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DROP ARBITRATION RESTRICTION, HOVENSA URGES

Aug. 20, 2002 – A top Hovensa official has written to the chair of the Senate Rules Committee urging the deletion of a section of the proposed 2003 Omnibus Authorization Act that would restrict the use of arbitration to resolve labor-management conflicts.
If the section should become law, Alex Moorhead, Hovensa vice president for government affairs and community relations, implied, it will be struck down in federal court as unconstitutional.
The Omnibus bill and all of the Fiscal Year 2003 budget bills passed by the Senate Finance Committee earlier this month are scheduled for consideration by the Rules Committee on Thursday.
In the early hours of Aug. 8, the Finance Committee tacked together the 25-page, 55-section Omnibus bill that authorizes more than $20 million in spending beyond what's in the 2003 budget bills but also — among other things — calls for the creation of a V.I. Supreme Court and a Department of Youth Affairs, Sports and Recreation; reallocates tobacco funds; and establishes a Land Buyer's Protection Act.
It also, according to Moorhead, "purports to create conditions that would be required for the use of arbitration to resolve a controversy related to an employment relationship." This, he said in his letter to the Rules chair, Sen. Carlton Dowe, "would effectively prohibit the use of any pre-dispute arbitration agreement in an employment relationship."
The section of the bill in question reads as follows:
"Notwithstanding an employment contract that provides for the use of arbitration to resolve a controversy arising out of or relating to the employment relationship, arbitration may be used to settle such a dispute only if:
"(1) the employer or employee submits a written request after the dispute arises to the other party to use arbitration; and
"(2)the other party consents in writing not later than sixty (60) days after the receipt of the request to use arbitration.
"An employer subject to this section may not require an employee to arbitrate a dispute as a condition of employment."
According to a Hovensa release distributed on Tuesday, Moorhead wrote to Dowe on Aug. 12. He stated that the Legislature is pre-empted from enacting such a provision because it would conflict with the Federal Arbitration Act "by creating special rules for employment arbitration agreements that are not applicable to other contracts."
In the letter, Moorhead said the U.S. Supreme Court has twice ruled that in adopting the Federal Arbitration Act, "Congress intended to foreclose state legislative attempts to undercut the enforceability of arbitration agreements." And he said laws similar to the restriction proposed in the Omnibus bill that were enacted by some states have been struck down by the federal courts as pre-empted by the Federal Arbitration Act.
Finally, Moorhead wrote, the Revised Organic Art of 1954 stipulates that the legislative authority of the Virgin Islands "shall extend to all rightful subjects of legislation not inconsistent with … the laws of the United States made applicable to the Virgin Islands."
In June, U.S. District Judge Raymond Finch ruled in a case brought by a Hovensa subcontractor that it was legal for the company, Wyatt V.I. Inc., to require that prospective employees agree in writing to have all labor-management disputes resolved by binding arbitration. Effective July 1, Hovensa itself instituted a dispute-resolution requirement for all applicants and new hires for non-unionized positions.
It also has given existing non-union personnel the option to enroll by September in the program. Moorhead said in July that about 530 existing refinery employees were eligible, versus some 460 workers who are represented by unions that have collective bargaining agreements with the company.
"The program requires that any disputes concerning a right protected by federal or Virgin Islands law be resolved by binding arbitration if it cannot be resolved within the company," Moorhead said in July. "The dispute would be heard by an arbitrator selected by the parties from a list of qualified and impartial arbitrators provided by the American Arbitration Association, and it would be decided in accordance with applicable law."
The advantage to both the company and the employees, Moorhead said then, is that arbitration provides a means for resolving disputes "within a period of several months, rather than three to five years, as is the case for lawsuits filed in the Territorial Court or U.S. District Court," with significant savings in costs as well as time. He also said the process allows for the parties to maintain "a harmonious relationship," rather than an adversarial one.
Last year, Wyatt began requiring job applicants to sign an agreement to put all employee-management disputes to binding arbitration, to be conducted under the rules of the America Arbitration Association.
Wyatt took the matter to court after Labor Commissioner Cecil Benjamin ordered the company to stop making the agreement a condition for employment and Attorney General Iver Stridiron issued an opinion backing Benjamin. Finch, however, disagreed, saying that the Supreme Court has held that under the Federal Arbitration Act, mandatory agreements are valid, provided that they are not in direct conflict with state laws.

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