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and Grapetree Shores, Inc.
Date: June 27, 2002
Arbitrator: Lynn Wagner
Citation: 2004 NAC 130
IN THE MATTER OF:
AWARD OF ARBITRATOR
arbitration was conducted in accordance with the Salaried Employee Agreement
(hereinafter “Agreement”) between Claimant, WILLIS HODGE, and Respondent,
GRAPETREE SHORES, INC. d/b/a DIVI CARINA BAY RESORT & CASINO, dated January
14, 2000. Claimant timely submitted
claims against Respondent alleging wrongful discharge and defamation.
The Final Hearing was held in Frederiksted, St. Croix, U.S. Virgin
Islands on April 19, 2002.
The Arbitrator has jurisdiction
to decide Claimant’s claims under the definition of arbitrable issues
contained in Section 17 of the Agreement. Neither
party has challenged the Arbitrator’s jurisdiction and, by proceeding on the
merits through the Final Hearing, have waived any defenses of lack of
jurisdiction. Section 20 of the
Agreement does, however, limit the Arbitrator’s authority to grant relief, as
it expressly provides that, “if the Arbitrator finds that disciplinary action
was merited, the Arbitrator may not alter or amend the form of disciplinary
action imposed by the Company.”
was hired by Respondent as the manager of its purchasing and receiving
department on January 14, 2000, shortly after it opened its new Divi Carina Bay
Resort & Casino on St. Croix, U.S. Virgin Islands (hereinafter “Resort”)
at an annual salary of $26,000. Immediately
preceding his employment by Respondent, he operated his own construction
materials business for approximately ten years.
Prior to that, he worked several years in various hourly and management
positions with much smaller, albeit
established, hotels and resorts on St. Croix.
duties of Claimant’s position included managerial responsibilities , such as
ordering products receiving deliveries, maintaining computerized inventory
records securing inventory and directing two hourly-paid employees, as well the
performance of some physical work, such as unloading trucks and stocking storage
shelves. Because his department was
located in a working area of the Resort, he only occasionally had direct contact
with guests. However, an incident occurred between Claimant and a guest of the
Resort on December 19, 2000.
Resort had scheduled an employee Christmas Party at its on-premises Conference
Center to start at about 6:00pm on December 19, 2000.
As Claimant was leaving his department for the day to go to the Christmas
Party, three packages were delivered by Federal Express. Unaware that a guest had alerted the front desk she was
expecting the delivery of a package containing medicine, he signed for the
packages and, without reading the outside markings, placed them in the storage
room with the intention of delivering them the next morning and proceeded to the
Respondent served alcoholic beverages at the party and Claimant, like other
employees in attendance, had several drinks between his arrival and about
7:30p.m., when a co-employee advised him a guest was at the front desk asking
whether a package had arrived containing medicine.
Although Claimant was off-duty for the day, he immediately returned to
the purchasing and receiving department by golf cart to determine if such a
package was there. He discovered it
was one of the packages he had just signed for when he left for the party.
took the package to the front desk without delay, where the guest, Mrs. Farris,
was waiting to sign for it. Although
it had only been fifteen minutes or so since she had come to the front desk and
inquired about the package, Mrs. Farris began berating Claimant in a loud voice
for inconveniencing her. When he
tried to explain what had happened, she told him what she thought he should have
done that would have avoided her need to wait the time it took for him to return
from the Christmas Party and bring the package to her.
who admitted his judgment may have been effected by the drinks he had just
consumed at the Christmas party, responded by asking Mrs. Farris, also in a
raised voice, whether she was trying to tell him how to do his job. Claimant admitted that he exercised poor judgment in
responding in this fashion, but attributed it to the several drinks he had at
the Christmas Party.
an effort to avoid further confrontation with Mrs. Farris, Claimant retreated to
the other end of the front desk, and, facing in the opposite direction to her,
muttered to a bellman, “she is really starting to piss me off.” Unbeknownst to Claimant, Mrs. Farris was not content to end
the confrontation, but had pursued him as he walked away from her and was
standing directly behind him when he made his remark to the bellman.
As a result, she overheard the remark, became angrier and asked to speak
to the Resort’s General Manager, Mr. Conway.
Mrs. Farris was told Mr. Conway was at the Christmas party, she began walking
toward the Conference Center. At
the same time, Claimant began returning to the Conference Center in a golf cart
operated by another employee. When
Mrs. Farris noticed the golf cart with Claimant approaching, she started running
toward the Conference Center shouting she was not going to allow Claimant to
speak to Mr. Conway first and “poison his mind” about the incident.
Farris and Claimant arrived at the Conference Center at about the same time.
While crying hysterically, she reported the incident to Mr. Conway,
adding that Claimant had followed her in the golf cart.
After calming her, Mr. Conway spoke with Claimant separately about what
had happened, after which he told Claimant not to worry about the incident.
At that point, Mr. Conway did not view Claimant’s conduct as warranting
discipline, let alone discharge.
incident would have faded away, except Mrs. Farris had other ideas. She started using it as a basis for demanding monetary
compensation from Respondent. She
even wrote the Vice President at Respondent’s North Carolina headquarters
about the incident. She sent copies
of her letter to other executives, including Respondent’s principal
shareholder (hereinafter “owner”). As
a result, Respondent eventually paid her a small amount.
After Mrs. Farris complained to the Vice
President and copied the owner, Mr. Conway took a different view of the
seriousness of the incident. What
he had viewed as nothing to worry about at the Christmas Party became a
discharge offense. Apparently concerned whether the incident with Mrs. Farris
was, by itself, sufficient grounds for discharge, Mr. Conway had his managers
cite Claimant for three alleged offenses involving his management of the
purchasing and receiving department, occurring on the day or two following the
incident. He also had them develop
a laundry list of similar performance deficiencies alleged to have occurred over
the eleven months preceding the incident. Although
Mr. Conway had not decided earlier to discharge Claimant for these pre-December
19, 2000 offenses for reasons of expediency (he was not sure he could replace
Claimant with anyone who could do the job any better), he resurrected them to
serve as additional reasons to justify Claimant’s discharge.
then ensued a confused effort by Respondent’s newly appointed Human Resources
Manager, Ms. Rachel, to execute Mr. Conway’s discharge decision. First, she conducted what she called an “investigation”
of the incident, during which she learned from the bellman that Claimant had
made the “pissed off” remark, but to him and not to Mrs. Farris, and from
the front desk employee that there had been a loud discussion between Claimant
and Mrs. Farris, during which he asked whether she was trying to tell him how to
do his job. She spoke with Mrs.
Farris for two hours and learned her version of the incident and that she
appeared to be emotionally distraught over it.
She did not speak to Claimant because she concluded, based on her
“investigation”, that his version or explanation was irrelevant.
Respondent’s Open Door Policy, which provides an employee the opportunity to
be heard prior to the imposition of discipline, Ms. Rachel and other managers
met with Claimant on December 23, 2000 and notified him he was discharged, as a fait
accompli, citing a laundry list of incidents of poor performance in managing
the purchasing and receiving department. The final offenses on the list were incidents of such poor
performance on December 21, and 22, 2000. The
incident on December 19, 2000 involving Mrs. Farris was listed as only one of
the prior offenses.
Ms. Rachel realized she had not followed the Open Door Policy, she withdrew the
discharge and suspended Claimant with pay pending a meeting on December 27,
2000, at which he could present his responses.
That meeting did not occur, as Claimant hand-delivered a lengthy written
response to each of the alleged offenses. He
remained on paid suspension while Respondent considered his response.
the denials or explanations in Claimant’s response letter, Respondent
maintained its decision to discharge him. On
or about January 8, 2001, Ms. Rachel mailed Claimant a letter notifying him of
that decision by registered mail, return receipt requested.
Rather than citing the final incidents of poor performance upon which she
relied on December 23, 2000 as the final offenses for Claimant’s discharge,
Ms. Rachel’s letter of January 5, 2001 relied primarily upon the incident
involving Mrs. Farris. For example, it pointedly referenced that Mrs. Farris’
complaint had come to the attention of the owner.
It is reasonable to infer from the content of the letter that her
complaint to the Vice President and owner, or their reactions thereto, was the
determinative factor in Mr. Conway’s decision to discharge Claimant at that
On or about January 16, 2001, over a week
after the decision to discharge Claimant, Respondent’s managers opened the
deposit box in which Claimant was required to maintain a “bank” of $500 in
petty cash. Respondent had a work
rule, and Claimant had signed an agreement to the effect, that his bank was to
be kept in a designated deposit box, which must contain cash and receipts
totaling $500 at all times. The
agreement made violation of the rule a discharge offense.
Only $0.37 was found in the deposit box.
on such finding, but without seeking an explanation from Claimant, Ms. Rachel
concluded he had embezzled $499.63 from the Resort.
She then advised the head of security, Mr. Felix, that Claimant had
embezzled $500, provided him a photograph of Claimant and instructed him, if
Claimant was found on the premises, security personnel should escort him off
with care. Mr. Felix, in turn,
posted the photograph in the security office with a notation that Claimant had
embezzled $500 and, if observed on the premises, should be removed with care.
Other employees of the Resort soon became aware of the information on the
poster and rumors spread that Claimant had been discharged for embezzling money
from the Resort.
Claimant heard such rumors, he went to the Resort’s security office on January
16, 2001 and asked Mr. Felix for a copy of the posting.
At that time he had not received the notice of discharge mailed to him on
January 8, 2001. Although he denied
the request for a copy, Mr. Felix allowed Claimant to read the posting.
After confirming it stated he had embezzled $500, Claimant immediately
went to Respondent’s managers, took them to a file cabinet in the purchasing
and receiving department and showed them receipts and cash totaling $500,
thereby proving he had not embezzled the funds.
Although Respondent had the posting removed, it took no action to notify
employees that, contrary to what they may have heard, Claimant had not embezzled
next day, January 17, 2001, Claimant received the notice of termination by
registered mail. He was greatly
disturbed by his loss of employment, as well as the rumors that he had embezzled
funds. The discharge and rumors of
embezzlement caused Claimant embarrassment, as well as anxiety over whether they
would impair his ability to find a comparable position on St. Croix.
He did not, however, seek treatment by a health professional and
presented no evidence that he suffered emotional distress from the embezzlement
rumors, significantly beyond that he would have suffered due to his discharge
numerous efforts to find comparable employment on St. Croix, Claimant found only
sporadic, casual employment until recently, when he started to work as an
automobile salesperson on a straight commission basis.
The total amount of his interim earnings at the date of the Final Hearing
was $1,500. Since his discharge,
Claimant also received around $3,684 in unemployment compensation benefits.
Whether Respondent discharged Claimant without cause in breach of the
Whether Respondent committed the tort of defamation against Claimant.
If the answer to either issue is in the affirmative, the appropriate
CONCLUSIONS OF LAW
Salaried Employee Agreement provides Respondent may only discharge a salaried
employee, such as Claimant, for cause. Although
“cause” is not comprehensively defined, the Agreement gives several
examples, such as breach of the Agreement and violation of company policies and
work rules. Since provisions
requiring cause, good cause, just cause, etc. for discharge are commonplace in
both union and non-union employment contracts, there is no dearth of definitions
of such terms in the caselaw.
Wrongful Discharge Act of the U.S. Virgin Islands (hereinafter “Act”)
expressly provides it applies in the absence of a contract of employment.
Thus, it would appear to be inapplicable to this case and that the
Arbitrator should determine whether cause existed under the examples set forth
in the contract or the commonly understood meaning of that term as defined in
employment contract cases.
the parties have taken the position in their post-trial briefs that the
standards of the Act should apply, apparently being of the view that, since
cause is not defined comprehensively in the Agreement, it is appropriate to
incorporate the permissible reasons for discharge contained in the Act as the
complete definition. Since both the
parties desire to have the case decided in such manner, they have, in effect,
amended the Agreement, for purposes of this case, to incorporate by reference
the permissible grounds for discharge under the Act into the Agreement’s
definition of “cause” for termination.
the post-hearing briefs, the parties also agreed that only three of the reasons
for which discharge is permitted under the Act are potentially applicable to
this case: (1) insolent or offensive conduct toward a customer that
injures the employer’s business; (2) performing work assignments in a
negligent manner; and (3) incompetence or inefficiency impairing the
employee’s usefulness to the employer.
a preliminary matter, the Arbitrator finds Respondent’s decision to terminate
Claimant’s employment was due to the incident of December 19, 2000 with Mrs.
Farris and not for the other alleged offenses relied upon by Respondent’s
managers on December 23, 2000. Based
on Mr. Conway’s reversal of position after Mrs. Farris complained to the Vice
President and owner, and the change in the emphasis of the incident from a prior
offense on December 23, 2000 to the triggering event in Ms. Rachel’s discharge
letter of January 5, 2001, the Arbitrator finds Claimant would not have been
discharged at that time, but for such incident and Mrs. Farris’ complaint to
the Vice President and owner.
question as to whether Claimant was discharged for cause, therefore, is whether,
based on the weight of the evidence presented at the hearing, the incident of
December 19, 2000 qualifies as one of the three permissible reasons for
discharge contained in the Act, which the parties agree are potentially
view of the evidence presented at the Final Hearing, such question must be
determined entirely on the Claimant’s testimony describing the incident of
December 19, 2000 involving Mrs. Farris. Respondent
produced no witnesses with personal knowledge of what occurred between Mrs.
Farris and Claimant in the vicinity of the front desk nor on the way to the
Conference Center. Hearsay,
although admissible in arbitration, cannot trump first-hand testimony. Fortunately, this evidentiary shortfall by Respondent is of
little significance, as it does not take serious the issue with Claimant’s
basic testimony about such matters.
first of the three permissible reasons for discharge under the Act raises the
issue of whether Claimant’s behavior in the vicinity of the front desk and
while returning to the Conference Center the evening of December 19, 2000 was
insolent or offensive conduct toward Mrs. Farris, a guest of the Resort.
This question has three subparts, which involve whether Claimant was
insolent or offensive toward Mrs. Farris (1) when he asked her in a raised voice
whether she was telling him how to do his job; (2) when he retreated to the
other end of the front desk and muttered to the bellman that Mrs. Farris was
starting to piss him off; or (3) when he returned to the Conference Center in
the golf cart at the same time Mrs. Farris was walking there to complain to Mr.
Claimant’s question to Mrs. Farris of whether she was trying to tell him how
to do his job was insolent or offensive conduct toward her should be
determined by a two-pronged test: (1)
whether it was viewed in such a manner by Mrs. Farris, subjectively; and
(2) whether a reasonable person would view it as such.
Even from Claimant’s description of the incident, it is reasonable to
infer that Mrs. Farris subjectively felt his question, asked in a raised voice,
was offensive, if not insolent. The
Arbitrator also finds a reasonable person would view Claimant’s question as,
at least, offensive conduct toward Mrs. Farris.
the Arbitrator finds Claimant would not have asked Mrs. Farris the question had
Respondent not invited him to consume alcoholic beverages at its on-premises
Christmas Party. Claimant testified
that he was influenced by the consumption of two alcoholic drinks he had
consumed at the Christmas Party in asking the question to Mrs. Farris.
When Respondent served such beverages to Claimant and other employees, it
was reasonably foreseeable that one or more of them might be called back to duty
in an emergency or other urgent situation. Thus, Respondent must bear responsibility for any adverse
consequences due to the impairment of the judgment of any such employees
resulting from the alcohol it served them.
Under such circumstances, the Arbitrator concludes Respondent is estopped
by its conduct from discharging Claimant for asking Mrs. Farris whether she was
trying to tell him how to do his job.
comment muttered to the bellman after he withdrew from the confrontation with
Mrs. Farris should be judged by the same test.
Again, it is reasonable to infer that the comment was subjectively
offensive to Mrs. Farris when she overheard it.
On the other hand, the comment was not made to her, but to the bellman. To be a ground for discharge under the Act, the offensive
conduct must be toward the guest. There
is no evidence Claimant made the comment with knowledge Mrs. Farris was within
hearing distance or with the intention that she overhear it.
Mrs. Farris followed behind him after he attempted to break off the
confrontation and, as a result, placed herself in proximity to overhear the
remark directed to the bellman only. Under
the circumstances, the Arbitrator finds that a reasonable person would not view
Claimant’s statement to the bellman was directed toward Mrs. Farris.
The evidence concerning Claimant’s return to
the Conference Center in the golf cart while Mrs. Farris was walking there to
complain to Mr. Conway does not support a reasonable inference he was following,
chasing, threatening, harassing or trying to intimidate her.
It was natural Claimant would return to the Christmas Party in the same
manner as he had come from it – by golf cart.
Although Mrs. Farris was crying and appeared very upset when she reached
Mr. Conway, the evidence suggests her anxiety was not due to fear for her
personal well-being, but to anxiety that Claimant might reach Mr. Conway first
and “poison his mind” with his version of the incident.
The Arbitrator concludes a reasonable person would not view Claimant’s
return to the Christmas Party in the golf cart as insolent or offensive conduct
toward Mrs. Farris.
second of the three permissible reasons for discharge under the Act raises the
question of whether Claimant performed his duties related to the incident
negligently when he made the remark to the bellman, which was overheard by Mrs.
Farris. The Arbitrator concludes
that he acted with reasonable care in retreating from the confrontation with
Mrs. Farris and, under such circumstances, could not reasonably have anticipated
Mrs. Farris would not also end the confrontation, but, instead, follow behind
him and be positioned to overhear his muttered remark.
the third of the three permissible reasons for discharge under the Act raises
the question of whether Claimant was so incompetent or inefficient in connection
with the incident that it impaired his continued usefulness to Respondent in his
position as manager of purchasing and receiving.
Nothing concerning the incident, standing alone, raises any reasonable
question of Claimant’s overall competency or efficiency in performing the
regular duties of his position. For
the reasons discussed above, the Arbitrator has concluded Claimant’s level of
performance in managing purchasing and receiving should not be considered in
this case in determining whether his discharge was for cause.
view of the foregoing, the Arbitrator concludes Respondent did not have cause to
cannot be gainsaid that Respondent published a false and defamatory statement
when Ms. Rachel reported to the head
of security, Mr. Felix, that Claimant had embezzled $500, and when Mr. Felix
republished said statement by posting a photograph of Claimant in the security
office with accompanying text that repeated the accusation.
there is no direct evidence of actual economic loss by Claimant as a result of
the defamatory statement, the general rule, as provided in the Restatement
(Second) of Torts, is that an accusation of dishonest, immoral or criminal
conduct is defamatory per se, meaning that harm to the victim’s reputation is presumed
from the very nature of the accusation. For
defamation per se, the victim may
recover compensatory damages, and upon a proper showing, punitive damages,
without proof of actual economic loss.
there can be no doubt the accusation was false and defamatory per
se, Respondent’s liability for defamation turns solely on whether:
(1) Ms. Rachel’s publication and Mr. Felix’s republication of the
statement were protected by the conditional privilege to publish information
reasonably necessary to protect one’s business interest; and (2) if so,
whether that conditional privilege was abused. Id.
Since the privilege is conditional, it is lost if abused by the publisher
of the statement. Id.
the Arbitrator concludes that Ms. Rachel’s publication and Mr. Felix’s
republication of the accusation of embezzlement were within the ambit of such
conditional privilege, the determinative issue as to Respondent’s liability is
whether her conduct and that of Mr. Felix in publishing and republishing the
accusation constituted an abuse of the privilege.
Under ordinary circumstances, the Arbitrator would find they abused the
privilege by recklessly concluding Claimant had embezzled the $500 missing from
the deposit box without first contacting him for an explanation, and by
recklessly posting the accusation without reasonable safeguards to prevent it
from being republished beyond those employees in the Resort’s security
difficulty in reaching such a conclusion here is the publication and
republication would not have occurred in the absence of Claimant’s violation
of the work rule and written agreement requiring him to maintain his bank in the
deposit box at all times. But for
Claimant’s own commission of a discharge offense by violating such rule and
breach of such agreement, Respondent’s managers would not have had the
occasion to act recklessly in concluding he had embezzled the funds or in
posting the accusation without adequate safeguards.
Under such circumstances, the Arbitrator concludes Claimant is estopped
by his own misconduct to maintain that Respondent abused the conditional
privilege in such manner. Therefore,
Respondent is not liable to Claimant for defamation.
view of the foregoing, the Arbitrator concludes Claimant cannot recover against
Respondent on his defamation claim.
remedy for discharge of an employee without cause in violation of an employment
agreement ordinarily is restatement and backpay, or, when reinstatement is not
feasible, backpay plus reasonable front pay.
An arbitrator may depart from such ordinary remedies when mitigating
circumstances exist and fashion a more appropriate, or equitable, remedy when
necessary to due justice.
on the facts in this case, the Arbitrator concludes imposition of the ordinary
remedies of reinstatement or monetary recovery of loss of earnings would be
inappropriate. It would be
inequitable to require Respondent to reinstate, or pay backpay or front pay, to
Claimant in view of his violation of the work rule and agreement requiring him
to keep his bank in the deposit box. Claimant
read and signed an agreement containing the work rule that he must always keep
$500 bank in the deposit box and clearly providing violation of such rule would
result in his discharge. Yet,
Claimant knowingly violated the rule and agreement by placing his bank in an
unlocked file cabinet. Claimant
could have been discharged for such violation alone had Respondent amended or
supplemented its discharge notice.
such circumstances, it would be unjust to award Claimant reinstatement or
monetary damages, as such relief, in effect, would allow him to commit a
discharge offense and return to work and/or be paid money damages.
Under such circumstances, the Arbitrator concludes an appropriate remedy
is an award to Claimant of nominal damages in the amount of $100 and an order
that Respondent purge its records of all references relating to Claimant being
discharged and of the incident involving Mrs. Farris, and it not to make any
reference to either in responding to inquiries regarding his employment.
terminated Claimant’s employment without cause in breach of the Agreement.
However, because he knowingly violated Respondent’s work rule requiring
his bank be kept in the deposit box at all times would, standing alone, have
been cause for discharge, the Arbitrator concludes it would be inequitable to
compel Respondent to reinstate Claimant or pay him monetary damages.
Arbitrator further concludes the appropriate remedy, under such circumstances,
is to award Claimant $100 as nominal damages for Respondent’s breach of the
Agreement and to order Respondent to purge its records of any reference to
Claimant being discharged and the incident involving Mrs. Farris, and not to
make any reference related to either in responding to inquiries regarding his
Claimant’s claim he was discharged without cause in breach of the
Salaried Employment Agreement is hereby granted.
Respondent shall pay Claimant nominal damages in the amount of
$100, purge its files of all references related to Claimant being discharged and
the incident of December 19, 2000 involving Mrs. Farris, and not make any
reference to either in responding to any inquiries regarding his employment.
Claimant’s claim for defamation is hereby DENIED.
Respondent shall pay the full amount of the Arbitrator’s fees and
expenses. Otherwise, each party
shall bear its own attorney fees and costs.
ENTERED THIS 27th day of
LYNN E. WAGNER, ESQ.
If the triggering incident for Claimant’s discharge had been in the nature
of the proverbial “straw that broke the camel’s back”, involving an
additional incident of poor management of the purchasing and receiving
department, as was Respondent’s position on December 23, 2000, the
Arbitrator would have determined whether cause existed based on the totality
of such incidents. However,
since the triggering event relied upon by Respondent in its January 5, 2001
notice of discharge was of an entirely different nature, involving
interaction with a guest after unexpectedly having to return from a
Christmas Party after consuming alcoholic beverages provided by Respondent,
the Arbitrator concludes the discharge should be judged on that event alone.
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