Court Opinion

ID: 9494988
Source: CourtListenerOpinion
Date Created: 2023-08-05 15:51:55.046944+00
Date Added: 2024-06-11T17:56:45.149070
License: Public Domain

HOWARD, District Judge,
dissenting in part and concurring in part:
I concur with the majority’s decision in Part III. However, because I think an arbitration agreement is not rendered unconscionable merely by its failure to state how a party will obtain a list of arbitrators, I respectfully dissent from Part II of the majority’s opinion.
The issue presented in Part II is whether equitable grounds exist for the revocation of an otherwise valid agreement to arbitrate. The majority concludes that an arbitration agreement’s silence with respect to an employer’s procedures for obtaining a list of arbitrators renders the arbitration agreement unconscionable. The majority also indicates that an arbitration agreement contains unconscionable terms when an employee might construe the arbitration agreement and bylaws as allowing the President of the Union to fire an employee irrespective of the arbitrator’s decision.
I consider the majority’s refusal to enforce the arbitration clause on unconscio-nability grounds inconsistent with both Supreme Court and Fourth Circuit prece*307dent. See Green Tree Fin. Corp.-Alabama v. Randolph, 531 U.S. 79, 121 S.Ct. 513, 148 L.Ed.2d 373 (2000); Hooters of Am. v. Phillips, 173 F.3d 933 (4th Cir.1999). First, I do not believe that an arbitration agreement’s failure to specify how a party obtains a list of arbitrators is a contract provision egregious enough to “shock the conscience.” Second, Murray has failed to show an anticipatory breach by the Union in providing a list of neutral arbitrators to hear the parties’ dispute. Finally, I decline to read the arbitration agreement and bylaws as foreclosing a decision unfavorable to the Union. Accordingly, I would affirm the district court’s decision to dismiss Murray’s discrimination claim and compel arbitration.
I.
Congress enacted the FAA to combat a “longstanding judicial hostility to arbitration agreements ... and to place arbitration agreements upon the same footing as other contracts.” Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 24, 111 S.Ct. 1647, 114 L.Ed.2d 26 (1991). In evaluating whether an enforceable agreement to arbitrate exists, courts apply ordinary contract principles. Sydnor v. Conseco Fin. Servicing Corp., 252 F.3d 302, 305 (4th Cir.2001). Moreover, federal courts should not single out arbitration agreements for suspect status, but should evaluate arbitration agreements under prevailing contract standards. Id. (quoting Doctor’s Assocs. v. Casarotto, 517 U.S. 681, 687, 116 S.Ct. 1652, 134 L.Ed.2d 902 (1996)).
In determining whether a valid agreement to arbitrate exists, the court must first ask whether the parties agreed to submit their claims to arbitration. Green Tree Fin. Corp.-Alabama v. Randolph, 531 U.S. 79, 90, 121 S.Ct. 513, 148 L.Ed.2d 373 (2000). In the instant case, the parties agree that Murray signed a binding arbitration agreement that covered his discrimination claims. Murray also cannot contend that Congress intended to preclude the waiver of his judicial remedies for discrimination claims. Id.; Austin v. Owens-Brockway Glass Container, 78 F.3d 875, 881 (4th Cir.1996).
Having established that Murray’s claims of discrimination are arbitrable, the court then engages in a limited inquiry into the existence of “such grounds as exist at law or in equity for the revocation of any contract.” 9 U.S.C. § 2. Seizing on the court’s equitable powers, Murray argues that the arbitration agreement is unconscionable. As Murray agreed to arbitrate his discrimination claims, the burden of proving the arbitration agreement unconscionable lies with Murray, the party seeking to avoid arbitration. Green Tree, 531 U.S. at 91-92, 121 S.Ct. 513.
A.
The majority holds that the arbitration agreement is unconscionable because the arbitrator is selected from a list of arbitrators provided by the Union. In considering an unconscionability challenge, federal courts must remember that “[ujnconscio-nability is a narrow doctrine whereby the challenged contract must be one which no reasonable person would enter into, and the inequality must be so gross as to shock the conscience.” Sydnor, 252 F.3d at 305 (citations and internal quotations omitted).
While the arbitration agreement does not specify how the Union will obtain its list of arbitrators, this omission does not make the contract facially unconscionable. While the agreement’s silence could be read as allowing the Union to choose a biased arbitrator, a careful reading of the arbitration agreement and the record does not indicate that the Union is attempting to saddle Murray with a biased *308arbitrator. Placing the responsibility of providing an arbitrator list with the Union recognizes that the Union, as a repeat player in the arbitration process, has better access to methods for obtaining a list of arbitrators than Murray.1 While the Union admittedly could have drafted a more precise arbitration agreement, the agreement’s ambiguity does not make the contract sufficiently oppressive to render it unenforceable. Indeed, absent extraordinary circumstances, mere ambiguity of a contract term is not the type of provision which can be said to “shock the conscience.” Sydnor, 252 F.3d at 305.
In short, Murray does not argue that the arbitration agreement will necessarily produce a biased arbitrator pool, but that the contract’s silence creates the risk that the pool of arbitrators will be biased. However, the United States Supreme Court’s decision in Green Tree Financial Corporation-Alabama v. Randolph, 531 U.S. 79, 121 S.Ct. 513, 148 L.Ed.2d 373 (2000), counsels that an “arbitration agreement’s silence” as to arbitration terms and procedures, standing alone, “is plainly insufficient” to make the arbitration agreement unenforceable. See id. at 91, 121 S.Ct. 513 (concluding that arbitration agreement silent as to payment of arbitration fees and costs was not facially unenforceable).
Speaking for the majority, Chief Justice Rehnquist concluded that unsupported fears and unfounded assumptions that high arbitration costs would prevent a party from vindicating federal rights was “too speculative to justify the invalidation of an arbitration agreement.” Id. Randolph, the individual opposing arbitration in Green Tree, submitted evidence of fees typically charged by leading arbitration associations and of fees incurred in other arbitration cases. The court rejected this evidence as speculative, stating that Green Tree, the party requesting arbitration, had not selected an “arbitration associate or arbitrator to resolve” the parties’ dispute and also noting the possibility that the arbitrator’s fee would be waived. Id. at 91 n. 6, 121 S.Ct. 513. Finding no evidence other than the “arbitration agreement’s silence” as to allocation of arbitration costs, the Court concluded that the “risk that [a party would] be saddled with prohibitive cost [was] too speculative to justify invalidation of an arbitration agreement.” Id. at 91, 121 S.Ct. 513.
I find this case closely analogous to Green Tree because Murray presents a “what-if ’ scenario similar to the argument the Supreme Court rejected in Green Tree. Murray attempts to show that the arbitration agreement’s silence as to the Union’s method for selecting an arbitrator pool creates an unacceptable risk that Murray will face a biased arbitrator. However, rather than pointing to evidence showing a likelihood that the Union will produce a biased arbitrator pool, Murray asks the court to base its decision on his tenuous and unsupported assertions. The majority’s decision to invalidate the arbitration agreement based on a speculative risk of bias is, in my view, inconsistent with Green Tree.
Neither is the majority’s opinion compelled by the Fourth Circuit’s decision in *309Hooters of America v. Phillips, 173 F.3d 933 (4th Cir.1999). Hooters represents the “limited circumstances” in which an arbitration agreement containing a multitude of egregiously biased rules and procedures demonstrated one party’s intent to make a mockery of the arbitration system. Id. at 938; Sydnor, 252 F.3d at 306. The court in Hooters also warned that the decision should not be construed as “a full-scale assault on the fairness of proceedings before the matter is submitted to arbitration.” Hooters, 173 F.3d at 941.
Unlike the arbitration agreement in this case, the arbitration agreement in Hooters required the employee to provide notice of the specific nature of the claims, the specific acts or omissions on which the employee’s claims were based, and a list of all the employee’s factual witnesses with a summary of the facts known to them. Id. In contrast, Hooters did not have to file responsive pleadings, notice of its defenses, or provide a list of its witnesses. Id. In fact, only Hooters could expand the scope of arbitration to matters not raised in the employee’s claim, and only Hooters could move for summary dismissal prior to a hearing. Id. at 939. Hooters also exercised complete control in determining whether to create an official record of the arbitration hearing for appellate review and could even cancel the arbitration agreement with thirty days notice. Id. Moreover, once the arbitrator made its decision, Hooters, but not the employee, could seek vacatur or modification of the award by showing by a preponderance of evidence that the arbitration panel acted outside its authority. Id.
The only similarity between Hooters and this case involves the selection of the arbitrator. In Hooters the arbitration rules provided that the parties were to choose a three-panel arbitration board from a list of “Approved Arbitrators” compiled, maintained, and “created exclusively by Hooters.” Id. at 938-39; Hooters of Am. v. Phillips, 39 F.Supp.2d 582, 601 (D.S.C. 1998). In this case, the arbitration agreement states that the Union will provide a list of arbitrators (J.A. at 5), but says nothing about the Union’s right or intent to exercise independent control over the arbitrator pool. Thus, the arbitration agreement in Hooters is distinguishable from the agreement in this case.
However, even if the arbitration agreement in Hooters had contained the same language to which Murray now objects, I do not believe Hooters would have been decided differently or would have compelled the majority’s invalidation of this arbitration agreement. Hooters is based on the cumulative" effect of a number of one-sided rules and procedures demonstrating that Hooters’ “only possible purpose” in establishing its arbitration rules “was to undermine the neutrality of the [arbitration] proceeding.” Hooters, 173 F.3d at 939; see also Sydnor, 252 F.3d at 306 (noting that unconscionability ruling in Hooters was based on “multitude of biased and warped rules” and provided example of limited circumstances in which uncon-scionability finding was appropriate). Indeed, the violations in Hooters were so severe that the court granted the extraordinary equitable remedy of rescinding the entire contract. Hooters, 173 F.3d at 940 (noting that Hooters’ breach was “by no means insubstantial” but involved contractual performance “so egregious that the result was hardly recognizable as arbitration at all”). Faced with overwhelming evidence that Hooters never intended to provide its employees with a fair and unbiased arbitration forum, the Hooters court concluded that the agreement and procedures were so egregious and oppressive as to “shock the conscience.” This reading of Hooters is consistent with Green Tree because the Hooters’ employees, unlike Mur*310ray, pointed to a plethora of one-sided and flagrantly unfair rules, thus taking their allegations of unconscionability outside the realm of speculation, and into the arena of a demonstrative likelihood of harm.
Hooters also recognizes that a party with the responsibility of setting arbitration rules and procedures has a contractual duty to do so in good faith. Hooters, 173 F.3d at 938. The court in Hooters concluded that the promulgation of vast numbers of unfair and biased rules was not only unconscionable, but breached the duty of good faith. Id. at 940. In contrast, Murray has failed to point to rules and procedures promulgated in bad faith, or even evidence of an anticipatory breach by the Union in performing its contractual duty to provide a list of neutral arbitrators. As the Union indicated to the district court, it ultimately obtained a list of arbitrators from an outside source, the American Arbitration Association (“AAA”).2 In invalidating the arbitration agreement, the majority presumes that the Union will carry out its contractual obligation to provide a neutral arbitrator in bad faith. However, in accordance with ordinary contract principles, I believe it is entirely proper to presume, prior to arbitration and without evidence suggesting otherwise, that both parties will act in accordance with their contractual duties of good faith and fair dealing.
While I do not believe that Murray has shown an arbitration agreement containing egregious terms even remotely close to those cited in Hooters or bad faith by the Union, his failure to demonstrate uncon-scionability or breach of contract prior to arbitration does not leave him without recourse. If the Union skewed the arbitration pool in its favor, Murray has the right to return to court postarbitration to show arbitrator bias and seek vacatur of the arbitration award under 9 U.S.C. § 10, a scenario contemplated by the Court in Green Tree. See Green Tree, 531 U.S. at 97, 121 S.Ct. 513 (Ginsberg, J., dissenting) (noting that majority opinion did not foreclose party from challenging arbitration costs postarbitration).3 However, postar-bitration review is not the basis of the majority’s opinion.
B;
Finally, the majority notes in passing that the arbitration rules are one-sided because an employee, reading the arbitration agreement and Union’s bylaws together, might believe a decision favorable to the employee could be ignored by the President. See supra at 303. First, whether a document is unconscionable does not turn on an employee’s subjective beliefs about the arbitration agreement. Second, while courts have refused to enforce arbitration agreements specifically allowing *311employers to ignore arbitrators’ decisions, the Fourth Circuit in O’Neil v. Hilton Head Hospital, 115 F.3d 272 (4th Cir.1997), refused to read such a provision into an arbitration agreement when the employer consistently agreed that arbitration was binding on both parties. Id. at 275. I would apply the reasoning in O’Neil with equal force to a party’s attempts to infuse an arbitration agreement with implied limits on an arbitrator’s decisionmaking and enforcement authority. As neither the arbitration agreement nor the Union bylaws give the President the power to ignore or circumvent the arbitrator’s decision, I would refuse to read unconscionable terms into the agreement.
II.
For the foregoing reasons, I respectfully dissent from the majority’s decision in Part II, and would affirm the district court’s opinion dismissing Murray’s Title VII claims and compelling arbitration. I concur with the majority’s decision in Part III reversing the district court’s dismissal of Murray’s state laws claims.

. The record indicates that the President's office does not maintain or draft a list of arbitrators. Instead, when arbitration is demanded pursuant to a collective bargaining agreement or a dispute by a Union employee, the Union obtains a list of arbitrators from the American Arbitration Association or the Federal Mediation and Conciliation Service. The arbitration association then sends the President a list of randomly selected arbitrators. (J.A. 215-16, 360-402). In disputes involving employees and the Union, the Union pays the fees charged by the AAA. (J.A. 399-400).

. The Union selected the AAA to provide an arbitrator list because the Federal Arbitration and Conciliation Service only provides arbitrators for disputes between employers and unionized employees. (J.A. 254). The AAA is a large, non-profit organization which was used as a model in striking down Hooters' arbitration agreement. See Hooters, 173 F.3d at 939-40. Murray presented little evidence supporting his accusation that the AAA’s policies and procedures yield biased arbitrators. Thus, the majority's suggestion that Murray's arbitrator was "hand-picked” by the Union, supra at 303, is not supported by the record.

. While Murray asserts that the arbitration he ultimately received was biased, his post-arbitration claims of actual bias were limited to his argument that the arbitration was biased because the Union paid all of the arbitrator’s fees. (J.A. 403-05). The majority’s decision does not discuss this issue as a basis for its opinion. Moreover, my reading of the claims presented to the district court does not find support for the majority's suggestion that Murray ultimately received an arbitrator who was actually biased. See supra at 304.