NOT FOR PUBLICATION

UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF NEW JERSEY

ORAL CANCER PREVENTION

INTERNATIONAL, INC.

Plaintiff,

v.

JOHNSON & JOHNSON, and JOHNSON &

JOHNSON CONSUMER COMPANIES,

INC.

Defendants.

Civil Action No. 3:11-cv-3878 (PGS)

MEMORANDUM & ORDER

SHERIDAN, U.S.D.J.

This matter comes before the Court byDefendants’, Johnson & Johnson (“J&J”) and Johnson

& Johnson Consumer Companies, Inc., (“JJCCI”), motion to compel arbitration and stay the

litigation. Plaintiff,Oral Cancer Prevention International (“OCPI”), has opposed this motion in favor

of allowing its claims to proceed in this litigation rather than arbitration. OCPI’s diversity action has

raised three common law claims in the complaint: (1) fraud; (2) tortious interference with contract;

and (3) civil conspiracy. OCPI argues that its claims are outside the scope of the arbitration

agreement of which defendants are non-signatories, and it would be inequitable to allow the

defendants to compel arbitration. For the reasons set forth below, the Court will grant Defendants’

motion to compel arbitration and stay this litigation.

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I. FACTUAL BACKGROUND

The following facts are alleged in OCPI’s complaint. OCPI has developed and patented a

product known as the OralCDx Brush Test that is used for early detection of oral cancer. At the time

of the product’s development, OCPI recognized that oral cancer is on the rise worldwide and only

a few simple tests for early detection existed. OCPI has worked with the American Dental

Association to advertise its OralCDx Brush as a quick, painless, and inexpensive test that uses a

patented brush to collect cells that are analyzed at OCPI laboratories for preventative pre-cancer

screening and detection. OCPI intended to market and distribute its product among dentists to be

used for routine screening of patients. 

In 2008 and 2009 OCPI had a four person sales team that generated 2,000 laboratory tests

per month. In 2009, OCPI was approached by OraPharma, a subsidiary of J&J, to be the exclusive

sales representative for the OralCDx Brush Test. OraPharma was reputed to have an expertly trained

and well-managed sales forcewithin the dental industrywith approximately100 sales representatives

reaching 50,000 dental practices nationwide, and selling products like Arestin (antibiotic treatment

of periodontal disease) and Listerine that aimed to protect and improve the health of oral soft tissue. 1

Of OraPharma’s 50,000 dental practice customers, 20,000 accounted for 80% of sales, and were

known as OraPharma’s “Prime Customers.” Since OCPI’s OralCDx Brush also relates to healthy

maintenance of oral soft tissue, OraPharma was capable of selling the OralCDx Brush alongside its

existing products. 

J&J acquired Listerine through its purchase of Pfizer’s consumer health care unit in 1

2006. 

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On February 5, 2010, OCPI entered into a Sales Services Agreement (“Sales Agreement” or

“Agreement”) with OraPharma after a year of extensive negotiations. The SalesAgreement provided

that OraPharma would exclusively market the OralCDx Brush. Sales Agreement § 2.01. The

provisions at issue in the Sales Agreement are the assignment clause and the arbitration clause. Sales

Agreement §§ 14.02, 14.06. 

Once the Sales Agreement was executed, OraPharma’s marketing projections required OCPI

to handle at least 20,000 laboratory tests per month within the first six months of the Agreement. 

In reliance on these projections, OCPI raised $5 million to expand its laboratories. However, in the

first six months of the Agreement, OCPI alleges that the OralCDx Brush was only marketed to a

small percentage of OraPharma’s dental customers who were least likely to purchase products

relating to oral soft tissue care. OCPIsuggests that the reason for the limited roll out of the OralCDx

Brush was because of a study published in 2008 in the Dental Journal of Australia (“Australian

study”). The Australian study identified a potential link between mouthwash with high alcohol

content to an increased risk of oral cancer. OCPI contends that Listerine has the highest alcohol

content of any over-the-counter mouthwash, and J&J was concerned that if OraPharma were to sell

both Listerine and the OralCDx Brush, J&J would be tacitly validating the Australian study.

OCPI asserts that J&J also launched Listerine Zero, an alcohol-free mouthwash, soon after

the Sales Agreement was executed, which was in direct response to the concerns raised in the

Australian study. OCPI contends that OraPharma never executed a nationwide launch of the

OralCDx Brush to its 50,000 dental customers because of J&J’s tortious conduct. 

J&J sold OraPharma in December 2010 to Water Street Healthcare Partners. In Early 2011,

OraPharma terminated the Sales Agreement with OCPI consistent with the termination clause. 

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Thereafter in July 2011, OCPI filed the instant action against defendants in this Court; notably,

OraPharma is not named as a defendant. 

II. DISCUSSION

A. Legal Standard

A motion to compel arbitration and stay the litigation may be treated as a motion for

summary judgment. Kaneff v. Del. Title Loans, Inc., 587 F.3d 616, 620 (3d Cir. 2009). Accordingly,

the issue of whether the defendants, as non-signatories to the Sales Agreement, can compel OCPI

to arbitrate its claims will be decided under the summary judgment standard. All reasonable doubts

and inferences will be in favor of OCPI as the party opposing arbitration. Id. 

Summary judgment is appropriate under Fed. R. Civ. P. 56(c) when the moving party

demonstrates that there is no genuine issue of material fact and the evidence establishes the moving

party’s entitlement to judgment as a matter of law. Celotex Corp. v. Catrett, 477 U.S. 317, 322-23

(1986). A factual dispute is genuine if a reasonable jury could return a verdict for the non-movant,

and it is material if, under the substantive law, it would affect the outcome of the suit. Anderson v.

Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). “In considering a motion for summary judgment, a

district court may not make credibility determinations or engage in any weighing of the evidence;

instead, the non-moving party’s evidence ‘is to be believed and all justifiable inferences are to be

drawn in his favor.’” Marino v. Indus. Crating Co., 358 F.3d 241, 247 (3d Cir. 2004) (quoting

Anderson, 477 U.S. at 255).

Once the moving party has satisfied its initial burden, the party opposing the motion must

establish that a genuine issue as to a material fact exists. Jersey Cent. Power & Light Co. v. Lacey

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Twp., 772 F.2d 1103, 1109 (3d Cir. 1985). The party opposing the motion for summary judgment

cannot rest on mere allegations and instead must present actual evidence that creates a genuine issue

as to a material fact for trial. Anderson, 477 U.S. at 248; Siegel Transfer, Inc. v. Carrier Express,

Inc., 54 F.3d 1125, 1130-31 (3d Cir. 1995). “[U]nsupported allegations . . . and pleadings are

insufficient to repel summary judgment.” Schoch v. First Fidelity Bancorp., 912 F.2d 654, 657 (3d

Cir. 1990); see also Fed. R. Civ. P. 56(e) (requiring nonmoving party to “set forth specific facts

showing that there is a genuine issue for trial”). Moreover, only disputes over facts that might affect

the outcome of the lawsuit under governing law will preclude the entry of summary judgement. 

Anderson, 477 U.S. at 247-48. If a court determines, “after drawing all inferences in favor of [the

non-moving party], and making all credibility determinations in his favor – that no reasonable jury

could find for him, summary judgment is appropriate.” Alevras v. Tacopina, 226 Fed. App’x. 222,

227 (3d Cir. 2007). The court will apply this standard to each of the Plaintiff’s claims. 

B. The Federal Arbitration Act

The Federal Arbitration Act (FAA) governs whether an arbitration agreement is valid and

enforceable, and whether a dispute that gave rise to litigation falls within the scope of an arbitration

agreement. 9 U.S.C. §§ 1, 2; Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth, Inc., 473 U.S.

614, 626 (1985);see also Becker Autoradio U.S.A., Inc. v. Becker Autoradiowerk GmbH, 585 F.2d

39, 43 (3d Cir. 1978). The FAA establishes a strong federal policy in favor of arbitration by

providing that a written agreement to arbitrate “shall be valid, irrevocable, and enforceable.” 

9 U.S.C. § 2. The rationale behind this policy is to enforce private contractual agreements. E.I.

DuPont de Nemours and Co. v. Rhone Poulenc Fiber & Resin Intermediates, S.A.S., 269 F.3d 187,

194 (3d Cir. 2001). Before parties are compelled to arbitrate, the court must determine if (1) there

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is a valid agreement to arbitrate; and (2) the dispute at issue falls within the scope of that agreement.

Century Indem. Co. v. Certain Underwriters at Lloyd’s, 584 F.3d 513, 523 (3d Cir. 2009). This

Circuit has held that under the FAA “a court may only compel a party to arbitrate where that party

has entered into a written agreement to arbitrate that covers the dispute.” E.I. DuPont, 269 F.3d at

194 (quoting Bel-Ray Co., Inc. v. Chemrite (Pty) Ltd., 181 F.3d 435, 444 (3d Cir. 1999)); see also

Smith/Enron Cogeneration LP, Inc. v. Smith Cogeneration Int’l, Inc., 198 F.3d 88, 95 (2d Cir. 1999)

(“whether an entity is a party to the arbitration agreement [] is included within the broader issue of

whether the parties agreed to arbitrate.”). It is undisputed that the Sales Agreement contains a valid

and enforceable arbitration clause that requires OCPI and OraPharma to submit to bindingarbitration

in New York for “any controversy or claim arising out of or relating” to the Agreement. The issue

here is whether the defendants, as non-signatories to the Sales Agreement, may compel OCPI to

arbitrate its claims. 

C. Did the Arbitration Agreement Terminate with the Sales Agreement?

Neither of the parties raised the issue of whether J&J’s transfer of the Sales Agreement to

a third party, Water Street Healthcare Partners , and the Agreement’s subsequent termination

2

rendered the arbitration clause to be void and unenforceable by J&J. This is a preliminary issue that

should be addressed before determining whether there is a valid agreement to arbitrate. In the

context of disputes arising under collective bargaining agreements, the U.S. Supreme Court has held

that an arbitration clause within a contract does not terminate when the contract is terminated. 

Specifically, 

If the contract does not state that the duty to arbitrate ends with the termination of the

 By way of J&J’s divestiture of OraPharma to Water Street Healthcare Partners. 2

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contract, the strong policies favoring arbitration should ordinarily lead the court to

conclude that the obligation to arbitrate- especially as to claims that accrued during

the term of the contract- survives the expiration of the contract. Butchers, Food

Handlers and Allied Workers Union v. Hebrew Nat’l Kosher Foods, Inc., 818 F.2d

283, 287 (2d Cir. 1987) (citing Nolde Bros. V. Local No. 358, Bakery &

confectionary Workers Union, 430 U.S. 243, 250-51 (1977). See also Emery Air

Freight Corp. v. Local Union 295, 786 F.2d 93, 97-98 (2d Cir. 1986).3

Here, the arbitration clause does not expressly state that the right to arbitrate terminates once the

Sales Agreement is terminated. Additionally, OCPI’s claims against defendants arose during the

term of the Agreement. Thus, consistent with the strong policy in favor of arbitration, the arbitration

clause in the Sales Agreement is still enforceable for OCPI’s claims arising during the term of the

Agreement, even though the Agreement has since terminated.

D. Is There A Valid Agreement to Arbitrate? 

The defendants acknowledge that they are not signatories to the Sales Agreement, but argue

that they can compel OCPI to arbitrate on two grounds: (1) JJCCI is a party to the Sales Agreement

by virtue of OraPharma’s oral assignment of certain rights and obligations under the Agreement to

JJCCI, and (2) the principle of equitable estoppel applies to prevent OPCI from avoiding the

arbitration clause, and allows defendants to compel arbitration as non-signatories to the Sales

Agreement.

1. Assignment to JJCCI

Defendants argue that OraPharma orally assigned certain rights and obligations under the

Sales Agreement to JJCCI as an Affiliate, which establishes JJCCI as a party under the Agreement. 

The defendants rely on the assignment clause, which, in relevant part, provides that

 See infra D.1. New York law governs contract formation and interpretation of the Sales 3

Agreement.

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This Agreement, or any of the rights and obligations created herein, shall not be

assigned or transferred, in whole or in part, by either Party hereto without the prior

written consent of the other Party; provided, however, that OraPharma shall have the

right to assign any or all of its rights or obligations under this Agreement to any

Affiliate, or a successor to that part of its business to which this Agreement relates,

without such prior written consent . . . [T]his Agreement shall bind and inure to the

benefit of the Parties hereto and their respective successors and assigns.

OCPI argues that there is no evidence that an oral assignment was ever made from OraPharma to

JJCCI. OCPI relies on Property Asset Mgmt., Inc. v. Chicago Title Ins. Co. to demonstrate that

defendants have not satisfied their burden of proving the existence of an assignment because under

New York law “there is a need for some ‘act or words’ that manifest an intent to assign.” 173 F.3d

84, 87 (2d Cir. 1999).

To decide the construction of the contract language, the Court will look to the state law

principles that governed contract formation. Century Indem. Co., 584 F.3d at 524. Here, New York

law governs the Sales Agreement. Sales Agreement § 14.12. Under New York law, an oral

assignment of contractual rights is valid provided there is consideration between the parties. Martha

Graham Sch. &Dance Found., Inc. v. Martha Graham Ctr. Of Contemporary Dance, Inc., 380 F.3d

624, 643-44 (2d Cir. 2004). In the absence of a written assignment agreement, the court can look

to other evidence of the assignment including testimony from an employee regarding the contractual

rights that had been assigned. Id. Additionally, for an assignment to be valid under New York law, 

“no particular words are necessary . . . it is only required that there be a perfected transaction

between the assignor and assignee, intended by those parties to vest in the assignee a present right

in the things assigned.” Leon v. Martinez, 84 N.Y.2d 83, 88 (N.Y. Ct. App. 1994) (emphasis added). 

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The Sales Agreement permits OraPharma to assign its rights to any Affiliate without prior

written consent. The Agreement defines “Affiliate” as “any Person [including corporations] that

directly or indirectly controls, is controlled by or is under common control with such Party.” Sales

Agreement §1.01(c). JJCCI, as an operating subsidiaryfor J&J’s consumer healthcare products unit,

is under common control by J&J, as is OraPharma, and can be deemed an “Affiliate” within the

meaning of the Agreement. Furthermore, a JJCCI employee certified to the functions that were

assigned from OraPharma to JJCCI while the Agreement was in effect, and even after J&J’s

divestiture of OraPharma. The assigned functions included the development of marketing plans

(Sales Agreement § 2.01); review of marketing materials (Sales Agreement § 2.03(b)(vii), 6.01(b));

regulatory compliance (Sales Agreement § 2.03(c)(iv); customer information (Sales Agreement §

2.05); and qualitycontrol (Sales Agreement Ex. E). JJCCI also certified that OraPharma reimbursed

JJCCI for the assigned functions that JJCCI employees performed, which constitutes valid

consideration for the assignment. Thus, JJCCI has demonstrated a “perfected transaction” between

OraPharma, as the assignor, and JJCCI, as the assignee, to perform certain rights and obligations

during the course of the Sales Agreement. Accordingly, JJCCI is bound to the Sales Agreement by

virtue of the assignment. 

2. Equitable Estoppel 

Courts have held that a non-signatory may compel a signatory to arbitration so long as the

non-signatoryis bound to the arbitration agreement byordinaryprinciples of contract and agencylaw

such as third party beneficiary, a principal-agent relationship, and equitable estoppel. E.I. DuPont,

269 F.3d at 194; see also Thomson-CSF, S.A. v. American Arbitration Assoc., 64 F.3d 773, 778 (2d

Cir. 1995). Here, the defendants argue that they can compel OCPI to arbitration based on the

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principle of equitable estoppel. OCPI argues that it would be inequitable to allow the defendants to

enforce an arbitration agreement as a non-signatory when OCPI’s claims are a result of defendants’

alleged tortious conduct, which is independent of the Sales Agreement.

Courts generally follow one of two theories to bind a non-signatory to an arbitration

agreement under the principle of equitable estoppel. See, e.g., E.I. DuPont, 269 F.3d at 199. Under

the first theory, courts have bound a non-signatory to an arbitration agreement where the nonsignatory attempts to exploit certain provisions within a contract, but denies being bound to the

arbitration clause within that contract. Id. at 200. Under this theory, the non-signatory is estopped

from rejecting the arbitration clause while accepting other provisions within the contract. Id. Under

the second theory, a non-signatory to the arbitration agreement may compel a signatory to arbitrate

a dispute once the court has assessed that (1) there is a close relationship between the entities

involved, (2) the relationship of the alleged wrongs to the non-signatory’s obligations and duties in

the contract, and (3) the claims were intertwined with the underlying contractual obligations. Id. at

201 (citing Thomson-CSF, S.A., 64 F.3d at 776. The second theory of equitable estoppel requires

a fact specific analysis of those three factors. JLM Indus. v. Stolt-Nielsen, S.A., 387 F.3d 163, 177-78

(2d Cir. 2004). The Court will evaluate whether equitable estoppel under the second theory applies

to the present matter. 

Courts have applied the second theory of equitable estoppel to cases that are factually

similar to the present matter. The defendants relied on the following cases in support of its argument

that they may compel OCPI to arbitration. In most of these cases, the court declined to apply

equitable estoppel, but the cases establish the general proposition that a non-signatory may compel

a signatory to arbitrate a dispute after careful review of the relationship among the parties, the

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contracts they signed, and whether the dispute is related to that contract. See JLM Indus., 387 F.3d

at 177. OCPI’s attempts to distinguish each of these cases from the present matter is unavailing

because each case is analyzed on its own set of facts.

In E.I. Dupont, the court held that a signatorycan be estopped from avoiding arbitration with

a non-signatory when the issues to be resolved in arbitration are intertwined with the contract. 269

F.3d at. 202; see also Thomson-CSF, 64 F.3d at 779. The court declined to apply equitable estoppel

because the court found that the plaintiff’s claims for breach of an oral agreement and fraudulent

misrepresentations occurred much later in time than the execution of the contract, and therefore the

claims were not sufficiently intertwined with the contract containing the arbitration clause. Id. In

PNY Technologies v. Samsung Elec. Co., Ltd., the court applied the fact specific analysis and held

that a non-signatory, that was an affiliate of a signatory, may compel arbitration where the arbitration

clause in one agreement extended to the dispute that arose under another agreement between the

parties. No. 10-4587, 2011 WL 900154 (D.N.J. March 14, 2011). The court estopped PNY from

avoiding arbitration because PNY selectively chose to differentiate its claims against Samsung and

its affiliates in an effort to avoid the arbitration clause. Id. at *8. Defendants also rely on Orange

Chicken, L.L.C. v. Nambe Mills, Inc., to demonstrate that equitable estoppel under the second theory

is recognized in the Second Circuit. No. No. 00 civ. 4730, 2000 WL 1858556 (S.D.N.Y. Dec. 19,

2000). After applying the fact specific analysis, the court held that equitable estoppel did not apply

because plaintiff’s claims for false advertising and disparagement against its retail competitor

defendants were unrelated to plaintiff’s license and sales agreement with a mutual third party. In

Denney v. Jenkens & Gilchrist, the court held that for claims to be intertwined with the contract

then“[a]t a minimum, the signatory’s claims must ‘make [] reference to or presume [] the existence

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of the written agreement.’” 412 F. Supp.2d 293, 298 (S.D.N.Y. 2005)(quoting JLM Indus., 387 F.3d

at 178). The court also noted that the purpose of equitable estoppel is to prevent a plaintiff from

relying on a contract to establish a claim, but then rejecting that contract’s arbitration clause. Id. at

298. Ultimately, the court held that the plaintiff’s claims were not intertwined with the contract

because even if the contract was void, invalid or unenforceable, the plaintiff’s claims against the

non-signatory could still proceed.

Upon review of OCPI’s allegations in its complaint, the relationship of the parties, the Sales

Agreement, and the issues in dispute, the Court finds that the defendants may compel OCPI to

arbitration based on the principle of equitable estoppel. First, as to the relationship between the

entities involved, OCPI entered into the Sales Agreement with OraPharma, a subsidiary of J&J, and

OraPharma assigned certain rights and obligations under the Agreement to JJCCI, also a subsidiary

of J&J, and an Affiliate to OraPharma within the meaning of the Sales Agreement. Therefore, a

“close relationship” exists among OCPI, J&J and JJCCI. Second, the alleged wrongs of defendants,

as non-signatories to the Agreement, are directly related to OraPharma’s obligations under the

Agreement. Specifically, OCPI’s fundamental argument is that OraPharma was unable to perform

its obligations under the Agreement because of defendants’ tortious conduct. Third, OCPI has

asserted three common law claims against defendants for fraudulent inducement to enter into the

Sales Agreement, tortious interference with the Sales Agreement, and civil conspiracy. Each of

OCPI’s claims make reference to and requires the existence of the Sales Agreement. See Denney,

412 F. Supp.2d at 298; JLM Indus., 387 F.3d at 178. Thus, OCPI’s claims are sufficiently

intertwined with the underlying contractual obligations in the Sales Agreement. The court finds that

the facts in this case satisfy the three factor analysis to equitably estop OCPI from avoiding

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arbitration with the defendants. Accordingly, there is a valid agreement to arbitrate between the

parties in this action.

E. The Scope of the Agreement

Having determined that there is a valid agreement to arbitrate that can be enforced between

OCPI and the defendants, the next inquiry is whether OCPI’s claims fall within the scope of the

arbitration clause. To determine whether particular claims fall within the scope of an arbitration

clause, courts focus on the factual allegations in the complaint rather than the legal causes of action

asserted. Mitsubishi Motors Corp. v. Soler Chrysler-Plymouth Inc., 473 U.S. 614, 622 n.9 (1985). 

If the underlying factual allegations in the complaint “touch matters” covered by the contract

containing the arbitration clause, then those claims are arbitrable, notwithstanding the legal labels

for those claims. Id. at 625 n. 13. 

Applying this standard to the present matter, the Court finds that each of OCPI’s claims are

arbitrable as a matter of law. OCPI’s complaint alleges that J&J fraudulently induced OCPIto enter

into the Sales Agreement with OraPharma; J&J tortiously interfered with the Sales Agreement

causing OraPharma to breach that Agreement; and J&J and JJCCI conspired to fraudulently induce

OCPIto enterinto the Sales Agreement. Compl. ¶¶¶ 64, 69-70, 76-77. OCPI alleges that defendants’

tortious conduct was for the purpose of suppressing sales and public awareness of the OralCDx

Brush in order to protect sales of Listerine, which may have a causal link to oral cancer. Compl. ¶

1. Legal labels aside, the essence of OCPI’s complaint is that because of defendants’ actions,

OraPharma breached the terms of the Sales Agreement by not marketing and distributing the

OralCDx Brush. These factual allegations necessarily “touch matters” covered by the Sales

Agreement, including contract formation, interpretation, and performance. 

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The Court further finds that the arbitration clause is sufficiently broad to encompass all of

OCPI’s claims against defendants. The arbitration clause states in relevant part, 

Any controversy or claim arising out of or relating to this Agreement shall be

resolved by arbitration before a panel of three arbitrators in accordance with the

Commercial Arbitration Rules of the American Arbitration Association . . .The

arbitration shall be held in New York and the arbitrator shall apply the substantive

law of New York, except that the interpretation and enforcement of this arbitration

provision shall be governed by the Federal Arbitration Act . . .EACH PARTY

HERETO WAIVES ITS RIGHT TO TRIAL O F ANY ISSUE BY JURY.

Sales Agreement § 14.02.

In furtherance of the strong policy in favor of arbitration, any doubts as to whether a dispute is

covered by an arbitration agreement is resolved in favor of arbitration. Battaglia v. McKendry, 233

F.3d 720, 727 (3d Cir. 2000) (citing AT&T Techs., Inc. v. Commc’n Workers of Am., 475 U.S. 643,

650 (1986)). The arbitration clause provides that “any controversy or claim arising out of or relating

to this Agreement” must be resolved by arbitration. Sales Agreement § 14.01. Generally, arbitration

clauses that have phrases such as ‘arising under’ and ‘arising out of’ are given broad construction.

Id. In light of the presumption in favor of arbitration and the broad construction of the arbitration

clause under the Sales Agreement, OCPI’s claims are properly within the scope of the arbitration

clause. 

OCPI has attempted to distinguish its claims against defendants as independent tort claims

that are unrelated to the Sales Agreement and therefore not subject to the Agreement’s arbitration

clause. The Second and Third Circuits have rejected OCPI’s strategy to distinguish tort claims from

breach of contract claims to avoid arbitration agreements. The Third Circuit has held that “[i]t is

well established that where separate tort claims arise out of the same facts as the breach of contract

claim, a broadly worded arbitration provision covers such claims.” U.S. Claims, Inc. v. Saffren &

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Weinberg, LLP, No. 07-0543, 2007 WL 4225536 (E.D.Pa. Nov. 29, 2007). The Second Circuit has

held that a “[p]laintiff cannot avoid the broad language of the arbitration clause by casting its

complaint in tort” when the claim is based on a breach of contract. Altshul Stern & Co., Inc. v.

Mitsui Bussan Kaisha, Ltd., 385 F.2d 158, 159 (2d Cir. 1967) (holding that a civil conspiracy claim

was arbitrable because it was based on a breach of contract claim). It is also well established that

fraudulent inducement claims have been held to be arbitrable as a matter of law. Genesco, Inc. v.

T. Kakiuchi & Co., Ltd., 815 F.2d 840, 854 (2d Cir. 1987) (citing Prima Paint Corp. v. Flood &

Conklin Mfg. Co., 388 U.S. 395, 402-07 (1967)); see also Smith/Enron Cogeneration L.P., Inc. v.

Smith Cogeneration Int’l, Inc., 198 F.3d 88, 99 (2d Cir. 1999). Accordingly, OCPI’s claims of

fraudulent inducement, tortious interference, and civil conspiracy against defendants are common

law torts that are directly related to OraPharma’s breach of the contract. OCPI cannot avoid the

Agreement’s mandate to arbitrate claims by simply failing to bring a breach of contract claim against

OraPharma. The court finds that without an alleged breach of the Agreement, OCPI would not have

a foundation for its present claims against defendants. 

III. CONCLUSION

For the reasons set forth above, the defendants’ motion to compel arbitration and stay this

litigation is granted. The defendants, as non-signatories to the Sales Agreement can compel plaintiff

to arbitrate its claims consistent with the arbitration clause under the Sales Agreement under a theory

of equitable estoppel. The Court will enter an order enforcing the arbitration clause in the Sales

Agreement so that plaintiff’s claims for fraudulent inducement, tortious interference, and civil

conspiracy against defendants are held to be arbitrable as a matter of law. 

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ORDER 

IT IS on this 7 day of December, 2011 th

ORDERED that defendants’ motion to compel arbitration and stay the litigation is

GRANTED. The arbitration clause in the Sales Agreement is enforced and plaintiff’s claims are

arbitrable as a matter of law; and it is further

ORDERED that the Clerk administratively terminate this action without prejudice. The

parties have the right to reopen the proceedings for good cause shown for the entry of any stipulation 

or order, or for any other purpose required to obtain a final determination of the litigation.

s/Peter G. Sheridan 

PETER G. SHERIDAN, U.S.D.J. 

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