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Hamovitz v. Santa Barbara Applied Research


March 31, 2010


The opinion of the court was delivered by: Judge Terrence F. McVerry

Magistrate Judge Lisa Pupo Lenihan


Plaintiff initiated this lawsuit by the filing of his Complaint on April 4, 2007. By Order of Court dated April 11, 2007, this Court referred the action to United States Magistrate Judge Lisa Pupo Lenihan for pretrial proceedings in accordance with the Magistrate Judges Act, 28 U.S.C. § 636(b)(1), and Local Rules for Magistrate Judges, LR 72.1.3 and 72.1.4.

On February 26, 2010, Magistrate Judge Lenihan issued a Report and Recommendation (the "Report") in which it was recommended, following lengthy analysis, that the Motion for Summary Judgment filed by each Defendant be denied, with the exception that summary judgment be granted on Plaintiff's claims that he (a) was denied a "benefit of employment" in the Defendants' "hiring/application process" and (b) was entitled to punitive damages, and that the Motion for Partial Summary Judgment filed by Plaintiff be denied. The Report concluded that judgment on the remaining claims was precluded by questions of material fact as to the liability of Defendants for (a) failure to reinstate Plaintiff to his former position upon his return from active military duty service, as required of a successor-in-interest under the Uniformed Services Employment and Reemployment Rights Act of 1994, 38 U.S.C. § 4301 et seq. ("USERRA"); and (b) discriminatory refusal to hire Plaintiff upon his return from active military duty service.

Since the filing of the Report, the parties have filed the following: Plaintiff's Objections to the Magistrate Judge's Report and Recommendation (Document No. 107), Defendant's, Maytag Aircraft Corporation, Objections to the Report and Recommendation of the Magistrate*fn1 (sic) (Document No. 108), Defendant's, Maytag Aircraft Corporation, Response to Plaintiff's Objections to the Magistrate Judge's Report and Recommendation (Document No. 109), Defendant Santa Barbara Applied Research, Inc.'s Response to Plaintiff's Objections to the Magistrate Judge's Report and Recommendation on Cross Motions for Summary Judgment (Document No. 110), Plaintiff's Brief in Opposition to Defendant Maytag's Objections to the Magistrate Judge's Report and Recommendation (Document No. 111), Plaintiff's Supplemental Appendix (Document No. 112), and Plaintiff's Sur Reply to SBAR's Reply to Plaintiff's Objections to the Magistrate Judge's Report and Recommendation (Document No. 113).

This Court has completed a thorough de novo review of the pleadings and documents in the case, together with the Report, the applicable case law and regulations, and provides the following responses to the Objections:

Plaintiff's Objections

First, in asserting entitlement to summary judgment on his successor-in-interest claim, Plaintiff overstates the Report's conclusion to Section E(1). See Report at 26 (observing that the evidence "tends to support Plaintiff's position" and that there are genuine issues of material fact); id. at 2-8 (providing factual summation). There remain fact questions relevant to the applicable multi-factor test. For example, and as noted in the Report, Defendants assert they had a PARS contract for meaningfully different services. This could also, in turn, have affected to some degree the scope of the employment positions and the working conditions. The "team" relationship between SBAR and Maytag may also have affected the positions and/or working conditions. In addition, and again as noted in the Report, the cases suggest that the extent to which the facilities and equipment belonged to PARS, and not to either subcontractor, may affect the weight of this factor (or remove it from the multi-factor assessment).

Second, Plaintiff asserts that he was entitled to a partial summary judgment, holding that Maytag was deemed to have received his application through its agent or employee, Fratangeli. There are factual disputes and/or ambiguities regarding when Plaintiff's application was delivered and received, when it was passed up the Defendants' operational/administrative heirarchy/ies, what Fratangeli's relationship was vis-a-vis SBAR/Maytag (i.e., administrative organizational ambiguities), and whether an SBAR application should have been considered an application for a Maytag position.*fn2 But the principal reason Plaintiff's assertion should be rejected is simply that receipt of his application is not itself a claim on which relief can be granted. See, e.g., Buckley v. Hoffnagle, 2008 WL 4459047 (M.D. Fla. October 3, 2008) (denying plaintiff's request for partial summary judgment on "non issue" of employment relationship, which was an element, but not a claim); id. (finding judgment as a matter of law "inappropriate" on a matter that was not a cause of action).

Third and last, Plaintiff maintains that the Report, while denying any "benefit of employment claim" under§ 4311,*fn3 "does not fully address plaintiff's other claims" under § 4311. Plaintiff proceeds to assert that he has two separate claims: (i) intentional discrimination in employment motivated by his repeated active-duty service and (ii) a claim"in the nature of that recognized in" Beattie v. Trump Shuttle, Inc., 758 F.Supp. 30 (D.D.C. 1991) and McClain v. City of Somerville, 424 F.Supp.2d 329 (D.C. Mass 2006). Plaintiff errs.

The Report expressly recommends denial of summary judgment on Plaintiff's discrimination in hiring claim under § 4311,*fn4 and it properly sets forth the procedural framework and evidentiary burdens thereto. The cases cited in Plaintiff's Objections ground neither an additional claim nor application of a different procedural framework. To the contrary, these cases simply stand for the proposition that if a servicemember brings a § 4311 claim, and a defendant responds that it cannot be held liable under the Act when it did not hire the servicemember because s/he wasunavailable for the defendant's start-date, the defendant is not absolved from liability. A refusal to hire an active duty serviceperson because s/he will still be on active duty when the position is to start is an impermissible reason under the legislation, i.e., it is not a defense. Plaintiff's interpretation to the contrary notwithstanding, these cases do not stand for the proposition that some § 4311 claims do not require any showing of improper motive. These cases never reach the burden-shifting procedures of § 4311. When a Defendant's stated reason for not hiring the plaintiff servicemember is his unavailability, and that is the question before the Court, the given reason is itself proscribed by the statute, and the Court need not look any further. See, e.g., McClain , 424 F.Supp.2d at 333 ("The sole question is whether USERRA prevents discrimination in initial hiring on the basis of unavailability due to active service."); id. n. 3 (noting that the procedural scheme of § 4311 was "insignificant" because the parties agreed the sole reason was unavailability). In the case sub judice, unavailability for Defendants' start-date was not a given reason for Plaintiff's non-hire. To the contrary, Plaintiff was available for work by the time Defendants assumed the contract on February 1st. The relevant analysis on the question of Defendants' liability for §4311 discrimination is that set forth in the Report. See Report at 27-29.

Defendant Maytag's Objections

This Court is troubled by the tenor and tone of Defendant's Objections to the Report. The Court also finds it regrettable that Defendant, although understandably disappointed that the Report reaches a conclusion on a question of first impression in this District and Circuit which differs from its own, would go so far as to impugn the integrity of the Court and elect to express its disagreement in language of aspersion and escalating disrespect for the Court and its Magistrate Judges. See, e.g., Defendant's Objections at 2 (describing, on the basis of a summary affirmance of a case distinguished in the Report, Magistrate Judge's legal analysis as "discredited"); id. at 6-8 (characterizing Magistrate Judge's factual summation as "insinuation[s]" and "innuendo"); id. at 12 (describing Magistrate Judge's legal analysis as "unreliable"); and id. at 14 (ultimately accusing the Magistrate Judge of "misconstru[ing], misstat[ing] and/or ignor[ing] existing legal precedent in an effort to achieve the result clearly desired by the Magistrate") (emphasis added). The last of these excerpts from Defendant's Objections, in particular, is patently outside the bounds of professional conduct and decorum, and inappropriate to an officer of the Court.*fn5

As to the merits of Defendant's objections, Defendant continues to argue that a merger or transfer of assets is a precondition to establish "successor in interest." The Court notes that this argument is identical to the argument previously made by Defendant and said argument was given due consideration by the Magistrate Judge and rejected. These objections, therefore, do not warrant further analytical discussion, but given the extent and tone of the objections, the Court will address same. As an initial matter, the Court notes, as did counsel for Plaintiff in his Brief in Opposition to Defendant Maytag's Objections, that the opinions in Reynolds v. Rehab Care Group East, Inc., 531 F. Supp.2d 1050 (S.D. IA 2008), and Reynolds v. Rehab Care Group East, Inc. 590, F. Supp.2d 1107 (S.D. IA 208), aff'd, 591 F.3d 1030 (8th Cir. 2010), do not support Defendant Maytag's position. In fact, the two Reynolds district court opinions, as well as the recent appellate court decision affirming the district court's decision to grant summary judgment , each support a position completely contrary to that put forth by Defendant. In its summary judgment opinion, the district court in Reynolds explicitly adopted its earlier conclusion that no "merger or acquisition" was required to establish "successor in interest" under USERRA, to wit:

In its Order on Plaintiff's Motion for Preliminary Injunction, this Court discussed extensively the only two reported cases that have considered questions of successor in interest liability under USERRA -- Coffman v. Chugach Support Services, Inc., 411 F.3d 1231, 1232 (11th Cir. 2005), and Murphree v. Communications Technologies, Inc., 460 F. Supp.2d 702, 704 (E.D. La. 2006). See Reynolds, 531 F. Supp.2d at 1058-60. The Court specifically declined to employ Coffman's "ownership and control" test, favoring instead the "business continuity test" employed by Leib, adopted in Murphree, and requested by Plaintiff. Id. At 1060. Accordingly, bearing in mind the different standard of review applicable to the present Motion for Summary Judgment, the Court turns now, as it previously did with respect to Plaintiff's Motion for Preliminary Injunction, to an evaluation of each of the six Department of Regulation factors to determine whether RehabCare is a successor in interest to Progressive.

Reynolds, 590 F. Supp.2d at 1113 (emphasis added.)

Defendant makes no contention that the applicable regulations are ultra vires. As discussed at length in the Report, the regulations promulgated by the United States Department of Labor include on their face a requirement that the Leib factors be applied in every case; that is their plain meaning, and a meaning which - again as discussed in the Report - has been followed by both district courts which have addressed the issue since the regulations went into effect in January, 2006.*fn6 See Reynolds and Murphree. It was incumbent on Defendant to present a persuasive analysis supporting its contention that the regulations set one consideration - that of business privity - apart as a prerequisite or threshold factor. Defendant failed to do so.

The regulations' definition of a successor-in-interest under the USERRA (which term was not defined within the statute) is entitled to Chevron deference. See Chevron, USA, Inc. v. NRDC, Inc., 467 U.S. 837, 845 (1984) (requiring deference to agency's construction of statute so long as it is "a reasonable policy choice for the agency to make"); see also National Cable Telecomm. Ass'n v. Brand X Internet Servs., 545 U.S. 967, 983 (2005) (agency remains authoritative interpreter (within the limits of reason) of statute).*fn7

As to the case law, which constitutes tertiary authority, Defendant's headlined assertion that three Circuit Court opinions compel a finding in its favor is wholly unfounded. The Third Circuit's opinion more than sixty (60) years ago in Kicinski v. Constable Hook Shipyard, Inc., 168 F.2d 404 (3d Cir. 1948), decided under a statute which imposed liability solely upon the employer in whose employ the veteran was at the time he entered the service, is distinguishable and does not mandate summary judgment for Defendant for reasons explained clearly and at length in the Report. See Report at 15-17. The Eleventh's Circuit opinion in Coffman v. Chugach Support Services, Inc., 411 F.3d 1231 (11th Cir. 2005), which concluded that a re-employment obligation required a threshold showing of privity in the form of a merger or transfer of assets, occurred - as noted in the Report - prior to the Department of Labor's interpretive definition of successor-in-interest under its regulations to the USERRA. The underlying opinions of the District Court in Reynolds apply the multi-factor test codified in the regulations and are wholly consistent with the analysis of the Report. See Report at 21-22.*fn8

Defendant's Objections do not, of course, highlight the fourth relevant Circuit opinion, that of the Eighth Circuit in Leib v. Georgia-Pacific Corp., 925 F.2d 240 (8th Cir. 1991), which sets forth the multi-factor test later codified by the Department of Labor's USERRA regulations, and which the Report, in conformance with those regulations, applied. See Leib, 925 F.2d at 245-47 (adopting multi-factor test for successor liability which looked to "totality of the circumstances", including business continuity; use of the same plant; continuity of work force; similarity of jobs and working conditions; similarity of supervisory personnel; similarity in machinery, equipment and production methods; similarity of products or services; notice of claim; and change of circumstances making it impossible or unreasonable for defendant to re-employ the veteran).*fn9

Many pages of Defendant's Objections are also devoted to a reiteration of factual assertions contained in prior pleadings. It is directed to Section II(B) of the Report.*fn10

Finally, the Court finds no merit to Defendant's Objections regarding denial of summary judgment as to Plaintiff's claims for discrimination in hiring and liquidated damages for reasons fully set forth in the Report.

SBAR's Response to Plaintiff's Objections

To the extent that SBAR has raised objections to Plaintiff's objections, same have been given due consideration and the Court finds that SBAR's objections are without merit and do not do not warrant further analytical discussion.

To the extent that SBAR has raised objections to the Report, the objections were untimely filed and, therefore, not considered by the Court. See Report at 31 ("the parties are allowed fourteen (14) days from the date of service of a copy of this Report and Recommendation to file objections.")

An appropriate Order follows.


AND NOW, this 31ST day of March, 2010, IT IS HEREBY ORDERED that the Motions for Summary Judgment filed by Defendants are DENIED, with the exception that summary judgment is GRANTED on Plaintiff's claims that he (a) was denied a "benefit of employment" in the Defendants' hiring / application process" and (b) was entitled to punitive damages.

IT IS FURTHER ORDERED that the Motion for Partial Summary Judgment filed by Plaintiff is DENIED.

The Report and Recommendation of Magistrate Judge Lenihan dated February 26, 2010, is adopted as the Opinion of the Court.

Terrence F. McVerry United States District Court Judge

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