Government of Virgin Islands v. United Indus. Workers, N.A.

• Decision Date: 17 February 1999
• Docket Number: No. 98-7148,AFL-CIO,98-7148
• Parties: 160 L.R.R.M. (BNA) 2533, 137 Lab.Cas. P 10,369 GOVERNMENT OF THE VIRGIN ISLANDS; Department of Justice, Appellants, v. UNITED INDUSTRIAL WORKERS, N.A., Seafarers International Union of North America,; Lawrence Acker.
• Court: U.S. Court of Appeals — Third Circuit

Page 172

169 F.3d 172

160 L.R.R.M. (BNA) 2533, 137 Lab.Cas. P 10,369

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.

No. 98-7148.

United States Court of Appeals Third Circuit.

Argued Dec. 10, 1998.

Decided Feb. 17, 1999.

Julio A. Brady, Attorney General, Paul J. Gimenez (Argued), Maureen P. Cormier, Solicitor General, Department of Justice, St. Thomas, U.S.V.I., for Appellants.

Eszart A. Wynter, Sr. (Argued), Law Offices of Eszart A. Wynter, Frederiskted, St. Croix, U.S.V.I., for Appellees.

Before: ROTH, LEWIS and GARTH, Circuit Judges.

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. §§ 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. §§ 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.

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.

The DOJ filed a Writ of Review under 5 V.I.C. §§ 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. § 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. § 1421 only permitted review of actions of governmental officers or entities. The Territorial Court further held that the Federal Arbitration Act, 9 U.S.C. §§ 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. § 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., 987 F.Supp. 439, 443 (D.Virgin Islands 1997). 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. § 4, provides that a court may enforce an arbitration award. See Restatement (Second) Contracts § 345(f). ⁴ Second, section 2 of the FAA ⁵ 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, 104 S.Ct. 852, 79 L.Ed.2d 1 (1984), ⁶ and that the Territorial 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. § 1291 and Section 23A(c) of the Revised Organic Act of 1954, 48 U.S.C. § 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, § 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 § 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 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, 115 S.Ct. 834, 130 L.Ed.2d 753 (1995) (citing Volt Information Sciences, Inc. v. Board of Trustees of Leland Stanford Junior Univ., 489 U.S. 468, 474, 109 S.Ct. 1248, 103 L.Ed.2d 488 (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. § 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 291 (3d Cir.1995). Although the FAA applies by its terms to cases in federal courts, 9 U.S.C. §§ 3-4, in Southland Corp. v. Keating, 465 U.S. 1, 104 S.Ct. 852,...