Government of the Virgin Islands v. United Industrial Workers, N.A.

Opinions of the United
1999 Decisions States Court of Appeals
for the Third Circuit
2-17-1999
Govt of V.I. v. United Ind Workers
Precedential or Non-Precedential:
Docket 98-7148
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Filed February 17, 1999
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
No. 98-7148
GOVERNMENT OF THE VIRGIN ISLANDS;
DEPARTMENT OF JUSTICE
Appellants
v.
UNITED INDUSTRIAL WORKERS, N.A., SEAFARERS
INTERNATIONAL UNION OF NORTH AMERICA, AFL-CIO;
LAWRENCE ACKER
On Appeal from the District Court
of the Virgin Islands, Appellate Division
(St. Croix)
(D.C. No. 92-cv-00022)
District Judge: Honorable Thomas K. Moore
Argued Thursday, December 10, 1998
BEFORE: ROTH, LEWIS and GARTH, Circuit Judges
(Opinion filed February 17, 1999)
Julio A. Brady
Attorney General
Paul J. Gimenez (Argued)
Maureen P. Cormier
Solicitor General
Department of Justice
48B-50C Kronprindsens Gade
GERS Building - 2nd Floor
St. Thomas, U.S.V.I. 00802
Attorneys for Appellants
Eszart A. Wynter, Sr. (Argued)
Law Offices of Eszart A. Wynter
#27 Estate Whim, P.O. Box 1847
Frederiskted, St. Croix, U.S.V.I.
00841
Attorney for Appellees
OPINION OF THE COURT
GARTH, Circuit Judge:
This case presents the issue of whether the Virgin Islands
Writ of Review statute, 5 V.I.C. SS 1421-23, provides the
Territorial Court of the Virgin Islands with jurisdiction to
review an employment arbitration decision that binds the
Government of the Virgin Islands in its role as an employer.
We are also faced with the question of whether the Federal
Arbitration Act ("FAA"), 9 U.S.C. SS 1-16, applies in the
Territorial Court.
We hold that the Writ of Review statute gives the
Territorial Court jurisdiction to review actions of
government actors only, as distinct from private actors.
Because the arbitrator whose conduct is at issue here was
not a government actor, the Writ of Review statute cannot
apply to the instant case. We also hold that the provisions
of the FAA and the standards developed by our
jurisprudence in reviewing arbitrations under the FAA are
enforceable in the Territorial Court.
2
I.
Defendant Lawrence Acker commenced his employment
with plaintiff Virgin Islands Department of Justice ("DOJ")
as an Assistant Attorney General in the fall of 1987. The
DOJ alleges that Acker took unauthorized leaves of
absences beginning in 1988 and continuing into early
1990. In the spring of 1990, the DOJ suspended Acker,
giving sixteen reasons for doing so, pending review of his
alleged unauthorized absences and withheld his pay.
Acker's union, defendant United Industrial Workers of
North America, Seafarers International Union, AFL-CIO
("Union"), filed a grievance on Acker's behalf.
Pursuant to the Collective Bargaining Agreement ("CBA")
between the DOJ and the Union, the DOJ and the Union
met to discuss the grievance ("Grievance Meeting"), but
their efforts produced no solution. The Union demanded
arbitration, again pursuant to the CBA, and the DOJ and
the Union selected an arbitrator, Robert A. Ellison
("Arbitrator"), to conduct the arbitration.
Before deciding the substantive issue of Acker's
suspension and termination, the Arbitrator considered and
decided two procedural arguments raised by the DOJ. First,
the DOJ claimed that Acker's grievance had not been timely
filed. The Arbitrator decided that Acker's grievance had
been filed within the specified ten days provided in the CBA
after he received his termination letter on March 15, 1990.1
Second, the DOJ argued that although Acker was present
at the Grievance Meeting, his behavior at the Grievance
Meeting amounted to a failure to participate, which was a
waiver of the right to arbitrate.2 The Arbitrator rejected this
argument as well. On the substantive issue of Acker's
termination, the Arbitrator ruled that the DOJ's decision to
terminate Acker was unjust and he ordered Acker to be
reinstated with back-pay.
_________________________________________________________________
1. The DOJ had argued that the dispute "ripened" on February 12, 1990,
the date on which Acker's termination was effective. However, the
termination letter was dated March 15, 1990.
2. The appellate record does not specify the particulars of Acker's
conduct at the Grievance Meeting.
3
The DOJ filed a Writ of Review under 5 V.I.C.SS 1421-23
in the Virgin Islands Territorial Court ("Territorial Court"),
seeking vacation of the arbitration award. The Writ of
Review statute provides:
Any party to any proceeding before or by any officer,
board, commission, authority, or tribunal may have the
decision or determination thereof reviewed for errors
therein as prescribed in this chapter and the rules of
court. Upon the review, the court may review any
intermediate order involving the merits necessarily
affecting the decision or determination sought to be
reviewed.
5 V.I.C. S 1421 (1997).3 The DOJ asserted in the Territorial
Court that the Arbitrator was biased because he had rented
office space from counsel for the Union. The DOJ also
argued to the Territorial Court, as it had to the Arbitrator,
that the Arbitrator did not have jurisdiction over Acker's
grievance because Acker did not meaningfully participate in
the Grievance Meeting.
The Territorial Court held that it did not have subject
matter jurisdiction because 5 V.I.C. S 1421 only permitted
review of actions of governmental officers or entities. The
Territorial Court further held that the Federal Arbitration
_________________________________________________________________
3. 5 V.I.C. S 1422 provides:
The writ of review shall be allowed in all cases where there is no
appeal or other plain, speedy, and adequate remedy, and where the
officer, board, commission, authority, or tribunal in the exercise
of
his or its functions appears to have exercised such functions
erroneously, or to have exceeded his or its jurisdiction, to the
injury
of some substantial right of the plaintiff.
5 V.I.C. S 1423 provides:
Upon the review provided for in this chapter the court shall have
power to affirm, modify, reverse, or annul the decision or
determination reviewed, and, if necessary, to award restitution to
the plaintiff, or, by mandate, direct the officer, board,
commission,
authority, or tribunal to proceed in the matter reviewed according
to
its decision. From the judgment of the district court on review an
appeal may be taken in like manner and with like effect as from a
judgment of such district court in a civil action.
4
Act, 9 U.S.C. SS 1-16, barred any review of the Arbitrator's
decision.
The DOJ appealed to the District Court of the Virgin
Islands, Appellate Division ("District Court"), which agreed
with the Territorial Court that 5 V.I.C. S 1421 did not
provide the Territorial Court with subject matter
jurisdiction: "[W]e hold that the Territorial Court does not
have jurisdiction to review a private arbitrator's decision
under the Writ of Review statute." Government of the Virgin
Islands v. United Industrial Workers of Am., D.C. Civ. App.
No. 1992-022 (D.V.I. App. Div. Dec. 1, 1997), at 10.
However, the District Court went on to hold that the
Territorial Court did have jurisdiction to review the
Arbitrator's decision. First, Virgin Islands substantive law,
which incorporates rules of the common law in absence of
local law to the contrary, see 1 V.I.C.S 4, provides that a
court may enforce an arbitration award. See Restatement
(Second) Contracts S 345(f).4 Second, section 2 of the FAA5
requires a court to review the validity, irrevocability, and
enforcement of agreements to arbitrate. The District Court
held that the FAA's substantive provision in section 2
applies to both federal and state courts, Southland Corp. v.
Keating, 465 U.S. 1, 16 (1984),6 and that the Territorial
_________________________________________________________________
4. Restatement (Second) Contracts S 345(f) provides:
The judicial remedies available for the protection of interests
stated
in S 344 [expectation, reliance, or restitution interests] include
a
judgment or order . . . (f) enforcing an arbitration award
5. 9 U.S.C. S 2 provides:
Validity, irrevocability, and enforcement of agreements to
arbitrate
A written provision in any maritime transaction or a contract
evidencing a transaction involving commerce to settle by
arbitration
a controversy thereafter arising out of such contract or
transaction,
or the refusal to perform the whole or any part thereof, or an
agreement in writing to submit to arbitration an existing
controversy
arising out of such a contract, transaction, or refusal, shall be
valid,
irrevocable, and enforceable, save upon such grounds as exist at
law
or in equity for the revocation of any contract.
6. See also Virgin Islands Hous. Auth. v. Coastal General Constr. Services
Corp., 27 F.3d 911, 915-16 (3d Cir. 1994).
5
Court is a state court for this purpose. See Harris v.
Boreham, 233 F.2d 110, 113-14 (3d Cir. 1956).
The District Court recognized that the United States
Supreme Court has not ruled definitively on whether the
procedural FAA provisions apply in a state or territorial
court. The District Court ruled, however, based upon
Supreme Court dicta and other precedents, that the
procedural provisions in sections 3 and 4 of the FAA (orders
to stay and to compel arbitration), applied in the Territorial
Court.
The DOJ timely filed its notice of appeal of the District
Court's December 1, 1997 order on December 30, 1997. We
exercise jurisdiction pursuant to 28 U.S.C. S 1291 and
Section 23A(c) of the Revised Organic Act of 1954, 48
U.S.C. S 1613a(c).
II.
As both the Territorial Court and the District Court
concluded, the plain language of the Writ of Review statute
contemplates review of actions taken by the Government of
the Virgin Islands qua government. The Arbitrator was
neither a government employee, nor was he associated with
the government. Accordingly, S 1421, which authorizes a
Writ of Review only when the proceeding is before an
"officer, board, commission, authority, or tribunal
[government actors]," is inapplicable here.
We therefore reject the two arguments made by the DOJ.
First, the DOJ criticizes the Territorial Court for
disregarding Territorial Court prior decisions that read the
Writ of Review statute more broadly, entertaining
jurisdiction under S 1421 of other than governmental
determinations. Those decisions, as the District Court
pointed out, are not binding on either the Appellate
Division or, as we observe, on this court. Second, the DOJ
argues that because the DOJ was a party to the contract,
a statute providing review of government actions applies to
the decision of the Arbitrator concerning such an
employment contract. Because the DOJ does not have to
agree to arbitration in its employment contracts, it argues,
it may obtain review of the arbitration decision under the
6
Writ of Review statute. We reject this argument as well
because the Government of the Virgin Islands is acting here
as a litigant, the employer, and not as a governmental
adjudicatory body.
III.
A.
We must next consider whether the FAA applies to local
matters litigated in the Territorial Court. Congress enacted
the FAA pursuant to its power to define the jurisdiction of
the federal courts and pursuant to the Commerce Clause.
Congress, and thereafter the courts, intended to override
the then-current federal courts practice of not favorably
regarding arbitration clauses in contracts. "The basic
purpose of the Federal Arbitration Act is to overcome
courts' refusals to enforce agreements to arbitrate." Allied-
Bruce Terminix Cos. v. Dobson, 513 U.S. 265, 270 (1995)
(citing Volt Information Sciences, Inc. v. Board of Trustees of
Leland Stanford Junior Univ., 489 U.S. 468, 474 (1989)). As
the District Court stated and as we agree, the Territorial
Court is a state court for purposes of the FAA. See Harris
v. Boreham, 233 F.2d 110, 113-14 (3d Cir. 1956).
The FAA thus mandates that federal courts not review
substantive decisions of arbitrators. Review of arbitration
decisions is severely restricted and limited to, among other
things, fraud, impartiality, or lack of jurisdiction. See 9
U.S.C. S 10(a); see, e.g., Matteson v. Ryder Sys., Inc., 99
F.3d 108 (3d Cir. 1996); High Concrete Structures, Inc. v.
United Elec., Radio & Mach. Workers of Am., 879 F.2d 1215(3d Cir. 1989); Apex Fountain Sales, Inc. v. Kleinfeld, 818
F.2d 1089 (3d Cir. 1987); Sun Ship, Inc. v. Matson
Navigation Co., 785 F.2d 59 (3d Cir. 1986); Virgin Islands
Nursing Association's Bargaining Unit v. Schneider, 668
F.2d 221 (3d Cir. 1981); Bender v. Smith Barney, Harris
Upham & Co., Inc., 901 F. Supp. 863 (D.N.J. 1994), aff'd,
67 F.3d 341 (3d Cir. 1995). Although the FAA applies by its
terms to cases in federal courts, 9 U.S.C. #8E8E # 3-4, in
Southland Corp. v. Keating, 465 U.S. 1 (1984), and Allied-
Bruce Terminix Companies v. Dobson, 513 U.S. 265 (1995),
7
the Court reaffirmed that the FAA also applies in state
courts to the extent that an arbitration provision affects
interstate commerce. See also Virgin Islands Hous. Auth. v.
Coastal Gen. Constr. Services Corp., 27 F.3d 911, 915 (3d
Cir. 1994). Thus, in order for the FAA to apply in the
Territorial Court, the arbitration at issue must affect
interstate commerce as defined by Allied-Bruce.
The District Court, in its opinion, stated that the Virgin
Islands had not adopted statutes making the FAA
applicable to the Virgin Islands Territorial Courts, and we
are aware that the issue remains unsettled. The District
Court, however, directed the Territorial Court, which is
where arbitration decisions are to be enforced (or vacated)
to "look to the substantive and procedural body of federal
arbitration law for guidance in enforcing arbitration
agreements." Government of the Virgin Islands v. United
Industrial Workers of Am., D.C. Civ. App. No. 1992-022
(D.V.I. App. Div. Dec. 1, 1997), at 16.
We are of course aware of the Southland and Allied-Bruce
requirement that a contract comes within the purview of
the FAA only when an interstate nexus is shown. The
Supreme Court has stated that the FAA's reach coincides
with that of the Commerce Clause. Allied-Bruce, 513 U.S. at
274. This broad interpretation of the FAA "is consistent
with the [FAA]'s basic purpose, to put arbitration provisions
``on the same footing' as a contract's other terms." Id.(quoting Scherk v. Alberto-Culver Co., 417 U.S. 506, 511
(1974)).
While it is true that in this case the record is scant as to
an interstate nexus, we recognize that the appellee United
Industrial Workers of North America, Seafarers
International Union, AFL-CIO itself, which represents
Acker, is an international body embracing Union workers
not only in the various states of the union, but in foreign
countries as well. Its activities, by their very nature, qualify
as having an interstate nexus. Moreover, we can take
judicial notice that the Attorney General's office of the
Virgin Islands, of which Acker was a member until his
termination, has been and is involved with matters
concerning the various states. See, e.g., Travel Services, Inc.
v. Government of the Virgin Islands, 904 F.2d 186 (1990)
8
(assessment of tax on commissions earned from sale of
airline tickets); Business Ventures International v. Olive, 893
F.2d 641 (1990) (determination of tax liability for income
unconnected with Virgin Islands' activity); Inter-Island
Transport Line, Inc. v. Government of the Virgin Islands, 539
F.2d 322 (3d Cir. 1976) (alleged breach of water-hauling
contract between Government of the Virgin Islands and
carrier); Pan American World Airways, Inc. v. Government of
the Virgin Islands, 459 F.2d 387 (3d Cir. 1972) (whether tax
on airlines' gross receipts violates Commerce Clause or
Fourteenth Amendment of the United States); Holmes v.
Government of the Virgin Islands, 370 F. Supp. 715 (D.V.I.
1974) (validity of act of legislature authorizing agreement
between the Government of the Virgin Islands and a
corporation intending to build an oil refinery); Southerland
v. St. Croix Taxicab Ass'n, 315 F.2d 364 (3d Cir. 1963)
(action by tour agency to prevent the Government of the
Virgin Islands from interfering with tour agency's right to
transport persons who purchased package tour); Virgo
Corp. v. Paiewonsky, 254 F. Supp. 405 (D.V.I. 1966)
(validity of tax of watches exported to United States
customs area); see also The West Indian Co. v. Government
of the Virgin Islands, 844 F.2d 1007 (3d Cir. 1988)
(enforceability of contract between the Government of the
Virgin Islands and a Danish-owned corporation).
Although we recognize that the individual employment
contract of Lawrence Acker can be construed narrowly as
an employment contract of a local nature only, we are not
persuaded that the character of his union, which negotiated
the CBA, which sought to enforce the CBA, and which filed
the grievance on behalf of Acker, and the nature of Acker's
employment can be overlooked in determining whether the
necessary interstate nexus for application of the FAA is
present. Hence, we are satisfied that the FAA should be
applied by the Territorial Court because its requirements
have been met. See Virgin Islands Hous. Auth. v. Coastal
Gen. Constr. Services Corp., 27 F.3d 911, 915 (3d Cir.
1994).
The appellant has called our attention to Great Western
Mortgage Corp. v. Peacock, 110 F.3d 222 (3d Cir. 1997),
where the appellant argued that the FAA did not apply to
9
her employment contract because she fell within the scope
of the exceptions to the FAA mandatory arbitration.7 We
rejected her argument, relying upon Tenney Engineering,
Inc. v. United Electrical Radio & Machine Workers of Am.,
207 F.2d 450 (3d Cir. 1953) (en banc), and we held that the
exceptions to the FAA only applied to those employees
working directly in the channels of commerce itself. Peacock
did not fall within that classification, and neither does
Acker in the present case. We are satisfied that while Acker
was not employed directly in the channels of commerce, the
FAA in this case nevertheless satisfies the interstate
commerce nexus.
B.
Additionally, the District Court held that the provisions of
the FAA apply within the Territorial Court by virtue of the
common law of the Virgin Islands. We agree. Because there
is no Virgin Islands statute on point, the Restatement
(Second) of Contracts S 345(f) provides a rule of law for the
Virgin Islands. 1 V.I.C. S 4.8 Section 345(f) provides:
The judicial remedies available for the protection of
interests stated in S 344 [expectation, reliance, or
restitution interests] include a judgment or order . . .
(f) enforcing an arbitration award.
_________________________________________________________________
7. That exception is found in S 1 of the FAA, which provides, in pertinent
part:
"Maritime transactions" and "commerce" defined; exceptions to
operation of title
. . . but nothing herein contained shall apply to contracts of
employment of seamen, railroad employees, or any other class of
workers engaged in foreign or interstate commerce.
8. 1 V.I.C. S 4 provides:
The rules of the common law, as expressed in the restatements of
law approved by the American Law Institute, and to the extent not
so expressed, as generally understood and applied in the United
States, shall be the rules of decision in the courts of the Virgin
Islands in cases to which they apply, in the absence of local laws
to
the contrary.
10
Comment (e) to S 345 states that "[b]ecause questions
concerning the enforcement of arbitration awards depend
largely on statute, they are not considered in detail in this
Restatement." The Restatement contemplates that state
courts will look to arbitration statutes for guidance. See
Allied-Bruce Terminix Cos. v. Dobson, 684 So. 2d 102, 106
(Ala. 1995) (opinion after remand) (adopting provisions of
the FAA to define state law to the extent the FAA is
consistent with otherwise-provided procedures of the state).
The common law, as articulated by the Restatement,
provides that arbitration law depends on statutory
schemes, and thus the Territorial Court should apply the
FAA scheme to questions of arbitration.
If there is a difference between applying the FAA directly
to the Territorial Court, as we now do, see supra III.A, or
holding, as the District Court did, that the FAA "supplies
the framework" for the Territorial Court, id. at 20, it is a
difference without a distinction. We therefore take no great
leap in holding the FAA applicable to the Virgin Islands in
light of those provisions of the FAA that have been held to
apply in the Territorial Court by the District Court
Appellate Division and the common law of the Virgin Islands.9
_________________________________________________________________
9. The opinion of Chief Judge Moore for the District Court included the
provisions of S 10(a) of the FAA listing five factors for the Territorial
Court to consider in reviewing the instant arbitration decision. In
addition, it listed in the footnote those sections of the FAA that applied
in the Territorial Court:
In addition to sections 9, 10(a), and 11, other sections of the FAA
clearly apply in Territorial Court. These include: section 3,
providing
for a stay of proceedings where [the] issue therein [is] referable
to
arbitration; section 4, for order to compel arbitration and
judicial
enforcement; section 5, appointment of arbitrators or umpire;
section 6, application heard as motion; section 7, witnesses before
arbitrators, their fees, and compelling attendance; section 12,
notice
of motions to vacate or modify and their service, and procedure for
staying proceedings; section 13, what papers must befiled for an
order confirming, modifying, or correcting award; and section 16,
appeals from actions of Territorial Court. There are some
provisions
of the FAA which obviously would not apply in the Territorial Court
because they deal with strictly federal proceedings, e.g., 9 U.S.C.
S 8
(proceedings begun by libel in admiralty and seizure of vessel or
property); id. S 10(b) (referring to 5 U.S.C. SS 372 & 380).
Government of the Virgin Islands v. United Industrial Workers of Am.,
D.C. Civ. App. No. 1992-022 (D.V.I. App. Div. Dec. 1, 1997), at 19 n.21.
11
IV.
We hold that the Writ of Review statute, 5 V.I.C.SS 1421-
23, does not provide the Territorial Court with jurisdiction
to review a private arbitrator's decision. The Federal
Arbitration Act, 9 U.S.C. S 1-16, however, applies to
appellant Lawrence Acker's employment contract by virtue
of its interstate character and through application of the
common law.
We will therefore affirm the order dated December 1,
1997, of the District Court of the Virgin Islands, Appellate
Division of St. Croix, and remand to the Territorial Court
for proceedings consistent with this opinion.
A True Copy:
Teste:
Clerk of the United States Court of Appeals
for the Third Circuit
12