82.1 F
Charlotte Amalie
Sunday, July 21, 2024


Sept. 24, 2002 – Hovensa and one of its contractors, Wyatt V.I., have filed suit in District Court challenging a brand-new Virgin Islands law that in effect outlaws the companies' requirement that non-union job applicants, as a condition of employment, agree to have disputes resolved by binding arbitration.
In so doing, the two companies are playing out the scenario outlined a week ago by Gov. Charles W. Turnbull in signing the law, which was a part of the wide-ranging Omnibus Authorization Act of 2003. In his letter to the Senate president, the governor said that, having reviewed "widely varied views on the legality of this provision," he determined "that so severe a chasm is most appropriately resolved by the judiciary."
The law makes pre-dispute arbitration agreements unenforceable in the territory. The suit filed jointly by Hovensa and Wyatt on Tuesday asks the court to declare that this conflicts with the federal Arbitration Act, "and thus is pre-empted under the Supremacy Clause of the United States Constitution."
Last year, Wyatt began requiring job applicants to sign an agreement to put all employee-management disputes to binding arbitration under the rules of the America Arbitration Association. Wyatt would cover most of the arbitration costs.
Wyatt took the matter to District Court on St. Croix after Labor Commissioner Cecil Benjamin ordered the company to stop making the agreement a condition for employment and Attorney General Iver Stridiron issued an opinion calling the agreement "unconscionable," "coercive," "contrary to public policy" and "ripe for injunctive relief."
In June, District Judge Raymond Finch found the pre-employment agreement neither "unconscionable" nor "unenforceable." In fact, he said, the law is clear that such agreements are valid.
As of July 1, Hovensa implemented its own Dispute Resolution Program, making it mandatory for new hires not covered by bargaining agreements. Hovensa spokesman Alex A. Moorhead said at the time that the company also was giving its current non-union employees the option of agreeing to the program, and asking them to decide by this month.
Moorhead, vice president for government affairs and community relations, said then that about 530 Hovensa employees were eligible to do so, compared with about 460 workers covered by collective bargaining agreements with the refinery.
Before Finch earlier this year, government lawyers argued that prospective Wyatt employees were being coerced into signing the agreement and that it was in violation of the territory's Wrongful Discharge Act. Finch said the Wrongful Discharge Act "makes no mention" of the validity or enforceability of arbitration agreements. And he said the Supreme Court has held that under the federal Arbitration Act, mandatory agreements are valid, provided that the act is not in direct conflict with state laws.
Since last Wednesday, the Virgin Islands has had a "state" law that is in such direct conflict.
Moorhead said in a release Tuesday that the company "remains confident that the new statute will be determined by the court to be illegal." Federal court rulings have consistently upheld the legality of such agreements and rejected efforts to create rules to restrict such agreements, the release said.
Moorhead also said that until the court acts on its complaint, Hovensa "will suspend all hiring, except temporary hiring, for a period not to exceed 120 days."
Hovensa fought against the new law throughout the legislative process. Moorhead wrote to Sen. Carlton Dowe, chair of the Senate Rules Committee, urging its deletion from the Omnibus bill and arguing that if it became law, it would be struck down in federal court.
While the Omnibus bill was on the governor's desk, Hovensa waged an advertising campaign urging Turnbull to veto the item, calling it "legally flawed." Labor interests ran their own ads in response, calling the provision legal.
Meanwhile, on Sept. 13, the refinery furloughed some 1,045 workers employed by seven contractors, stating that the liability insurance policy covering them all had expired and that Hovensa had been unable to find replacement coverage.
Terrence "Positive" Nelson, president of Our Virgin Islands Labor Union, and St. Croix lawyer Lee Rohn charged last week that the timing of the insurance crisis was suspect, suggesting it was planned to coincide with Turnbull's consideration of the Omnibus bill.
A full-page ad Rohn placed in a print newspaper not only disputed Moorhead's claims concerning insurance but also challenged the validity of Hovensa requiring a pre-employment agreement to arbitration.
Moorhead has said the advantage of mandatory binding arbitration is "the more expeditious resolution of disputes between employees and the company, thereby avoiding the cost of lengthy litigation which could involved appeals to as many as three courts and animosity that can arise between the parties during that lengthy period of time."
Arbitration typically allows for resolving disputes "within a period of several months, rather than three to five years, as is the case for lawsuits filed in the Territorial Court or U.S. District Court," he said.

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