Daniel C. MURRAY, Plaintiff-Appellant, v. UNITED FOOD AND COMMERCIAL WORKERS INTERNATIONAL UNION, Local 400; Donald Cash; Christian Sauter, Defendants-Appellees, 289 F.3d 297

Reversed and remanded by published opinion. Judge TRAXLER wrote the majority opinion, in which Judge WILLIAMS joined. Judge HOWARD wrote a dissenting and concurring opinion. OPINION TRAXLER, Circuit Judge. Daniel C.

Murray (“Murray”) brought this action against his employer, the United Food & Commercial Workers Union, Local 400 (“Local 400”), and Donald Cash (“Cash”), a union managerial employee, alleging that they discriminated against him on the basis of his race in violation of Title VII of the Civil Rights Act of 1964, see 42 U.S.C.A. §§ 2000e-2000e-17 (West 1994 & Supp.2001), and 42 U.S.C.A. § 1981 (West 1994), when they terminated him from his employment.

Murray also alleged a pendent state law claim for defamation against Local 400 and its organizing director, Christian Sauter (“Sauter”), arising from alleged defamatory statements made by Sauter after Murray was fired. The district court granted defendants’ motion to dismiss and to compel arbitration of Murray’s discrimination claim, and granted defendants’ motion to dismiss Murray’s defamation claim pursuant to Federal Rule of Civil Procedure 12(b)(6) for failure to state a claim upon which relief could be granted. We reverse and remand. I.

Local 400 of the United Food & Commercial Workers Union is a labor union representing approximately 40,000 members, many of whom are employed in retail food stores. In February 1997, Murray took a leave of absence from his position as a produce clerk at Giant Food, Inc., and began working full-time as a union organizer for Local 400. As a condition of his employment with Local 400, Murray was required to sign an agreement containing the following arbitration clause: All Representatives are employed under the terms of the Bylaws of Local 400.

Any claims of ... discrimination which ... ha[ve] not been properly remedied through [Local 400’s internal discrimination complaint process], shall be determined and adjudicated through final and binding arbitration. A single, arbitrator shall be chosen by the alternate strike method from a list of arbitrators provided by the [Local WO] President’s office. Such arbitrator shall not have the authority to alterfj change or diminish any power, right or authority granted to the President or Acting President of Local 400 under the terms and conditions of the Bylaws of Local 400. J.A. 79 (emphasis added).

On June 29, 1998, Local 400 and Donald Cash informed Murray that his employment with Local 400 would be terminated effective July 11, 1998. Murray returned to his position at Giant Food and, on July 10, 1998, instituted this action against Local. 400 and Cash under Title VII and § 1981. Murray, a 42-year-old white male, alleged that Local 400 and Cash, who is African American, terminated “his employment on account of his race even though he is qualified for that employment, and ... defendants plan to retain similarly situated African American employees because of their race.” J.A. 8.

Among other relief, Murray sought reinstatement to his position as a union organizer and monetary damages. In September 1998, Murray amended his complaint to add Christian Sauter, Local 400’s Organizing Director, as a defendant and asserted a state law defamation claim against Local 400 and Sauter. Murray alleged that Sauter defamed him after he was terminated from his position as a union organizer with Local 400 by telling one or more Giant Food employees that Murray “was not a good organizer.” J.A. 230.

Defendants filed a motion to dismiss and to compel arbitration of Murray’s discrimination claim, ás well as a motion to dismiss Murray’s defamation claim for failure to state a claim for relief under Maryland law. The district court granted both motions, holding that (1) the discrimination claim was subject to the arbitration agreement between Local 400 and Murray, and

(2) Sauter’s statements failed to state an actionable defamation claim under Maryland law. The district court subsequently denied Murray’s motion to reconsider, and the parties proceeded to arbitration of Murray’s discrimination claim. At the conclusion of arbitration, the single arbitrator ruled in favor of Local 400 and Cash, concluding that Murray had failed to establish a prima facie case of unlawful discrimination and, in any event, that Local 400 had articulated legitimate nondiscriminatory reasons for Murray’s discharge. The district court then confirmed the award and entered final judgment.

Murray now appeals the district court’s grant of defendants’ motion to dismiss and to compel arbitration of his discrimination claim, as well as the district court’s dismissal of his defamation claim under Rule 12(b)(6). II. We begin with Murray’s contention that the district court erred in granting the motion to dismiss and to compel arbitration of his race discrimination claim brought under Title VII and § 1981 against Local 400 and Cash. A. The Federal Arbitration Act (“FAA”), 9 U.S.C.A. §§ 1-16 (West 1999) represents “a liberal federal policy favoring arbitration agreements,” Moses H. Cone Mem’l Hosp. v.

Mercury Constr. Corp., 460 U.S. 1, 24, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983), in order “ ‘to reverse the longstanding judicial hostility to arbitration agreements ... and to place arbitration agreements upon the same footing as other contracts,’ ” Green Tree Fin. Corp.-Alabama v. Randolph, 531 U.S. 79, 89, 121 S.Ct. 513, 148 L.Ed.2d 373 (2000) (alteration in original) (quoting Gilmer v.

Interstate/Johnson Lane Corp., 500 U.S. 20, 24, 111 S.Ct. 1647, 114 L.Ed.2d 26 (1991)). “Pursuant to th[is] liberal policy, ‘any doubts concerning the scope of arbi-tral issues should be resolved in favor of arbitration, whether the problem at hand is the construction of the contract language itself or an allegation of waiver, delay, or a like defense to arbitrability.’ ” O’Neil v. Hilton Head Hosp., 115 F.3d 272, 273-74 (4th Cir.1997) (quoting Moses H. Cone, 460 U.S. at 24-25, 103 S.Ct. 927).

When parties have entered into a valid and enforceable agreement to arbitrate their disputes and the dispute at issue falls within the scope of that agreement, the FAA requires federal courts to stay judicial proceedings, see 9 U.S.C.A. § 3, and compel arbitration in accordance with the agreement’s terms, see 9 U.S.C.A. § 4. It is settled that the provisions of the FAA, and its policy favoring the resolution of disputes through arbitration, apply to employment agreements to arbitrate discrimination claims brought pursuant to federal statutes, including Title VII of the Civil Rights Act.

See Circuit City Stores, Inc. v. Adams, 532 U.S. 105, 109, 121 S.Ct. 1302, 149 L.Ed.2d 234 (2001); Hooters of Am., Inc. v. Phillips, 173 F.3d 933, 937 (4th Cir.1999). Such an agreement is enforceable because “ ‘[b]y agreeing to arbitrate a statutory claim, a party does not forgo the substantive rights afforded by the statute; it only submits to their resolution in an arbitral, rather than judicial, forum.’ ” Hooters, 173 F.3d at 937 (quoting Gilmer, 500 U.S. at 26, 111 S.Ct. 1647).

If “the prospective litigant effectively may vindicate his or her statutory cause of action in the arbitral forum,” the claim is appropriately subjected to arbitration in lieu of litigation. Green Tree, 531 U.S. at 89, 121 S.Ct. 513 (internal quotation marks and alteration omitted). The strength of this well-established policy favoring the enforcement of valid arbitration agreements, however, does not end our inquiry. Rather, courts are called upon to determine whether the particular dispute at issue is one to be resolved through arbitration.

In doing so, “we engage in a limited review to ensure that the dispute is arbitrable — i.e., that a valid agreement to arbitrate exists between the parties and that the specific dispute falls within the substantive scope of that agreement.” Hooters, 173 F.3d at 938 (internal quotation marks omitted). Although “highly circumscribed,” the “judicial inquiry ... is not focused solely on an examination for contractual formation defects such as lack of mutual assent and want of consideration.” Id.

Rather, the FAA specifically contemplates that parties may also seek revocation of an arbitration agreement “under ‘such grounds as exist at law or in equity,’ including fraud, duress, and unconscionability.” Sydnor v. Conseco Fin. Servicing Corp., 252 F.3d 302, 305 (4th Cir.2001) (quoting 9 U.S.C.A. § 2).

And, of course, agreements to arbitrate federal statutory claims, such as those pursued under Title VII, may be revoked if the prospective litigant demonstrates that it cannot “effectively ... vindicate his or her statutory cause of action in the arbitral forum.” Green Tree, 531 U.S. at 89, 121 S.Ct. 513 (internal quotation marks and alteration omitted); cf. Bradford v. Rockwell Semiconductor Sys., Inc., 238 F.3d 549, 556 (4th Cir.2001) (“[T]he crucial inquiry ... is whether the particular claimant has an adequate and accessible substitute forum in which to resolve his statutory rights.... ”). B.

With these principles in mind, we turn to the question of whether a valid and enforceable arbitration agreement existed between Murray and Local 400 which compelled Murray to submit his race discrimination claim to arbitration. Murray asserts that the arbitration clause, drafted by Local 400 and to which he was required to accede as a condition of his employment, is not valid and enforceable because it is structurally biased in favor of Local 400.

More specifically, Murray points to the agreement’s requirement (1) that “[a] single arbitrator shall be chosen by the alternate strike method from a list of arbitrators provided by the President’s office”; and (2) that, in any event, “[s]uch arbitrator shall not have the authority to alter [,] change or diminish any power, right or authority granted to the President ... of Local 400 under the terms and conditions of the Bylaws of Local 400.” J.A. 79.

Construed together, Murray claims, these clauses render the agreement grossly unfair and one-sided by placing choice of the arbitrator exclusively in the hands of Local 400 and providing that, in any event, Local 400 can disregard the arbitration result because the arbitrator cannot alter the President’s authority, under the Local 400 Bylaws, to “terminate the employment of any [personnel] at the end of an assignment or in the best interest of the Local Union.” J.A.126.

In accordance with the principles outlined above, we have previously recognized that equity may require invalidation of an arbitration agreement that is unconscionable, see Sydnor, 252 F.3d at 305; Hooters, 173 F.3d at 938, as well as an arbitration agreement that allows an employer to ignore the arbitration result, see Johnson v. Circuit City Stores, 148 F.3d 373, 378 (4th Cir.1998); O’Neil, 115 F.8d at 274-75.

Indeed, in Hooters, we revoked an arbitration agreement plagued by rules and procedures which were “so one-sided that their only possible purpose [was] to undermine the neutrality of the proceeding.” Hooters, 173 F.3d at 938. Among other unfair procedures, the agreement in Hooters provided that Hooters and the employee would each select an arbitrator, who would in turn select the third arbitrator. But, the employee’s arbitrator and the third arbitrator were required to be selected from a list of arbitrators created exclusively by Hooters.

No limits were placed on whom Hooters could put on the list, giving Hooters absolute control over the selection of the entire panel. See id. at 938-39. Such a mechanism for selecting an arbitration panel to adjudicate the employee’s statutory claim, we held, was one “crafted to ensure a biased decisionmaker.” Id. at 938.

In this case, we are presented with a quite similar method for choosing the deci-sionmaker. ' As a condition of his employment, Murray was required to enter into an arbitration agreement drafted by his prospective employer that placed control over the selection of the single arbitrator for employment disputes in the hands of his employer. The parties ostensibly engage in an alternate strike method to select the single arbitrator from a list of prospective arbitrators, but they exercise these alternate strikes “from a list of arbitrators provided by” Local 400 with absolutely no specified constraints. J.A. 79.

In this respect, the selection method is virtually indistinguishable from the one we disapproved of in Hooters: [The employer] is free to devise lists of partial arbitrators who have existing relationships, financial or familial, with [the employer] and its management. In fact, the rules do not even prohibit [the employer] from placing its managers themselves on the list. Further, nothing in the rules restricts [the employer] from punishing arbitrators who rule against the company by removing them from the list.

Given the unrestricted control that [the employer] has over the panel, the selection of an impartial decision maker would be a surprising result. Id. at 939. And, as in Hooters, the one-sided nature of the arbitration agreement is not limited to the employer providing itself with the exclusive right to select the list of potential arbitrators from which the ultimate decisionmaker will be selected.

In the unlikely event the hand-picked arbitrator rules against Local 400, the language of the arbitration agreement in conjunction with the Union’s Bylaws, even if not ultimately enforceable, might be construed by the employee as prohibiting a decision that would contravene the President’s right to terminate the employee in any event. Although an arbitration agreement will not be invalidated for failure to “replicate the judicial forum,” id. at 940, we again refuse to enforce an agreement so “utterly lacking in the rudiments of even-handedness,” id. at 935.

By agreeing to arbitration in lieu of litigation, the parties agree to “trade ‘the procedures and opportunity for review of the courtroom for the simplicity, informality, and expedition of arbitration.’ ” Id. at 936 (quoting Gilmer, 500 U.S. at 31, 111 S.Ct. 1647). They do not agree to forego their right to have their dispute fairly resolved by an impartial third party.

See id. at 941 (noting that, although objections to the fairness of an arbitral proceeding in general must be submitted to the arbitrator in the first instance, the arbitration proceeding may be so skewed in one party’s favor as to deny the other party “arbitration in any meaningful sense of the word”). In such a ease, the agreement is unconscionable and one under which the prospective litigant cannot effectively vindicate the statutory cause of action. See Green Tree, 581 U.S. at 89, 121 S.Ct. 513. C.

For its part, Local 400 asserts that we should look beyond the language of the arbitration clause, accept that arbitration under the agreement was conducted before a fair and unbiased arbitrator, and trust that had the decision gone the other way, Local 400 would not have asserted a right to terminate Murray under the agreement’s deference to its Bylaws. We decline to do so.

Before the district court, Local 400 asserted that it did not maintain a list of arbitrators and that the President’s office would instead have to obtain a list of neutral arbitrators from the American Arbitration Association’s Labor Arbitration Rules or the Federal Mediation and Conciliation Service as it does in its collective bargaining agreements with employers.

When Murray pointed out that this procedure for selecting an arbitrator in the collective bargaining context would not apply in individual employment cases, Local 400 then argued that it would instead request a list of arbitrators under the American Arbitration Association’s National Rules for the Resolution of Employment Disputes, which could apply to individual employment cases. After the district court granted Local 400’s motion to compel arbitration, such a list was obtained and a single arbitrator was selected from it using the alternate strike method.

Based upon this construction of the arbitration agreement’s selection provision, Local 400 asserts that the agreement is valid and enforceable because it “must be construed as requiring the President [of Local 400] to provide a neutral list of arbitrators from which the parties can choose an arbitrator.” Brief of Appellees at 17.

Additionally, Local 400 argues that we should not construe the agreement’s provision denying the selected arbitrator any authority to “alter[,] change or diminish any power, right or authority granted to the President ... of Local 400 under the terms and conditions of the Bylaws of Local 400,” J.A. 79, as allowing it to disregard the arbitrator’s decision because, the argument goes, a discriminatory termination could not be construed as an action taken “in the best interest of’ Local 400, J.A. 126.

The flaw in Local 400’s argument, of course, is that there is no reference to the AAA National Rules for the Resolution of Employment disputes, or to any other rules governing the selection of an arbitrator, anywhere in the language of the arbitration agreement, no doubt engendering the uncertainty and confusion in this case. Furthermore, the agreement is not merely silent as to the selection method; the selection method is to be by the alternate strike method from a list of arbitrators arbitrarily selected or created by Local 400, and then provided to the employee.

Local 400’s argument, therefore, is little more than a claim that because Local 400 says it will provide a list of neutral arbitrators and abide by the ultimate arbitration decision, the selection procedure is not one-sided and the agreement is not unconscionable. We decline to allow Local 400 to salvage the agreement simply because it may have provided, after much haranguing, a list of impartial arbitrators in this case, or because it promises to act fairly in future cases.

The arbitration agreement is unenforceable as written and Local 400 may not rewrite the arbitration clause and adhere to unwritten standards on a case-by-case basis in order to claim that it is an acceptable one. Cf. Perez v. Globe Airport Sec. Servs. Inc., 253 F.3d 1280, 1285-86 (11th Cir.2001) (rejecting attempt to rewrite unenforceable arbitration clause in order to salvage it).

Nor is it appropriate for us to now adjudicate Local 400’s claim that the arbitration in this case was ultimately conducted in a fair manner before an impartial arbitrator, a fact that'at least appears to remain the subject of some dispute.. When the order compelling arbitration was entered, the parties reasonably believed that it was not immediately appealable under this circuit’s existing precedent. See, e.g., American Cas. Co. v. L-J, Inc., 35 F.3d 133, 135 (4th Cir.1994). Consequently, this appeal is the first opportunity- Murray has had to challenge the order of arbitration.

We now know that such an order compelling arbitration and dismissing the underlying claims is “a final decision with respect to an arbitration,” 9 U.S.C.A. § 16(a)(3), which is immediately appeal-able. See Green Tree, 531 U.S. at 89, 121 S.Ct. 513. The Supreme Court’s decision in Green Tree, however, post-dates the district court’s order compelling arbitration. Had it been otherwise, Murray would have been entitled to immediately appeal the order compelling arbitration under the agreement and challenge the validity of the agreement here before being forced to litigate his claims in the arbitral forum at all.

Because of the uncertainty in the law, the fact that Murray has not been able to appeal the issue until now cannot be held against him. In the future, this procedural uncertainty will not exist. To conclude, we hold that the arbitration agreement is unenforceable and, therefore, that the district court erred in compelling arbitration.

Although we note that the district court did not have the benefit of our decision in Hooters or of the Supreme Court in Green Tree when it granted Local 400’s motion to compel arbitration of Murray’s discrimination claims, we are nonetheless constrained to reverse the order compelling arbitration and remand the claims for litigation in the judicial forum. III. We now turn to Murray’s claim that the district court erred in ruling that Murray failed to state an actionable defamation claim against Sauter and Local 400 under Maryland law and, therefore, in dismissing the claim pursuant to Rule 12(b)(6).

In dismissing the claim, the district court ruled that Sauter’s statement that Murray “was not a good organizer” was not defamatory per se under Maryland law, and that the statement was merely the expression of Sauter’s opinion, as opposed to one of fact, which could.be neither verified nor refuted in litigation. “Under Maryland law, a defamatory statement is one that tends to expose a person to public scorn, hatred, contempt or ridicule, thereby discouraging others in the community from having a good opinion of, or from associating or dealing with, that person.” Samuels v.

Tschechtelin, 135 Md.App. 483, 763 A.2d 209, 241-42 (2000) (internal quotation marks omitted). “To establish a prima facie case of defamation when the plaintiff is not a public figure, the plaintiff must prove: (1) that the defendant made a defamatory communication to a third person; (2) that the statement was false; (3) that the defendant was at fault in communicating the statement; and (4) that the plaintiff suffered harm.” Id. at 242.

While the tort of defamation is generally viewed as one based upon false assertions of fact, it may also be based upon the expression of an opinion to a third person if the “opinion contains implied assertions of underlying objective fact.” Id. at 242. Although “loose, figurative, or hyperbolic language” expressing a mere opinion may not fairly be viewed as being defamatory, Milkovich v.

Lorain Journal Co., 497 U.S. 1, 21, 110 S.Ct. 2695, 111 L.Ed.2d 1 (1990), “a false statement of fact cannot escape liability for defamation under the guise of opinion.” Samuels, 763 A.2d at 242 (citing Milkovich, 497 U.S. at 18, 110 S.Ct. 2695). “[A] statement, even if expressed in terms of an opinion, can be defamatory under certain circumstances .... When the underlying facts used to form the opinion are not given along with the defamatory statement, the statement itself may be treated as being factual and therefore potentially defamatory.” Peroutka v. Streng, 116 Md.App. 301, 695 A.2d 1287, 1297 (1997).

Subsequent to the district court’s dismissal of Murray’s defamation claim in this case, the Maryland Court of Special Appeals held that an employer’s statement that an employee “had been terminated for poor performance” was defamatory per se under its law. Samuels, 763 A.2d at 241; see id. at 245. Murray’s claim of defamation has its genesis in the allegation that “Sauter stated, at least twice, to one or more Giant employees, that [Murray] was not a good organizer,” and that he did so with knowledge of the falsity of this statement and with the intent to injure Murray. J.A. 230.

Sauter, it is alleged, was the Organizing Director for Local 400 and made these statements shortly after Murray was terminated from his employment as a full-time organizer for Local 400. While perhaps an expression of Sauter’s opinion of Murray, it is at least arguably an opinion that might be construed as implying Murray’s failure to fulfill the duties of his position of a union organizer.

Because the alleged defamatory statement contains such “implied assertions of underlying objective fact,” Samuels, 763 A.2d at 242, and in view of this recent Maryland precedent, we hold that Murray’s allegation was sufficient to survive a Rule 12(b)(6) motion to dismiss for failure to state a claim for defamation under Maryland law and, accordingly, reverse and remand this claim for further proceedings as well. IV.

For the foregoing reasons, we reverse the district court’s decision granting defendants’ motion to dismiss Murray’s Title VII claim and compelling arbitration, reverse the district court’s decision granting defendants’ motion to dismiss Murray’s state law defamation claim, and remand this matter for further proceedings. REVERSED AND REMANDED.