23 V.I. 395


Civil No. 1984/195

District Court of the Virgin Islands Div. of St. Croix

March 8, 1988

John R. Coon, Esq., St. Croix, V.I., for plaintiffs

Nancy V. Young, Esq. (Law Offices of Britain H. Bryant), St. Croix, V.I., for Hess Oil Virgin Islands Corporation

O’BRIEN, District Judge


The question we decide herein is whether federal labor laws preempt application of the borrowed servant defense to the exclusive remedy provisions of the Virgin Islands Workmen’s Compensation statute. We conclude that they do not, and because no other facts are in dispute, this case must be dismissed.


The circumstances under which this matter comes back to us can be gleaned from Prevost v. Hess Oil Virgin Islands Corp., 640 F. Supp. 1220 (D.V.I. 1986) (“Prevost I”), rev’d and remanded sub nom. Nieves v. Hess Oil Virgin Islands Corp., 819 F.2d 1237 (3d Cir. 1987), cert. denied, — U.S. —, 108 S.Ct. 452 (1987).

*396The Third Circuit remanded the matter for us to decide the factual question whether the plaintiff, Pauliphy Prevost, was the borrowed servant of the defendant, Hess Oil Virgin Islands Corporation (“HOVIC”) for purposes of the exclusive remedy provision of the Virgin Islands Workmen’s Compensation statute (“statute”), 24 V.I.C. § 251 et seq., such that this suit is barred. See Nieves, 819 F.2d at 1252-53. It had been recognized in Vanterpool v. Hess Oil Virgin Islands Corp., 589 F. Supp. 334 (D.V.I. 1984), modified, 766 F.2d 117, 127-28 (3d Cir. 1987), cert. denied, 474 U.S. 1059, 106 S.Ct. 801 (1986) that the borrowed servant doctrine (“doctrine”) was applicable in the context of workmen’s compensation to preclude a personal injury suit brought by a borrowed worker against an employer to whom he agreed to be loaned.

The Vanterpool holding predicated the doctrine’s application upon an express or implied contract of hire between the borrowed employee and the borrowing employer. 766 F.2d at 128. It was repudiated by statute in 24 V.I.C. § 263(a). However, in Nieves, retroactive renunciation as to this and other cases pending at the time was held a violation of the Contracts Clause. Art. I § 10, cl. 1 of U.S. Constitution, as applied to the territory by the Revised Organic Act of 1954, 48 U.S.C.A. 1561 (Supp. 1987). 819 F.2d at 1252.

Now once again faced with summary judgment on this factual issue, Prevost does not claim he was not HOVIC’s borrowed servant. Rather, he argues that the federal labor laws pre-empt application of the borrowed servant defense to his tort suit.

Specifically, Prevost suggests that the federal labor laws preclude the independent contract for hire, he, by necessity, had to have entered into with HOVIC in order to have become HOVIC’s borrowed servant. He refers us to Allis-Chalmers Corp. v. Lueck, 471 U.S. 202 (1984).

Secondly, he claims that HOVIC and Litwin Panamerican Corporation’s (“Litwin”) application of the borrowed servant status to his employment is an unfair labor practice under the provisions of the National Labor Relations Act (“NLRA”), and is within the exclusive jurisdiction of the National Labor Relations Board (“NLRB”). He contends that HOVIC’s defense is, therefore, preempted from our consideration. He cites San Diego Building Traders Council v. Garmon, 359 U.S. 236 (1959).

He also turns our attention to the doctrine enunciated in Machinists v. Wisconsin Employment Relations Comm’n, 427 U.S. *397132 (1976). He argues that this pre-emption precludes territories from regulating this very aspect of employer-employee relations.

Prevost makes these three arguments by reference to the 1983 collective bargaining agreement (“CBA”) entered into on his behalf by the United Steelworkers of America, local 8248 (“local”) with his employer, Litwin.1 He specifically points us to article 22 of the agreement which reads:

The Company [Litwin] shall not enter into any separate agreement with any employee in the bargaining unit, or with any other organization for the employees involved herein, with respect to any terms or conditions of employment.

He contends that this section preserves the prohibition against individual employee contracts and precludes interference with the local’s status as the exclusive bargaining agent on behalf of the unit members like himself. This assertion is made notwithstanding his concession that pursuant to Article 4 of the CBA, Litwin had the right to assign him to work for HOVIC.2

The interference to which Prevost refers is embodied in the HOVIC/Litwin maintenance agreement which in effect is an assignment of employees to HOVIC and which has been described as follows:

In 1976, Hess and Litwin entered into an agreement, amended in 1980, whereby Litwin was to provide personnel to perform general maintenance and turnaround work at Hess’ St. Croix refinery. Under the agreement, Litwin workers were divided into two classes. Employees in the class involved here, Type-I personnel, were furnished “as loanees under HOVIC’s direction and control in the numbers and by skills as ordered from time to time by HOVIC.” Hess assumed “direct supervision, direction *398and control” over these employees, and Litwin was not “responsible to HOVIC or liable for the workmanship of such personnel or for any mistake, error or act of negligence of such personnel.” Litwin was responsible for maintaining “at its own expense” Virgin Islands workmen’s compensation insurance and employer’s liability insurance against common law claims.
* * *

Nieves, 819 F.2d at 1239-40; see also, Vanterpool, 766 F.2d at 119— 20. We, however, do not read Prevost’s objections as to the maintenance agreement itself, but the application of the doctrine to it in light of the CBA.3


Federal labor law’s pre-emption of state law in this field represents the limits Congress has placed upon the “scope of ‘state regulation *399of activity touching upon labor-management relation’.” New York Tel. Co. v. New York Dept. of Labor, 440 U.S. 519, 527 (1979) (quotation omitted). Specifically two pre-emption doctrines exist under the National Labor Relations Act (“NLRA”), 29 U.S.C. § 151 et seq. Golden State Transit v. City of Los Angeles, 475 U.S. 608, 106 S.Ct. 1395 (1986) (citing Metropolitan Life Ins. Co. v. Massachusetts, 471 U.S. 724, 105 S.Ct. 2380 (1985)). The Garmon doctrine prohibits states or territories from “‘regulating activity that the NLRA protects, prohibits or arguably protects or prohibits’.” Golden State Transit, 106 S.Ct. at 1398 (quoting Wisconsin Dept. of Industry v. Gould, Inc., 475 U.S. 282, 106 S.Ct. 1057 (1986)). The Machinists pre-emption precludes state or territorial regulations “concerning conduct that Congress intended to be unregulated’.” Golden State Transit, 106 S.Ct. at 1398 (quoting Metropolitan Life Ins., 105 S.Ct. at 2394).

In addition to these two pre-emption doctrines flowing from the NLRA, federal common law developed pursuant to section 301 of the Labor Management Relations Act (“LMRA”) 29 U.S.C.A. 185(a), pre-empts state law in the area of interpreting collective bargaining agreements. See Lueck, 471 U.S. at 209-10.

... [qjuestions relating to what the parties to a labor agreement agreed, and what legal consequences were intended to flow from breaches of that agreement, must be resolved by reference to uniform federal law, whether such questions arise in the context of a suit for breach of contract or in a suit alleging liability in tort ....

Lueck, 471 U.S. at 211.

Because application of each of these three pre-emptions is asserted by Prevost, we discuss each seriatim.

A) Garmon Doctrine

The Garmon doctrine prevents states from regulating activity which the NLRA “protects, prohibits or arguably protects or prohibits[,] [bjecause conflict is imminent whenever two remedies are brought to bear on the same activity.” Gould, 106 S.Ct. at 1060 *400(citations and quotations omitted).4 Thus, courts lack subject matter jurisdiction and are displaced from applying local rules where the controversy at issue is identical with that which could be presented to the NLRB unless it is one of particular local concern. Belknap Inc. v. Hale, 463 U.S. 491, 510-11 (1983).

Here, however, our resolution of HOVIC’s defense is not one which would substantially conflict with a remedy that might be provided by the NLRB even assuming the existence of an unfair labor practice as asserted by Prevost.5 This is because our focus is not upon the local’s relationship with Prevost’s employer, but upon the territory’s interest in applying the exclusive remedy provision of the statute. In this regard, the Third Circuit has recognized the inapplicability of federal labor law to rights afforded under workmen’s compensation statutes. See Herring v. Prince Macaroni of New Jersey, 799 F.2d 120, 124 n.2 (3d Cir. 1986).

More importantly, we are dealing with a personal injury matter brought pursuant to territorial law. Even if HOVIC were Prevost’s joint employer or even a party to the CBA, there is nothing protected *401or arguably protected by the NLRA in HOVIC’s conduct (negligence) for which Prevost complains. It is clear that if confronted with the issue before us, the NLRB would have no authority to suspend enforcement of a state regulatory scheme which has general application. See, e.g., Metropolitan Life, 105 S.Ct. at 2397. As the Vanterpool court noted, “. . . where the scheme is mandatory it conditions all employment.” 766 F.2d at 126.

By focusing upon the implicit contract nature of the doctrine, Prevost is misguided. This is because, as can be garnered from the Third Circuit discussion in Vanterpool, the inquiry for determining the applicability of the doctrine to the statute is primarily focused upon actions of the loaned employee. See generally, 766 F.2d at 122. Possible NLRB sanctions vis-a-vis Prevost’s employer, whether it be HOVIC or Litwin, for committing an unfair labor practice, would have no effect as to determining whether Prevost became HOVIC’s borrowed employee by operation of territorial law. There is simply no conflict with the NLRB’s focus which is upon the relations between the local and the employer, and the concern of the territory in the implementation of its statute. We presume that it is for this and similar reasons that the Circuit in Herring noted that workmen’s compensation statutes are not pre-empted by federal law. 799 F.2d at 124 n.2.

Therefore, because determination of the scope of the workmen’s compensation scheme is clearly a matter within the ambit of a court of local concern, and sitting as we do as a local court in this matter, we address it, not the NLRB, unless foreclosed by the Machinists doctrine.6

B) Machinists Doctrine

Although the Garmon doctrine precludes state regulation of activity governed by the NLRB, the Machinists doctrine precludes state regulation where Congress intentionally left the area to be effected by the free flow of economic forces. Golden State, 106 S.Ct. at 1398 (quotation omitted). “States are, therefore, prohibited from imposing additional restrictions on economic weapons of self help unless such restrictions presumably were contemplated by Congress.” 106 S.Ct. at 1399.

*402A discussion of the Machinists doctrine case was made in Metropolitan Life. There the Supreme Court faced the issue whether a Massachusetts statute providing for mandatory minimum mental health care benefits was pre-empted by the federal labor laws when applied to collective bargaining agreements. Id. at 2883. In reaching its decision, the Court first noted that Congress never considered the question whether state laws of general application affecting terms of collective bargaining agreements were to be pre-empted. Id. at 2390. It wrote in this regard:

The evil Congress was addressing thus was entirely unrelated to local or federal regulation establishing minimum terms of employment. Neither inequality of bargaining power nor the resultant depressed wage rates were thought to result from the choice between having terms of employment set by public law or having them set by private agreement. No incompatibility exists, therefore, between federal rules designed to restore the equality of bargaining power, and state or federal legislation that imposes minimal substantive requirements on contract terms negotiated between parties to labor agreements, at least so long as the purpose of the state legislation is not incompatible with these general goals of the NLRA.
* * *
Minimum state labor standards affect union and nonunion employees equally, and neither encourage nor discourage the collective-bargaining processes that are the subject of the NLRA. Nor do they have any but the most indirect effect on the right of self-organization established in the Act. Unlike the NLRA, mandated-benefit laws are not laws designed to encourage or discourage employees in the promotion of their interests collectively; rather, they are in part “designed to give specific minimum protections to individual workers and to ensure that each employee covered by the Act would receive” the mandated health insurance coverage. Nor do these laws even inadvertently affect these interests implicated in the NLRA. Rather, they are minimum standards “independent of the collective-bargaining process [that] devolve on [employees] as individual workers, not as members of a collective organization.

Id. at 2397 (citation and quotation omitted).

The Court went on to add that states have broad power to regulate the employment relationship to protect workers within the state. *403It pointed out that workmen’s compensation statutes have been of the group which have survived scrutiny. Id. at 2398 (citation omitted).

Here we face a territorial statute which provides mandated benefits in exchange for common law tort remedies. The Third Circuit wrote in Vanterpool that the Virgin Islands Act “is intended to provide an injured employee with certain and absolute benefits in lieu of possible and speculative common law benefits obtainable only in a tort action against his employer.” 766 F.2d at 122. We view application of the doctrine as merely an extension of that rule to the borrowing employer.

In so concluding, we note that it is clear that there is nothing inconsistent between policies behind the exclusive remedy provisions in the statute and the NLRA’s goal of equating bargaining power between management and labor. Its application may affect the terms of Prevost’s employment, but it “does not limit the rights of self organization or collective bargaining protected by the NLRA . . .” 105 U.S. at 2399. This is simply not a case as the Supreme Court faced in Golden State, 106 S.Ct. at 1395, where the state’s action affected the union power to strike and to apply economic power to obtain bargaining concessions from management such that the balance of power between union and manager was affected.

More importantly, the application of the doctrine to the statute’s exclusive remedy provision does nothing to alter this balance of power between management and labor. While Prevost does not ask us to hold the exclusive remedy provision of the statute pre-empted in toto, his assertion that the doctrine’s application to the statute is barred as to him, implicates the same concerns. Simply put, he asks us to void this protection of employees arising from territorial law merely because they are party to a collective bargaining agreement. We see nothing in the policies of the NLRA which requires nor mandates this distinction.

This is not a case where state law provides different benefits depending upon an employee’s union status. See, e.g., United Steelworkers of America v. Johnson, 799 F.2d 402 (8th Cir. 1986). Thus, we view it. in line with Metropolitan Life, and hold that the doctrine as applied to the exclusive remedy provisions of the statute is not pre-empted by the NLRA. We now turn to the question of federal common law pre-emption.

C) Federal Common Law

Here we face a pre-emption principle varied from the two NLRA pre-emptions, the effect of section 301 of LMRA. Lingle v. Norge *404Div. of Magic Chef, Inc., 823 F.2d 1031, 1042 (7th Cir. 1987) (citing Textile Workers Union v. Lincoln Mills, 353 U.S. 948 (1957)). Specifically, we must consider whether § 301 and the common law developed under its auspices would allow the implied contract of hire implicit in the borrowed servant relationship. Unlike our discussion pursuant to the Garmon doctrine where we looked for conflicting remedies, and the Machinists doctrine where we balanced federal and territorial interests, this question requires us to decide whether application of the doctrine to the exclusive remedy provision of the statute gives way under federal law. Lingle, 823 F.2d at 1042 (citations omitted).

We immediately point out that we do not believe application of the statute, even as applying the doctrine, is affected by federal labor law. The Third Circuit wrote in Herring:

Because worker’s compensation rights are rooted in state law, rather than the collective bargaining agreement, and because the cause of action in question is part-and-parcel of the state’s worker’s compensation scheme, we do not believe it is pre-empted by federal labor law. See also Peabody Galion v. Dollar, 666 F.2d 1309, 1316 (10th Cir. 1981) (cause of action has nothing to do with union organization or collective bargaining, nor is there tendency to conflict with federal labor law).

799 F.2d at 124 n.2.7

Second, even assuming that the application of the doctrine to the statute can be considered from a contract position vis-a-vis the federal labor laws, as opposed to a statutory criteria, we believe there is no inconsistency between the implied contract and the CBA.8 This is because nothing in article 22 of the CBA as referred to us by *405Prevost precludes the implicit agreement at issue,9 nor are we directed by Prevost to any other provision which does.10 In fact, the CBA is utterly silent as to employees’ common law rights to sue in tort.11

Additionally, the implied contract arises over time. Vanterpool, 766 F.2d at 127 (citation omitted). Its existence and terms bear no dependence upon the CBA or its provisions. In short, we view it as independent from the CBA, therefore, within the Caterpillar distinction. Overall, we see no conflict with federal law in this regard.


Having found the Garmon and Machinists doctrines respectively inapplicable, and concluding that claims involving workmen’s compensation statutes as either not affected by federal labor law, or in this case, sufficiently independent from concerns of federal law, we can dispense with Prevost’s legal defense. Because he puts no facts into dispute as to his status as HOVIC’s borrowed servant we find, therefore, in line with Vanterpool that HOVIC was responsible for Prevost’s working conditions and the attendant risks; that Prevost’s employ with HOVIC was of sufficient duration so that Prevost’s can be presumed to have acquiesced in these risks after evaluation; and, finally, that the work Prevost performed was HOVIC’s work. 766 F.2d at 122. Judgment will enter in favor of HOVIC. See Celotex Corp. v. Catrett, 477 U.S. 313, 106 S.Ct. 2548 (1986).


THIS MATTER is before us on renewed motion by the defendant, upon remand from the Third Circuit, for summary judgment pursuant to Fed. R. Civ. P. 56. Having entered an opinion of even date herewith, and the premises considered, now therefore it is


THAT the defendant’s motion for summary judgment is GRANTED; and further

THAT the plaintiff’s complaint is DISMISSED WITH PREJUDICE.

Prevost v. Hess Oil Virgin Islands Corp.
23 V.I. 395

Case Details

Prevost v. Hess Oil Virgin Islands Corp.
Decision Date
Mar 8, 1988

23 V.I. 395

Virgin Islands



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