New England Biz Law Update
A terminated employee could sue his employer for discriminatory treatment based on his military service without showing the employer’s stated reason for firing him was a pretext for bias, the 1st Circuit recently ruled in a case of first impression.
The employee argued that in cases under the Uniformed Services Employment and Reemployment Rights Act (USERRA), the burden is on the employer to show that its stated reason is not pretextual.
The 1st Circuit agreed, reversing a U.S. District Court judge’s summary judgment for the employer.
“The language of the statute and the legislative history make clear that the employee need only show that military service was ‘a motivating factor’ in order to prove liability, unless ‘the employer can prove that the [adverse employment] action would have been taken’ regardless of the employee’s military service,” wrote Senior Judge Norman H. Stahl for the court in Velazquez-Garcia v. Horizon Lines of Puerto Rico, Inc.
“This burden-shifting analysis is markedly different from the burden-shifting analysis in Title VII actions,” Stahl observed.
The plaintiff, Carlos Velazquez, began working as a middle manager supervising stevedores for CSX Lines (later renamed “Horizon Lines of Puerto Rico”), which operated a marine terminal in San Juan.
In December 2002, Velazquez enlisted as a reservist in the U.S. Marine Corps.
After six months of basic training, he returned to his job but continued to report to the Marines for monthly weekend training sessions as well as annual two-week intensive training sessions. Because Velazquez was a shift employee, he often had to work weekends. The defendant, Horizon Lines of Puerto Rico, had to adjust his work schedule accordingly.
Velazquez claimed this arrangement caused trouble for him at work. His superiors allegedly complained and pressured him about the difficulty of rescheduling his shifts. He also claimed he was harassed at work, being referred to as “G.I. Joe,” “little lead soldier” and “Girl Scout.”
During the plaintiff’s periods of military service, Horizon Lines paid him his full salary. As a result, when Velazquez came back to work, Horizon Lines would deduct money from his paycheck to offset his military income for those days where he received both a civilian and a military check.
In 2004, Velazquez began operating a side business. When Horizon Lines stopped paying its stevedores in cash and began paying them by check, Velazquez began cashing employee checks for a fee
He conducted his side business while off duty, though he acknowledged cashing “one or two” while on duty. He conducted his transactions primarily outside the defendant’s gate or in its parking lot.
Eventually, his check-cashing activities were spotted by the defendant’s operations manager, Roberto Batista, who was one of the plaintiff’s supervisors and one of the people Velazquez claimed had trouble with his military schedule.
After Batista reported Velazquez’s activities to other managers, Velazquez was fired. The termination letter stated no reason for the firing, but Velazquez was told his side business violated the defendant’s “code of business conduct.”
According to Velazquez, he never received a copy of the code. Also, he allegedly was never warned to stop his check-cashing business. He additionally maintained that other employees who had similar code violations were not summarily fired.
Velazquez subsequently filed suit in U.S. District Court in Puerto Rico alleging the defendant unlawfully discriminated against him under the USERRA.
Judge Jaime Pieras Jr. granted summary judgment for the defendant, ruling the plaintiff had not shown sufficient discriminatory animus and had not shown that the stated reason for his firing – the code violation – was a mere pretext for discrimination.
Plaintiff-friendly standard
On appeal, the 1st Circuit ruled that the trial judge had applied the wrong standard in determining whether the plaintiff’s suit could go forward and reversed the summary judgment for the employer.
The court observed that Congress had passed USERRA to remedy the impact of the U.S. Supreme Court’s interpretation of its predecessor, the Veterans’ Reemployment Rights Act (VRRA), in its 1981 decision in Monroe v. Standard Oil Co. In that case, the Supreme Court ruled that claims for anti-military employment discrimination could only go forward if the employee could show that the discrimination was motivated solely by reserve status.
“This, in effect, kept the burden on the employee to show that any offered reason by the company was actually a pretext,” Stahl commented, noting that the House report accompanying passage of USERRA stated Monroe “misinterpreted the original legislative intent” of VRRA, which was to place the burden of proof on the employer once a prima facie case was established.
Instead, the House called for the burden-shifting framework laid out in the Supreme Court’s 1983 NLRB v. Transportation Management Corp. decision, which – once the employee has shown that his protected status was a motivating factor in the adverse employment action — requires the employer to show that it would have taken the same action regardless of the employee’s protected status, Stahl said.
“The circuit courts that have addressed the issue of burden-shifting under USERRA are unanimous in adopting this ‘substantial or motivating factor’ test, rather than the ‘sole motivating factor’ test of Monroe, and in putting the burden on the employer to show lack of pretext,” said the judge.
Stahl acknowledged this “two-pronged” burden-shifting analysis is very different from the three-pronged analysis in Title VII discrimination claims as laid out in the Supreme Court’s 1973 decision in McDonnell-Douglas Corp. v. Green. In those cases, once the employer has stated a nondiscriminatory reason for its action, the burden shifts back to the plaintiff to show that the action was a pretext for discrimination.
“By contrast, under USERRA … the employer must show, by a preponderance of the evidence that the stated reason was not a pretext,” the judge reiterated.
The 1st Circuit found that Velazquez had, in fact, produced sufficient evidence that his military service was at least “a motivating factor” in the defendant’s decision to fire him.
It also found that the defendant had failed to show that no reasonable jury could find that the plaintiff’s side business was a mere pretext for discrimination.
