Brendan Gilmore v. Shearson/American Express Inc. and Stuart Travis

Summary

The court considered whether claims arising from alleged securities-account churning, including claims under § 10(b), RICO, and state law, were subject to arbitration. In light of the Supreme Court's intervening decision in Shearson/American Express, Inc. v. McMahon, the court held that the federal securities and RICO claims were arbitrable and that Shearson could revive its motion to compel arbitration as to the § 10(b) claims, but not the state-law claims. The court compelled arbitration of the federal claims and stayed the remaining litigation.

Holdings

1. An intervening Supreme Court decision establishing that Exchange Act and RICO claims are arbitrable justified reconsideration of the district court's prior ruling under the law-of-the-case doctrine.
2. The plaintiff's RICO and section 10(b) claims were subject to arbitration.
3. Shearson was permitted to revive its right to compel arbitration of the section 10(b) claims.
4. The arbitration clause applied to all transactions in the plaintiff's account, not merely the two option transactions.
5. The motion to compel arbitration of the common-law state claims was denied because the Second Circuit had already held that Shearson failed to establish a basis to revive its right to arbitrate those claims.
6. The balance of the litigation, including the claims against Travis, was stayed pending arbitration because the arbitrable claims predominated and rested on the same underlying facts as the nonarbitrable claims.

Questions Presented

1. Whether an intervening Supreme Court decision holding Exchange Act and RICO claims arbitrable permitted the district court to reconsider its prior contrary ruling under the law-of-the-case doctrine.
2. Whether Shearson's prior withdrawal of its arbitration motion waived its right to compel arbitration of the RICO and section 10(b) claims.
3. Whether the arbitration agreement covered all transactions in Gilmore's account or only the option transactions associated with the Client Option Agreement.
4. Whether the nonarbitrable state-law claims and claims involving a non-signatory defendant should be stayed pending arbitration of the arbitrable claims.

Disposition

other