Legal Memorandum: Wrongful Discharge Action based on Misconduct

Issue: Does a finding of misconduct in an unemployment compensation matter have any bearing on a subsequent wrongful discharge action?

Area of Law: Employee Law, Litigation & Procedure
Keywords: Misconduct; Unemployment compensation matter; Wrongful discharge action
Jurisdiction: Virgin Islands
Cited Cases: 501 U.S. 104; 557 A.2d 779; 691 A.2d 498; 679 A.2d 669; 214 F.3d 402; 598 N.W.2d 610; 384 U.S. 394; 15 F.3d 1258; 860 N.E.2d 735
Cited Statutes: 24 V.I.C. § 304(b)(3), § 76, § 76(a)
Date: 07/01/2007

The Virgin Islands Territorial Court’s case of Charles v. Daily News Publishing Co., 29 V.I. 34 (V.I. 1994), supports the position that an administrative law judge’s (ALJ’s) finding of misconduct in the unemployment compensation setting should not have preclusive effect in a subsequent wrongful discharge court action.  In the Charles case, the plaintiff sought to benefit from the issue preclusion doctrine by arguing that the decision of the Virgin Islands Employment Security Agency (VIESA) that he was not terminated for misconduct should have preclusive effect in his wrongful discharge action. 

After citing the four Restatement factors for testing whether issue preclusion should apply, the court found that the first prong—”[w]as the issue determined in the prior action the same as that in the subsequent action?”.—was not satisfied.  As the court in Harrilal v. Blackwood, No. CIV. 619/1998 (V.I. Terr. Ct. Dec. 13, 2001), would explain seven years later, the Charles court reasoned that the ultimate issue in the VIESA proceedings and the ultimate issue in a wrongful discharge case are not identical.

VIESA’s sole purpose in making any judgments under the facts of this case was to determine the Plaintiff’s eligibility for unemployment insurance.  In this regard[] the agency was interpreting 24 V.I.C. § 304(b)(3) as to whether the Plaintiff was discharged for misconduct connected with his most recent work, being his employment with the Defendant.  Misconduct under the statute has been interpreted to mean an act of wanton or willful disregard of an employer’s […]

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