In a unanimous decision, the Supreme Court of the Virgin Islands held that the Wrongful Discharge Act (WDA) provides a remedy not only when an individual is discharged or resigns under circumstances that are alleged to constitute a constructive discharge, but also when the individual is demoted from a previously held position. Rennie v. Hess Oil Virgin Islands Corp., No. 2014-0028 (V.I. Feb. 6, 2015). Reasoning that the legislature of the Virgin Islands clearly intended to eliminate the employment-at-will doctrine when it enacted the WDA, the court concluded that only a broad construction of the word “discharged” would effectuate the drafters’ intent. 

The court also squarely rejected the McDonnell Douglas burden-shifting approach that had been applied to WDA claims for more than a decade. Instead, the court held that a plaintiff only bears the burden of pleading—and eventually proving—that he or she was discharged, and that the permissible reasons identified in the WDA are affirmative defenses that the employer is required to plead and to prove.

Addressing another theory of liability advanced in the complaint, the supreme court held that the McDonnell Douglas framework did not apply to claims alleging violations of the Virgin Islands Civil Rights Act (VICRA) which, among other things, prohibits “discrimination or differential pay or working conditions for workers doing the same work, on account of race, creed, color, or national origin.” 10 V.I.C. § 3.  Emphasizing that the statute predated enactment of the federal Civil Rights Act of 1964, the court held that the proper approach for evaluating a pleading was simply to look to the language of the Act. As a result, the court concluded that the plaintiff had pled a valid claim even though he did not cite the statute or specifically allege that other unprotected workers were not demoted.

In addition to addressing the employment actions that could give rise to liability under the WDA and the pleading requirements for WDA and VICRA claims, the supreme court also clarified that these claims were subject to a six-year statute of limitations, rather than a two-year limitations period, as both local and federal trial courts have held. Additionally, the court held that another territorial anti-discrimination provision, 24 V.I.C. § 451, authorized a private right of action even before the legislature in 2011 amended it to expressly state that a person who has been discriminated against “may bring an action for compensatory and punitive damages in any court of competent jurisdiction.” In so doing, the Virgin Islands Supreme Court criticized the use of rules of statutory construction that the Supreme Court of the United States has adopted for interpreting laws enacted by Congress, and emphasized that such principles were not necessarily appropriate when interpreting acts of the Virgin Islands Legislature.

The Rennie decision constitutes a significant development for businesses faced with claims that their employment decisions violate Virgin Islands law. On the procedural front, Rennie establishes that the pleading requirements for plaintiffs under these statutes is modest and that employers must plead (and prove) all applicable affirmative defenses to liability. Rennie also establishes that individuals have six years from the date of an employment decision to raise statutory claims and that, under the VICRA, liability may exist even for actions that pre-date the 2011 amendment to that statute. On the substantive front, Rennie establishes that the same constraints that apply to decisions to discharge covered employees also apply to decisions to demote such individuals. As a result, covered employers considering whether to demote an employee must be prepared to defend such a decision using the criteria set forth in the WDA.

According to Charles E. Engeman, managing shareholder of the St. Thomas office of Ogletree Deakins, “As a practical matter, the standard announced in this case will make it more difficult to obtain summary judgment in cases alleging violations of the statutes addressed by the court. This decision, which was issued nearly 20 years after the plaintiff was demoted in March 1995, adds significant further support to our long-standing belief that every employer in the U.S. Virgin Islands should require arbitration agreements for all applicants and employees.”