Court Opinion

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Opinions of the United
2007 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit

8-2-2007

Edwards v. Hovensa LLC
Precedential or Non-Precedential: Precedential

Docket No. 06-4601

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"Edwards v. Hovensa LLC" (2007). 2007 Decisions. Paper 513.
http://digitalcommons.law.villanova.edu/thirdcircuit_2007/513

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                                             PRECEDENTIAL

          UNITED STATES COURT OF APPEALS
               FOR THE THIRD CIRCUIT

                         No. 06-4601

                    LELAND EDWARDS

                               v.

                      HOVENSA, LLC,
                                 Appellant

    On Appeal from the District Court of the Virgin Islands
                  (D.C. No. 05-cv-00041)
          District Judge: Hon. Raymond L. Finch

                     Argued May 8, 2007

Before: SLOVITER, STAPLETON, and VAN ANTWERPEN,
                    Circuit Judges

                   (Filed: August 2, 2007)

W. Carl Jordan    (Argued)
Vinson & Elkins
Houston, TX 77002-6760

      Attorney for Appellant

K. Glenda Cameron (Argued)
Law Office of Rohn & Cameron
USVI, 00820

      Attorney for Appellee
                 OPINION OF THE COURT
SLOVITER, Circuit Judge.

        HOVENSA, LLC appeals from the decision of the
District Court of the Virgin Islands denying HOVENSA’s
motion to compel arbitration on the ground that the relevant
arbitration agreement is unconscionable under Virgin Islands
law. Because the District Court’s opinion relied on its view that
it was not bound by contrary decisions of the Virgin Islands
Superior Court, it is incumbent upon us to examine the
restructured judicial system for the Virgin Islands following the
1984 Revised Organic Act and the 1990 amendment by the
Virgin Islands legislature to 4 V.I. Code § 76(a).

                                I.

      Leland Edwards entered into a Dispute Resolution
Agreement (“DRA”) with Wyatt, V.I., Inc. (“Wyatt”), his
prospective employer, before he began to work at the
HOVENSA factory in St. Croix. The DRA provided, in relevant
part:

       Regardless of whether Wyatt offers me
       employment, both Wyatt and I agree to resolve any
       and all claims, disputes or controversies arising out
       of or relating to . . . (4) any claims for personal
       injury or property damage arising in any way from
       my presence at the HOVENSA refinery that are
       not covered by the [Collective Bargaining
       Agreement]; exclusively and by final and binding
       arbitration before a neutral arbitrator pursuant to
       the American Arbitration Association’s (“AAA”)
       National Rules for the Resolution of Employment
       Disputes [“National Rules”], a copy of which is
       available at www.adr.org or from Wyatt. This
       agreement extends to such disputes with or claims
       against Wyatt, HOVENSA, LLC, other contractors
       or subcontractors employed at the HOVENSA
       refinery, and any of their related or affiliated
       companies, entities, employees or individuals (as
       intended third party beneficiaries to this

                                2
       agreement).

App. at 18 (emphasis added). Wyatt, V.I., Inc., which became
Edwards’ employer, is a contractor for HOVENSA.

        Edwards was injured in January 2005 due to what he
alleged was HOVENSA’s negligence. He filed a complaint
against HOVENSA in the District Court for the District of the
Virgin Islands, St. Croix Division, asserting negligence and
personal injury claims against HOVENSA arising out of the
injury allegedly suffered during his employment. HOVENSA
thereafter sought to enforce the terms of the DRA and filed a
motion to compel arbitration and to stay the proceedings pending
arbitration pursuant to 9 U.S.C. §§ 3 and 4. The District Court
denied HOVENSA’s motion, and it filed a timely notice of
appeal.

                                II.

       The District Court had subject matter jurisdiction
pursuant to 28 U.S.C. § 1332 and 48 U.S.C. § 1612(a). The
parties are diverse. Edwards is a citizen of Massachusetts.
HOVENSA is a limited liability corporation, incorporated in the
U.S. Virgin Islands with its principal place of business in St.
Croix. The amount in controversy exceeds $75,000.

        This court has jurisdiction pursuant to 9 U.S.C. § 16(a)(3)
which provides that an appeal may be taken from an order
denying an application to compel arbitration. We exercise
plenary review over questions regarding the validity and
enforceability of an agreement to arbitrate. Lloyd v.
HOVENSA, LLC, 369 F.3d 263, 273 (3d Cir. 2004). “[T]o the
extent that the District Court predicated its decision on findings
of fact, our standard of review is whether those findings were
clearly erroneous.” Id. (quoting Medtronic AVE, Inc. v.
Advanced Cardiovascular Sys., Inc., 247 F.3d 44, 53-54 (3d Cir.
2001)).
                                 III.

       In denying HOVENSA’s motion to compel arbitration,
the District Court concluded that “[t]he manner in which

                                 3
Edwards entered into the Dispute Resolution Agreement is
procedurally unconscionable and that the agreement to arbitrate
personal injury claims against intended third-party beneficiaries
is substantively unconscionable.” App. at 11. In reaching this
conclusion, the District Court rejected HOVENSA’s contention
that it must follow Superior Court decisions that have upheld
similar agreements to arbitrate personal injury claims against
third-party tortfeasors. See, e.g., Moore v. HOVENSA, LLC,
2005 WL 1677522 (V.I. Super. Ct. June 22, 2005); St. Rose v.
HOVENSA, L.L.C., 2005 WL 1018071 (V.I. Super. Ct. Mar. 15,
2005).

        In this appeal, HOVENSA argues that (1) the District
Court improperly concluded that it was not bound by prior
decisions of the Superior Court of the Virgin Islands that, as a
matter of local contract law, agreements to arbitrate personal
injury claims are not unconscionable and must be enforced; and
(2) the District Court improperly refused to compel arbitration,
pursuant to the Federal Arbitration Act, by concluding that
Edwards’ arbitration agreement with his employer, as applied to
personal injury claims against the third party upon whose
premises he worked, was not supported by adequate
consideration and therefore was unconscionable.

                                IV.

                                 A.

        A brief analysis of the jurisdiction of the District Court of
the Virgin Islands is necessary to put the issue before us in
perspective. In our opinion in Carty v. Beech Aircraft Corp.,
679 F.2d 1051 (3d Cir. 1982), where we considered in some
detail the basis on which the District Court of the Virgin Islands
had jurisdiction over the matter at issue there, we analyzed that
court’s jurisdiction “in light of historical perspective and the
applicable authorities[.]” Id. at 1053. After reviewing the origin
of the United States’ dominion over the Virgin Islands and the
establishment of its courts, in particular the 1936 Organic Act of
the Virgin Islands, we concluded that “when Congress acted to
establish the District Court of the Virgin Islands, it established it
as a court of original and general jurisdiction.” Id. at 1055.

                                  4
        Thereafter, Congress amended the Revised Organic Act
in 1984, 48 U.S.C. § 1611 et seq., and “established the
framework for a dual system of local and federal judicial review
in the Virgin Islands.” Parrott v. Gov’t of the V.I., 230 F.3d 615,
619 (3d Cir. 2000). Under the 1954 Revised Organic Act, 48
U.S.C. § 1612, the District Court of the Virgin Islands had
“jurisdiction over federal questions, regardless of the amount in
controversy, and general original jurisdiction over questions of
local law, subject to the exclusive jurisdiction of the local courts
over civil actions where the amount in controversy was less than
$500.” Moravian Sch. Advisory Bd. v. Rawlins, 70 F.3d 270,
272 (3d Cir. 1995). As we explained in Parrott, “[b]y virtue of
[the 1984] amendments, the District Court now possesses the
jurisdiction of a ‘District Court of the United States.’ 48 U.S.C.
§ 1612(a).” 230 F.3d at 619.

       Significantly, in Parrott we noted that under the statute,

       The Virgin Islands Legislature was now able,
       however, to divest the District Court of original
       jurisdiction for local matters by vesting that
       jurisdiction in territorial courts established by local
       law for all causes for which “any court established
       by the Constitution and laws of the United States
       does not have exclusive jurisdiction.”

Id. We made explicit that “[t]o the extent that that divestiture
power is exercised by the legislature, the District Court loses
jurisdiction to the Territorial Court over local matters. See 48
U.S.C. § 1612(b)[.]” Id.1
       The Virgin Islands statute enacted September 5, 1990,
provided that:

       effective October 1, 1991, the Superior Court shall
       have original jurisdiction in all civil actions
       regardless of the amount in controversy; to
       supervise and administer estates and fiduciary

       1
         Until October 29, 2004, the Superior Court was known as
the Territorial Court.

                                  5
       relations; to appoint and supervise guardians and
       trustees; to hear and determine juvenile, divorce,
       annulment and separation proceedings; to grant
       adoptions and changes of name; to establish
       paternity; to legitimize children and to make orders
       and decrees pertaining to the support of relations.

4 V.I.C. § 76(a).

        As we stated in Parrott, “§ 1613 of the Revised Organic
Act acts in combination with § 76(a) of the V.I. Code to
effectively repeal any grant of concurrent jurisdiction to the
District Court over local actions once the Virgin Islands
legislature has vested jurisdiction over local civil actions in the
Territorial Court.” 230 F.3d at 620 (citing Brow v. Farrelly, 994
F.2d 1027, 1035-36 (3d Cir. 1993) (recognizing implicit repeal
in 4 V.I. Code § 32)).

       It follows that Edwards errs when he argues that the
District Court of the Virgin Islands still remains vested with the
“judicial power of the territory.” He cites a pre-1984 case of this
court for the proposition that the District Court of the Virgin
Islands sits “essentially as a local court,” not a federal court
interpreting local law, V.I. Dep’t of Conservation & Cultural
Affairs v. V.I. Paving, Inc., 714 F.2d 283, 285-86 (3d Cir. 1983),
but that opinion preceded the restructure of the courts of the
Virgin Islands. Thus, we reiterate that which we previously
made clear in Parrott: the 1991 Virgin Islands statute divested
the District Court “of original jurisdiction over purely local civil
matters.” Parrott, 230 F.3d at 620. In addition, the District
Court has been divested of its appellate jurisdiction.2

       2
          The Revised Organic Act of 1954 granted the District
Court “appellate jurisdiction to review the judgments and orders of
the inferior courts of the Virgin Islands to the extent now or
hereafter prescribed by local law.” Act of July 22, 1954, Pub. L.
No. 517-558, § 22, 68 Stat. 497, 506 (revising the Organic Act of
the Virgin Islands of the United States). In 1984, the Revised
Organic Act was amended to provide that when the Virgin Islands
legislature established an appellate court, that court would

                                 6
        We recognize that it is not easy for the District Court,
which has contributed generously and productively to the local
law of the Virgin Islands, to accept its divestiture but that
follows inexorably from the statutes and is confirmed by the
legislative history. In 1991, the Virgin Islands legislature
exercised the authority granted it under 48 U.S.C. § 1612(b) to
divest the District Court of original jurisdiction over any cause
over which local law has vested jurisdiction in the local courts.
See 30 Cong. Rec. 23783, 23789 (1984) (statement of Sen.
Weicker) (“At any time, . . . by vesting jurisdiction in the local
courts, the local law will have the effect of divesting the district
court of jurisdiction.”). We therefore take this opportunity to

supercede the appellate division of the District Court with respect
to new appeals. See 48 U.S.C. § 1613a(a). That provision, 48
U.S.C. § 1613a, states:

       (d) Appeals to appellate court; effect on District Court

       Upon the establishment of the appellate court
       provided for in section 1611(a) of this title all
       appeals from the decisions of the courts of the Virgin
       Islands established by local law not previously taken
       must be taken to that appellate court. The
       establishment of the appellate court shall not result
       in the loss of jurisdiction of the district court over
       any appeal then pending in it. The rulings of the
       district court on such appeals may be reviewed in the
       United States Court of Appeals for the Third Circuit
       and in the Supreme Court notwithstanding the
       establishment of the appellate court.

The Virgin Islands legislature has now provided for the
establishment of the Supreme Court of the Virgin Islands, see
Russell v. DeJong, 2007 WL 1746256, at *1 (3d Cir. June 19,
2007), and it has repealed the prior statute establishing the
Appellate Division of the District Court. Act of September 30,
2004, No. 6687, § 13(a), 2004 V.I. Sess. Law 190. The appellate
division of the District Court will cease existence when the last
case pending is decided.

                                  7
reject any statements to the contrary in District Court opinions.
See, e.g., Spink v. Gen. Accident Ins. Co. of Puerto Rico, Ltd.,
36 F. Supp. 2d 689, 691 (D.V.I. 1999) (“This court need not
predict local law . . . because it is vested with the authority to
decide novel questions as a local trial court.”).

        This does not mean that the doctrine established in Erie
R.R. Co. v. Tompkins, 304 U.S. 64 (1938), does not apply or
that the District Court is bound to follow the law as expressed in
decisions of the Superior Court. We turn to that issue.

                                 B.

        Although the 1984 Revised Organic Act provided the
path that ultimately led to the District Court being divested of its
jurisdiction over local law, it also expanded the jurisdiction of
the District Court by investing it with diversity jurisdiction and
thereby extended the principles of federalism to the judicial
system of the Virgin Islands. Specifically, 48 U.S.C. § 1613
states:

       The relations between the courts established by the
       Constitution or laws of the United States and the
       courts established by local law with respect to
       appeals, certiorari, removal of causes, the issuance
       of writs of habeas corpus, and other matters or
       proceedings shall be governed by the laws of the
       United States pertaining to the relations between
       the courts of the United States, including the
       Supreme Court of the United States, and the courts
       of the several States in such matters and
       proceedings . . . .

       In Walker v. Gov’t of the V.I., 230 F.3d 82, 87 (3d Cir.
2000), our court held that Congress intended that all of the
provisions of Title 28 apply to the District Court “where
appropriate.” The Rules of Decision Act, which sets forth how
federal courts are to interpret prior state court judgments, states,
“The laws of the several states . . . shall be regarded as rules of
Decision in civil actions in the courts of the United States . . . .”
28 U.S.C. § 1652.

                                  8
        It is likely that prior to 1984, the Rules of Decision Act
did not apply to the District Court of the Virgin Islands. The
Virgin Islands, of course, is a territory, not a state and the
District Court is not a “court of the United States.” Waialua
Agric. Co. v. Christian, 305 U.S. 91, 108 (1938) (Rules of
Decision Act not applicable to territories). Now that § 1613
mandates that the relations between courts established by laws of
the United States, e.g., the Revised Organic Act, and courts
established by local law should mirror the relations between
state and federal courts, we conclude that § 1613 makes the Erie
doctrine and the Rules of Decision Act applicable to the District
Court of the Virgin Islands.

        The fact that the District Court of the Virgin Islands is an
Article IV court rather than an Article III court does not preclude
the application of Erie. For example, the Erie doctrine is applied
by bankruptcy courts. See generally Thomas E. Plank, The Erie
Doctrine and Bankruptcy, 79 Notre Dame L. Rev. 633 (2004). In
Maternally Yours, Inc. v. Your Maternity Shop, Inc., 234 F.2d
538, 540-41 n.1 (2d Cir. 1956), the court stated that “the Erie
doctrine applies, whatever the ground for federal jurisdiction, to
any issue or claim which has its source in state law.” Although
this court stated in Parrott that “[f]ederalism concerns . . . are not
implicated in matters where the District Court, in the past,
reviewed questions of local law sitting as a territorial court and
exercising its general jurisdiction,” Parrott, 230 F.3d at 623
(emphasis added), that is no longer the case. In more recent
cases, this court has referred to the District Court of the Virgin
Islands as a “federal court.” See Moravian, 70 F.3d at 274
(“Because §§ 1631 and 610 clearly demonstrate that Congress
intended to limit the authority of the federal courts to transfer
cases only to other federal courts, we have held that § 1631
provides no authority for a federal court to transfer a case over
which it lacks jurisdiction to a state court.”).

       We see no reason not to incorporate the federalism
principles applicable throughout the circuit into our relationship
with the Virgin Islands courts. Indeed, concluding otherwise
would result in two court systems “engag[ing] independently in
the process of formulating the local law of the [Territory],”
thereby “subvert[ing] the dual aims of Erie: discouraging forum

                                  9
shopping and promoting uniformity within any given jurisdiction
on matters of local substantive law.” Lee v. Flintkote Co., 593
F.2d 1275, 1278-79 n.14 (D.C. Cir. 1979).

                                C.

       A federal court under Erie is bound to follow state law as
announced by the highest state court. “If the highest court has
not spoken to the issue, we can garner assistance from the
decisions of the state’s intermediate appellate courts in predicting
how the state’s highest court would rule.” Mosley v. Wilson,
102 F.3d 85, 92 (3d Cir. 1996). Although state intermediate
appellate decisions are not automatically controlling, see Paoletto
v. Beech Aircraft Corp., 464 F.2d 976 (3d Cir. 1972), the
Supreme Court in Commissioner of Internal Revenue v. Estate of
Bosch, 387 U.S. 456, 465 (1966), summarized current practice as
follows: “even in diversity cases this Court has further held that
while the decrees of lower state courts should be attributed some
weight the decision is not controlling where the highest court of
the State has not spoken on the point.” Id. at 465 (internal
quotation marks and citations omitted). In West v. A.T.&T. Co.,
311 U.S. 223, 237 (1940), the Supreme Court further held that
“an intermediate appellate state court . . . is a datum for
ascertaining state law which is not to be disregarded by a federal
court unless it is convinced by other persuasive data that the
highest court of the state would decide otherwise.”
       The Superior Court of the Virgin Islands (formerly the
Territorial Court) is not the highest court of the Territory. It is
not even an intermediate appellate court, but rather a trial court.
Therefore, although we believe that the District Court could have
looked to the decisions of the Superior Court as “a datum for
ascertaining state law,” we cannot conclude that it erred in
holding that it was not bound by the decisions of the Superior
Court.3 Because the Virgin Islands Supreme Court has made no

       3
         Because the Supreme Court of the Virgin Islands had not
yet been established at the time the District Court rendered its
decision here, we recognize that it would have been impossible for
the District Court to meaningfully apply the Erie doctrine in
ascertaining Virgin Islands law. As of the District Court’s

                                10
pronouncement on the arbitration issue presented in this case, we
will turn our attention to the arbitrability of employee claims for
personal injury.

                                 V.

decision, the Virgin Islands did not yet have a truly “separate,
insular judicial system.” Saludes v. Ramos, 744 F.2d 992, 994 (3d
Cir. 1984). While the Superior Court served, and continues to
serve, as a territorial trial court exercising exclusive jurisdiction
over purely local matters, appeals from that Court were to the
Appellate Division of the District Court, which is “essentially a
federal creature, and not an insular [local] appellate court,” BA
Properties Inc. v. Gov’t of the Virgin Islands, 299 F.3d 207, 212
(3d Cir. 2002), and our Court exercised second-level appellate
review as the de facto “Supreme Court of the Virgin Islands.”
Polius v. Clark Equip. Co., 802 F.2d 75, 80 (3d Cir. 1986); see also
BA Properties, 299 F.3d at 212 (creating an indigenous Virgin
Islands jurisprudence “has proved and will continue to prove very
difficult to attain until the Virgin Islands has its own appellate
court composed entirely of locally appointed judges, which would
essentially supplant the Third Circuit”); id. at 212 (Third Circuit
and Appellate Division both exercise plenary review over
interpretation and application of Virgin Islands law by Superior
Court). In effect, the District Court’s task was to “predict” how our
Court, sitting essentially as the Supreme Court of the Virgin
Islands, would resolve the issue of territorial law presented here.

        Going forward, now that the Virgin Islands has established
an insular appellate court and will begin developing indigenous
jurisprudence, the District Court, when exercising jurisdiction over
cases requiring the application of Virgin Islands law, will be
required to predict how the Supreme Court of the Virgin Islands
would decide an issue of territorial law, and should seek guidance
from Superior Court decisions in undertaking this endeavor. As
noted above, however, the District Court will not be bound by
Superior Court decisions. See Houbigant, Inc. v. Federal Ins. Co.,
374 F.3d 192, 199 (3d Cir. 2004) (district court sitting in diversity
is not bound by state trial court rulings).

                                 11
        In declining to compel arbitration notwithstanding the
DRA, the District Court held that Edwards’ agreement to
arbitrate personal injury claims is procedurally and substantively
unconscionable.4 In support of its holding, the District Court
concluded that the consideration was grossly inadequate and that
Edwards did not benefit from any efficiency or economy in the
arbitration process. The Court stated that there is a gross
disparity in the values exchanged, in that Edwards has given up
the right to a judicial forum against a third-party tortfeasor for his
personal injury claims, solely for the sake of employment. The
Court stated that the economic benefit of arbitration for
employees with personal injury claims is not as significant as it is
with respect to an employee’s contractual or statutory
employment claims. We suggest that the District Court’s opinion
reflects the judicial hostility to arbitration that the Supreme Court
of the United States has sought to alter.

        Before directing parties to proceed to arbitration, the court
must ascertain whether the parties entered a valid agreement to
arbitrate by looking to the relevant state law of contracts.
Alexander v. Anthony Int’l, L.P., 341 F.3d 256, 264 (3d Cir.
2003). Pursuant to 1 V.I.C. § 4, “[t]he rules of 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 applied in the United States, shall be the rules of
decision in the courts of the Virgin Islands in cases to which they
apply, in the absence of local laws to the contrary.”

       Restatement (Second) of Contracts § 208 provides that a
court may refuse to enforce a contract or term of a contract that is
unconscionable at the time the contract is made. The doctrine of

       4
          The District Court held that the agreement to arbitrate
personal injury claims is not void ab initio, that to the extent that
Edwards has a statutory right to a judicial forum for his personal
injury claims against HOVENSA, the FAA preempts it, that the
agreement is not unenforceable for failure to comply with 24 V.I.C.
§ 74a, and that HOVENSA is an intended third-party beneficiary
of the DRA. We agree, and therefore do not devote any discussion
to these issues.

                                 12
unconscionability involves both “procedural” and “substantive”
elements. See Alexander, 341 F.3d at 265 (explaining that the
“procedural” element of a claim of unconscionability “is
generally satisfied if the agreement constitutes a contract of
adhesion.”). However, a contract term is “not unconscionable
merely because the parties to it are unequal in bargaining
position.” Restatement at § 208 cmt. d (cited in Alexander, 341
F.3d at 265).

       There is no dispute here that the DRA is a procedurally
unconscionable adhesion contract. HOVENSA instead contests
the District Court’s conclusion that the DRA was substantively
unconscionable. Because this presents a legal question
concerning the enforceability of an arbitration agreement, our
standard of review is plenary. Harris v. Green Tree Fin. Corp.,
183 F.3d 173, 176 (3d Cir. 1999).

        Although there had been some resistance to requiring
arbitration of employment-related claims, the Supreme Court of
the United States held in Circuit City Stores, Inc. v. Adams, 532
U.S. 105 (2001), that a contract by an employee to arbitrate such
claims is valid. The Court made clear that the Federal
Arbitration Act applies to employment contracts. Id. at 119.

        The District Court sought to distinguish the holding in
Circuit City Stores from the issue in this case on the ground that
this case involves a personal injury claim rather than a
contractual or statutory employment claim, stating that “personal
injury claims frequently involve larger sums of money.” App. at
11. That distinction is unpersuasive. In the first place, nothing
in the Circuit City Stores opinion suggested that the application
of the agreement to arbitrate depended on the size of the claim.
In the second place, statutory or contractual employment claims
are likely to involve no lesser monetary claims (and not
infrequently higher monetary claims) than personal injury claims.

       The District Court also relied on what it believed was a
“gross disparity in the values exchanged in that Edwards has
given up the right to a judicial forum against a third-party
tortfeasor for his personal injury claims, solely for the sake of
employment.” App. at 10-11. We do not deny that there is a

                                 13
disparity in the consideration exchanged between the parties
here. The DRA essentially requires Edwards to arbitrate his
claims against Wyatt and third-party beneficiaries like
HOVENSA while they retain the option of litigating any claims
they might have against Edwards. That fact standing alone,
however, does not make the DRA substantively unconscionable.

        We take our guidance from the Supreme Court’s decision
in Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20 (1991).
Gilmer, the manager of financial services for the respondent
firm, was terminated when he was 62 years old. Id. at 24. He
filed an action under the Age Discrimination in Employment Act.
Id. at 23. His employer sought arbitration, as there was an
arbitration agreement that was part of the registration application
Gilmer was obliged to sign as a securities representative with
several stock exchanges. Id. Gilmer could not have served in his
job without such registration. Id.

        The district court denied Interstate’s motion to compel
arbitration because it concluded that Congress intended to
preclude ADEA claimants from the waiver of a judicial forum.
Id. at 24. The Court of Appeals reversed, and the Supreme Court
upheld the Court of Appeals’ position. The Court noted that the
purpose of the FAA “was to reverse the longstanding judicial
hostility to arbitration agreements that had existed at English
common law and had been adopted by American courts, and to
place arbitration agreements upon the same footing as other
contracts.” Id. It reiterated the statement from one of its earlier
opinions that the provisions of the FAA “manifest a ‘liberal
federal policy favoring arbitration agreements.’” Id. at 25
(quoting Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp.,
460 U.S. 1, 24 (1983)). The Gilmer Court rejected the argument
that compulsory arbitration of age discrimination claims was
inconsistent with the social policy underlying the ADEA, noting
that “the prospective litigant effectively may vindicate his or her
statutory cause of action in the arbitral forum.” Id. at 28 (internal
quotation marks and citations omitted).

        Gilmer and other Supreme Court decisions in this area,
see, e.g., Rodriguez de Quijas v. Shearson/American Express,
Inc., 490 U.S. 477 (1989) (enforcing arbitration agreement

                                 14
requiring plaintiff to arbitrate claims under Securities Act of
1933); Shearson/American Express Inc. v. McMahon, 482 U.S.
220 (1987) (upholding agreements to arbitrate claims under
Security Exchange Act of 1934 and the RICO statutes), are
grounded on the premise that “arbitration clauses substitute one
procedurally fair forum for another.” David S. Schwartz,
Enforcing Small Print to Protect Big Business: Employee and
Consumer Rights Claims in an Age of Compelled Arbitration,
1997 Wisc. L. Rev. 33, 110 (1997). Where, as here, an
arbitration provision requires only one side to submit its claims
(personal injury or otherwise) to arbitration, but does not alter or
limit the rights and remedies available to that party in the arbitral
forum, it cannot be said that the parties’ agreement is
substantively unconscionable under the rationale of Gilmer.5 We
see no reason to predict that the Supreme Court of the Virgin
Islands will hold otherwise when faced with this question.

                                VI.

      For the reasons set forth, we will vacate the District
Court’s order and remand to the District Court to grant
HOVENSA’s motion to compel arbitration and stay the
proceedings pending arbitration pursuant to 9 U.S.C. §§ 3 and 4.

       5
           In Alexander, by contrast, we found the arbitration
agreement to be unconscionable under Virgin Islands law based on
certain procedural provisions, such as a unilateral thirty-day suit
limitations period, which made it “unnecessarily burdensome for
an employee to seek relief from the [employer’s] illegal conduct,”
341 F.3d at 267, as well as certain substantive provisions, including
a restriction on the availability of damages, which deprived the
employee of “complete compensation for any harm done” while
enabling the employer “to evade full responsibility for its actions.”
Id.

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