, 2008 WL 4307090, at *9 (E.D. Pa. Sept. 19, 2008); Vincent v. Comerica Bank, No. H-05-2302, 2006 U.S. Dist. LEXIS 28613, 2006 WL 1295494, *5-6 (S.D. Tex. May 10, 2006); Badgett v. Federal Express Corp., 378 F. Supp. 2d 613 (M.D.N.C. 2005); Fink v. Guardsmark, LLC, No. CV 03-1480-BR, 2004 U.S. Dist. LEXIS 16970, 2004 WL 1857114, at *1 (D. Or. Aug. 19, 2004); Johnson v. DaimlerChrysler Corp., No. C.A. 02-69 GMS, 2003 WL 1089394, at *1 (D. Del. Mar. 6, 2003).

            But, before you pick up the phone to call your client with your latest brilliant idea, understand that Oswald is like a grandfather clock – it is an out-of-date antique that has no application to any claims that arise after October 10, 2008, the effective date of the Veterans’ Benefits Improvement Act, Pub. L. No. 110-389, §311(f)(1), 122 Stat. 4145, 4164 (2008) (codified at 38 U.S.C. § 4327(b)) (the “VBIA”).  In particular, Oswald may not apply to claims that were not time-barred as of the effective date of the VBIA, even when those claims are filed after they otherwise would be time-barred, absent the VBIA.  The VBIA contained an amendment to USERRA which replaced USERRA’s prohibition on the application of state statutes of limitations with the following language:

If any person seeks to file a complaint or claim with the Secretary [of labor], the Merit Systems Protection Board, or a Federal or State court under this chapter alleging a violation of this chapter, there shall be no limit on the period for filing the complaint or claim.

VBIA, Pub. L. No. 110-389(f)(2)(b).  Oswald’s claim arose on September 14, 2007, the date of his termination.  Furthermore, in Oswald, the plaintiff admitted that the amendment did not apply retroactively.  And in Middleton, described below, the Seventh Circuit declined to retroactively apply the unlimited-filing period contained in the VBIA. 

In Middleton v. City of Chicago, 578 F.3d 655 (7th Cir. 2009), subsequent to the passage of the 2008 VBIA, a panel of the Seventh Circuit held that it was not retroactive, and thus a claim under USERRA was held to be subject to the four-year catch-all limitations period set forth in 28 U.S.C. § 1658.   In Middleton, plaintiff’s USERRA claim was filed 13 years after it had accrued, and prior to the VBIA’s enactment.  See also Wagner v. Novartis Pharmas. Corp., 565 F. Supp. 2d 940, 945 (E.D. Tenn. 2008) (collecting cases); Nino v. Haynes Int’l, Inc., 2005 U.S. Dist. LEXIS 43971 (S.D. Ind. Aug. 19, 2005).  See our blog’s discussion of Section 1658, Section 1981 Retaliation Claims Governed by Federal Catch-All 4-Year Statute of Limitations, here.  Previously, the Seventh Circuit had applied the equitable doctrine of laches to USERRA claims.  See Maher v. City of Chicago, 547 F.3d 817, 821-23 (7th Cir. 2008); Miller v. City of Indianapolis, 281 F.3d 648, 653-54 (7th Cir. 2002).  In neither Maher nor Miller did the parties argue that the 1994 passage of USERRA, replacing the Veterans’ Reemployment Rights Act (“VRRA”) was a federal statute enacted after December 1, 1990 and thus subject to § 1658’s 4-year catch-all statute of limitations. 

In Goodman v. City of New York, 2011 U.S. Dist. LEXIS 111069 (S.D.N.Y. Sept. 26, 2011) the Court, Judge Richard J. Sullivan, distinguished Middleton and held that “the express language of the VBIA indicates that it applies to any plaintiff who, like Doherty, filed his complaint after the statute was enacted.”  Goodman held that a USERRA claim that accrued on January 27, 2007 was not time-barred despite the fact that the complaint was not filed until May 19, 2011 – four months after the expiration of the four-year § 1658 statute of limitations – because the claim was “live” at the time of the enactment of the VBIA, 38 U.S.C. § 4327(b).  See also Andritzky v. Concordia Univ. Chicago, 2010 U.S. Dist. LEXIS 35941 (M.D. Ill. April 8, 2010) (holding that USERRA claims accruing within four years of the VBIA’s enactment are governed by the VBIA and are therefore not time-barred); Roark v. Lee Co., 2009 U.S. Dist. LEXIS 108707 (M.D. Tenn. Nov. 20, 2009) (same).

            To summarize:

·         A USERRA claim that arose before October 10, 2008 (the effective date of the VBIA) and expired by virture of § 1658’s 4-year statute of limitations prior to October 10, 2008, is moribund and is not revived by the enactment of the VBIA in 2008.

·         A USERRA claim that arose before October 10, 2008, and has expired before October 10, 2008, by virture of an express contractual agreement to shorten the 4-year statute of limitations is moribund and is not revived by the enactment of the VBIA in 2008.

·         A USERRA claim that arose after October 10, 2008, cannot be time barred by § 1658 or an agreement to shorten the time period to sue.

A USERRA claim that arose before October 10, 2008 and “expired” after October 10, 2008 by virtue of § 1658 or an agreement to shorten the statute of limitations may not be time barred.  See Goodman, 2011 U.S. Dist. LEXIS 111069, supra.

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