Miсhael SHAFFER, v. Susan GRAYBILL, as an Individual and as Administratrix of the Estate of Dennis M. Graybill; Minuteman Press International, Inc.; Robert Emmett Minuteman Press International, Inc.; Robert Emmett Appellants.
No. 02-1260.
United States Court of Appeals, Third Circuit.
Decided July 3, 2003.
Submitted Under Third Circuit LAR 34.1(a) May 22, 2003.
Before SCIRICA, Chief Judge, SLOVITER and NYGAARD, Circuit Judges.
4. It is true that the plaintiff sees physicians “only three times a year,” but that hardly seems inadequate, much less a basis for denying the claim.
5. While the ALJ also found that the plaintiff has the residual capacity to perform a full range of light exertional work, including her past work as a day worker and dry cleaner, we cannot divine the basis for this conclusion in the record. We add that a number of disability evaluation reports in the record seem to support Oh‘s claims (although it is not сlear who the reporters are or whether they examined Oh).
In sum, it is apparent to us that the ALJ did not give the required deference to the opinion of the treating physician, see Morales, supra, which was based on both objectivе and clinical findings. The ALJ also appears to have engaged in speculation and made medical judgments on her own in the absence of record support, which is beyond the province of an ALJ. See Kent v. Schweiker, 710 F.2d 110 (3d Cir.1983). Morе specifically, the ALJ does not cite medical evidence or opinions to contradict Dr. Kim‘s evaluation. Also, for reasons noted above, the ALJ‘s opinion cannot be sustained on (lack of) credibility grounds.
Accordingly the decision of the ALJ cannot stand. This is not, however, a proper case to direct the award of benefits. The medical record developed before the ALJ is deficient, as are the ALJ‘s findings. Accоrdingly, the judgment of the District Court will be reversed and the case remanded to the District Court with directions to remand to the Commissioner for further proceedings.
OPINION OF THE COURT
SLOVITER, Circuit Judge.
Before us is an appeal by Defendants Susan Graybill, Minuteman Press Internаtional, Inc. and Robert Emmett from the District Court‘s order denying reconsideration of its earlier order denying Defendants’ motion to dismiss or, in the alternative, to stay the action pending arbitration. Although we ordinarily do not have juris
I.
Introduction
Michael A. Shaffer, a former Minuteman Press franchisee located in Lemoyne, Pennsylvaniа, commenced this action in the Court of Common Pleas of Cumberland County, Pennsylvania. Shaffer named as Defendants Susan Graybill, who, with her now deceased husband Dennis Graybill sold Shaffer the franchise, Minuteman Press International, the frаnchiser, and Robert Emmett. The complaint sought damages for negligence, fraud, fraudulent misrepresentation, civil conspiracy, and emotional distress, as well as declaratory relief. The case was subsequently rеmoved to the United States District Court for the Middle District of Pennsylvania.
Minuteman Press is a New York corporation which offers and sells franchises to “Minuteman Press Full Service Printing Centers,” which are printing and copying centers. Robert Emmett is an agent for Minuteman. Susan Graybill and Dennis Graybill, residents of Pennsylvania, owned and operated a Minuteman Franchise in Lemoyne, Pennsylvania. Beginning in November of 1999, Shaffer entered into discussions with Emmett for the purchase of a Minuteman franchise. On September 6, 2000, Shaffer and the Graybills entered into an asset purchase agreement with respect to the Lemoyne Minuteman Franchise. At the same time, Shaffer negotiated a franchise agreement with Minuteman through its representative, Emmett.
Paragraph 23 of the franchise agreement contains an “Arbitration and Litigation” clause which provides that the “Federal Arbitration Act shall apply to all claims аrising out of or relating to this Agreement or the breach thereof . . . Any controversy or claim arising out of or relating to this Agreement or the breach thereof, shall be settled by arbitration.” App. at 119.
Shaffer claims that approximately five months after he entered into the franchise,
II.
Discussion
Under the FAA, a court, on application of one of the parties to an agreement to arbitrate, must stay a judiсial action commenced in that court which is the subject of an arbitration clause or, in the alternative, must dismiss any arbitrable claims.
The FAA makes agreements enforceable to the same extent as other contracts, and federal law presumptively favors the enforcement of arbitration agreements. Harris v. Green Tree Financial Corp., 183 F.3d 173, 178 (3d Cir.1999). Thus, while states may regulate contracts, including arbitration clauses, they must be careful that state law does not contravene policies under the FAA and congressional intent to favor arbitration clauses. Doctor‘s Assocs., Inc. v. Casarotto, 517 U.S. 681, 686 (1996). In the current case, the District Court appears to have overlooked the strong policy favoring the enforcement of arbitration agreements. Furthermore, the court‘s conclusion that Shaffer presents a “valid cause of action,” vis-a-vis his contract of adhesion allegations, does not follow from the facts presented.
Quoting from Black‘s Law Dictionary, Pennsylvania has defined a contract of adhesion as a:
standardized contract form offered to consumers of goods and services on [an] essentially ‘take it or leave it’ basis without affording [the] consumer [a] realistic opportunity to bargain and under such conditions that [the] consumer cannot obtain [the] desired product or services except by acquiescing in [the] form contract.
Denlinger, Inc. v. Dendler, 415 Pa.Super. 164, 608 A.2d 1061, 1066 (1992). In Denlinger, the Pennsylvania Superior Court noted that whether a contract is one of adhesion must be determined on an individual basis by looking at the particular circumstances involved. Id. at 1067.
Without explanation, the District Court simply quoted from Denlinger, reiterated Shaffer‘s allеgations regarding the arbitration agreement, and concluded that the
As a preliminary matter, it appears that the District Court conflated two distinct doctrines, namely that of fraud in the inducement and adhesion contracts. Befоre addressing Shaffer‘s allegations that the arbitration clause was a contract of adhesion, the District Court presented the legal principles guiding a court‘s power to adjudicate claims that there is fraud in the inducement of arbitration clauses. It should be noted that Shaffer does not allege, and the District Court did not find, that there was fraud in the inducement of the arbitration clause. As to the arbitration clause, Shaffer solely alleges that it is a contract of adhesion.
We are unaware of any relevant cases in which the court has found an adhesion contract when dealing with the purchase of a franchise rather than a consumer purchase. Cf. J & R Ice Cream v. California Smoothie Licensing, 31 F.3d 1259 (3d Cir.1994) (holding commercial franchises are not covered by New Jersey Consumer Fraud Act because they are businesses and not consumer goods). Furthermore, in Denlinger itself, the court expressed its lack of concern for unequal bargaining power when neither of the parties involved were consumers. 608 A.2d at 1066. The court concluded that the Appellant was an experienced businessman in spite of his repeated argument thаt he was only a high school graduate. Id.; see also Aamco Transmissions, Inc. v. Harris, 1990 WL 83336, at *4 (E.D.Pa.1990) (holding that a franchise contract requiring franchisee to waive right to jury trial was not adhesion contract as franchisee was “perfectly free to reject the deal“). Similаrly, we see no reason to view Shaffer as anything but an experienced businessman who was free to reject the deal at issue.
Furthermore, an adhesion contract that will not be enforced must be one that is unconscionable or oppressive, unreasonably favoring one party over another. See, e.g., Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 33 (1991); Seus v. John Nuveen & Co., Inc., 146 F.3d 175, 184 (3d Cir.1998); Witmer v. Exxon Corp., 495 Pa. 540, 434 A.2d 1222, 1228 (1981). In this case, the arbitration clause clearly did not favor one party over another as it equally applied to both parties.
In sum, we see no support in the record of unequal bargaining power or unconscionability to support the District Court‘s conclusion that Shaffer‘s allegations sufficiently stated a cause of action. This lack of support coupled with the presumptive enforcement of arbitration agreements leads us to conclude that the District Court improperly denied Defendants’ motion to stay the proceedings pursuant to arbitration.
III.
Conclusion
The actions commenced by Shaffer against Defendants are subject to a previously agreed upon arbitration clause which provides for arbitration in the state of New York. Because a district court may not compel arbitration outside the district in which it sits,