UNPUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

SYNCOR INTERNATIONAL CORPORATION,
a Delaware corporation,
Plaintiff-Appellee,

v.
                                                                No. 96-2261
DAVID L. MCLELAND, an individual,
Defendant-Appellant,

JEFFREY CLANTON,
Party-in-interest.

Appeal from the United States District Court
for the Southern District of West Virginia, at Bluefield.
David L. Faber, District Judge.
(CA-95-565-1)

Argued: June 4, 1997

Decided: August 11, 1997

Before WILLIAMS and MICHAEL, Circuit Judges, and
BUTZNER, Senior Circuit Judge.

_________________________________________________________________

Affirmed by unpublished per curiam opinion.

_________________________________________________________________

COUNSEL

ARGUED: Barry Lee Bruce, BARRY L. BRUCE & ASSOCIATES,
Lewisburg, West Virginia, for Appellant. Benjamin Lee Bailey,
BOWLES, RICE, MCDAVID, GRAFF & LOVE, Charleston, West
Virginia, for Appellee. ON BRIEF: Ronda L. Harvey, BOWLES,
RICE, MCDAVID, GRAFF & LOVE, Charleston, West Virginia, for
Appellee.

_________________________________________________________________

Unpublished opinions are not binding precedent in this circuit. See
Local Rule 36(c).

_________________________________________________________________

OPINION

PER CURIAM:

David L. McLeland appeals the district court's order granting the
motion of Syncor International Corporation (Syncor) to enforce the
final award resulting from an ex parte arbitration proceeding. McLe-
land claims that the arbitration award should not have been enforced
because the arbitration proceeding was conducted ex parte and
because the dispute was beyond the scope of the arbitration agreement
between the parties. In addition, McLeland argues that the district
court reviewed the arbitrator's award under an incorrect standard.
Finding no error, we affirm.

I.

Syncor compounds and distributes nuclear pharmaceuticals, owns
and operates nuclear pharmacies, and sells related products and ser-
vices. McLeland began his employment with Syncor in the mid-
1980s. Although he left Syncor for a brief period in the late 1980s,
McLeland continued to work for Syncor in various capacities for
nearly ten years.

On April 10, 1990, McLeland signed an Invention, Secrecy and
Other Matters Agreement (the 1990 Secrecy Agreement), which spe-
cifically prohibited McLeland from using, directly or indirectly, pro-
prietary information to solicit Syncor's customers. Soon thereafter, he
was promoted to the position of Pharmacy Manager. Because Syn-
cor's policy at that time was to require all managerial level employees
to sign employment agreements, on August 26, 1991, McLeland

                    2
signed a Director/Manager Employment Agreement (the 1991
Employment Agreement). The Employment Agreement, among other
things, (1) contained a clause that prohibited McLeland from compet-
ing against Syncor for ninety days following termination of his
employment; (2) prohibited McLeland from encouraging other
employees to leave Syncor; (3) created an irrevocable consulting
agreement option during the term of the Employment Agreement and
for ninety days after its termination; and (4) provided for injunctive
relief and attorneys' fees as available remedies for any dispute arising
thereunder. Later, after rising to the position of Midwest Regional
Manager for Syncor, McLeland signed a second Director/Manager
Employment Agreement (the 1993 Employment Agreement). The
1993 Employment Agreement expressly superseded the 1991
Employment Agreement. Both the 1991 and the 1993 Employment
Agreements bound McLeland to the 1990 Secrecy Agreement.

On November 28, 1994, Syncor informed McLeland that his
employment was to be terminated, for business reasons, on December
31, 1994. Syncor policy provided for ten weeks of severance pay for
terminated employees. In addition to this ten weeks of severance pay,
Syncor offered McLeland an additional twelve weeks in exchange for
his execution of a release agreement. On December 6, 1994, McLe-
land executed the release, thereby earning twelve additional weeks of
severance pay and releasing Syncor from any claims based on McLe-
land's termination.

Shortly after McLeland's termination, Syncor rehired him as a tem-
porary pharmacist. Upon his rehire, McLeland signed an arbitration
agreement (the Arbitration Agreement) and a second Invention,
Secrecy and Other Matters Agreement (the 1995 Secrecy Agreement).
Syncor did not require McLeland to sign another employment agree-
ment. In March 1995, Syncor again terminated McLeland.

Beginning around October 1994, before his first termination notice,
McLeland became interested in establishing a nuclear pharmacy,
which he hoped to operate as a joint venture with Syncor, in the
Beckley-Princeton area of West Virginia. He approached Wade Hop-
kins, the Director of Pharmacy Expansion for Syncor, with his plan
to open such a pharmacy. Within a month, McLeland learned that
Syncor was not interested in entering a joint venture to open the pro-

                    3
posed nuclear pharmacy. Hopkins, however, felt that McLeland's idea
was a good business investment, and therefore agreed to loan McLe-
land $20,000 to develop the business. Soon thereafter, in order to
repay the loan, McLeland gave Hopkins a 50% ownership interest in
the proposed pharmacy.

In January 1995, McLeland incorporated Princeton Diagnostic Iso-
topes, Inc. (PDI), under West Virginia law. Hopkins, believing that
PDI would not adversely affect Syncor's relationship with its custom-
ers, became involved in the business. There is no evidence, however,
that Hopkins ever discussed PDI or his involvement with any of his
superiors. Nevertheless, in February 1995 Syncor discovered that
McLeland had incorporated PDI, and McLeland then tried to sell all
or part of PDI to Syncor. The negotiations failed. Meanwhile, Syncor
purchased the 50% share in PDI owned by Hopkins. However, McLe-
land, who held the stock certificates, has refused to transfer them.

In late 1994 and early 1995, McLeland actively solicited the busi-
ness of the two largest Syncor accounts in the Beckley-Princeton area,
Beckley Hospital and Raleigh General Hospital. Although Syncor
retained both accounts, the hospitals expressed interest in switching
to PDI. There is also evidence that McLeland attempted to recruit an
employee of the Huntington Pharmacy, the pharmacy through which
Syncor served accounts in the Beckley-Princeton area.

On May 18, 1995, Syncor submitted an arbitration demand against
McLeland to the American Arbitration Association (AAA), claiming
that McLeland's activities involving PDI had breached the 1993
Employment Agreement, the 1990 Secrecy Agreement, and the 1995
Secrecy Agreement. On July 12, 1995, AAA scheduled the arbitration
for August 21, 1995, and notified both parties. McLeland decided not
to attend the arbitration, based on his belief that the dispute over PDI
was not arbitrable. Meanwhile, on August 2, 1995, Syncor filed in the
United States District Court for the Southern District of West Virginia
a complaint and petition to compel arbitration against McLeland. On
August 23, 1995 -- two days after the arbitration proceeding --
McLeland answered the complaint, denied the applicability of the
Arbitration Agreement to the pending dispute, and counterclaimed,
alleging intentional infliction of emotional distress, intentional inter-
ference with his business interests, and anticompetitive behavior.

                    4
Then, on September 21, 1995, Syncor filed an answer to McLeland's
counterclaim and its own counterclaim, to which McLeland filed an
answer on October 3, 1995.

Despite the flurry of activity in the federal court, the arbitration
proceeded as scheduled and was conducted ex parte on August 21,
1995. On September 29, 1995, the arbitrator issued a written award
in which he found that McLeland violated the 1990 Secrecy Agree-
ment, the 1995 Secrecy Agreement, and the 1993 Employment
Agreement. The arbitrator ordered certain equitable relief, including
an award to Syncor of 100% of the stock of PDI. On October 17,
1995, Syncor filed a motion in the district court to enforce the award.
After a hearing at which McLeland testified, the district court granted
Syncor's motion to enforce the arbitration award.

McLeland promptly moved for a new trial and to set aside the judg-
ment in favor of Syncor. Syncor responded in opposition to the
motion on April 25, 1996. On August 19, 1996, the district court
denied McLeland's pending motions and upheld its previous order
enforcing the arbitration award. McLeland appeals, claiming that the
arbitration award is not enforceable because it was conducted ex parte
and because the dispute was not arbitrable. He further claims that the
district court erred by applying an incorrect standard of review in
approving the arbitrator's allegedly erroneous rulings. Applying a de
novo standard of review to the district court's decision enforcing the
arbitration award, see Peoples Sec. Life Ins. Co. v. Monumental Life
Ins. Co., 991 F.2d 141, 145 (4th Cir. 1993), we address each issue in
turn.

II.

McLeland first argues that the arbitration award is unenforceable
because it is the product of an ex parte proceeding. The district court
summarily rejected this argument, concluding that AAA "rules pro-
vide for an arbitration hearing to proceed ex parte, if a party who has
received proper notice does not participate in the hearing." (J.A. at
248-49.) This conclusion is correct. See Sheet Metal Workers Int'l
Ass'n Local Union No. 33 v. Power City Plumbing & Heating, Inc.,
934 F.2d 557, 561 (4th Cir. 1991) (holding that if the opposing party
was served with proper notice and was aware of the arbitration pro-

                    5
ceeding, then "[t]he arbitration award is valid and fully enforceable
despite [that party's] absence").

McLeland, however, tries to draw a distinction between arbitration
where the arbitrator is to be jointly selected by the parties and arbitra-
tion where the arbitrator is either pre-selected or joint selection is not
necessary. He points out that AAA rules, which the parties agreed to
follow in the Arbitration Agreement, state that"[u]nless the law pro-
vides to the contrary, the arbitration may proceed in the absence of
any party . . . who, after due notice, fails to be present." (J.A. at 136-
37.) In McLeland's view, when the arbitrator is to be jointly selected
by the parties, then "the law provides to the contrary."

To support this position, McLeland relies upon Toyota of Berkeley
v. Automobile Salesmen's Union, Local 1095, 834 F.2d 751 (9th Cir.
1987). In that case, the court explained:

          [T]he general trend of authority is clear. Under a collective
          bargaining agreement specifically providing for designation
          of an arbitrator without the participation of both parties, an
          arbitrator may issue an enforceable default award when one
          party fails to attend the hearing. If an agreement provides
          that the parties shall jointly select an arbitrator, however, a
          court may refuse to enforce an award made following an ex
          parte hearing before an arbitrator selected without the
          defaulting party's cooperation, on the grounds that the party
          not in default should have sued to compel arbitration.

Id. at 754 (citations omitted). Here, McLeland argues that because the
agreement provides for joint selection of the arbitrator, the ex parte
proceeding should not be enforced.

Without expressing any opinion on the merits of the Ninth Circuit's
rule, we reject McLeland's argument. First, McLeland errs in claim-
ing that the arbitrator here was to be jointly selected by the parties.
On the contrary, the AAA rules, which are applicable here, provide:

          [I]mmediately after the filing of the demand or submission,
          the AAA shall send simultaneously to each party to the dis-

                     6
          pute an identical list of names of persons chosen from the
          panel.

          Each party to the dispute shall have 10 days from the trans-
          mittal date in which to strike any names objected to, number
          the remaining names in order of preference, and return the
          list to the AAA. . . . If a party does not return the list within
          the time specified, all persons named therein shall be
          deemed acceptable. From among the persons who have been
          approved on both lists, and in accordance with the desig-
          nated order of mutual preference, the AAA shall invite the
          acceptance of an arbitrator to serve.

(J.A. at 267.) Therefore, AAA rules provide only for joint input, not
joint selection. Second, not only do AAA rules provide the method of
selection here, but they also recognize the validity of an ex parte arbi-
tration. Under McLeland's view AAA rules would be self-defeating.
An ex parte arbitration proceeding under AAA rules would never be
enforceable because of the method of selection described in the AAA
rules. Third, McLeland's objection more properly concerns the arbi-
trator that was actually selected; insofar as he complains about being
deprived of his strikes, the issue is whether the arbitrator who con-
ducted the arbitration was biased. McLeland has made no such claim,
however, and has never objected to the choice of arbitrator. By his
own admission he was not prejudiced by his failure to participate in
the selection of the arbitrator. We therefore conclude that the arbitra-
tion proceeding here was valid despite McLeland's failure to attend.

III.

Next, McLeland argues at some length that the dispute is not arbi-
trable under the Arbitration Agreement. The Arbitration Agreement
itself provides for arbitration if:

          (a) Employee disagrees with an Employer decision involv-
          ing Employee's compensation, position or other conditions
          of employment or (b) if a dispute arises out of the separation
          from employment of Employee by Employer then first
          efforts to resolve the disagreement or dispute shall be
          according to the problem solving procedure in the Employ-

                     7
          er's Employee Handbook. If such disagreement or dispute
          is not resolved by such problem solving procedures, then it
          shall be resolved by binding arbitration, at the request of
          either party, in accordance with the rules of the American
          Arbitration Association.

(J.A. at 27.) McLeland claims that the dispute here does not fall
within the reach of either provision.

The scope of the arbitration agreement is a question to be deter-
mined by the court, not the arbitrator, and is subject to de novo
review. See Summer Rain v. Donning Co./Publishers, Inc., 964 F.2d
1455, 1459 (4th Cir. 1992); see also First Options of Chicago, Inc.
v. Kaplan, 115 S. Ct. 1920, 1924 (1995) ("Courts should not assume
that the parties agreed to arbitrate arbitrability unless there is clear
and unmistakable evidence that they did so." (quotations and alter-
ations omitted)). However, "`any doubts concerning the scope of arbi-
trable issues should be resolved in favor of arbitration.'" Mitsubishi
Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S. 614, 626
(1985) (quoting Moses H. Cone Mem'l Hosp. v. Mercury Constr.
Corp., 460 U.S. 1, 24-25 (1983)); see also O'Neil v. Hilton Head
Hosp., 115 F.3d 272, 273-74 (4th Cir. 1997) (same); American Recov-
ery Corp. v. Computerized Thermal Imaging, Inc., 96 F.3d 88, 92 (4th
Cir. 1996) (noting that "we may not deny a party's request to arbitrate
an issue unless it may be said with positive assurance that the arbitra-
tion clause is not susceptible of an interpretation that covers the
asserted dispute" (quotation omitted)). The district court invoked this
presumption, applied a de novo review, and concluded that the dis-
pute was arbitrable:

          It appears to the court that the dispute to which Syncor
          wished to arbitrate related to McLeland's violation of the
          [1995 Secrecy Agreement] while he was still employed by
          Syncor, his refusal to execute the Consulting Agreement,
          and the parties' inability to negotiate a deal involving PDI.
          The court finds that these matters relate to the separation of
          respondent from his employment with Syncor, and also
          relate to respondent's disagreement with Syncor's decisions
          involving the conditions of employment. Specifically, Syn-
          cor decided to exercise its contractual option to engage

                    8
          McLeland as a consultant, and McLeland refused to abide
          by the Consulting Agreement. In addition, the parties are in
          disagreement over the issue of whether McLeland was enti-
          tled to ninety days notice before his termination, which
          clearly relates to McLeland's separation from his employ-
          ment. Finally, McLeland was, in fact, separated from his
          employment when Syncor discovered that he had estab-
          lished PDI.

(J.A. at 251-52.) We agree with this assessment, and McLeland's
arguments to the contrary -- that the arbitrator somehow fouled up
the issue by deciding the arbitrability question himself, that the
arbitrability question remains undecided, and that there is no evidence
that the "problem-solving procedures" described in the Employee
Handbook were complied with -- are not persuasive. Accordingly,
we affirm the district court's conclusion that the dispute was arbitra-
ble.

IV.

McLeland's final argument on appeal is that the district court
applied an incorrect standard in reviewing the arbitrator's decision.
The district court relied on the standard of review set forth in Upshur
Coals Corp. v. United Mine Workers of America Dist. 31, 933 F.2d
225 (4th Cir. 1991). In that case, we explained:

          [A]n arbitrator's . . . interpretation of the law is accorded
          deference as well. A legal interpretation of an arbitrator may
          only be overturned where it is in manifest disregard of the
          law. An arbitration award is enforceable even if the award
          resulted from a misinterpretation of law, faulty legal reason-
          ing or erroneous legal conclusion, and may only be reversed
          when arbitrators understand and correctly state the law, but
          proceed to disregard the same.

Id. at 228 (quotations and citations omitted). Ordinarily, this is the
correct standard. But here, the Arbitration Agreement provided that
"[t]he arbitrator shall not have the power to commit errors of law or
legal reasoning, and the award may be vacated or corrected by judi-
cial review for any such error." (J.A. at 27.) According to McLeland,

                    9
this language means that the district court should have conducted full
de novo review of the arbitrator's award.

McLeland is correct, to a point. As explained by the Fifth Circuit:

           Usually . . . the district court's review of an arbitration
          award is extraordinarily narrow. In a proceeding to confirm
          or vacate an arbitration award, the Federal Arbitration Act
          ("FAA") circumscribes the review of the court, providing
          that an award shall not be vacated unless: (1) the award was
          procured by corruption, fraud, or undue means; (2) there is
          evidence of partiality or corruption among the arbitrators;
          (3) the arbitrators were guilty of misconduct which preju-
          diced the rights of one of the parties; or (4) the arbitrators
          exceeded their powers.

           In this case, however, the parties contractually agreed to
          permit expanded review of the arbitration award by the fed-
          eral courts. Specifically, their contract details that "[t]he
          arbitration decision shall be final and binding on both par-
          ties, except that errors of law shall be subject to appeal."
          Agreement Apr. 29, 1991, at Article 9 (emphasis added).
          Such a contractual modification is acceptable because, as
          the Supreme Court has emphasized, arbitration is a creature
          of contract . . . . Because these parties contractually agreed
          to expand judicial review, their contractual provision sup-
          plements the FAA's default standard of review and allows
          for de novo review of issues of law embodied in the arbitra-
          tion award.

Gateway Technologies, Inc. v. MCI Telecommunications Corp., 64
F.3d 993, 996-97 (5th Cir. 1995) (quotation and citations omitted);
see also Volt Info. Sciences, Inc. v. Board of Trustees, 489 U.S. 468,
479 (1989) ("Just as [the parties] may limit by contract the issues
which they will arbitrate, so too may they specify by contract the
rules under which that arbitration may be conducted" (citation omit-
ted)). The Fifth Circuit also pointed out that "the FAA does not pro-
hibit parties who voluntarily agree to arbitration from providing
contractually for more expansive judicial review of the award."
Gateway Technologies at 997 n.3. We therefore agree with McLe-

                    10
land's contention that the district court should have reviewed the arbi-
trator's legal conclusions de novo.

As such, the district court erred. The district court relied "on the
premise that an arbitrator's award is entitled to a special degree of
deference on judicial review, and may only be overturned where it is
in manifest disregard of the law," and found"that the arbitrator's
award was not in manifest disregard of the law." (J.A. at 258.) We
decline to remand the case, however, because our own de novo
review of the arbitrator's decision convinces us of its correctness. See
Gateway Technologies, 64 F.3d at 997 (noting that the district court
erred in applying a deferential standard of review when the arbitration
agreement called for de novo review, but declining to remand the
case). McLeland argues that the arbitrator erred (1) in applying the
terms of the 1993 Employment Agreement and the 1990 Secrecy
Agreement; (2) in finding that McLeland did not have corporate
approval to engage in any of the activities at issue; and (3) in award-
ing relief beyond that authorized by the Arbitration Agreement. We
have reviewed the record, briefs, and pertinent case law in this matter,
and we have had the benefit of oral argument. Our de novo review
persuades us that the arbitrator did not commit error, either legal or
factual, in issuing his award. Accordingly, we conclude that although
the district court applied an incorrect standard of review, that error
was harmless.

V.

In conclusion, we hold that the ex parte arbitration was valid, that
the dispute here was subject to arbitration, and that the arbitrator did
not commit legal error in fashioning its award. The district court's
order enforcing the arbitration award is therefore affirmed.

AFFIRMED

                     11
