June 7, 2002 – U.S. District Judge Raymond Finch has ruled that a Hovensa subcontractor's use of an arbitration agreement is valid and enforceable.
Wyatt V.I. Inc., which does maintenance work at the refinery on St. Croix, asked for the District Court ruling on the issue after Labor Commissioner Cecil Benjamin earlier this year ordered Wyatt to stop making the agreement a condition for employment.
Attorney General Iver Stridiron later wrote an opinion backing Benjamin's position. Stridiron wrote in that opinion that the arbitration agreement was "unconscionable, coercive," "contrary to public policy" and "ripe for injunctive relief."
In his ruling issued Wednesday, however, Finch wrote that he found nothing unconscionable about the agreement. In fact, he said, the law is very clear that such arbitration agreements are valid.
"Simply, there is no reason to find the agreement unenforceable," Finch wrote in his decision to grant Wyatt's request to dismiss the case. Were the case to move forward, he said, "The court has no doubt that Wyatt would prevail on the merits."
Last year, Wyatt began requiring all job applicants to sign a document agreeing to put all disputes between employees and management before a neutral arbiter whose decision on the matter would be binding. Many companies prefer arbitration as a less expensive and less cumbersome means of resolving disputes than going to court.
Under the terms of the Wyatt agreement, arbitration would be conducted under the rules of the America Arbitration Association, and Wyatt would pick up most of the costs involved after the employee seeing relief filed a $50 fee.
Labor and Justice Department attorneys argued that prospective employees were being coerced into signing the agreement, by which they would give up their rights to take disputes to court. The government argued that the agreement was in violation of the territorial Wrongful Discharge Act.
But, Finch noted, the Wrongful Discharge Act "makes no mention whatsoever" of the validity or enforceability of arbitration agreements. Moreover, he wrote in his opinion, the U.S. Supreme Court has upheld that the Federal Arbitration Act makes mandatory agreements valid as long as the act is not in direct conflict with state laws.
Finch added that if the territorial law were different, the V.I. government might have a case for challenging the federal law.
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