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Savage v. Federal Express Corp.

United States Court of Appeals, Sixth Circuit

May 10, 2017

Kenneth E. Savage, Plaintiff-Appellant,
Federal Express Corporation, dba FedEx Express; FedEx Corporation Employees' Pension Plan; FedEx Corporation Retirement Savings Plan, Defendants-Appellees.

          Argued: December 9, 2016

         Appeal from the United States District Court for the Western District of Tennessee at Memphis. No. 2:14-cv-02057-S. Thomas Anderson, District Judge.


          Peter Romer-Friedman, WASHINGTON LAWYERS' COMMITTEE FOR CIVIL RIGHTS AND URBAN AFFAIRS, Washington, D.C., for Appellant.

          Terrence O. Reed, FEDERAL EXPRESS CORPORATION, Memphis, Tennessee, for Appellees.

         ON BRIEF:

          Peter Romer-Friedman, WASHINGTON LAWYERS' COMMITTEE FOR CIVIL RIGHTS AND URBAN AFFAIRS, Washington, D.C., Kathryn S. Piscitelli, Orlando, Florida, Meghan M. Boone, INSTITUTE FOR PUBLIC REPRESENTATION, Washington, D.C., for Appellant.

          Carl K. Morrison, Joseph B. Reafsnyder, FEDERAL EXPRESS CORPORATION, Memphis, Tennessee, for Appellees.

          Before: BATCHELDER, STRANCH, and DONALD, Circuit Judges


          JANE B. STRANCH, Circuit Judge.

         Kenneth Savage worked as an aviation mechanic for FedEx, while simultaneously serving as a lieutenant in the United States Naval Reserve. He was terminated by FedEx for violating its reduced-rate shipping policy and acceptable conduct policy. Savage brought claims against Federal Express Corporation d/b/a FedEx Express, FedEx Corporation Employees' Pension Plan, and FedEx Corporation Retirement Savings Plan (collectively "FedEx") for discrimination, retaliation, and improper benefit calculations under the Uniformed Services Employment and Reemployment Rights Act (USERRA), 38 U.S.C. § 431 et seq. The district court granted summary judgment to the defendants. For the following reasons, we AFFIRM in part and REVERSE in part the judgment of the district court.

         I. BACKGROUND

         Kenneth Savage worked as a Senior Aircraft Mechanic at FedEx's Memphis hub from August 2001 to September 2012. He had a strong record as an employee during his tenure at FedEx, earning top performance reviews and various awards and was never formally disciplined prior to his termination. During that time, Savage also served as a lieutenant in the United States Naval Reserve, where he served as an aircraft maintenance officer. Over the course of his eleven years at FedEx, Savage was allowed to: take time off to fulfill his military duties; fly on cargo planes to military sites to perform those duties; and use FedEx computers to complete military training while at work. Savage was one of many current or former service members employed by FedEx.

         Savage participated in the FedEx Corporation Employees' Pension Plan ("pension plan"), a defined benefit plan covering all eligible and participating employees. At the time, Mercer, an actuarial and retirement benefits administrative firm separate from FedEx, calculated and administered retirement benefits under the pension plan. Savage states that in late May or early June 2012, he notified his manager, human resources advisor, and other individuals in FedEx's benefit department about a discrepancy in his pension calculations. He also raised the issue with the FedEx Retirement Center, which is not a FedEx entity but a specific group of Mercer employees. Savage states that he continued to make complaints through July and August.

         Savage was not the first to complain about the calculation of pension benefits. Cliff Cunningham, another service member and FedEx employee in Savage's work group, also stated that he believed his military service had resulted in FedEx incorrectly crediting his retirement accounts. In 2008, FedEx settled a dispute with its pilots' union over "FedEx's failure to make the correct USERRA pension contributions for pilots serving in the military." Savage and other FedEx mechanics were participants in the same pension plan as the pilots.

         FedEx allowed employees, their spouses, and dependents to utilize shipping services at a reduced rate, though this discount could not be used for any type of commercial benefit or commercial purpose not related to FedEx Express, or for any commercial enterprise or business, either non-profit or for-profit. FedEx's acceptable conduct policy states that "[v]iolation of guidelines and policy for employee reduced rate shipping . . . may result in severe disciplinary action up to and including termination." These policies are listed in FedEx manuals and handbooks that Savage had access to throughout the course of his employment. At the time Savage signed up for his reduced-rate shipping account, he agreed to the terms and conditions of the policy. Savage states that the policy allowed FedEx employees to use reduced shipping rates for their personal benefit, and was revised on September 2, 2012, to explicitly prohibit employees from using the discount to ship merchandise sold on eBay. Savage asserts that he was not notified of this change, and on September 4, his wife used the employee discount to ship one or two items she had sold on eBay. Savage and his wife had previously used the discounted shipping rate to transport various items they had sold through websites like eBay and Craigslist.

         FedEx routinely investigates whether employees abuse their shipping privileges. In 2012, Savage used his reduced-rate shipping discount 90 times between March and August, and appeared on FedEx's audit for this high volume of shipments. Savage's name did not appear on the initial quarterly audit list, but was added as part of an additional pull made because many of the employees on the first list were already under investigation. Patricia Williams, a FedEx security specialist, investigated Savage's use of the discount. After reviewing the nature and volume of his shipments, Williams interviewed Savage on September 12. He told her that he was aware of the shipping policy and that he and his wife sold items online using his discount. Specifically, Savage said that he and his wife would buy products, like saddles and bridles, from sellers at online auctions. They would then fix up the merchandise for resale, list the goods for resale online, and ship the merchandise to buyers using his employee discount. Savage later clarified that he and his wife "'resold' items that [they] currently owned, " and did not "buy and re[sell] these items to make a profit." Savage also maintained that he was not running a business with these transactions. He asserts that many employees found the shipping policy vague and confusing, in part because "FedEx constantly changed its discount shipping policy, often without given notice to its employees."

         At the end of the interview, Savage was suspended with pay pending investigation. The suspension occurred 34 days after he had completed a period of military service, and less than a month after he complained to the FedEx Retirement Center about the calculation of his retirement benefits. Savage submitted a statement a few days later, expressing his belief that his use of the policy had been for a permissible purpose under the FedEx policy in place prior to September 2. Williams concluded that Savage had violated the shipping policy by selling merchandise and using his discount to ship the items to buyers. Williams testified that at the time of her investigation and the interview, she was not aware that Savage was in the military or had made complaints about how FedEx treated military employees. Williams provided her conclusions to Thomas Lott, the human resources advisor for aviation mechanics at the Memphis hub, who forwarded the results to Maureen Patton, the managing director. Savage was terminated on September 20, 42 days after completing military service and a little over a month after he contacted the FedEx Retirement Center about his benefits. Savage unsuccessfully appealed his termination through FedEx's internal appeal process.

         Savage argues that FedEx had "no black-and-white rule or requirement that any employee who violates its discount shipping policy will or must be terminated, " but that such a decision was discretionary. He also states that other non-protected FedEx employees violated the reduced-rate shipping policy and received only warnings letters as discipline. Lott stated that Savage's termination was consistent with FedEx policy, and that he was not aware of any employee who violated the shipping policy and was not terminated. Troy Turnipseed, Savage's manager, who drafted his termination letter but was not involved in the investigation, stated the same.

         Following his September 2012 termination, Savage filed a complaint with the Department of Labor Veterans' Training Service (DOL-VETS). In October 2013, during DOL-VETS's investigation, a lawyer in FedEx's tax and employee benefits legal department wrote that "[u]pon review, we discovered that due to the manner in which [Lt.] Savage's information was entered into the system, the imputed earnings for certain short-term leaves were not captured for pension purposes." (R. 99-10 at PageID 2589) Savage asserts that FedEx incorrectly calculated his retirement benefits on three separate occasions.

         At this time, FedEx recalculated Savage's earnings for each period of time he was on military leave between May 20, 2002 and September 21, 2012. Because Savage's rate of pay during these periods was not "reasonably certain due to shift differential pay, overtime pay, and premium license pay" that he received, FedEx attempted to use the "12-month look-back methodology" to estimate Savage's compensation during service as required by USERRA. FedEx calculated the estimation by a two-step process: first, it calculated his average rate of pay during the 12 months prior to each period of service; and second, it used that average rate of pay to calculate his imputed earnings. Because Savage was on leave for 55 separate time periods, totaling 2, 166 hours of military leave associated with his scheduled work days, FedEx calculated 55 average rates of pay. To determine these average rates of pay, FedEx used the equation: (Total Pensionable Earnings divided by Total Hours Paid) = Average Rate of Pay. FedEx then calculated Savage's imputed earnings using the equation (Average Rate of Pay multiplied by Imputed Hours of Work Missed for Military Service) = Imputed Earnings, and determined that he had earned a total of $92, 463.50 for the periods he was on military leave. After recalculating Savage's imputed earnings, FedEx provided this information to Mercer to adjust his retirement benefits under the pension plan. Savage asserts that FedEx has still not correctly calculated his retirement benefits because its method of estimation did not accurately capture his potential overtime hours during his periods of military leave. He argues that under USERRA, FedEx should have calculated his contributions in one step based on the average compensation he earned for all hours that he worked during the 12 months before each period of military service, instead of a two-step process that used a look-back method to determine only his average rate of pay and multiplied that rate by the hours that FedEx imputed to him for each particular period of absence.

         Savage filed suit against FedEx in District Court on January 26, 2014, alleging USERRA discrimination and retaliation claims under 38 U.S.C. § 4311 and a claim under USERRA's pension provision, 38 U.S.C. § 4318. FedEx filed a motion for summary judgment, which the district court granted.

         II. ANALYSIS

         We review a district court's grant of summary judgment de novo and consider the facts and any inferences drawn in the light most favorable to the non-moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986). Summary judgment is only appropriate where there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(a). The burden falls to the moving party to demonstrate that no genuine issues of material fact exist. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). "Credibility determinations, the weighing of the evidence, and the drawing of legitimate inferences from the facts are jury functions, not those of a judge." Anderson, 477 U.S. at 255. The central question at the summary judgment stage is "whether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one-sided that one party must prevail as a matter of law." Id. at 251.

         USERRA prohibits an employer from discriminating against a member of the uniformed services for his membership in or obligations to those services, and from taking an adverse employment action against an employee who exercises his rights under the statute. See 38 U.S.C. § 4311. Because Congress enacted USERRA to "protect the rights of veterans and members of the uniformed services, [the statute] must be broadly construed in favor of its military beneficiaries." Petty v. Metro Gov't of Nashville-Davidson Cty., 538 F.3d 431, 439 (6th Cir. 2008); see also Bobo v. United Parcel Serv., Inc., 665 F.3d 741, 754 (6th Cir. 2012). Savage makes three claims under USERRA, alleging that FedEx: (1) discriminated against him on the basis of his ...

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