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. e du/thir dc ir c uit_1999/41Filed 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, provid es the Territorial Court of the Virgin Islands with jurisd iction to review an employment arbitration decision that bind s 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 ac tors.
Because the arbitrator whose conduct is at issue he re was not a government actor, the Writ of Review statute cannot apply to the instant case. We also hold that the pr ovisions of the FAA and the standards developed by our jurisprudence in reviewing arbitrations under the F AA are
enforceable in the Territorial Court.

2I.

Defendant Lawrence Acker commenced his employment with plaintiff Virgin Islands Department of Justice ("DOJ") as an Assistant Attorney General in the fall of 198 7. The DOJ alleges that Acker took unauthorized leaves of absences beginning in 1988 and continuing into earl y 1990. In the spring of 1990, the DOJ suspended Acke r, 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-C IO ("Union"), filed a grievance on Acker's behalf.

Pursuant to the Collective Bargaining Agreement ("C BA") between the DOJ and the Union, the DOJ and the Unio n met to discuss the grievance ("Grievance Meeting"), but their efforts produced no solution. The Union deman ded 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 consider ed 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 grievanc e had been filed within the specified ten days provided i n the CBA
after he received his termination letter on March 1 5, 1990.1 Second, the DOJ argued that although Acker was pres ent at the Grievance Meeting, his behavior at the Griev ance Meeting amounted to a failure to participate, which was a waiver of the right to arbitrate.2 The Arbitrator r ejected this argument as well. On the substantive issue of Acker 's termination, the Arbitrator ruled that the DOJ's de cision 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 partic ulars of Acker's conduct at the Grievance Meeting.

3The DOJ filed a Writ of Review under 5 V.I.C.SS 142 1-23

in the Virgin Islands Territorial Court ("Territori al 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 ma y have the
decision or determination thereof reviewed f or errors therein as prescribed in this chapter and th e rules of court. Upon the review, the court may review any intermediate order involving the merits nece ssarily affecting the decision or determination soug ht to be
reviewed.

5 V.I.C. S 1421 (1997).3 The DOJ asserted in the Te rritorial
Court that the Arbitrator was biased because he had rented office space from counsel for the Union. The DOJ al so argued to the Territorial Court, as it had to the A rbitrator, that the Arbitrator did not have jurisdiction over Acker's grievance because Acker did not meaningfully partic ipate in the Grievance Meeting.

The Territorial Court held that it did not have sub ject matter jurisdiction because 5 V.I.C. S 1421 only pe rmitted review of actions of governmental officers or entit ies. The
Territorial Court further held that the Federal Arb itration

___________________________________________________ ______________

3. 5 V.I.C. S 1422 provides:

The writ of review shall be allowed in all c ases where there is no appeal or other plain, speedy, and adequate remedy, and where the officer, board, commission, authority, or tr ibunal in the exercise

of his or its functions appears to have exercis ed 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 t he decision or determination reviewed, and, if necessary, t o award restitution to the plaintiff, or, by mandate, direct the of ficer, board, commission, authority, or tribunal to proceed in the mat ter reviewed according

to its decision. From the judgment of the distr ict 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 a ction.4Act, 9 U.S.C. SS 1-16, barred any review of the Arb itrator's

decision.

The DOJ appealed to the District Court of the Virgi n Islands, Appellate Division ("District Court"), whi ch 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 th e Virgin Islands v. United Industrial Workers of Am., D.C. C iv. App. No. 1992-022 (D.V.I. App. Div. Dec. 1, 1997), at 10

. However, the District Court went on to hold that th e Territorial Court did have jurisdiction to review t he Arbitrator's decision. First, Virgin Islands substa ntive law, which incorporates rules of the common law in absen ce of local law to the contrary, see 1 V.I.C.S 4, provide s that a court may enforce an arbitration award. See Restate ment (Second) Contracts S 345(f).4 Second, section 2 of the FAA5 requires a court to review the validity, irrevocabi lity, and enforcement of agreements to arbitrate. The Distric t Court held that the FAA's substantive provision in sectio n 2 applies to both federal and state courts, Southland Corp. v. Keating, 465 U.S. 1, 16 (1984),6 and that the Terri torial

___________________________________________________ ______________

4. Restatement (Second) Contracts S 345(f) provides :

The judicial remedies available for the prot ection of interests

stated in S 344 [expectation, reliance, or restitut ion interests] include

a judgment or order . . . (f) enforcing an arb itration award

5. 9 U.S.C. S 2 provides:

Validity, irrevocability, and enforcement of agreements to
arbitrate

A written provision in any maritime transact ion 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 p art thereof, or an agreement in writing to submit to arbitratio n 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 contr act.6. See also Virgin Islands Hous. Auth. v. Coastal G eneral Constr. Services

Corp., 27 F.3d 911, 915-16 (3d Cir. 1994).

5Court 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 State s Supreme Court has not ruled definitively on whether the procedural FAA provisions apply in a state or terri torial court. The District Court ruled, however, based upo n Supreme Court dicta and other precedents, that the procedural provisions in sections 3 and 4 of the FA A (orders to stay and to compel arbitration), applied in the Territorial

Court.

The DOJ timely filed its notice of appeal of the Di strict 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 Cour t concluded, the plain language of the Writ of Review statute contemplates review of actions taken by the Governm ent of the Virgin Islands qua government. The Arbitrator w as neither a government employee, nor was he associate d with the government. Accordingly, S 1421, which authoriz es a Writ of Review only when the proceeding is before a n "officer, board, commission, authority, or tribunal [government actors]," is inapplicable here.

We therefore reject the two arguments made by the D OJ. 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 governmenta l determinations. Those decisions, as the District Co urt pointed out, are not binding on either the Appellat e Division or, as we observe, on this court. Second, the DOJ argues that because the DOJ was a party to the cont ract, a statute providing review of government actions ap plies 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, i t argues, it may obtain review of the arbitration decision un der the

6Writ of Review statute. We reject this argument as well

because the Government of the Virgin Islands is act ing here as a litigant, the employer, and not as a governmen tal adjudicatory body.

III.

A.

We must next consider whether the FAA applies to lo cal matters litigated in the Territorial Court. Congres s enacted the FAA pursuant to its power to define the jurisdi ction of the federal courts and pursuant to the Commerce Cla use. Congress, and thereafter the courts, intended to ov erride the then-current federal courts practice of not fav orably regarding arbitration clauses in contracts. "The ba sic purpose of the Federal Arbitration Act is to overco me courts' refusals to enforce agreements to arbitrate ." AlliedBruce Terminix Cos. v. Dobson, 513 U.S. 265, 270 (1 995) (citing Volt Information Sciences, Inc. v. Board of Trustees of Leland Stanford Junior Univ., 489 U.S. 468, 474 (19 89)). As the District Court stated and as we agree, the Terr itorial 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 revie w substantive decisions of arbitrators. Review of arb itration decisions is severely restricted and limited to, am ong other things, fraud, impartiality, or lack of jurisdictio n. 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.2 d 1215 (3d Cir. 1989); Apex Fountain Sales, Inc. v. Kleinf eld, 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, Ha rris Upham & Co., Inc., 901 F. Supp. 863 (D.N.J. 1994), aff'd, 67 F.3d 341 (3d Cir. 1995). Although the FAA applie s 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 AlliedBruce Terminix Companies v. Dobson, 513 U.S. 265 (1 995),

7the Court reaffirmed that the FAA also applies in s tate

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, 9 15 (3d Cir. 1994). Thus, in order for the FAA to apply in the Territorial Court, the arbitration at issue must af fect 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 Dis trict Court, however, directed the Territorial Court, whi ch 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 arbitrati on agreements." Government of the Virgin Islands v. Un ited 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 purvie w of the FAA only when an interstate nexus is shown. The Supreme Court has stated that the FAA's reach coinc ides with that of the Commerce Clause. Allied-Bruce, 513 U.S. at 274. This broad interpretation of the FAA "is consi stent 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 sc ant as to an interstate nexus, we recognize that the appellee United Industrial Workers of North America, Seafarers International Union, AFL-CIO itself, which represen ts Acker, is an international body embracing Union wor kers not only in the various states of the union, but in foreign countries as well. Its activities, by their very na ture, qualify as having an interstate nexus. Moreover, we can tak e judicial notice that the Attorney General's office of the Virgin Islands, of which Acker was a member until h is termination, has been and is involved with matters concerning the various states. See, e.g., Travel Se rvices, 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-I sland Transport Line, Inc. v. Government of the Virgin Is lands, 539 F.2d 322 (3d Cir. 1976) (alleged breach of water-ha uling contract between Government of the Virgin Islands a nd carrier); Pan American World Airways, Inc. v. Gover nment of the Virgin Islands, 459 F.2d 387 (3d Cir. 1972) (wh ether tax on airlines' gross receipts violates Commerce Claus e 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 a greement between the Government of the Virgin Islands and a corporation intending to build an oil refinery); So utherland v. St. Croix Taxicab Ass'n, 315 F.2d 364 (3d Cir. 1 963) (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); Virg o Corp. v. Paiewonsky, 254 F. Supp. 405 (D.V.I. 1966) (validity of tax of watches exported to United Stat es customs area); see also The West Indian Co. v. Gove rnment 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 employmen t
contract of Lawrence Acker can be construed narrowl y as an employment contract of a local nature only, we a re not persuaded that the character of his union, which ne gotiated 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 F AA is present. Hence, we are satisfied that the FAA shoul d be applied by the Territorial Court because its requir ements have been met. See Virgin Islands Hous. Auth. v. Co astal Gen. Constr. Services Corp., 27 F.3d 911, 915 (3d C ir. 1994).

The appellant has called our attention to Great Wes tern Mortgage Corp. v. Peacock, 110 F.3d 222 (3d Cir. 19 97), where the appellant argued that the FAA did not app ly to

9her employment contract because she fell within the scope

of the exceptions to the FAA mandatory arbitration. 7 We rejected her argument, relying upon Tenney Engineer ing,
Inc. v. United Electrical Radio & Machine Workers o f Am., 207 F.2d 450 (3d Cir. 1953) (en banc), and we held that the exceptions to the FAA only applied to those employe es working directly in the channels of commerce itself . Peacock did not fall within that classification, and neithe r does Acker in the present case. We are satisfied that wh ile Acker was not employed directly in the channels of commer ce, the
FAA in this case nevertheless satisfies the interst ate

commerce nexus.

B.

Additionally, the District Court held that the prov isions of the FAA apply within the Territorial Court by virtu e of the common law of the Virgin Islands. We agree. Because there is no Virgin Islands statute on point, the Restatem ent (Second) of Contracts S 345(f) provides a rule of l aw for the Virgin Islands. 1 V.I.C. S 4.8 Section 345(f) provi des:

The judicial remedies available for the prot ection of interests stated in S 344 [expectation, reli ance, 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" defin ed; exceptions to operation of title

. . . but nothing herein contained shall ap ply to contracts of employment of seamen, railroad employees, or any other class of workers engaged in foreign or interstate com merce.

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 ap plied in the United States, shall be the rules of decision in th e courts of the Virgin Islands in cases to which they apply, in the absence of local laws

to the contrary.

10Comment (e) to S 345 states that "[b]ecause questio ns

concerning the enforcement of arbitration awards de pend largely on statute, they are not considered in deta il in this Restatement." The Restatement contemplates that sta te courts will look to arbitration statutes for guidan ce. See Allied-Bruce Terminix Cos. v. Dobson, 684 So. 2d 10 2, 106 (Ala. 1995) (opinion after remand) (adopting provis ions of
the FAA to define state law to the extent the FAA i s consistent with otherwise-provided procedures of th e state). The common law, as articulated by the Restatement, provides that arbitration law depends on statutory schemes, and thus the Territorial Court should appl y the FAA scheme to questions of arbitration.

If there is a difference between applying the FAA d irectly to the Territorial Court, as we now do, see supra I II.A, or holding, as the District Court did, that the FAA "s upplies 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 Is lands in light of those provisions of the FAA that have been held to apply in the Territorial Court by the District Cour t Appellate Division and the common law of the Virgin Islands.9

___________________________________________________ ______________

9. The opinion of Chief Judge Moore for the Distric t Court included the provisions of S 10(a) of the FAA listing five facto rs for the Territorial Court to consider in reviewing the instant arbitrat ion 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, ot her sections of the FAA clearly apply in Territorial Court. These in clude: 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 arbit rators or umpire; section 6, application heard as motion; sect ion 7, witnesses before arbitrators, their fees, and compelling atte ndance; section 12,
notice of motions to vacate or modify and their ser vice, and procedure for staying proceedings; section 13, what papers must befiled for an order confirming, modifying, or correcting a ward; and section 16, appeals from actions of Territorial Court. T here are some provisions of the FAA which obviously would not apply i n the Territorial Court because they deal with strictly federal proc eedings, 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 Industri al Workers of Am.,

D.C. Civ. App. No. 1992-022 (D.V.I. App. Div. Dec. 1, 1997), at 19 n.21.

11IV.

We hold that the Writ of Review statute, 5 V.I.C.SS 1421- 23, does not provide the Territorial Court with jur isdiction to review a private arbitrator's decision. The Fede ral Arbitration Act, 9 U.S.C. S 1-16, however, applies to appellant Lawrence Acker's employment contract by v irtue 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 Territoria l Court for proceedings consistent with this opinion.

A True Copy:

Teste:

Clerk of the United States Court of Appeals
for the Third Circuit

12