Court Opinion

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Opinions of the United
2008 Decisions                                                                                                             States Court of Appeals
                                                                                                                              for the Third Circuit

11-25-2008

Gonzalez v. AMR Amer Air
Precedential or Non-Precedential: Precedential

Docket No. 06-5161

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http://digitalcommons.law.villanova.edu/thirdcircuit_2008/178

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                                      PRECEDENTIAL

      UNITED STATES COURT OF APPEALS
           FOR THE THIRD CIRCUIT

                     No. 06-5161

                     _________

                 JOEL GONZALEZ,

                                        Appellant

                           v.

          AMR, AMERICAN AIRLINES;
          EXECUTIVE AIRLINES, INC.

On Appeal from the District Court of the Virgin Islands
                (Division of St. Croix)
                  No. 98-cv-00218
      District Judge: Hon. Anne E. Thompson

            Argued on December 11, 2007

    Before: SCIRICA*, Chief Judge, SMITH and
              ROTH, Circuit Judges
            ( Opinion filed November 25, 2008)

K. Glenda Cameron, Esquire (ARGUED)
Lee J. Rohn, Esquire
Law Offices of Rohn and Cameron, LLC
1101 King Street, Suite 2
Christiansted, St. Croix
USVI, 00820

                    Counsel for Appellant

      *This case was argued before the panel of Judges Smith,
Nygaard and Roth. After argument, Judge Nygaard recused
himself in this matter. Chief Judge Scirica replaces Judge
Nygaard on the coram.

                             2
Charles E. Engeman, Esquire (ARGUED)
Catherine L. Young, Esquire
Ogletree, Deakins, Nash, Smoak & Stewart, LLC
The Tunick Building, Suite 201
1336 Beltjen Road
Charlotte Amalie, St. Thomas
USVI, 00802

                     Counsel Appellees

                        OPINION

ROTH, Circuit Judge:

        Joel Gonzalez appeals the order of the District Court of
the Virgin Islands, granting summary judgment against him.
We hold that the District Court erred in concluding that a prior
holding by an Administrative Law Judge (ALJ) in Gonzalez’s
unemployment compensation proceedings precluded litigation
of Gonzalez’s claim that he was wrongfully discharged.
Accordingly, we will vacate the District Court’s grant of
summary judgment with respect to Gonzalez’s wrongful
discharge claim and remand this claim to the District Court. We
will affirm the District Court’s judgment in all other respects.

                               3
I. Factual and Procedural Background

       Prior to his discharge, Joel Gonzalez was employed as a
station agent in St. Croix by Executive Airlines, Inc. (a
subsidiary of AMR), doing business as American Eagle. On
May 20, 1998, Gonzalez collected four twenty-dollar bills from
a passenger for a ticket change fee. The fee was only $75, and
Gonzalez gave change to the passenger from his own pocket.
Gonzalez claims that he placed the $80 in a drawer by the
boarding gate. The $75 payment was not recorded in American
Eagle’s computer system.

        When the passenger complained that he was charged the
ticket change fee a second time upon his return to St. Croix on
May 25, Gonzalez remembered the earlier transaction. On May
26, Gonzalez asked his co-worker to look in the drawer by the
boarding gate. His co-worker found $80, in three bills, one fifty,
one twenty, and one ten. American Eagle suspended Gonzalez
on May 27 while it investigated the incident. On June 12, 1998,
Gonzalez was terminated on the ground that he had violated the
American Eagle Executive Airline Rules and Regulations.

        Gonzalez filed a claim for unemployment compensation
with the Virgin Islands Employment Security Agency (VIESA).
Section 304(b)(3) of the Virgin Islands Unemployment
Insurance Act provides in part that an insured employee is
entitled to unemployment benefits unless he was discharged for
“misconduct.” V.I. Code Ann., tit. 24, § 304(b)(3) (1997).
Although the statute does not define the term “misconduct,”
case law has defined it as:

                                4
       [A]n act of wanton or willful disregard of an
       employer’s interests, a deliberate violation of the
       employer’s rules, a disregard for the standards of
       behavior which an employer has a right to expect
       from an employee, or negligence indicating an
       intentional disregard of the employer’s interest or
       of [the] employee’s duties and obligations to the
       employer.

Charles v. The Daily News Publishing Co., 29 V.I. 34, 36 (Terr.
Ct. 1994) (citing Jackman v. Heyliger, 20 V.I. 536, 538-39
(D.V.I. 1984)).

      VIESA denied Gonzalez’s claim pursuant to Section
304(b)(3). Gonzalez appealed, and a hearing was conducted by
a VIESA Administrative Law Judge. Gonzalez was represented
by counsel at the hearing.

        The ALJ affirmed the initial determination that Gonzalez
was ineligible for unemployment benefits under Section
304(b)(3). The ALJ characterized Gonzalez’s actions as
“contrary to stated procedures and highly questionable.” The
ALJ made the following findings: that the collection of funds
at the boarding gate was not unusual; that, although Gonzalez
claimed he was too busy to record the transaction at the
boarding gate, he was able to enter the passenger’s name on the
stand-by list; that the money retrieved from the boarding gate
was in different denominations than the money collected from
the passenger; and that the boarding gate was a heavily
trafficked area.      The ALJ cited the interpretation of
“misconduct” under Section 304 and concluded,

                               5
       The failure of the Claimant [Gonzalez] to
       document the Administrative Service Charge as
       well as to ask his supervisor to not inform the
       general manager of this failure are in strict
       violation of the Employer’s interests and a
       disregard for standards of expected behavior. The
       employee’s duties are deemed, at best, a negligent
       act. The undersigned interprets said actions to be
       misconduct.

Gonzalez did not seek judicial review of the ALJ’s decision, and
it became final.

       Two months later, Gonzalez filed suit against Executive
Airlines, Inc. (his former employer), AMR, and American
Airlines (collectively, the Airlines) in the District Court of the
Virgin Islands. In his complaint, Gonzalez alleged wrongful
discharge in violation of the Virgin Islands Wrongful Discharge
Act, V.I. Code Ann., tit. 24, § 76; violation of American Eagle’s
employee manuals and rules and regulations; slander and
defamation; intentional infliction of emotional distress; and
negligent infliction of emotional distress. Gonzalez also brought
a claim for punitive damages.

       The Virgin Islands Wrongful Discharge Act provides that
“[a]ny employee discharged for reasons other than those stated
in [Section 76(a)] shall be considered to have been wrongfully
discharged . . .. ” V.I. Code Ann., tit. 24, § 76(c) (1997). This
provision establishes a presumption that an employee has been
wrongfully discharged if discharged for any reason other than
those listed in Section 76(a). Harrilal v. Blackwood, 44 V.I.
6
144, 150 (Terr. Ct. 2001). Section 76(a) provides nine reasons
justifying discharge:

      (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 wilfully and
             intentionally disobeys
             reasonable and lawful
             rules, orders, and
             instructions of the
             employer; provided,

                              7
             however,           the
             employer shall not bar
             an employee from
             patronizing the
             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)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.

V.I. Code Ann., tit. 24, § 76(a) (1997 & 2008 Supp.).

                               8
       The Airline moved for summary judgment, in part on the
ground that the ALJ’s decision in the VIESA proceedings
precluded claims that Gonzalez’s discharge was wrongful under
any legal theory, including breach of contract. In the same
motion, the Airline sought dismissal of the defamation and
emotional distress claims for failure to state a claim and dismissal
of the punitive damages claim on the ground that there is no
separate cause of action for punitive damages.

        The District Court granted summary judgment for the
Airline. With respect to Gonzalez’s claim under the Wrongful
Discharge Act, the District Court found that the claim was
precluded based on the ALJ’s determination that Gonzalez had
been discharged for “misconduct” within the meaning of the
Unemployment Insurance Act. The District Court reasoned that
Gonzalez had to prove that he was terminated for a reason other
than “willful misconduct,” as defined in Section 76(a)(4)
(referring to an employee who “wilfully and intentionally
disobeys reasonable and lawful rules, orders, and instructions of
the employer”). The District Court determined that the issue to
be decided in both the VIESA claim and the present case raised
the identical factual question: “Was Plaintiff discharged for
misconduct?” The District Court found further that Gonzalez
had a full and fair opportunity to litigate that issue before VIESA
because he was permitted to present witnesses and evidence and
was represented by counsel at the hearing.

        With respect to Gonzalez’s other claims, the District Court
dismissed Gonzalez’s claim of violation of the employee manual
in light of the preclusion of his wrongful discharge claim. The
District Court dismissed the defamation and emotional distress

                                 9
claims for failure to state a claim and denied Gonzalez’s motion
to amend the complaint with respect to the defamation claim,
reasoning that such an amendment would be futile in light of the
preclusion ruling. The District Court dismissed the punitive
damages claim because Gonzalez conceded that there was no
separate cause of action for punitive damages. Gonzalez
appealed.

II. Discussion

       The District Court had jurisdiction under 28 U.S.C. § 1332
because there is diversity of citizenship of the parties and the
amount in controversy exceeds $75,000. We have jurisdiction
over this appeal from a final judgment of the District Court
pursuant to 28 U.S.C. § 1291.

       We review a grant of summary judgment de novo,
applying the same standard that the District Court should have
applied. Caver v. City of Trenton, 420 F.3d 243, 253 (3d Cir.
2005). Summary judgment is appropriate only where there is no
genuine issue of material fact and the moving party is entitled to
judgment as a matter of law. Id. at 253-54.

         Review of the District Court’s application of issue
preclusion is also plenary. Jean Alexander Cosmetics, Inc. v.
L’Oreal USA, Inc., 458 F.3d 244, 248-49 (3d Cir. 2006). An
agency determination “may be given preclusive effect in certain
circumstances where the agency is acting in a judicial capacity.”
Caver, 420 F.3d at 258. Virgin Islands courts do not flatly
prohibit the application of issue preclusion to unreviewed agency
determinations in Wrongful Discharge Act claims. See Harrilal

                               10
v. Blackwood, 44 V.I. at 146, 150-52 (analyzing whether
collateral estoppel applied to unreviewed determination by the
VIESA ALJ in a subsequent wrongful discharge action). As
such, we must give the same preclusive effect to VIESA’s
findings as would the Virgin Islands courts. Jones v. United
Parcel Service, 214 F.3d 402, 405 (3d Cir. 2000).

       Virgin Islands law requires four elements for the
application of issue preclusion:

       (1) the previous determination was necessary to
       the decision, (2) the identical issue was previously
       litigated, (3) the issue was decided in a decision
       that [was] [sic] final, valid, and on the merits, and
       (4) the party that is being precluded from
       relitigating the issue was adequately represented
       in the previous action.

Harrilal, 44 V.I. at 150 (citing Hawksbill Sea Turtle v. FEMA,
126 F.3d 461, 475 (3d Cir. 1997)); see also Charles, 29 V.I. at
36.1 The questions raised by this appeal are whether the issue in

  1

In Charles, the Territorial Court described the four-prong test
for issue preclusion as:

              (1) Was the issue determined in the
              prior action the same as that in the
              subsequent action?
              (2) Was the party against whom the
              defense is invoked identical to or in

                                11
the VIESA proceedings is identical to the issue presented by
Gonzalez’s wrongful discharge claim and whether Gonzalez had
a full and fair opportunity to litigate his wrongful discharge claim
in the VIESA proceedings.

        The Territorial Court of the Virgin Islands (now the
Superior Court) has previously considered whether a finding of
“misconduct” under Section 304(b)(3) precludes a wrongful
discharge claim under Section 76(a). In Charles, 29 V.I. 34, the
Territorial Court held that VIESA’s finding of no willful or
deliberate misconduct on the employee’s part was not identical
to the issue of whether the employee had been wrongfully
discharged. The Territorial Court noted, however, that “it is
possible to find willful misconduct under § 304(b)(3) which will
preclude the losing party from further asserting a subsequent
wrongful discharge claim while disallowing issue preclusion
when no willful misconduct is found in the initial proceeding.”
Id. at 37.2

                 privity with the party in the first
                 action?
                 (3) Was the previous judgment
                 final on the merits?
                 (4) Did the party have a full and
                 fair opportunity to litigate on the
                 merits?
29 V.I. at 36.
    2
    In two subsequent unpublished opinions, the Territorial
Court determined that a finding of “misconduct” in VIESA

                                 12
       In Harrilal v. Blackwood, 44 V.I. 144 (Terr. Ct. 2001), the
Territorial Court held that a finding of “misconduct” in an
unemployment compensation proceeding, which was based on
the employee’s involvement in a verbal and physical altercation
with a co-worker, did not preclude the employee’s wrongful
discharge claim. The Territorial Court’s decision was based in
part on its conclusion that “[w]ith respect to identity of issues, the
analysis involved in a wrongful discharge action encompasses a
separate set of policies and rights than a determination of
unemployment benefits.” Id. at 150. However, the Territorial
Court also reasoned,

       Because the factual predicates for both questions
       involve different requirements, i.e., a finding of
       misconduct for section 304(b)(3) versus the
       existence of one of nine scenarios for section
       76(a), an administrative determination that Harrilal
       was ineligible for unemployment benefits does not
       inform a finder of fact in a subsequent proceeding
       whether or not she was improperly terminated.

Id. at 152.

      As in Harrilal, the salient inquiry here is whether
Gonzalez’s VIESA proceedings and his wrongful discharge
claims present “identical” issues. We conclude that there are

proceedings precluded claims under the Wrongful Discharge
Act. See Bergin v. Purple Parrot, Inc., Civ. No. 687/1995 (Terr.
Ct. V.I. Apr. 16, 1998); Ramos v. Kmart Corp., Civ. No.
355/1998 (Terr. Ct. V.I. July 17, 1998).

                                 13
legal and factual differences between the questions decided in
Gonzalez’s VIESA proceedings and those presented by his
wrongful discharge claims so that issue preclusion does not
apply.

       In Gonzalez’s VIESA proceedings, the ALJ had to
determine whether Gonzalez’s conduct constituted “misconduct”
for purposes of Section 304(b)(3). As noted above, the term
“misconduct” for purposes of Section 304 has been specifically
defined by the Virgin Islands courts as

       an act of wanton or willful disregard of an
       employer’s interests, a deliberate violation of the
       employer’s rules, a disregard for the standards of
       behavior which an employer has a right to expect
       from an employee, or negligence indicating an
       intentional disregard of the employer’s interest or
       of [the] employee’s duties and obligations to the
       employer.

Charles, 29 V.I. at 36. The ALJ determined that Gonzalez’s
conduct met this definition because it was “in strict violation of
the Employer’s interests and a disregard for standards of
expected behavior” and “at best, a negligent act.”

       Gonzalez’s wrongful discharge claim, in contrast, presents
the factual question of whether his conduct falls within the nine
reasons for dismissal listed in Section 76(a). “Misconduct” as
defined for purposes of Section 304(a) is not included among the
permissible grounds for termination under Section 76(a). Not

                               14
surprisingly, given that the ALJ was charged only with
determining whether Gonzalez’s conduct constituted
“misconduct,” the ALJ’s decision does not resolve which, if any,
of the Section 76(a) grounds might apply to Gonzalez’s case.

       Accordingly, we find that the decision by the ALJ in
Gonzalez’s VIESA proceeding does not preclude his wrongful
discharge claim.3 We will vacate the District Court’s grant of
summary judgment on that ground.

       Gonzalez raises no arguments on appeal with respect to
the District Court’s determination that he had failed to state a
claim for breach of the employee manual, defamation, intentional
or negligent infliction of emotional distress, or punitive damages.
Nor does he challenge the District Court’s denial of his motion
to amend the complaint. As such, those issues have been waived.
Kachmar v. SunGard Data Systems, Inc., 109 F.3d 173, 184 n.2
(3d Cir. 1997).

IV. Conclusion

      Because the District Court erred in determining that
Gonzalez’s unemployment proceedings precluded litigation of
his wrongful discharge claim, we will vacate the grant of
summary judgment on that claim and remand it to the District

  3
   We note that, in determining issue preclusion does not apply
here, we are in no way holding that Gonzalez’s discharge will
not ultimately be found to fall within one of the nine reasons for
discharge cited in Section 76(a).

                                15
Court for further proceedings. We will affirm the judgment of
the District Court’s decision in all other respects.

                             16