The history of the litigation in In re Hailey, decided by the Virgin Islands Supreme Court last Wednesday:
2014: Tropic Leisure Corp. gets a $5,764 judgment in Virgin Islands small claims court against Jerry Hailey.
2015: Tropic Leisure domesticates the judgment in North Carolina, presumably so it can then enforce it against Hailey’s property in North Carolina. But Hailey appeals, and (in 2017) the North Carolina Court of Appeals holds that the judgment violated the Due Process Clause. Why? The Virgin Islands small claims court, the North Carolina court concluded, not only forbade people from being represented by counsel (common for small claims courts) but also didn’t offer a chance to have the case be reheard anew in a court which did allow counsel. Tropic Leisure petitioned for review by the N.C. Supreme Court and then the U.S. Supreme Court, but both courts (still in 2017) denied review.
Back in 2015: Hailey sues Tropic Leisure in North Carolina, claiming that the Virgin Islands small claims judgment violated his constitutional rights under color of law.
2018: Hailey wins a $29,311 jury verdict in North Carolina, and also gets $182,070 in attorney fees. There’s an appeal pending to the North Carolina Court of Appeals.
2019: Hailey then tries to domesticated the North Carolina judgment in the Virgin Islands. After some complicated procedural stuff, the case ended up in the Virgin Islands Supreme Court.
2020: The Virgin Islands Supreme Court just held that the North Carolina judgment violated the Petition Clause of the First Amendment, by penalizing nonfrivolous litigation:
Here, the two North Carolina judgments impose civil liability on the respondents for filing a successful lawsuit against Hailey in the Small Claims Division of the Superior Court of the Virgin Islands resulting in a judgment that, while not enforced by the North Carolina courts, still remains valid and enforceable in the Virgin Islands.
(It also held that, under Virgin Islands law, defendants in small claims cases were never denied the right to counsel, because “a matter filed in the Small Claims Division should be transferred to the Civil Division [where counsel can be used] whenever counsel is retained or even just requested.”)
No word on whether Hailey will be petitioning for U.S. Supreme Court review, or what both parties’ aggregate attorney fees now are.
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