Brent v. Source Interlink Distribution, LLC et al

Filing 36

ORDER denying 25 Defendant Source Interlink Companies, Inc.'s Motion to Stay Proceedings; denying 34 Defendant Source Interlink Companies, Inc.'s Motion for Leave to File Reply to Plaintiff's Response to Defendant Source Interlink Companies' Motion to Stay Proceedings. Plaintiff Brent is directed to comply with the CM/ECF Administrative procedures going forward in this case. See M.D. Fla. Admin. Proc. for Elec. Filing in Civil and Criminal Cases ("Separate Attachment: Each separate exhibit must be filed as a separate attachment to the main document."). Signed by Judge Sheri Polster Chappell on 8/21/2014. (LMF)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
FORT MYERS DIVISION
DEBBIE BRENT,
Plaintiff,
v.

Case No: 2:14-cv-52-FtM-38DNF

SOURCE INTERLINK
DISTRIBUTION, LLC and SOURCE
INTERLINK COMPANIES, INC.,
Defendants.
/
ORDER1
This matter comes before the Court on Defendant Source Interlink Companies, Inc.'s
Motion to Stay Proceedings (Doc. 25) filed on July 16, 2014. Plaintiff Debbie Brent filed a
response in opposition (Doc. 32; see also Doc. 33) on August 4, 2014. This matter is now
ripe for review.
Background
Plaintiff Debbie Brent initiated this litigation by filing a complaint against Defendants
Source Interlink Distribution, LLC and Source Interlink Companies, Inc. (Doc. 1). The counts
are pursuant to Title VII of the Civil Rights Act of 1964 (“Title VII”) and the Florida Civil Rights
Act of 1992 (“FCRA”). The counts are Title VII Sex Discrimination (Count I); FCRA Sex
Discrimination (Count II); Title VII Retaliation (Count III); and FCRA Retaliation (Count IV).

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On July 9, 2014, Source Interlink Distribution, LLC filed a Suggestion of Bankruptcy.
(Doc. 18). Therefore, pursuant to 11 U.S.C. § 362, this matter is stayed as it relates to Source
Interlink Distribution, LLC only. (Doc. 22). The Court indicated on July 11, 2014, this matter
is not stayed as it relates to Source Interlink Companies, Inc. (“SIC”). (Doc. 22). Then, SIC
filed this instant motion, requesting to stay this entire matter pursuant to Section 362, or
alternatively, to promote judicial efficiency. Brent opposes the motion.
Standard
The law is clear, when a debtor files a petition under the bankruptcy code, this filing
operates as an automatic stay of the continuation of a previously commenced judicial
proceeding against the debtor. Ellison v. Northwest Eng’r Co., 707 F.2d 1310, 1311 (11th Cir.
1983) (citing 11 U.S.C. § 362(a)(1)). This automatic stay is designed to give the debtor “a
breathing spell from his creditors. It stops all collection efforts, all harassment, and all
foreclosure actions. It permits the debtor to attempt a repayment or reorganization plan, or
simply to be relieved of the financial pressure that drove [the debtor] into bankruptcy.” Ellison,
707 F.2d at 1311 (citing H.R.Rep. No. 595, 95th Cong.2d Sess. 340, reprinted in 1978
U.S.Code Cong. & Ad. News 5787, 5963, 6297). The clear language of Section 362, however,
only stays the action automatically against a debtor. Chicago Title Ins. Co. v. Lerner, 435 B.R.
732, 735 (S.D. Fla. 2010) (quoting McCartney v. Integra Nat’l Bank North, 106 F.3d 506, 509
(3d Cir. 1997)); see, e.g., Souder v. Premier Automo. on Atl., LLC, No. 3:08-cv-973-J-32JRK,
2009 WL 691916, at *1 (M.D. Fla. Mar. 13, 2009) (staying the case only to the debtor
defendant); In re Colonial Bancgroup Inc. Sec. Litig., 2:09cv104-MHT, 2010 WL 119290, at
*1 (M.D. Ala. Jan. 7, 2010) (“The automatic stay provisions of § 362(a) generally do not
operate to stay claims against non-debtor defendants.”) (citation omitted).
Nevertheless, in unusual circumstances, courts have stayed matters against nondebtor defendants as well. See, e.g., A.H. Robins Co., Inc. v. Piccinin, 788 F.2d 994, 1016

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(4th Cir. 1986) (finding a stay was warranted with regard to the non-debtors); In re Steven P.
Nelson, 140 B.R. 814, 816-17 (Bank. M.D. Fla. 1992) (same); c.f. In re Colonial BancGroup,
Inc. Sec. Litig., 2010 WL 119290, at *5 (choosing not to extend the stay to the non-debtors);
In re Sunbean Sec. Litig., 26 B.R. 534 (S.D. Fla.2001) (same); All Seasons Resorts, Inc. v.
Milner (In re All Seasons Resorts, Inc.), 79 B.R. 901 (Bankr.C.D.Cal. 1987) (same); In re
Metal Ctr, Inc., 31 B.R. 458 (D.Conn. 1983) (same). An unusual circumstance exists when
“there is such an identity between the debtor and the third-party defendant that the debtor
may be said to be the real party defendant and that a judgment against the third-party
defendant will be in effect be a judgment or finding against the debtor.” A.H. Robins Co., Inc.,
788 F.2d at 999. In contrast, where a non-debtor co-defendant is allegedly liable upon its own
breach of duty, then the automatic stay protection afforded to a debtor is not extended to a
non-debtor co-defendant. In re Metal Ctr, Inc., 31 B.R. at 462. Some courts take into account
the debtor’s request. See, e.g., In re All Seasons Resorts, Inc., 79 B.R. at 904 (“[T]he
automatic stay does not automatically encompass co-defendants. A court must make that
determination upon request of the debtor.”); In re Sunbeam Sec. Litig. 261 B.R. 534, 537
(S.D. Fla. 2001).
Aside from Section 362, the Court has general discretion to stay proceedings. See
Landis v. N. Am. Co., 299 U.S. 248, 254 (1936) (“[T]he power to stay proceedings is incidental
to the power inherent in every court to control the disposition of the causes on its docket with
economy of time and effort for itself, for counsel, and for litigants.”); see also Dunn v. Air Line
Pilots Ass’n, 836 F. Supp. 1574, 1584 (S.D. Fla. 1993) (“A stay of proceedings is generally in
the court’s discretion. It is based on the balancing test in which the movant bears the burden
of showing either ‘a clear case of hardship or inequity’ if the case proceeds, or little possibility
the stay with harm others.”) (citing Landis, 299 U.S. at 254-55). In determining whether to
grant a stay, courts examine general factors such as whether a stay will unduly prejudice or

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tactically disadvantage the non-moving party; simplify the issues and streamline trial; and
reduce the burden of litigation on the parties and on the court. Alps South, LLC v. The Ohio
Willow Wood Co., No. 8:09-cv-00386-T-EAK-MAP, 2010 WL 2465176, at *1 (M.D. Fla. June
16, 2010) (citations omitted).
Discussion
A. Whether the Court should stay all claims against Defendant Source Interlink
Companies, Inc. pursuant to 11 U.S.C. § 362
SIC argues the Court should take a liberal approach to the automatic stay provision of
Section 362 and extend the stay against non-debtor SIC. That is, SIC asserts “unusual
circumstances” exists to warrant a stay to SIC too. SIC asserts the complaint does not contain
separate counts for each defendant and the relief sought from each defendant is the same.
In addition, SIC states Brent’s claims cannot be litigated without the direct involvement of
Source Interlink Distribution, LLC. SIC supports its argument by relying on A.H. Robins Co.,
Inc., 788 F.2d at 999.
Upon review and consideration, the Court does not find a stay is warranted with regard
to SIC, the non-debtor, pursuant to Section 362. The Court also does not find an unusual
circumstance exists to warrant a stay. SIC has failed to persuasively explain how this case
cannot be litigated without the direct involvement of Source Interlink Distribution, LLC. In
addition, SIC has failed to show that a judgment or finding against one defendant is in essence
the same against the other defendant in this case. A.H. Robins Co., Inc., 788 F.2d at 999
(“This ‘unusual situation,’ it would seem, arises when there is such identity between the debtor
and the third-party defendant that the debtor may be said to be the real party defendant and
that a judgment against the third-party defendant will in effect be a judgment or finding against
debtor.”). Moreover, the purposes of granting an automatic stay pursuant to the bankruptcy
code is not present here. For example, to the Court’s knowledge SIC does not need to

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harmonize other actions by creditors against it. A.H. Robins Co., Inc., 788 F.2d at 998 (citing
Fidelity Mortg. Investors v. Camelia Builders, Inc., 550 F.2d 47, 55 (2d Cir. 1976)).
B. Whether the Court should stay all claims against Defendant Source Interlink
Companies, Inc. to promote judicial efficiency
SIC argues this matter should be stayed in all aspects in the interest of judicial
economy and efficiency. Specifically, SIC asserts the allegations against both defendants are
intertwined and present common questions of law and fact. SIC asserts it would be best if
this case is resolved at the same time because allegations against both defendants are the
same and the plaintiff seeks the same relief from both defendants. Thus, SIC asserts any
basis for recovery from one defendant would be based on the same facts against the other
defendant.
In addition, SIC asserts if this case is stayed to one defendant now and not to the other
defendant, then this matter would result in piecemeal litigation. Relying on Peterson v.
Avantair, Inc. and Lisa v. Mayorga, SIC asserts avoiding piecemeal litigation warrants a stay.
Peterson v. Avantair, Inc., No. 8:13-cv-1683-T-33EAJ, 2013 WL 4506414, *4 (M.D. Fla. Aug.
23, 2013); Lisa v. Mayorga, 232 F. Supp. 2d 1325, 1328 (S.D. Fla. 2002). Finally, SIC asserts
without a full stay of this case the court will duplicate its efforts which may result in inconsistent
outcomes.
Even though the claims against the defendants are the same and the relief sought
from both defendants is the same, the Court does not find staying this case in its entirety
would support judicial efficiency. To the extent piecemeal litigation will occur in this case, the
Court finds the parties and this Court will not be greatly harmed or inconvenienced.
Inconsistent outcomes are unlikely, if anything, moving forward with this case now will
streamline the issues later for the other defendant. Moreover, the purposes of granting a stay
pursuant to a court’s general stay powers are not present here. For example, a stay would

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tactfully disadvantage the plaintiff in this case. Therefore, the Court chooses to use its
discretion to not stay this proceeding pursuant to its general discretionary powers.
Accordingly, it is now ORDERED:
1. Defendant Source Interlink Companies, Inc.'s Motion to Stay Proceedings (Doc.
25) is DENIED.
2. Defendant Source Interlink Companies, Inc.’s Motion for Leave to File Reply to
Plaintiff’s Response to Defendant Source Interlink Companies’ Motion to Stay
Proceedings (Doc. 34) is DENIED.
3. Plaintiff Brent is directed to comply with the CM/ECF Administrative procedures
going forward in this case. See M.D. Fla. Admin. Proc. for Elec. Filing in Civil and
Criminal Cases ("Separate Attachment: Each separate exhibit must be filed as a
separate attachment to the main document.").
DONE and ORDERED in Fort Myers, Florida this 21st day of August, 2014.

Copies: All Parties of Record

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