1994 Decisions

Opinions of the United

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Precedential or Non-Precedential: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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Recommended Citation

"SIU de Puerto Rico v. V.I. Port Auth." (1994). 1994 Decisions. Paper 216.

http://digitalcommons.law.villanova.edu/thirdcircuit_1994/216
 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 

1⁄2 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.