SIU de Puerto Rico v. V.I. Port Auth. ( 1994 )

Opinions of the United
1994 Decisions States Court of Appeals
for the Third Circuit
12-13-1994
SIU de Puerto Rico v. V.I. Port Auth.
Precedential or Non-Precedential:
Docket 94-7217
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"SIU de Puerto Rico v. V.I. Port Auth." (1994). 1994 Decisions. Paper 216.
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UNITED STATES COURT OF APPEALS FOR THE THIRD CIRCUIT
No. 94-7217
SIU DE PUERTO RICO,
CARIBE Y LATINOAMERICA,
AFFILIATED TO SEAFARERS INTERNATIONAL UNION
OF NORTH AMERICA, AFL-CIO,
Appellant
v.
VIRGIN ISLANDS PORT AUTHORITY
On Appeal from the District Court of the Virgin Islands
(D.C. Civ. No. 92-cv-00186)
Submitted Pursuant to Third Circuit LAR 34.1(a)
December 5, 1994
Before: SLOVITER, Chief Judge,
SCIRICA and COWEN, Circuit Judges
(Filed December 13, 1994)
Archie Jennings
Charlotte Amalie, USVI
Attorney for Appellant
Don C. Mills
Virgin Islands Port Authority
Charlotte Amalie, USVI
Attorney for Appellee
OPINION OF THE COURT
SLOVITER, Chief Judge.
Appellant SIU de Puerto Rico, a union that is the
exclusive representative of certain employees of the Virgin
Islands Port Authority (VIPA), appeals from the district court's
dismissal of its claim against VIPA to enforce an arbitration
settlement awarding payment for accumulated sick leave to
retiring employees represented by SIU. This court has
jurisdiction under 28 U.S.C. § 1291.
I.
FACTS AND PROCEDURAL HISTORY
On December 23, 1987, SIU and VIPA entered into a
collective bargaining agreement (Agreement), effective from
October 1, 1987 to September 30, 1990. The Agreement specified
that "[a]ll sick leave in excess of 90 days shall be paid in lump
sum as compensation" to retiring employees at their rate of pay.
App. at 16. Sometime after signing the Agreement, VIPA stopped
paying retirees for accumulated sick leave, claiming that the
sick leave provision of the Agreement violated Virgin Islands
law. SIU filed a grievance against VIPA and submitted it to
arbitration. SIU and VIPA then settled, agreeing that VIPA would
comply with the sick leave provision. The arbitrator approved
the agreement on September 18, 1991.
However, VIPA continued to refuse to pay for
accumulated sick leave. SIU then filed a complaint in the
district court to enforce the arbitration settlement. The
district court denied VIPA's motion to dismiss for lack of
subject matter jurisdiction, and SIU moved for summary judgment.
In response, VIPA argued that at the time the Agreement was in
place it lacked statutory authority to pay for accumulated sick
leave and that the inclusion of the sick leave provision was
inadvertent. VIPA also claimed that it had entered into the
stipulated settlement only because of an "abrupt change in
personnel." App. at 84. The district court denied summary
judgment for SIU and dismissed its claim with prejudice because
it found that VIPA lacked legal authority to pay for accumulated
sick leave. SIU filed a timely appeal.
II.
DISCUSSION
A.
Although VIPA has not filed a brief with this court and
thus has not renewed its argument that the district court lacked
subject matter jurisdiction, we must assure ourselves of
jurisdiction.
The district court asserted subject matter jurisdiction
under section 301 of the Labor Management Relations Act of 1947,
29 U.S.C. § 185, which confers jurisdiction on federal courts to
hear suits between labor organizations and employers for
violations of collective bargaining agreements.1 VIPA had argued
that section 301 did not confer jurisdiction on the district
court because VIPA's dispute with SIU concerned a violation of an
individual employment contract, not a violation of the collective
bargaining agreement.2 In Smith v. Evening News Ass'n, 371 U.S.
195 (1962), the Supreme Court said, "The concept that all suits
to vindicate individual employee rights arising from a collective
bargaining agreement should be excluded from the coverage of
section 301 . . . has not survived." Id. at 200. It follows
that the district court had jurisdiction under 29 U.S.C. § 185.
VIPA also argued without merit that SIU lacked standing
to vindicate the rights of an individual employee. We agree with
the district court that unions have standing to vindicate
individual employee rights under a collective bargaining
agreement negotiated by the union. See UAW v. Hoosier Cardinal
Corp., 383 U.S. 696, 699-700 (1966).
B.
On the merits, SIU argues that the district court erred
in holding that VIPA lacked statutory authority to pay for
1
. The district court of the Virgin Islands exercises the same
jurisdiction as a district court of the United States. See 48
U.S.C. § 1612(a); 4 V.I.C. § 32.
2
. VIPA relied on Association of Westinghouse Salaried Employees
v. Westinghouse Elec. Corp., 348 U.S. 437 (1955), a case the
Supreme Court later declared had been undermined by subsequent
cases and was "no longer authoritative as a precedent." Smith v.
Evening News Ass'n, 371 U.S. 195, 199 (1962).
accumulated sick leave. Our standard of review on this question
of law is plenary. Epstein Family Partnership v. Kmart Corp., 13
F.3d 762, 765-66 (3d Cir. 1994).
VIPA is an instrumentality of the Virgin Islands
government, 29 V.I.C. § 541(e), a characterization that by
express statute applies for purposes of public employee labor
relations. 24 V.I.C. § 362(i). In 1986, the Virgin Islands
legislature eliminated the authority of public employers
participating in the Employees Retirement System of the Virgin
Islands (ERSVI) to pay retirees for accumulated sick leave. See
3 V.I.C. § 731(a).3 Because section 731(a) authorized VIPA only
to credit accumulated sick leave to a retiree's retirement
annuity as of 1987, the date of the Agreement, the district court
was correct in holding that VIPA acted beyond the scope of its
3
. Section 731(a) provides:
Any member [of ERSVI] having accumulated and unused
sick leave at date of retirement shall be entitled to
service credit towards the service retirement annuity
to which the member may be entitled. The credit for
accumulated and unused sick leave shall be 1 month for
any period of 14 to 26 days inclusive of such leave and
½ month for any period of 5 to 13 days inclusive. Less
than 5 days of such unused sick leave shall not be
considered for such credit.
authority in agreeing to pay accumulated sick leave "in lump sum
as compensation" to retirees.
It is "well-settled law" that neither the United States
nor the Virgin Islands government is bound by a contract entered
into by an agency acting beyond the scope of its authority. In
re Penn Cent. Transp. Co., 831 F.2d 1221, 1229 (3d Cir. 1987);
accord Heyl & Patterson Int'l, Inc. v. F.D. Rich Hous. of Virgin
Islands, Inc., 663 F.2d 419, 428-29 (3d Cir. 1980), cert. denied,
455 U.S. 1018 (1981); In re Hooper's Estate, 359 F.2d 569, 577
(3d Cir.), cert. denied, 385 U.S. 903 (1966). It follows that
VIPA acted beyond the scope of its authority in agreeing to pay
accumulated sick leave to retirees, and the sick leave provision
of the Agreement is void ab initio and cannot be enforced. See
Smith v. Department of Educ., 942 F.2d 199, 201-02 (3d Cir. 1991)
(where agent of Virgin Islands government failed to execute
agreement in compliance with applicable statutes, "no valid
contract was ever created"); Heyl & Patterson, 663 F.2d at 432
(agreement by government that did not meet statutory requirements
"null and void ab initio"); Hooper's Estate, 359 F.2d at 577 (no
contract existed when agents of Virgin Islands government acted
beyond scope of authority in granting tax subsidy).
Nor is VIPA estopped from claiming that the sick leave
provision of the Agreement exceeded its authority. The
government cannot be estopped from denying the validity of an
agreement unless it engaged in "'affirmative misconduct,' as
opposed to mere omission or negligent failure." United States v.
Pepperman, 976 F.2d 123, 131 (3d Cir. 1992). Cf. Office of
Personnel Management v. Richmond, 496 U.S. 414, 421 (1990)
("[S]ome type of 'affirmative misconduct' might give rise to
estoppel against the Government."). In its response to SIU's
motion for summary judgment, VIPA claimed that it "inadvertently
permitted" the inclusion of the invalid sick leave provision in
the Agreement and that it stipulated to the arbitration
settlement only because of "an abrupt change of personnel." App.
at 84. SIU produced no evidence of affirmative misconduct. In
the absence of any such showing, VIPA is not estopped from
denying the validity of the sick leave provision of the
Agreement.
SIU argues that for the purposes of negotiating the
Agreement VIPA was not an agent of the Virgin Islands government.
However, VIPA's enabling statute specifically provides that all
VIPA employees "shall be covered by and subject to the Employees
Retirement System of the Virgin Islands." 29 V.I.C. § 573(a).
Though VIPA is a semi-autonomous public corporation with "legal
existence and personality separate and apart from the
Government," id. § 541(e), it must be considered an agent of the
Virgin Islands government when it bargains with its employees.
This court reached the same conclusion twenty years ago
in a case between the same parties. See Virgin Islands Port
Auth. v. SIU de Puerto Rico, 494 F.2d 452 (3d Cir. 1974) (VIPA
I). SIU went on strike against VIPA after its collective
bargaining agreement with VIPA expired. The district court
enjoined the strike because Virgin Islands law prohibited strikes
by public employees. On appeal, SIU argued that VIPA was
effectively a private employer for the purpose of bargaining with
its employees. This court disagreed, holding that VIPA is
"expressly made a government instrumentality," id. at 453, and
that nothing placed VIPA's employees on a "different footing from
other government employees." Id. at 454. SIU then argued that
the expiration of the collective bargaining agreement, which
prohibited strikes, implicitly authorized SIU's strike. Again,
this court disagreed, concluding that even if the parties
intended that expiration would create a right to strike, such an
agreement would be unenforceable because Virgin Islands law
prohibited strikes by public employees. Id. at 455. VIPA I
therefore stands for the dual propositions that VIPA is an agent
of the Virgin Islands government in bargaining with its employees
and that VIPA cannot contract with its employees beyond the scope
of its authority. Specifically, VIPA cannot confer a benefit on
its employees that Virgin Islands law prohibits, and any attempt
to do so is void ab initio.
We do not condone VIPA's actions in its dealings with
its union and its employees.4 As the district court recognized,
4
. Indeed, VIPA has demonstrated the same nonchalance in dealing
with the arbitrator, failing to appear at a scheduled
arbitration, and with this court, having failed to file a brief
SIU presents a "sympathetic" case. App. at 90. However, the
employees' rights to enforce their contract with VIPA is a matter
which lies in the hands of the Virgin Islands legislature.
III.
CONCLUSION
For the foregoing reasons, we will affirm the judgment
of the district court dismissing SIU's claim.
(..continued)
in this court to defend its position and the district court's
order.