On February 6, 2015, the Supreme Court of the Virgin Islands issued a decision that addresses several aspects of territorial laws prohibiting discrimination and limiting the permissible reasons for discharging employees. Rennie v. Hess Oil Virgin Islands Corp., No. 2014-0028 (V.I. Feb. 6, 2015). The decision is likely to have far reaching implications not only for companies involved in litigation, but also for the day-to-day practices of employers doing business in the U.S. Virgin Islands.

Ronnie Rennie was employed by Hess Oil Virgin Islands Corporation (HOVIC) and, in January 1994, held the position of “Shift Foreman.”  In March 1995, Rennie became an “A Operator,” which was a position below the “Shift Foreman” position. Rennie alleged that this demotion was motivated by his race and filed a complaint against HOVIC in November 1997 alleging violations of federal and territorial law. After the U.S. District Court of the Virgin Islands entered judgment in HOVIC’s favor on the federal civil rights claim, the case was remanded to the Superior Court of the Virgin Islands to address the territorial claims. Eventually, the Superior Court dismissed the remaining claims on the grounds that they fell outside the statute of limitations, and Rennie appealed the adverse decision to the Supreme Court of the Virgin Islands.

The Limitations Period for Statutory Claims: Six Years

The supreme court first addressed the limitations period for claims under the Virgin Islands Wrongful Discharge Act (WDA) and the Virgin Islands Civil Rights Act (VICRA). Rejecting the conclusion reached by the Superior Court that the limitations period for these claims was two years, the Supreme Court held that the limitations period was the six-year period that is applicable to “[a]n action under a liability created by statute, other than a penalty or forfeiture.” 5 V.I.C. § 31(3)(B).

Existence of a Private Right of Action Under 24 V.I.C. § 451

In addition to holding that Rennie’s WDA and VICRA claims were timely despite having been filed more than two years after the complained-of demotion, the court held that Rennie also could pursue a claim under a Virgin Islands statute that prohibits discrimination in employment. From the time of its enactment in 1964 until 2011, that provision had authorized the Virgin Islands Department of Labor to conduct investigations and take other appropriate action to address unlawful employment practices or discrimination. However, until amended by the legislature in 2011 to provide that “[i]n addition to other remedies, any person who has been discriminated against as defined in this section may bring an action for compensatory and punitive damages in any court of competent jurisdiction,” the statute had been silent on the ability of employees to seek redress directly. As a result, the U.S. District Court of the Virgin Islands had ruled, on several occasions, that section 451 did not establish a private right of action. The supreme court expressly rejected this line of cases and emphasized that the rules of statutory construction that the Supreme Court of the United States has adopted for interpreting laws enacted by Congress were not necessarily appropriate when interpreting acts of the Virgin Islands Legislature.

Employment Decisions Actionable Under the WDA

The supreme court also held that the 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. Reasoning that the legislature of the Virgin Islands clearly intended to eliminate the employment-at-will doctrine when it enacted the WDA, which provides that an employee discharged for reasons other than those identified in the Act shall be considered to have been wrongfully discharged, the court concluded that only a broad construction of the word “discharged” would effectuate the drafters’ intent.

Pleading Requirements Under the WDA and the VICRA

In addition to addressing the employment actions that could give rise to liability under the WDA and the VICRA, and the limitations periods for these claims, 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 was discharged, and that the permissible reasons identified in the WDA are affirmative defenses that the employer is required to plead and to prove. Noting that the VICRA predated enactment of the federal Civil Rights Act of 1964, the Virgin Islands Supreme Court held that the McDonnell Douglas framework also did not apply to claims brought under that statute, 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. As a result, the court concluded that Rennie had pled a valid claim even though he did not cite the statute or specifically allege that other unprotected workers were not demoted.

Key Takeaways

The Rennie decision constitutes a significant development for businesses faced with pending or potential future 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. As such, employers could be faced with challenges to such decisions long after the underlying events have occurred. On the substantive front, Rennie establishes that the 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.

Charles E. Engeman, managing shareholder of Ogletree Deakins’ St. Thomas office, offers his insight into the Rennie decision: “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”