218 F.3d 232 (3rd Cir. 2000), 99-3513, The St. Thomas - St. John Hotel & Tourism Assoc. v . Government of the United States Virgin Islands

Docket Nº:Elsa Huggins; Ladiah Whyte, Intervenors/Appellants in No. 99-3513
Citation:218 F.3d 232
Party Name:THE ST. THOMAS - ST. JOHN HOTEL & TOURISM ASSOCIATION, INC.; THE ST. THOMAS - ST. JOHN CHAMBER OF COMMERCE, INC.; ST. CROIX HOTEL & TOURISM ASSOCIATION, INC. v. GOVERNMENT OF THE UNITED STATES VIRGIN ISLANDS, by and through the Virgin Islands Department of Labor; ELEUTERIA ROBERTS, in her official capacity as Acting Commissioner of the Virgin Islan
Case Date:June 30, 2000
Court:United States Courts of Appeals, Court of Appeals for the Third Circuit

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218 F.3d 232 (3rd Cir. 2000)

THE ST. THOMAS - ST. JOHN HOTEL & TOURISM ASSOCIATION, INC.; THE ST. THOMAS - ST. JOHN CHAMBER OF COMMERCE, INC.; ST. CROIX HOTEL & TOURISM ASSOCIATION, INC.

v.

GOVERNMENT OF THE UNITED STATES VIRGIN ISLANDS, by and through the Virgin Islands Department of Labor; ELEUTERIA ROBERTS, in her official capacity as Acting Commissioner of the Virgin Islands Department of Labor, Appellants in No. 99-3563;

Elsa Huggins; Ladiah Whyte, Intervenors/Appellants in No. 99-3513

Nos. 99-3513, 99-3563

United States Court of Appeals, Third Circuit

June 30, 2000

Argued October 22, 1999

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Iver A. Stridiron, Pamela R. Tepper, Carol S. Moore, Department of Justice, St. Thomas, USVI, Attorneys for Appellants in No. 99-3563.

Scott A. Kronland, Altshuler, Berzon, Nussbaum, Berzon & Rubin, San Francisco, CA. Jonathan P. Hiatt, Washington, D.C. Richard Austin, Kathleen Navin (Argued), Legal Services of Virgin Islands, Inc., Christiansted, St. Croix, USVI, Attorneys for Intervenors/Appellants in No. 99-3513.

Charles E. Engeman (Argued), Dudley, Topper & Feuerzeig, Charlotte Amalie, St. Thomas, USVI, Attorney for Appellees.

Before: SLOVITER and RENDELL, Circuit Judges, and BYRNE, District Judge.[*]

OPINION OF THE COURT

SLOVITER, Circuit Judge.

I.

INTRODUCTION

Before us is an appeal from the order of the District Court granting a preliminary injunction enjoining enforcement of the Virgin Islands Wrongful Discharge Act (WDA or "Act"), V.I. Code Ann. tit. 24, §§ 76-79, a territorial law that declares that an employee discharged for any reason other than for cause as set forth in nine enumerated reasons "shall be considered to have been wrongfully discharged," unless modified by a union contract. The central issue is the District Court's holding that the plaintiffs have a probability of success on the merits on their claim that the WDA is preempted by the National Labor Relations Act (NLRA), 29 U.S.C. §§ 151-169. The Government of the Virgin Islands and two intervening employees who have claims pending under the WDA filed appeals, which we consolidated.

We have jurisdiction over the appeal from the grant of the preliminary injunction pursuant to 28 U.S.C. § 1292(a)(1). Although the issuance of a preliminary injunction is reviewed for abuse of discretion, the underlying legal determination regarding preemption is reviewed de novo. Acierno v. New Castle County, 40 F.3d 645, 652 (3d Cir. 1994).

II.

BACKGROUND

A.

The Virgin Islands Wrongful Discharge Act

Section 76 of the WDA, enacted by the Virgin Islands legislature in 1986, sets forth the grounds for lawful employee discharge as follows:

(a) Unless modified by union contract, an employer may dismiss any employee:

(1) who engages in a business which conflicts with his duties to his employer or renders him a rival of his employer;

(2) whose insolent or offensive conduct toward a customer of the employer injures the employer's business;

(3) whose use of intoxicants or controlled substances interferes with the proper discharge of his duties;

(4) who willfully and intentionally disobeys reasonable and lawful rules, orders, and instructions of the employer; provided, however, the employer shall not bar an employee from patronizing the

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employer's business after the employee's working hours are completed;

(5) who performs his work assignments in a negligent manner;

(6) whose continuous absences from his place of employment affect the interests of his employer;

(7) who is incompetent or inefficient, thereby impairing his usefulness to his employer;

(8) who is dishonest; or

(9) whose conduct is such that it leads to the refusal, reluctance or inability of other employees to work with him.

(b) The Commissioner may by rule or regulation adopt additional grounds for discharge of an employee not inconsistent with the provisions enumerated in subsection (a) of this section.

(c) Any employee discharged for reasons other than those stated in subsection (a) of this section shall be considered to have been wrongfully discharged; however, nothing in this section shall be construed as prohibiting an employer from terminating an employee as a result of the cessation of business operations or as a result of a general cutback in the work force due to economic hardship, or as a result of the employee's participation in concerted activity that is not protected by this title.

V.I. Code Ann. tit. 24, § 76.

Any employee covered by the WDA and discharged in violation of § 76 may file an administrative complaint with the Commissioner of Labor, who has the authority to order reinstatement and back pay. See V.I. Code Ann. tit. 24, § 77. In addition, the employee may file a lawsuit for compensatory and punitive damages in any court of competent jurisdiction. See V.I. Code Ann. tit. 24, § 79.

As originally enacted, the text of § 76 began, "Unless modified by contract . . . ." In 1991, the Virgin Islands Department of Labor defined the term "contract" as a "written agreement negotiated between an employer and an employee, or representatives thereof, which contains the specific grounds for discharge, where the employment relationship has an established mechanism or procedure for resolving discharge grievances and this mechanism or procedure is referred to in the agreement or is otherwise known by the parties, such as a collective bargaining agreement." V.I.R. & Regs. tit. 24, § 77-1(E). Expressly excluded from that definition were printed statements on an application for employment, in employee manuals, or in statements of employers' rules. Id. However, in its administrative rulings, the Department later relaxed the definition by holding that the Department was deprived of jurisdiction under the WDA if an employee agreed in any contract, even an application for employment, that s/he was an at-will employee. This interpretation permitted the employer to remove the protection of the Act by contracting with one or more individual employees.

In 1996, the Virgin Islands legislature amended § 76(a) to begin, "Unless modified by union contract . . .." See V.I. Code Ann. tit. 24, § 76(a). Since that time, § 76(a) has been interpreted to apply to all employees in the Virgin Islands, absent a collective bargaining agreement setting discharge terms to the contrary.

B.

Procedural Background

The District Court that issued the preliminary injunction in this case had previously considered the same issue in Bell v. Chase Manhattan Bank, 40 V.I. 377, 40 F.Supp.2d 307 (D.V.I. 1999), a suit brought by a former employee alleging that she was discharged in violation of the WDA. The court held in Bell that the WDA was preempted by the NLRA and dismissed the employee's WDA action on that ground. Soon thereafter, the Department of Labor postponed all hearings then scheduled under the WDA. After a public hearing held by the Virgin Islands legislature on March 15, 1999,

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however, the Department of Labor announced that it would reschedule all hearings. The first hearing was rescheduled to commence on April 6, 1999.

On April 5, 1999, the St. Thomas-St. John Hotel & Tourism Association, Inc., the St. Thomas-St. John Chamber of Commerce, Inc., and the St. Croix Hotel & Tourism Association, Inc. (collectively "the associations") filed this action in the District Court of the Virgin Islands seeking to restrain the enforcement of the WDA in any pending or future WDA wrongful discharge proceeding. The associations, relying on the District Court's earlier decision in Bell, alleged that the WDA was preempted by the NLRA and contended that enforcement of the Act deprived them of federal rights in violation of 42 U.S.C. § 1983. They sought declaratory and injunctive relief under the Declaratory Judgment Act, 28 U.S.C. §§ 2201, 2202, as well as injunctive relief under 42 U.S.C. § 1983 and attorneys' fees under 42 U.S.C. § 1988 and V.I. Code Ann. tit. 5, § 541.

The associations are three not-for-profit corporations that represent the interests of more than 800 employers on the islands of St. Thomas, St. John, and St. Croix in the Virgin Islands. Together, their members employ over 12,000 employees in the Virgin Islands. The associations named as defendants the Government of the Virgin Islands, the Department of Labor, and the Acting Commissioner of the Department of Labor (collectively "the government"). Elsa Huggins and Ladiah Whyte, two employees who have WDA claims pending before the Virgin Islands Department of Labor, intervened as additional defendants.

The associations sought a preliminary injunction against the Virgin Islands Department of Labor, prohibiting it from holding any preliminary or formal hearings under the WDA. After a hearing, the District Court, adopting its earlier reasoning in Bell, concluded that the associations were likely to succeed on the merits of their preemption arguments and issued the requested preliminary injunction. St. Thomas-St. John Hotel & Tourism Assoc., Inc. v. Government of the United States Virgin Islands, 41 V.I. 317, Civ. No. 1999-54 (D.V.I. June 2, 1999) (hereafter "slip op."). The court believed that the WDA is "directly" preempted by § 7 of the NLRA "because it requires union involvement before any contractual modification to the WDA's requirements," and also preempted because "it upsets the 'balance of power' between labor and management in an area Congress intended to remain free [from regulation]." Slip op. at 6.

The court's order permitted the Department of Labor to continue to accept complaints and to encourage voluntary mediation, and to hold formal hearings for employees who are not covered by the NLRA. It also required the associations to post a bond in the amount of $ 25,000 to cover losses to any employee who may ultimately be awarded back pay under the WDA and is...

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