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HURST v. PRUDENTIAL SECS. INC.

July 10, 1995

JEAN HURST, Plaintiff,
v.
PRUDENTIAL SECURITIES INCORPORATED, dba Prudential Bache Capital Funding; JAMES CROWLEY, Defendants.



The opinion of the court was delivered by: ORRICK

 Plaintiff's motion to dissolve the stay of the case pending arbitration and to restore the case to the Court's trial calendar and defendants' motion to compel compliance with court orders directing plaintiff to arbitrate her claims pursuant to the rules of the New York Stock Exchange and to stay plaintiff from arbitrating before the National Association of Securities Dealers having come before the Court, and the Court, having considered the pleadings and having had the benefit of oral argument of counsel, for the reasons stated by the Court at the hearing and for the reasons stated below, grants plaintiff's motion and denies defendants' motion.

 I. FACTUAL BACKGROUND.

 A detailed discussion of the factual background of this case can be found in the Ninth Circuit's unpublished Memorandum. Hurst v. Prudential Sec., Inc., 1994 U.S. App. LEXIS 6940, No. 93-15148, slip. op. (9th Cir. Apr. 4, 1994). Plaintiff, Jean Hurst ("Hurst"), was employed in the San Francisco office of Prudential Securities Incorporated's ("Prudential") Investment Banking Department, known as Prudential-Bache Capital Funding ("PBCF"), from May 1987 through December 1990. At the inception of her employment Hurst executed a Standard Uniform Securities Industry Registration Form ("Form U-4" or "U-4 Agreement") that contains an arbitration clause obligating her to arbitrate disputes between her and her employer. (See Hurst Decl., filed Mar. 29, 1995, Ex. A.)

 On September 14, 1990, Hurst filed a complaint in the Superior Court for the City and County of San Francisco against PBCF, James Crowley ("Crowley"), and other defendants, alleging violations of the Racketeer Influenced and Corrupt Organizations Act ("RICO"), 18 U.S.C. § 1961, conspiracy to violate RICO, and violations of 42 U.S.C. § 2000e ("Title VII"), unlawful discrimination based on sex, and asserting several state law discrimination and contract claims. Defendants removed the case to federal court, moved to dismiss certain of Hurst's claims for failure to state a claim for which relief could be granted, and moved to change venue to the Southern District of New York.

 This Court, by Order filed May 24, 1991, dismissed the RICO and conspiracy to violate RICO claims, retained jurisdiction over Title VII, Equal Pay Act, and California Labor Code claims, and remanded to state court the remaining claims based on state law. Upon that remand, only PBCF and Crowley remained as defendants in this action.

 After the Supreme Court rendered its decision in Gilmer v. Interstate/Johnson Lane Corp., 500 U.S. 20, 114 L. Ed. 2d 26, 111 S. Ct. 1647 (1991). *fn1" PBCF and Crowley informed this Court that they "believed that this case may be referable to arbitration pursuant to the rules of the New York Stock Exchange, and that there has been no waiver of their right to petition for arbitration." (Am. Joint Status Conference Statement, filed July 8, 1991, at 4:6-9.) Hurst claimed that the case was not suitable for arbitration and that defendants had waived any right to petition for arbitration. On July 19, 1991, PBCF and Crowley filed their answer, asserting arbitration as an affirmative defense.

 On November 3, 1992, pursuant to a Stipulation and Order re Amendment filed on October 29, 1992, Hurst filed her second amended complaint in which PBCF was dropped as a defendant and Prudential was first named as a defendant. On November 16, 1992, Prudential answered the complaint and asserted as an affirmative defense the existence of the agreement to arbitrate Hurst's claims. On November 20, 1992, Prudential and Crowley filed their petition to compel arbitration.

 This Court denied defendants' petition to compel arbitration on the ground that they had waived their right to compel arbitration "by the actions they undertook in the course of this litigation." (Order filed Jan. 4, 1993, at 2:4.) On appeal, the Ninth Circuit reversed this Court and ordered the parties to go to arbitration. This Court then granted the petition to compel arbitration, required Hurst, Prudential, and Crowley to submit to arbitration all of the second amended complaint's claims and any other pending claims, and stayed, pending such arbitration, the action at bar and any San Francisco Superior Court proceeding in which one or more remanded claims are pending.

 Hurst now moves this Court to dissolve the stay and restore the case to the trial calendar, based on a recent Ninth Circuit decision that she argues precludes compulsory arbitration of her Title VII and related discrimination claims. Prudential Ins. Co. v. Lai, 42 F.3d 1299 (9th Cir. 1994). Hurst claims that pursuant to an established exception to the "law of the case" doctrine, this Court has discretion to revisit a previously decided issue where the controlling law has changed.

 First, defendants oppose Hurst's motion arguing that the motion is procedurally inappropriate and untimely. Second, they argue that the decision in Lai creates no exception to the application of the law of the case doctrine in this action. Defendants move the Court to compel compliance with the Court's Orders directing Hurst to arbitrate her claims pursuant to the rules of the New York Stock Exchange ("NYSE") and to stay Hurst from arbitrating before the National Association of Securities Dealers ("NASD").

 II. HURST'S MOTION TO DISSOLVE STAY AND RESTORE CASE TO TRIAL CALENDAR.

 A. Law of the Case Doctrine.

 The doctrine of law of the case states that "a court is generally precluded from reconsidering an issue that has already been decided by the same court, or a higher court in the identical case." Thomas v. Bible, 983 F.2d 152, 154 (9th Cir. 1993) (citing Milgard Tempering, Inc. v. Selas Corp. of America, 902 F.2d 703, 715 (9th Cir. 1990).) There are, however, a few narrow exceptions to the law of the case doctrine:


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