Thirteen years ago, Captain Garrett of the U.S. Marine Corps traded his camouflage utility uniform for the business-casual dress of a Circuit City service manager. The electronics company was booming, and Garrett could still get his dose of a soldier's life as a member of the Marine Reserve.

For almost a decade, Garrett ascended the company's ranks. But in October 2002, with war in Iraq near certain, his bosses asked whether he would go on active duty, according to Garrett. He said it was possible, and within weeks, the sniping began: his department took too long with repairs, one boss said, and its work was sometimes shoddy. Then, on March 17—two days before the U.S. invaded Iraq—Garrett got fired.

The company declines to comment, saying only that it "supports the mission and values of the United States Armed Forces." But Garrett says the timing was no coincidence: he lost his job because of his military status. If true, that would violate a 1994 federal law. So Garrett sued Circuit City, only to see it spring yet another surprise.

Garrett, the company said, had to take his case to private arbitration, a quasi-legal process offering sharply limited rights. Garrett acknowledged that his employment contract required arbitration, but he argued that the 1994 act overrode the contract. A federal judge in Dallas agreed in 2004, just before Garrett was activated for a 10-month tour in the Horn of Africa. Last year, though, the U.S. Court of Appeals in New Orleans reversed that decision, becoming the first court to rule that a contract crafted to help employers trumps the law designed to protect the rights of veterans. "That just blows me away," says Garrett, whose case heads for arbitration.

No one knows how many veterans are in a similar bind, but the numbers are substantial—and will grow as more troops return home. Complaints under the 1994 act have increased steadily, to more than 1,500 in 2006 from about 800 in 2001. Some have become lawsuits, and employers may have tried to steer many toward arbitration, since about one-fifth of U.S. companies require the procedure for workplace disputes. In defense of employers, it's not easy reserving jobs for workers called to active duty. But Congress judged that the cost was worth the peace of mind of citizen soldiers willing to sacrifice their time and perhaps lives to the military. Like predecessor statutes dating from 1940, the 1994 act's broad protections rest on the promise of a federal jury trial—with rights to evidence, a fair hearing and an appeal—if an employer fails to comply.

Companies like Circuit City say binding arbitration is faster and cheaper than going to court, though studies have cast doubt on both claims. What really bugs employees are the rights they lose in arbitration—and the apparent bias of arbitrators. There are strict limits on gathering evidence for arbitration hearings, and it is virtually impossible to appeal them. Arbitrators don't necessarily have to follow the law, and studies suggest they favor companies that regularly hire them. Still, the courts generally uphold arbitration clauses unless a law makes absolutely clear that the employee can go to court, arbitration be damned. That pretty much describes the 1994 act, as three federal courts have ruled.

But the magic of law is that even federal judges can give it surprising twists, as the court of appeals judges did in Garrett's case. Sure, they explained, the act says the rights it grants can't be limited. But the judges said that referred to "substantive rights" like the guarantee of a job. Whether such rights are enforced in court or arbitration, the judges thought, is just a matter of process. It's hard to believe, though, that Congress thought a second-class justice system like arbitration was just as good as the federal courts for veterans. As Bob Goodman, Garrett's lawyer, says, "Taking away the Seventh Amendment right to a jury trial is no way to treat the troops."  Or to welcome them home.

CIRCUIT  CITY  CONTACT  INFORMATION:

investor_media@circuitcity.com ; PR_Director@circuitcity.com

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