Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-caed-2_09-cv-03049/USCOURTS-caed-2_09-cv-03049-5/pdf.json

Nature of Suit Code: 790
Nature of Suit: Other Labor Litigation
Cause of Action: 28:1332 Diversity-Petition for Removal

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1

UNITED STATES DISTRICT COURT

EASTERN DISTRICT OF CALIFORNIA

----oo0oo----

ERIC B. BATES, on behalf of

himself, all others similarly

situated, the general public,

and as an “aggrieved employee”

under the California Labor

Code Private Attorneys General

Act,

NO. CIV. S-09-3049 FCD/GGH

Plaintiff,

v. MEMORANDUM AND ORDER

MORGAN STANLEY SMITH BARNEY

LLC, a limited liability

company, CITIGROUP GLOBAL

MARKETS INC., a corporation

formerly doing business as

SMITH BARNEY, CITIGROUP GLOBAL

MARKETS HOLDINGS, INC., a

corporation, and DOES 1

through 50, inclusive, 

Defendants.

----oo0oo----

This matter is before the court on (1) plaintiff Eric B.

Bates’ (“plaintiff”) motions for determination that defendants

Morgan Stanley Smith Barney LLC (“MSSB”), Citigroup Global

Markets Inc. f/k/a Smith Barney (“CGMI”) and Citigroup Global

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1 Plaintiff filed two separate motions, one on his own

behalf (Docket #23) and one on behalf of putative class member,

James R. Sevilla (“Sevilla”) (Docket #17). Both motions raise

essentially the same arguments, and thus, the court considers the

motions jointly herein. Additionally, while plaintiff styled the

motions as a request for a “determination that [defendants’]

arbitration claim[s] [are] part of the [instant] class action,”

the motions are more properly construed as counter-motions to

defendants’ motion to stay the proceedings, as plaintiff seeks by

his motions to preclude MSSB’s arbitrations. 

2 Because of the similarities of this case to Wright v.

RBC Capital Markets Corp., et al., Civ. No. S-09-3601 FCD/GGH,

the court finds that oral argument will not be of material

assistance, and accordingly, it submits these matters on the

briefs. E.D. Cal. L.R. 230(g).

3 Plaintiff alleges claims for: (1) violation of the

California Labor Code for failure to pay all wages, to provide

accurate records and to reimburse business expenses (first claim

for relief); (2) an injunction pursuant to Cal. Labor Code § 226

(second claim for relief); (3) violation of California’s Unfair

Competition Law (“UCL”), Cal. Bus. & Prof. Code § 17200 et seq.

(third claim for relief); (4) declaratory relief (fourth claim

for relief); and (5) violation of California’s Private Attorneys

General Act of 2004 (“PAGA”), Cal. Labor Code § 2699.3. (Not. of

Removal, filed Nov. 2, 2009, Ex. 3, attaching FAC.)

2

Markets Holdings Inc. (“CGMI Holdings”) (collectively,

“defendants”) cannot pursue arbitration of class claims (Docket

#s 17 and 23)1

 and (2) defendants’ motion to stay plaintiff’s

first amended complaint (“FAC”) pending MSSB’s arbitration

proceedings before the Financial Industry Regulatory Authority

(“FINRA”) (Docket #29).2 Plaintiff asserts five claims for

relief3 in this putative California-wide class action against

defendants, including plaintiff’s former employers, defendant

CGMI and MSSB. By their motion, defendants ask the court to stay

pending arbitration plaintiff’s FAC in its entirety, arguing that

all of plaintiff’s claims, concerning the subject promissory

notes signed by plaintiff and the class, should be stayed pending

the related proceedings brought by MSSB before FINRA and

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3

plaintiff’s other claims, to the extent they do not relate to the

promissory notes, should nonetheless be stayed in the interest of

judicial economy. Plaintiff contends by his motions that FINRA

Rule 13204 precludes the arbitration of class claims, and MSSB’s

arbitration claims against plaintiff and Sevilla are encompassed

within the instant class action and, thus, may not be arbitrated. 

Defendants respond, to the contrary, that Rule 13204 only

prohibits defendants from forcing plaintiff or a class member to

bring their class claims in arbitration; it does not apply to

defendants’ individual, affirmative claims against plaintiff or

any class member such as Sevilla.

This case is related to Wright v. RBC Capital Markets Corp.,

et al., Civ. No. S-09-3601 FCD/GGH also pending before the

undersigned (“Wright”). (Docket #12.) In a memorandum and

order, filed June 24, 2010, this court stayed, in part, the

Wright case pending the defendant’s FINRA arbitration, finding

Rule 13204 did not preclude the defendant’s arbitration which was

filed prior to Wright’s action and did not involve the same

claims as the class action. (Wright, Docket #39.) Defendants

contend here that Wright controls and likewise mandates a stay of

this action. Plaintiff argues that this case involves different

facts, and thus, Wright is distinguishable and does not require

entry of a stay in this case.

For the reasons set forth below, the court finds that Wright

governs this case, and accordingly, a stay of the action is

warranted, largely for the same reasons as set forth in the

Wright memorandum and order. The court, therefore, grants

defendants’ motion for a stay, staying the entirety of the action

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4 In Wright, the defendant only moved for a partial stay,

agreeing to answer those claims that did not involve the

promissory notes. As such, the court did not consider the

propriety of entering a complete stay of the action. Here, for

the reasons set forth below, the court finds that defendants have

made a sufficient showing to demonstrate that a stay of the

entire action is in the interest of judicial economy.

5 Plaintiff’s objection to the DeRobertis Declaration is

overruled. Defendants properly disclosed DeRobertis as a

potential witness in the case in their supplemental Rule 26

disclosures, and thus, there is no prejudice to plaintiff by the

court’s consideration of his declaration. More significantly,

the essential background information provided by DeRobertis is

not disputed by plaintiff. (See Docket #42.)

4

in the interest of judicial economy.4

 Plaintiff’s countermotions are accordingly denied.

Plaintiff moves in the alternative, should his motions be

denied, for an order granting an interlocutory appeal on the

issue of Rule 13204’s applicability. Plaintiff’s motion is

denied as the court cannot find that there is substantial ground

for difference of opinion on the issue. 28 U.S.C. § 1292(b). 

BACKGROUND

In May 2003, plaintiff became employed by defendant CGMI. 

(DeRobertis Decl., filed Aug. 6, 2010 [Docket #38], ¶ 3.)5 At

the time he was hired as a financial advisor, plaintiff was

provided a loan of $183,879, and he executed a promissory note in

connection with this loan. (Id. at Ex. A.) Under the terms of

the note, plaintiff agreed to repay the loan in nine equal annual

installments of $20,431 during his continued employment with

CGMI. (Id.) These annual payments would be made pursuant to an

agreement in which plaintiff would receive special compensation

from CGMI in the annual amount due as long as he remained

employed with CGMI. (Id.) However, if plaintiff resigned from

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6 On June 1, 2009, defendant CGMI and non-party Morgan

Stanley entered into a joint venture resulting in the formation

of defendant MSSB. (Id. at ¶ 5.) As a result, plaintiff and

Sevilla became employed by MSSB, and defendants maintain that

MSSB holds the rights to collect on their promissory notes. 

(Id.)

5

his employment with CGMI before the expiration of nine years,

the remaining principle balance of the loan plus interest

immediately became due, and he would no longer receive the

special compensation payments. (Id.)

In February 2004, alleged putative class member Sevilla

became employed as a financial advisor by defendant CGMI. (Id. at 

¶ 4.) At the time of his hire, Sevilla was provided with a loan

of $220,434, and he executed a promissory note in connection with

this loan. Sevilla agreed to repay the loan in eight equal

annual installments of $27,554.25 during his continued employment

with CGMI. (Id. at Ex. B.) Like plaintiff, these annual

payments were made pursuant to an agreement in which Sevilla

would receive special compensation from CGMI in the annual amount

due as long as he remained employed with CGMI. (Id.) However,

if he resigned from his employment with CGMI before the

expiration of eight years, the remaining principle balance of the

loan plus interest immediately became due, and Sevilla would no

longer receive the special compensation from CGMI. (Id.)

On June 12, 2009, Sevilla resigned from his employment with

MSSB6 and went to work for Stifel Nicolaus & Co. (Id. at ¶ 6.) 

At the time of his resignation, the principle balance remaining

on his loan was $82,662.75. (Id.) On June 15, 2009, plaintiff

resigned from MSSB and also went to work for Stifel Nicolaus &

Co. (Id. at ¶ 7.) At the time of his resignation, the

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6

principle balance remaining on his loan was $61,293. (Id.)

On July 17, 2009, MSSB sent Sevilla a demand letter

requesting that he repay the principle balance on the loan.

(Gottlieb Decl., filed Aug. 6, 2010 [Docket #39], Ex. E.) 

Sevilla refused to do so, and to date, he has not repaid the

outstanding balance on the loan. (DeRobertis Decl., ¶ 8.)

On July 22, July 31, and August 10, 2009, MSSB sent plaintiff

demand letters requesting that he repay the principle balance of

his loan. (Gottlieb Decl., Exs. B, C, and D.) Plaintiff refused

to do so, and to date, he has not repaid the outstanding balance

on the loan. (Gottlieb Decl, Ex. E; DeRobertis Decl., ¶ 8.)

On August 21, 2009, plaintiff filed his putative class

action complaint in California state court, alleging among other

claims, a declaratory relief claim seeking to declare the

“loans,” provided by defendants to their financial advisors, 

void as an illegal attempt to recoup a signing “bonus” provided

to the advisors. The complaint also set forth (1) a claim based

on various wage and hour violations of the California Labor Code;

(2) a claim for an injunction under the California Labor Code to

remedy certain violations; and (3) a claim under California

Business and Professions Code § 17200 based on certain Labor Code

violations. (See Not. of Removal, filed Nov. 2, 2009.) On

October 22, 2009, plaintiff filed a first amended complaint which

set forth the same claims but added a claim based on California’s

PAGA. (FAC, ¶¶ 66–71, Ex. 3 to Not. of Removal.)

On November 2, 2009, defendants removed the case to this

court under the Class Action Fairness Act. On November 17, 2009,

Carl Wright, represented by the same counsel as plaintiff herein,

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7

filed a nearly identical class action in this court against his

former employer, RBC Capital Markets (the aforementioned Wright

case).

On January 29, 2010, the defendant in Wright filed a

“Partial Motion to Dismiss or Stay” (“Wright Motion to Stay”),

contending that (1) Wright’s declaratory relief claim, and

related derivative claims, seeking to declare similar promissory

notes unenforceable as violative of the California Labor Code,

should be stayed because RBC had filed a FINRA arbitration

against Wright to collect amounts due under his promissory note;

(2) alternatively, Wright’s declaratory relief and other related

claims pertaining to the promissory notes should be dismissed

under Rule 12(b)(6) for failure to state a cognizable claim; and

(3) various of Wright’s California Labor Code claims should be

dismissed under the first-to-file rule because they were

encompassed within another class action already pending in

another district.

On January 29, 2010, MSSB filed a FINRA arbitration claim

against Sevilla, alleging breach of contract for Sevilla’s

failure to repay the amounts due under the promissory note. 

(Gottlieb Decl., Ex. F.) On March 19, 2010, recognizing that

“disposition of certain legal issues raised in the Wright

Defendant’s Motion to Dismiss or Stay Plaintiff’s First Amended

Complaint may have significance with respect to certain of the

legal issues raised in the Bates complaint,” the parties in the

instant action agreed to a stay of discovery pending the outcome

of the Wright Motion to Stay. (Docket #14, ¶ C.)

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8

On June 2, 2010, plaintiff filed the instant “Motion for

Determination that Arbitration Claim is Part of Class Action”

with respect to Sevilla (Docket #17.) In the motion, plaintiff

asserts that FINRA Rule 13204 precludes MSSB’s arbitration

against Sevilla. (Id.) 

On June 24, 2010, the court issued its ruling on the Wright

Motion to Stay (1) dismissing Wright’s first claim for relief

alleging various California Labor Code violations under the

first-to-file rule; (2) concluding that the FINRA arbitration

against Wright could proceed; and (3) staying

Wright’s declaratory relief claim, and related derivative claims,

pertaining to the enforceability of the subject promissory notes.

(Wright, Docket #39.)

The same day, on June 24, MSSB filed a FINRA arbitration

claim against plaintiff, alleging breach of contract for

plaintiff’s failure to repay the amounts due under the promissory

note he executed. (Jaskowiak Decl., filed July 29, 2010 [Docket

#28], Ex. A.) Citing Wright, on July 6, 2010, defendants

requested that plaintiff stay this action until the conclusion of

MSSB’s arbitration against him. (Id. at Ex. B.) Plaintiff

refused to do so. (Id., ¶ 5.) 

Instead, on July 23, 2010, plaintiff filed his “Motion for a

Determination that Arbitration Claim is Part of Class Action.”

(Docket #23.) In this motion, plaintiff contends despite the

decision in Wright, that FINRA Rule 13204 prevents MSSB’s

arbitration against plaintiff from proceeding. (Id.) On July 29,

2010, defendants filed their “Motion to Stay Proceedings,”

arguing Wright mandates a stay of this action.

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7 Neither plaintiff nor Sevilla dispute that pursuant to

their employment with defendants, they entered arbitration

agreements with defendants. They also do not dispute that if the

court finds Rule 13204 inapplicable here, they must proceed in

the arbitration while the instant claims relating to that

proceeding are stayed.

9

ANALYSIS

Here, unlike Wright, plaintiff relies exclusively on

subsection (d) of Rule 13204 to preclude MSSB’s arbitration of

its claims against plaintiff and Sevilla.7 (Docket #40 at 4 n.

3.) In Wright, the plaintiff argued that the defendant’s

arbitration was precluded by either subsection (b) or (d) of Rule

13204. Because Bates does not raise subsection (b) as a basis

for his motion, the court does not consider that provision. 

Instead, it reaches only the issue whether MSSB’s arbitration is

precluded by subsection (d) of Rule 13204.

That section provides in pertinent part: 

A member or associated person may not enforce any 

arbitration agreement against a member of a . . .

putative class action with respect to any claim that

is the subject of the certified or putative class action[.]

(Ex. 3 to Torngren Decl., filed July 22, 2010 [Docket #25].)

This court held in Wright that subsection (d) is applicable only

when (1) the class action was filed before the arbitration and

(2) the claims in the arbitration are “the subject of the

certified or putative class action.” (Wright, Docket #39 at 21.) 

Clearly, in this case, unlike Wright, the class action was filed

in advance of MSSB’s arbitration claims. Indeed, plaintiff’s

lawsuit was filed some five months prior to any arbitration claim

(MSSB filed its arbitration claim against Sevilla five months

after plaintiff instituted this action and it filed its

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arbitration claim against plaintiff eleven months later). 

Plaintiff is correct that this fact is an important distinction

from Wright, as there, Wright’s class action was filed four

months after the defendant filed its FINRA arbitration claim. 

This court emphasized in Wright, that a proper construction of

subsection (d) required that a party seek to arbitrate a claim

that was already the subject of an existing putative class

action. In other words, by its plain terms, subsection (d)

protected only those persons “who have already initiated a class

action or who are already members of class actions that have been

initiated.” (Id.) Plaintiff and Sevilla are such persons. 

However, contrary to plaintiff’s argument, that does not end the

inquiry.

For subsection (d) to preclude MSSB’s arbitrations, the

court must also find that MSSB’s arbitration claims are the

subject of the instant class action. The court answered that

precise question in Wright, finding that the defendant’s

arbitration claim in Wright was “distinct from and not the same

as any claim that [the] plaintiff now asserts in this court.” 

(Id.) The same is true in this case, as the claims asserted by

plaintiff Bates on his own behalf and on behalf of class members,

like Sevilla, are the exact claims asserted by plaintiff Wright

on his own behalf and on behalf of the putative class. (Compare

Bates’ FAC to Wright, Docket #39 at 19 and Wright FAC ¶s 60-65.) 

Thus, the court’s holding in Wright is equally applicable here.

By its arbitration claims, MSSB does not seek to compel

plaintiff and Sevilla to litigate their class claims addressing a

variety of purported California Labor Code, UCL and PAGA

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violations. Instead, MSSB seeks to arbitrate its individual,

contractual claims against plaintiff and Sevilla--claims which

FINRA provides expedited handling in light of the Authority’s

belief that promissory note claims “involve straightforward

contracts with few documents being entered into evidence.” See

FINRA Rule 13806 (providing expedited handling, including

proceedings before a single arbitrator with simplified discovery

procedures, for claims in which an “associated person failed to

pay money owed on a promisory note”); SEC Regulatory Notice 09-

49, Promissory Note Proceedings (August 2009). MSSB’s

arbitration claims, like the claims in Wright, are that specific

type of contract claim. (Wright, Docket #39 at 19.) By

contrast, plaintiff’s putative class action is based on numerous

violations predominately of the California Labor Code, which

allegedly give rise to violations also of the UCL and PAGA.

Plaintiff’s reliance on Olde Discount Corp. v. Hubbard, 4 F.

Supp. 2d 1268 (D. Kan. 1998) and Coheleach v. Bear Sterns & Co.,

Inc., 440 F. Supp. 2d 338 (S.D.N.Y. 2006) to support his argument

that the claims in MSSB’s arbitrations are the subject of this

class action is misplaced. These cases are distinguishable

because the defendants in Hubbard and Coheleach each sought to

compel the plaintiffs to arbitrate precisely the same claims that

were brought as a class action against the same defendant, and

the courts in both cases applied FINRA Rule 13204 to prevent the

defendants from doing so. In Hubbard, the court concluded that

Rule 13204 prevented a firm from forcing the plaintifff’s own

race discrimination claims into arbitration because the plaintiff

had elected to bring these claims as a class action. 4 F. Supp.

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2d at 1271. Similarly, in Coheleach, the court concluded that

Rule 13204 prevented a firm from forcing the plaintiff’s own

state and federal wage and hour law claims into arbitration

because the plaintiff had brought these claims as part of a class

action. 440 F. Supp. 2d at 341.

Hubbard and Coheleach do not support plaintiff’s position

that Rule 13204 can be used to prevent a firm from asserting its

own independent claim against an associated person in

arbitration. Indeed, this court specifically noted in Wright

that Hubbard is inapposite to the facts here: Hubbard “represents

a correct application of Rule 13204 but the factual circumstances

are different than this case.” (Wright, Docket #39 at 23.) 

Moreover, these cases also foreclose plaintiff’s argument that

Rule 13204 is rendered meaningless if this court likewise

precludes its application in this case. These cases demonstrate

how Rule 13204 is properly applied to certain circumstances.

Further, plaintiff does not cite any case in which a court

applied Rule 13204 to prevent a firm from pursuing its own

independent claim against an associated person. And, in the only

case raising a similar argument to plaintiff’s herein, the court

determined that Rule 13204 did not apply. (See Wright, Docket

#39 at 22 [discussing Banus].)

Plaintiff also attempts to distinguish this case from

Wright, arguing that here the subject promissory notes were not

refinanced. This is a distinction without a difference for the

purposes of Rule 13204. As described above, the type of

promissory note plaintiff Wright seeks to invalidate in his

putative class action is the same as the notes challenged by

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plaintiff and the class here. However, that fact is irrelevant

for purposes of Rule 13204(d) because both the defendant in

Wright and the defendants in this case do not seek to force the

plaintiffs nor any class member to arbitrate their class claims

in the arbitration. Instead, the defendants seek only to

litigate their individual, contractual claims against the

plaintiffs. Accordingly, the intended purpose of Rule 13204 is

not implicated here, as defendants do not seek to force plaintiff

and Sevilla to bring their claims in arbitration, in order to

prevent them from pursuing a class action or defeat class

certification or participation. See D.E. Frey & Co., Inc. v.

Wherry, 27 F. Supp. 2d 950, 951 (S.D. Tex. 1998) (recognizing

that the motivating principle behind the Rule remains to prevent

firms from using an arbitration agreement to compel an employee

to arbitrate his claims against the firm that are already

encompassed by a class action, as a means of frustrating the

employee’s choice to litigate in court). Ultimately, as this

court emphasized in Wright, Rule 13204 was not intended to be

used “as a sword” as plaintiff seeks to do so here; rather, it

was intended only to be “a shield” to protect a class member from

being compelled to arbitrate class claims. (Wright, Docket #39

at 24.)

Because like in Wright, MSSB in this action “seek[s] only to

have its own claim arbitrated, which is distinct from and not the

same as any claim that plaintiff [or Sevilla] now asserts in this

court,” the court must find Rule 13204 inapplicable. As such,

plaintiff’s motions are properly denied, and a stay of this

action is merited.

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As set forth in the Wright order, given the liberal policy

in favor of arbitration, the court finds that MSSB’s claims

before FINRA should proceed, while plaintiff’s instant class

claims are stayed. While the parties dispute how each claim for

relief specifically relates to the subject promissory notes, they

do agree that plaintiff’s FAC, at least in part, raises some

claims that are unrelated to the promissory notes. In Wright,

the defendant agreed to answer those unrelated claims and sought

only a partial stay of the action. (Docket #39 at 3 n. 3, 24.) 

Here, however, defendants move for a stay of the entire action. 

Certainly, judicial economy militates in favor of staying

plaintiff’s claim for declaratory relief challenging the

enforceability of the promissory notes, as well as his other

claims to the extent they seek to invalidate the promissory notes

as violative of the California Labor Code, UCL or PAGA, as the

outcome of the FINRA proceedings could well impact those claims

in this action. Allowing the two matters to proceed concurrently

would unnecessarily risk inconsistent judgments and defeat

efficiency. Interests of judicial economy also, however, support

entry of a complete stay of the action. Ultimately, the decision

to stay the entire action rests in the court’s discretion. See

Mediterranean Enterprises, Inc. v. Ssangyong Corp., 708 F.2d

1458, 1465 (9th Cir. 1983) (“A trial court may, with propriety,

find it is efficient for its own docket and the fairest course

for the parties to enter a [complete] stay of an action before

it, pending resolution of independent proceedings which bear upon

the case.”); see also United States ex rel. Newton v. Neumann

Caribbean International, Ltd., 750 F.2d 1422, 1427 (9th Cir.

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8 The court notes that plaintiff, without citation to any

authority, simply requested that the court certify the question

for “interlocutory appeal” in the conclusion section of his

memorandum of points and authorities. (Docket #24 at 15.) Only

in his reply, for the first time, did plaintiff discuss the

requirements for an interlocutory appeal under Section 1292(b). 

The court may properly disregard arguments raised for the first

time in a reply, and thus, it could deny plaintiff’s request on

this basis alone. However, defendants responded to plaintiff’s

request in their opposition, and as such, the court considers

whether interlocutory appeal is warranted in this case.

15

1985) (concluding that considerations of economy and efficiency

supported the district court’s decision to stay a non-arbitrable

claim while arbitration proceeded). Here, the gravamen of the

action is plaintiff’s challenge to the promissory notes; to the

extent other issues are involved, including certain alleged wage

and hour violations (see e.g. FAC ¶s 41-46, 48-51), they are

minor issues which the court can easily address in conjunction

with the full resolution of the case, following the arbitration

proceedings. Permitting these less substantial issues to

proceed, while the other central issues are stayed pending the

arbitrations, defeats efficiency. See Chelsea Family Pharmacy v.

Medco Health Solutions, Inc., 567 F.3d 1191, 1196 (10th Cir.

2009) (concluding that a stay of the entire court action is

appropriate when “arbitrable claims predominate the lawsuit and

the nonarbitrable claims are of questionable merit”). 

Accordingly, the court will stay the action in its entirety.

Should the court deny his motions, plaintiff, alternatively,

moves for an order permitting interlocutory appeal as to Rule

13204’s applicability to the instant action.8 Under 28 U.S.C. §

1292(b), a court may permit an interlocutory appeal “by

certifying that the order [at issue] ‘involves a controlling

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question of law as to which there is substantial ground for

difference of opinion and that an immediate appeal from the order

may materially advance the ultimate termination of the

litigation.’” James v. Price Stern Sloan, Inc., 283 F.3d 1064,

1068 n. 6 (9th Cir. 2002). The Ninth Circuit, however, has

repeatedly recognized that use of interlocutory appeals are

reserved for “extraordinary cases.” United States Rubber Co. v.

Wright, 359 F.2d 784, 785 (9th Cir. 1966). 

The court agrees with plaintiff that the motions present

controlling issues of law, involving Rule 13204’s applicability

to this putative class action, and that an appeal could

materially advance the termination of the litigation, as a

contrary decision by the Ninth Circuit would permit this action

to proceed immediately, rather than await the conclusion of the

FINRA arbitrations. However, plaintiff must also show that there

is substantial ground for difference of opinion on the issues. 

The court acknowledges there is no controlling Ninth Circuit

precedent on point, but contrary to plaintiff’s assertions, the

court’s decision does not conflict with any other decisions on

point. Hubbard and Coheleach raise different facts and are

distinguishable. And, Banus’ underlying rationale supports this

court’s interpretation of Rule 13204 as detailed in the Wright

order. It is not sufficient to grant an interlocutory appeal

that this court’s Wright decision and the instant order may raise

issues of first impression. Krangel v. Gen. Dynamics Corp., 968

F.2d 914 (9th Cir. 1992) (recognizing that simply because a court

is the first to rule on a particular question does not mean that

there is a substantial difference of opinion to support an

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interlocutory appeal); see also Fed. Dist. Ins. Corp. v. First

Nat’l Bank of Waukesha, Wis., 604 F. Supp. 616 (E.D. Wis. 1985)

(recognizing that the mere fact that there is a lack of authority

on a disputed issue does not necessarily establish some

substantial ground for difference of opinion under the statute). 

Plaintiff must show a likelihood that the court’s decision will

be reversed on appeal. See Oyster v. Johns-Manville Corp., 568

F. Supp. 83 (E.D. Pa. 1983) (holding that a substantial ground

for difference of opinion may be demonstrated by adducing

conflicting and contradictory opinions of courts which have ruled

on the issue). Plaintiff has not made such a showing here. 

Plaintiff’s mere claim that this court’s ruling is incorrect does

not demonstrate the required substantial ground for difference of

opinion. Wausau Bus. Ins. Co. v. Turner Const. Co., 151 F. Supp.

2d 488 (S.D. N.Y. 2001). Indeed, plaintiff makes no showing that

this case presents the type of “extraordinary” question which

warrants the grant of an interlocutory appeal.

CONCLUSION

For the foregoing reasons, plaintiff’s motions to preclude

arbitration of class claims (Docket #s 17 and 23) are DENIED, and

his alternative request for an order permitting interlocutory

appeal is also DENIED. Defendants’ motion to stay the action in

its entirety is GRANTED. The Clerk of the Court is directed to

enter a stay of the action. The parties are ordered to file a

joint status conference statement within 20 days of any

disposition of the FINRA arbitrations involving plaintiff or 

///

///

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Sevilla.

IT IS SO ORDERED.

 DATED: August 24, 2010

 FRANK C. DAMRELL, JR.

UNITED STATES DISTRICT JUDGE

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