Samuel F. Wright

Captain, JAGC, USN (Ret.)
Director, Service Members Law Center
(800) 809-9448, ext. 730
Email: swright@roa.org
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Law Review 1170

Law Review 1170

Million Dollar USERRA Judgment Affirmed by 2nd Circuit

By Captain Samuel F. Wright, JAGC, USN (Ret.)[1]

Serricchio v. Wachovia Securities LLC, 658 F.3rd 169 (2nd Cir. 2011).

1.3.2.1—Prompt Reinstatement

1.3.2.4—Status of the Returning Veteran

1.3.2.5—Rate of Pay after Reinstatement

1.4—USERRA Enforcement

On September 13, 2011, the United States Court of Appeals for the Second Circuit (2nd Circuit) upheld in full the judgment of the United States District Court for the District of Connecticut (Judge Janet Bond Arterton presiding) awarding $926,000 (not including attorney fees, which will likely be quite substantial and push the cost of this case to the defendant well past $1 million) to Air Force Reservist Michael Serricchio, for violation of his rights under the Uniformed Services Employment and Reemployment Rights Act (USERRA).  I discussed this case in the District Court in Law Review 0863 (December 2008) and Law Review 0863 Supplement (March 2009).

The 2nd Circuit is the federal appellate court that sits in New York City and hears appeals from district courts in New York, Connecticut, and Vermont.  As with any civil case in our federal appellate system, the appeal was heard and decided by a panel of three judges.  In this case, the three judges were Judge Rosemary S. Pooler and Judge Richard C. Wesley (both active judges of the 2nd Circuit) and District Judge John G. Koeltl of the Southern District of New York (sitting by designation).  Judge Pooler wrote the decision, and the other two judges joined, making it unanimous.

It is unclear whether the defendant will appeal, but it is running out of appeals.  There are only two appeals available, and both are unlikely to be successful.  The defendant can ask the 2nd Circuit to grant rehearing en banc.  If such a request were granted, all 12 active judges of the 2nd Circuit would hear new oral arguments and read new briefs, and the 12 active judges would decide the appeal.

The final step in our federal appellate system is to petition the United States Supreme Court for a writ of certiorari.  It takes four of the nine Justices to vote affirmatively to grant certiorari, and certiorari is denied almost 99% of the time.  If the Supreme Court denies certiorari, the case is over and final.  If the high court grants certiorari, there will be new briefs and a new oral argument in the Supreme Court, followed by a Supreme Court decision.[2]

At the time of the September 11 terrorist attacks, Michael Serricchio was a financial advisor for Prudential Securities in Stamford, Connecticut.  He was also a Sergeant in the Air Force Reserve, and he was called to active duty in the immediate aftermath of the terrorist attacks.  He remained on active duty for more than two years and was released in October 2003.

As I explained in Law Review 0766 and other articles, an individual returning from military service must meet five eligibility criteria to have the right to reemployment under USERRA.  The individual must have left a civilian position of employment (federal, state, local, or private sector) for the purpose of performing voluntary or involuntary service in the uniformed services, and he or she must have given the employer prior oral or written notice.  The individual’s cumulative period or periods of uniformed service, relating to the employer relationship for which he or she seeks reemployment, must not have exceeded five years.[3]  The individual must have been released from the period of service without having received the sort of punitive or other-than-honorable discharge that disqualifies the person under section 4304 of USERRA, 38 U.S.C. 4304.  Finally, the person must have made a timely application for reemployment, after release from the period of service.

It is clear that Michael Serricchio met these five conditions in the fall of 2003.[4]  Because Serricchio met the criteria, the employer[5] had the legal obligation to reemploy him “in the position of employment in which the person [Serricchio] would have been employed if the continuous employment of such person had not been interrupted by such service, or a position of like seniority, status, and pay, the duties of which the person is qualified to perform.”  38 U.S.C. 4313(a)(2)(A).

The central issue in this case is the meaning of “position of employment” in the context of a salesperson working solely on commission.  At the time he was called to active duty, Serricchio had a book of business (developed by years of his own efforts) worth more than $9 million (securities he managed for clients).  He was paid solely by commission, but he earned more than $75,000 per year.  When he returned from more than two years of military service, he found that his substantial book of business had been almost entirely dissipated.  Wachovia offered him the opportunity to make “cold calls” to the owners of dormant Wachovia accounts and to earn commissions at the same rate the he had been earning previously.  He likely would have been unable to earn any substantial commissions from such cold calling.

Serricchio treated the employer’s clearly insufficient reemployment offer as a constructive discharge.  The District Court found that the employer had constructively discharged Serricchio, and the 2nd Circuit affirmed.

Wachovia argued that all that it was required to do was to offer Serricchio the opportunity to earn commissions at the same rate he had been earning before he was called to service, and that the company had met its obligations under USERRA.  The District Court rejected that argument, and the Court of Appeals affirmed the District Court.  This is an important case, and it establishes a great precedent for other National Guard and Reserve personnel who leave commission-based jobs for voluntary or involuntary military service.

Serricchio is not required to prove that Prudential or Wachovia intentionally caused or negligently permitted Serricchio’s book of business to dissipate during his active duty.  Two years is a long time, and it may be that the dissipation was unavoidable, in view of Serricchio’s lengthy absence from work, but that is not the point.  The point is that it is possible to say, with reasonable certainty, that Serricchio would have continued to enjoy an income approaching six figures per year if his Prudential employment had not been interrupted by a call to the colors.  The employer is not required to pay him the income during the 25 months that he was gone, but the employer is required to restore Serricchio to that position upon his meeting the five USERRA eligibility criteria.

ROA commends the United States Department of Labor (DOL) for filing an amicus curiae brief in the 2nd Circuit, supporting Serricchio’s argument that the book of business, and the opportunity to earn substantial commissions, is part of the “position” to which the employer must restore the returning veteran, under USERRA.  The 2nd Circuit decision praised the DOL brief and found it persuasive, and held that it was entitled to some deference under Skidmore v. Swift & Co., 323 U.S. 134, 140 (1944).

ROA also congratulates attorneys David S. Golub, Jonathan M. Levine, Marilyn J. Ramos, and Craig N. Yankwitt of the law firm Silver, Golub & Teitell in Stamford, Connecticut, for their diligent and imaginative representation of Michael Serricchio.  Their efforts will help not only their individual client, but returning veterans generally, especially those who had been working primarily or exclusively for commissions. 



[1] By way of full disclosure, I should inform the readers that I had a very small role in this case, for which I was compensated by the law firm that represented the plaintiff, Michael Serricchio.  In August 2007, almost two years before I joined the ROA staff as the first Director of the Service Members Law Center (June 2009), I prepared a report as a proposed expert witness, giving my opinion about the requirements of USERRA as applied to Mr. Serricchio’s situation.  The judge rejected my report, because expert testimony is normally not permitted on questions of law (as opposed to complex questions of fact), but I hope that the judge read my report and that it served the purpose of an amicus curiae brief. 

[2] Please see Law Review 1122 (available at www.servicemembers-lawcenter.org) for a description of Staub v. Proctor Hospital, the Supreme Court USERRA decision that came down on March 1, 2011.

[3] All involuntary service and some voluntary service are exempted from the computation of the five-year limit.  Please see Law Review 201 for a definitive discussion of the five-year limit.

[4] The defendant has challenged the sufficiency of Serricchio’s application for reemployment, but both the District Court and the 2nd Circuit rejected that challenge.  This issue is discussed in Law Review 1171.

[5] Serricchio worked for Prudential Securities before he was called to the colors.  While he was on active duty, Prudential was taken over by Wachovia.  As the successor-in-interest to Prudential, Wachovia inherited the obligation to reemploy Serricchio upon his return from service.  In 2008, Wachovia was taken over by Wells Fargo, but that does not defeat Serricchio’s rights under USERRA.