The Sixth Circuit, construing the unorthodox language of the Uniformed Services Employment and Reemployment Rights Act (“USERRA”), 38 U.S.C. § 4302, holds that the employer’s severance and release agreement — while covered by this section — was nevertheless enforceable. Writes concurring Judge Boyce Martin, “Section 4302 is an exceedingly strange statute, . . . . I cannot recall ever having encountered anything remotely similar in my more than thirty years on the bench.”
Wysocki v. IBM, No. 09-5161 (6th Cir. June 16, 2010): Section 4302 states that
“(a) Nothing in this chapter shall supersede, nullify or diminish any Federal or State law (including any local law or ordinance), contract, agreement, policy, plan, practice, or other matter that establishes a right or benefit that is more beneficial to, or is in addition to, a right or benefit provided for such person in this chapter.
“(b) This chapter supersedes any State law (including any local law or ordinance), contract, agreement, policy, plan, practice, or other matter that reduces, limits, or eliminates in any manner any right or benefit provided by this chapter, including the establishment of addition al prerequisites to the exercise of any such right or the receipt of any such benefit.”
Plaintiff contended that subsection (b) invalidated a release obtained by IBM as part of a general reduction in force, which included $6,023.65 severance. The district court disagreed and entered summary judgment for the defendant.
The Sixth Circuit affirms. After determining that the district court did not abuse its discretion under Rule 12(d) by converting the motion into one for summary judgment, the panel wades into the language of section 4302. The panel declines to adopt the argument favored by the district court and defendant, i.e., that this subsection refers only to substantive rights to terms, conditions and benefits, and not so-called procedural rights (such as the right to bring a civil action in federal court). It holds, contrary to the district court, that a complete release of claims falls into the prohibition of subsection (b): “the Release purports to preclude Wysocki from advancing a USERRA claim in any forum, ever. An agreement that eliminates all of a veteran’s procedural rights also eliminates, for all practical purposes, all of the veteran’s substantive rights. Thus, enforcing the Release would provide Wysocki with no opportunity to present and prevail on a USERRA claim . . . .”
Despite finding that the release is covered by this section, the panel then holds that the second subsection is cabined by the first: “While § 4302(b) supercedes any law, plan or agreement that ‘reduces, limits, or eliminates in any manner any right or benefit provided by this chapter,’ its application is limited by § 4302(a), which exempts any law, plan or agreement that is ‘more beneficial to, or is in addition to, a right or benefit
provided for such person in this chapter’ from the operation of § 4302(b). Therefore, the critical inquiry is whether the Release is exempted from the operation of § 4302(b) by § 4302(a), because the rights it provided to Wysocki were more beneficial then the rights that he waived” [emphasis added].
The panel holds that the consideration received by the plaintiff, worth over $6,000, was in this case “more beneficial” than a statutory cause of action:
“In this case, the Release used clear and unambiguous language and involved a valuable amount of consideration. The Release stated that it covered claims based on ‘veteran status.’ This clear and unambiguous language informed Wysocki that he was waiving his USERRA rights and, in exchange for signing the Release, Wysocki received over $6,000. Under these circumstances, it appears from the record that Wysocki understood that the Release eliminated his USERRA rights, that he signed the Release because he believed that the rights provided in the Release were more beneficial than his USERRA rights and, therefore, that the Release is exempted from the operation of § 4302(b) by § 4302(a).”
Concurring, Judge Martin agrees that — under the procedural setting and facts of this case — the plaintiff failed to establish that the release violated § 4302(b). But he was struck by the contortions that the court resorted to simply to make sense of this language: “This case presents a question of first impression in the federal courts-the construction and application of 38 U.S.C. § 4302. Section 4302 is an exceedingly strange statute, at least as applied to contractual waivers of rights, in that it bases the validity of an agreement on whether enforcement results in a situation ‘more beneficial than the hypothetical scenario that would have existed had the plaintiff litigated rather than waived his USERRA rights. I cannot recall ever having encountered anything remotely similar in my more than thirty years on the bench. When confronted with a case in the right posture-a plaintiff placing the waiver squarely at issue with factual support and seeking rescission under section 4302-section 4302 raises fascinating questions about what it means for one thing to be ‘more beneficial’ than something else and how courts are to make that determination.”