Antitrust Law Daily Wrap Up, FRANCHISING & DISTRIBUTION—D.N.J.: Dental practice finds presumption of arbitrability has real teeth, (Jul 23, 2026)

By Justin Marcus Smith, J.D.

The court found the parties did not make a clear choice to terminate their arbitration obligations with the termination of an intellectual property sublicensing agreement.

A ClearChoice dental practice alleging claims under the New Jersey Franchise Practices Act (NJFPA) failed to show that various agreements with multiple counterparties expressly negated a presumption in favor of post-termination arbitration, held the federal district court in Camden, New Jersey, in ordering the parties to arbitration. Nor did the dental practice show that the parties clearly implied that arbitration obligations would end with termination of an intellectual property sublicense agreement. Inclusion of survival language in a section of a subsequent contract did not clearly imply that the parties meant for the arbitration clause to terminate on termination of the sublicense agreement. Given the strong presumption in favor of arbitration, and the plaintiffs’ failure to present enough evidence to negate the presumption, the court found one of the two defendants could compel arbitration under the sublicense agreement. The court found the other defendant could also compel arbitration by express survival provision in a subsequent agreement even though neither defendant was a signatory to that agreement. The court explained here that the second amended complaint (SAC) sufficiently alleged that one of the defendants was in fact a party to that agreement. The court denied ancillary relief to the dental practice requested mainly because there was no formal cross-motion for the relief. Having held for arbitrability, the court stayed the action without granting the defendants’ motion to dismiss (Implant Dentistry Associates Of Mount Laurel v. Clearchoice Management Services, LLC, No. 1:25-cv-16037-CPO-AMD (D.N.J. Jul. 21, 2026)).

Background. According to the SAC, Implant Dentistry Associates of Mount Laurel, P.C. and its physician owner (collectively, IDA) operated a ClearChoice dental practice in New Jersey after entering into a series of agreements, including an assumption of lease, while other agreements were with defendants ClearChoice Management Services, LLC (CCMS) and ClearChoice Holdings, LLC (CCH), in 2017. Agreements pertinent to the lawsuit included: an Administrative Services Agreement (ASA) with CC Philadelphia, LLC, not a party to the lawsuit; a Consulting Agreement between CCMS and IDA; a Succession Agreement between CCH and IDA; an Intellectual Property Sublicense and Proprietary Software License Agreement between CCMS and IDA (IP Sublicense Agreement); a Set Up Fee Agreement between CCMS and IDA; a Chattel Mortgage between CCMS and IDA; and the Bylaws for IDA.

IDA alleged the agreements and the parties’ course of business created a franchise protected by the New Jersey Franchise Practices Act (NJFPA). IDA complained that it invested millions of dollars in licensing fees, administrative services fees, and set up fees, but the defendants terminated by letter. IDA said the letter failed to state good cause for termination and did not provide requisite sixty-day notice, both purported violations of the NJFPA.

The court initially denied an IDA motion for a temporary restraining order because the court found IDA was not likely to succeed on the merits of proving that it was a “franchise” under the NJFPA. The court also did not find facial irreparable harm. Moreover, the court rejected IDA efforts to rely on ASA obligations for a franchise because the operative complaint at that juncture relied only on the obligations of the IP Sublicense Agreement. That iteration of the complaint did not refer to the ASA.

The defendants now moved for an order dismissing the case and compelling arbitration by virtue of dispute resolution provisions of the ASA and IP Sublicense Agreement, where the SAC now referred to the ASA. The court found minimal diversity of citizenship where the physician was a citizen of Pennsylvania; IDA was a citizen of New Jersey; and defendants CCMS and CCH were both citizens of Delaware and Illinois.

The court noted that the ASA and the IP Sublicense Agreement were previously filed on the docket and incorporated by reference into the SAC by citation to prior filings. The court said it did not need discovery, nor would it apply summary judgment, to decide arbitrability. The court applied the Fed. R. Civ. P. 12(b)(6) standard instead.

Arbitration. The court ruled for arbitrability. The parties did not dispute that there were valid contracts containing arbitration clauses. They also did not dispute that the sole claim IDA asserted under the NJFPA fell within the scope of those contracts. Instead, the court had to consider two issues: (1) whether the defendants could compel arbitration under the ASA given that they were not parties to that contract; and (2) whether the defendants could compel arbitration under the IP Sublicense Agreement where the plaintiffs contended the dispute resolution provision contained therein did not survive termination of that agreement.

IDA contended the defendants did not have standing under the ASA because they were not parties to that agreement, but the defendants invoked state law principles of agency and equitable estoppel. The defendants also argued the NJFPA was “inextricably intertwined” with the ASA because IDA relied on rights thereunder to support the existence of a franchise agreement.

The court found it did not need to look to state law theories to determine whether defendant CCH could enforce the ASA because the SAC sufficiently alleged that CCH was a party to that agreement. The “reality” was that the agreement was between CCH and IDA, even if CCH did not sign it. On the face of the SAC, CCH could enforce the arbitration provision in the ASA.

The SAC did not implicate CCMS as an effective party to the ASA, but the court said it did not need to consider state law principles of agency or equitable estoppel because CCMS could compel arbitration separately under the IP Sublicense Agreement.

IDA countered that the IP Sublicense Agreement arbitration clause did not survive purported contract termination, because a term expressly provided for survival of the limitation of liability without a similar survival provision for the rest of the agreement, including the dispute resolution provision. The court noted here that the IP Sublicense Agreement had not yet been terminated at filing of the original complaint. IDA instituted the litigation in lieu of following the dispute resolution mechanism still effective within the 30-day termination notice period under the IP Sublicense Agreement.

IDA claimed it could not have followed the dispute resolution protocol because its NJFPA claim did not accrue until the effective IP Sublicense Agreement termination, at which time, the dispute resolution clause also terminated. IDA cited no authority for this, and the court said that argument also ran contrary to the first amended complaint. IDA did not allege anticipatory violation of the NJFPA at that time. IDA alleged repeated and willful NJFPA violation.

Even if the argument had been valid, the court held the arbitration provision survived termination. Contract expiration does not automatically extinguish a duty to arbitrate without clear intent to avoid arbitrability at contract expiration. The instant contract did not express such, nor did it imply it. Several courts have ruled that omission of an express provision about arbitration clause survival, despite survival language in other parts of the contract, would not negate the presumption of arbitrability. The court reviewed example opinions.

Considering the IP Sublicense Agreement in its entirety, the court found the survival language for limitation of liability was not enough to imply the parties intended to avoid arbitration obligations on termination. The court also noted the arbitration language was broad and applied to “any and all controversies.” The court additionally noted it would be illogical to conclude that the parties only intended arbitration during the life of the agreement. Other provisions were of the kind that would typically survive termination.

The court rejected the IDA argument that the court was reaching an absurd result where the ASA, in contrast, did contain an express survival clause for arbitration. The court opined that the omission of a survival clause in the IP Sublicense Agreement, and the inclusion of a survival clause in the ASA, invited ambiguity, at best, about the parties’ intent for arbitration to survive termination of the former agreement. The court ruled there was no “clear implication” to rebut the presumption of arbitrability.

Mediation. The court declined to send the parties to mediation before arbitration. IDA requested mediation without making a formal cross-motion. Although the Federal Arbitration Act expressly addresses only arbitration, some courts have interpreted it to encompass mediation. The defendants moved to compel arbitration under the FAA, whereas IDA did not offer any argument as to whether the court had FAA authority to compel mediation first.

Fee-shifting, liability. IDA sought to strike provisions of the ASA and IP sublicense agreement with respect to fee-shifting and a limitation of “aggregate liability.” IDA said the two provisions ran contrary to the text and public policy underlying the NJFPA. Again, IDA did not seek this relief by cross-motion. The local rules did not permit affirmative relief without a cross-motion.

Even if the court ignored the procedural irregularity, it said it would have denied the request as beyond the scope of the court’s motion practice order limiting dispositive motions to motions about contractual dispute resolution. In addition, whether the NJFPA applied was still in dispute.

Having ruled for arbitrability, the court likewise ruled that any further matters surrounding the dispute were to be submitted to arbitration. IDA did not argue that anything made the ASA or IP Sublicense agreement entirely void or unenforceable.

Production. For the same reasons already stated, the court found IDA could not seek affirmative relief by means of an opposition brief with respect to compelling production of books and records from CC Philadelphia. IDA also failed to establish relevance. Nor did IDA cite any authority that the court could compel production of documents sought solely to aid mediation.

The Case is No. 1:25-cv-16037-CPO-AMD.

Judge: O’Hearn, C.

Attorneys: Brenna Dee Kelly (DLA Piper LLP) for Implant Dentistry Associates of Mount Laurel. Brad D. Feldman (Duane Morris LLP) for Clearchoice Management Services, LLC.

Companies: Implant Dentistry Associates of Mount Laurel; Clearchoice Management Services, LLC

Cases: FranchisingDistribution NewJerseyNews