The USERRA oxymoron: termination as a valid reemployment position.

AuthorHance, Breanna
PositionUniformed Services Employment and Reemployment Rights Act

Milhauser v. Minco Products, Inc., 701 F.3d 268 (8th Cir. 2012)

  1. INTRODUCTION

    Between 2000 and 2010, more than two million United States soldiers, marines, and sailors served in Iraq or Afghanistan. (1) At times, nearly thirty-five percent of U.S. forces in the Middle East consisted of National Guard and Reserve military forces. (2) These service members--sometimes referred to as "citizen soldiers"--maintain normal civilian lives and employment but are prepared to serve their country as needed. (3) Unfortunately, upon return from military service, many citizen soldiers suffer adverse retaliation, discrimination, or termination at the hands of their civilian employers. (4) With 90,000 troops slated to return from Afghanistan by 2014, reemployment rights for returning service members are an increasing concern. (5)

    The Uniformed Services Employment and Reemployment Rights Act (USERRA) protects uniformed service members returning to civilian employment. (6) For qualified service members, the act establishes a right to reemployment upon return from military service in the position the service member would have been in had he or she never left for service. (7) The employee's employment position--determined upon return by the "escalator principle"--may move up, down, or stay the same while the employee is on military leave. (8) A recent Eighth Circuit decision, Milhauser v. Minco Products, Inc., clarified that in certain circumstances, even termination qualifies as a reemployment position. (9)

    In Milhauser, a maintenance technician took military leave from his employer to train for his anticipated deployment to Iraq. (10) Subsequently, the employer suffered significant financial difficulties, and the company ordered a reduction in force. (11) Based on the service member's mediocre employment record, he was one of four persons terminated from his department. (12) The Eighth Circuit held that the service member employee was not entitled to return to the company following his required military training because, according to the escalator principle, his position of reemployment was termination. (13)

    This Note assesses Milhauser's impact on reemployment claims under USERRA. Part II begins with an analysis of the facts and holding of the case. Next, Part III synthesizes the background of USERRA, provides an overview of the statute, and introduces the escalator principle. Part IV outlines the court's rationale in deciding Milhauser. Finally, Part V discusses the impact of Milhauser on USERRA reemployment claims. This Note argues that: (1) the court's reliance on USERRA regulation [section] 1002.194 was misplaced because the court's interpretation presents a conflict between two sections of the statute and creates burden of proof issues; (2) the Milhauser holding should be narrowly interpreted; and (3) the case presents several unanswered questions that will spur subsequent litigation.

  2. FACTS AND HOLDING

    Douglas Milhauser brought the present action against his former employer, Minco Products, Inc. (Minco), claiming the company violated his rights under USERRA. (14) Milhauser worked as a maintenance technician for Minco from 2006 to 2009. (15) Throughout his employment with Minco, Milhauser also served as a member of the Navy Reserves and the Air Force Reserves. (16) Milhauser's membership in the armed services required him to take three separate military leaves of absence from Minco between 2007 and 2009. (17) The circumstances giving rise to litigation surrounded Milhauser's third leave of absence. (18)

    Prior to his third military leave of absence, Milhauser's performance as a maintenance technician was "inconsistent and sometimes poor." (19) Several of Milhauser's colleagues expressed concerns about his attitude and the quality of his work. (20) On one occasion, Milhauser received a written reprimand from his supervisors. (21) Following the reprimand, Milhauser's supervisors reassigned several of his duties to other maintenance technicians, replacing them with more menial tasks. (22)

    In 2008, Minco experienced a decline in customer orders; at the end of the year, the company posted its first ever annual loss. (23) Because the number of orders continued to decrease into 2009, Minco sought to cut costs by delaying the purchase of new equipment, reducing overtime hours for employees, and cutting employee pay. (24) Additionally, in March 2009, Minco reduced its workforce by cutting eighteen jobs. (25) Milhauser, who began his third military leave of absence that month, was not one of the employees terminated. (26)

    Despite eliminating eighteen jobs, Minco found the savings insufficient to compensate for company losses, and the company decided to cut an additional thirty-two jobs in June 2009. (27) In anticipation of the June cuts, Minco requested that Milhauser's supervisor name four of the thirteen employees whom he supervised to be considered for termination. (28) After considering work duties, special expertise, and attitudes of his employees, the supervisor nominated Milhauser as one of the four employees to be terminated. (29) He believed that Milhauser had no unique area of specialization and that, therefore, Milhauser's job functions could be more easily absorbed by other employees at the company. (30) When Milhauser's deployment ended prematurely in June, he reported back to work and was immediately terminated. (31)

    Milhauser subsequently brought a claim against Minco in the District Court for the District of Minnesota, claiming the company failed to provide reemployment as required by USERRA under 38 U.S.C. [section] 4312. (32) The USERRA statute requires that service members be reemployed "in the position of employment in which the person would have been employed if the continuous employment of such person with the employer had not been interrupted by such service...." (33) This idea is termed the "escalator principle." (34)

    In response to the claim, Minco argued that changed circumstances made Milhauser's reemployment "impossible or unreasonable," which is an affirmative defense under the USERRA statute. (35) In the alternative, Minco asserted that it placed Milhauser in the proper reemployment position--termination --because Milhauser would have been terminated even if he had not left for service. (36) Following trial, but before the case was submitted to the jury, Milhauser moved for judgment as a matter of law, claiming that Minco's evidence of economic difficulties was insufficient to prove his reemployment was "impossible or unreasonable." (37) Milhauser argued that without sufficient proof of the affirmative defense, he was "absolutely entitled to reemployment." (38) The district court disagreed and denied Milhauser's motion. (39)

    The court then submitted the case to the jury. (40) The jury instructions contained an explanation of the "escalator principle" (41) and indicated that it was Milhauser's burden to show that Minco failed to reemploy him in the appropriate escalator position. (42) During jury deliberations, the jurors asked the judge whether layoff or termination could be a valid reemployment position under the escalator principle. (43) Milhauser argued that termination was not a valid reemployment position; rather, termination of a returning service member was permissible only where the defendant proved reemployment was "impossible or unreasonable." (44) Minco, on the other hand, argued Milhauser's termination was a valid reemployment position because his position would have been eliminated as a part of the company's reduction in force, "regardless of his military service." (45) The court directed the jury to its earlier instruction. (46) The jury returned a verdict for Minco, finding that Minco failed to prove its "impossible or unreasonable" affirmative defense, but also finding that Milhauser failed to prove Minco reemployed him in an inappropriate position. (47)

    Following the verdict, Milhauser renewed his motion for judgment as a matter of law. (48) Fie argued that: (1) termination is not a valid reemployment position, and (2) if termination is a valid reemployment position, termination is permissible only where it occurred automatically and without employer discretion. (49) The trial court denied the motion and entered judgment on the jury's verdict. (50) Milhauser appealed to the Eighth Circuit Court of Appeals, and the Eighth Circuit affirmed the district court's denial of judgment as a matter of law. (51) The Eighth Circuit held that termination is a valid reemployment position under USERRA's escalator principle where the employer's systematic reduction in force caused the service member's position to be eliminated and where the service member's position would have been eliminated whether or not his or her employment was interrupted by military service. (52)

  3. LEGAL BACKGROUND

    This Part provides an introduction to reemployment rights law under USERRA by reviewing the predecessors and passage of USERRA, briefly examining relevant provisions of the statute, and introducing the escalator principle used in reemployment claims.

    1. Background of USERRA

      The concept of reemployment rights for returning service members is not a recent development. (53) As early as 1940, legislators passed federal laws protecting veterans' employment and reemployment rights following a period of service in the armed forces. (54) Today, these rights are codified in Chapter 43 of Title 38 of the United States Code. (55) Much of the current law involving reemployment privileges for returning service members derives from the original federal statute granting these rights. (56)

      The pressure to create a federal statute to benefit returning service members peaked after World War I, when millions of United States troops were demobilized. (57) Upon their return to civilian life, many of these veterans were unable to find employment. (58) In 1932, Walter Waters and other unemployed veterans traveled to...

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