US workers in Mideast find hurdles in local courts

American firms' policies block employees' suits

"They said it is a Dubai company, but that just goes in one ear and out the other. Once it happens to you, realize you have no recourse." - William Christopher Hyser, (above) who was hired by Virginia-based defense contractor DynCorp but was officially employed by a wholly owned subsidiary set up in Dubai, a business-friendly city-state. (John Blanding/ Globe Staff)

DUBAI, United Arab Emirates - When William Christopher Hyser abruptly lost his job as a police trainer in Iraq - and his $16,000 bonus - he was so angry that he wanted to sue DynCorp, the Virginia-based defense contractor that hired him.

But when he called the company's complaint line, he was told that if he wanted to file a lawsuit, he had to do it in the United Arab Emirates. Like nearly 1,000 other American police trainers in Iraq, Hyser wasn't on the official DynCorp payroll - he was employed by a wholly-owned subsidiary set up in a tax-free-zone Dubai, a business-friendly citystate where labor unions are banned.

"I was so frustrated," said the former Maryland state trooper. "It just blew me away."

DynCorp, one of the largest US defense contractors in Iraq, is one of a small but growing number of US companies that mandate the use of courts in the Middle East to resolve disputes with their American employees. The practice frequently serves to block employees' lawsuits, legal specialists say, because few are able to navigate a still-developing foreign legal system in a distant land.

"The company has put up a hurdle that is probably insurmountable, or is just not going to be worth it to fight," said Richard Posthuma, an international labor specialist at the University of Texas, El Paso.

The impact goes beyond denying satisfaction to those who want to sue. By lessening the threat of lawsuits, the practice makes it easier for US defense contractors to fire workers and deny them benefits they were promised in exchange for agreeing to undertake dangerous assignments, according to international labor specialists.

"What is considered appropriate in workplace discipline in the Arab world is not considered appropriate in the US," said Paul M. Secunda, associate professor at Marquette University Law School, who co-authored a book on international employee benefit law.

DynCorp is not alone in employing strategies to limit its liability in dangerous locations, where the potential for employee lawsuits is great. The Houston-based construction giant KBR mandates that its employees sign arbitration agreements, barring its employees from filing suits in the United States or abroad. Blackwater, a major private security company, recently asked a US court to dismiss a lawsuit filed by widows of American soldiers killed in a plane crash because the crash happened in Afghanistan. Blackwater lawyers argued that Afghan courts should have jurisdiction.

But no company provides a more stark example of the tactic than DynCorp. In addition to listing its Iraq workers as employees of its Dubai subsidiary - and mandating that disputes be heard only in Dubai - DynCorp also added a provision to the contracts of roughly 150 Americans hired to guard a US military base in Qatar that the "courts of Qatar shall alone have jurisdiction" to resolve disputes.

In 2006, more than two dozen American guards complained that DynCorp promised them a generous benefits package at their recruitment in Texas, and then gave them an inferior package when they arrived in Qatar. At least seven went on to launch lawsuits against the company in the tiny Arab nation, but their cases went nowhere.

By the spring of 2008, just two plaintiffs remained: a Colorado woman who had been told to wait for a female judge to review her case, and Chris Dupont of Webster, Mass. He was fired, his work visa lapsed, and in mid-July, he was forced to leave the country, bringing an end to a 15-month legal saga in which he never was able to speak before a judge.

"It was an uphill battle," Dupont said.

DynCorp's spokesman, Douglas Ebner, acknowledged that "there were clearly some misunderstandings [over pay] and we regret that." He said the company has improved its orientation in Texas as a result. But he insisted that Qatari courts vindicated the company of any wrongdoing.

DynCorp "has confidence" in the judicial systems of the United Arab Emirates and Qatar, Ebner said. He said DynCorp mandates their use to abide by the laws of those countries.

But employees for three other US defense contractors operating at the Qatar base - L-3 Communications, General Dynamics, and MPRI - all said their contracts did not include language limiting access to US courts.

"The trend [until now] has been to keep US employees under US law," Secunda said.

Only a few dozen people work out of DynCorp's bright second-floor offices in a gleaming office park in Dubai, but about 2,500 employees are on its payroll, including nearly 1,000 American police trainers in Iraq.

That set-up allowed the company to avoid paying Social Security and Medicare taxes for its American employees, until a recent change in federal law. But it also allows DynCorp to state in its employees' contracts that "any cause of action against the employer must be brought in the UAE."

DynCorp set up its Dubai subsidiary in 2002, around the same time that two former employees filed high-profile lawsuits accusing the company of firing them for going public with complaints about a sex trafficking ring in Bosnia run by DynCorp colleagues.

One received a $173,000 judgment from a British court that ruled DynCorp unfairly terminated her. Facing bad publicity, the company settled a similar lawsuit filed in a US court for an undisclosed amount.

Ebner, the DynCorp spokesman, said the company shifted its focus to the United Arab Emirates because business was picking up in the Middle East - and because of the "business- and tax-friendly environment in the free zone" of Dubai.

But the move has also served to frustrate legal action against the company.

Last year, Hyser, a 43-year-old police trainer in Iraq, was 37 days away from completing his year-long contract when he was abruptly fired, accused of violating the company's no-alcohol policy.

Hyser, a Muslim now living in Irvine, Calif., denies the allegation. He says he was fired after he videotaped his team leader offering him beer. Hyser said he gave the videotape to an investigator who was looking into rumors of alcohol use, and that he was fired in retaliation. Ebner said he had no information about the case.

Hyser lost his job and his $16,000 end-of-contract bonus and was forced to pay $5,000 for his return flight. The team leader, meanwhile, finished out the remainder of his contract, according to Hyser and Chad Ridenour , another former DynCorp employee who supported Hyser's account.

Hyser was so angry about his treatment that he called DynCorp's ethics line, but was told, "you have to pursue legal action in UAE,"' he recalled.

He was shocked. He said he remembered being told that he would be paid through a Dubai-based company for "tax purposes," but didn't realize that he was forgoing access to US courts.

"They said it is a Dubai company, but that just goes in one ear and out the other," he said. "Once it happens to you, realize you have no recourse."

He called five attorneys in Dubai, but none would take the case.

Nabih Bader, a Dubai-based lawyer who specializes in labor law, said few lawyers would be interested because it would be too much of a challenge to convince the Dubai Municipal Court that it has jurisdiction over an American working in Iraq.

"There are a lot of individuals stuck in this situation," Bader said.

In 2006, Dupont, a security supervisor, signed up to work with DynCorp, which helps protect a military base in Qatar.

At the orientation in Texas, Dupont said, he signed a 12-month contract that promised him a 401(k) retirement plan. With overtime and holiday pay, he was told he would make about $52,000, he said.

But when he arrived in Qatar, he was asked to sign a new contract that provided only 11 months of employment, no retirement plan, and a rate of overtime pay based on Qatari overtime standards that dropped his annual salary to roughly $28,000, according to Dupont, his former co-worker, Michael Bates of Palestine, Texas, and a third DynCorp employee who asked not to be named.

"It was a basic bait and switch," Dupont said in a telephone interview.

A group of American guards complained to DynCorp, and were told that they could return home at their own expense if they didn't like the terms, the employees said.

They brought their complaints to a Qatari labor official who ruled in their favor, they said. But DynCorp refused to pay, so the case moved to court. Soon after, Dupont was fired. As a result, his work visa lapsed. DynCorp turned his passport in to the police station.

Dupont fought on for more than a year without pay, borrowing money to pay more than $8,000 in legal costs. Dupont said his Qatari lawyer advised him that both sides of a legal dispute in Qatar customarily try to ensure a favorable judgment by giving large sums of money to the legal expert in the case.

The court ruled against him in May, according to Ebner, who provided a copy of the judgment. Ebner said Dupont had been treated fairly and had been allowed to live in a company villa while he pursued his case.

But Dupont said he was never informed of the judgment until he was summoned to the police station in mid-July. There, he said, he met the Qatar police chief and three DynCorp managers who told him his case had been dismissed and he had to leave the country. Dupont said he was forced to sign an agreement not to file an appeal, and threatened with jail time if he refused.

He signed it, he said. Days later, he was escorted to the airport by police.