U.S. EQUAL EMPLOYMENT OPPORTUNITY COMMISSION v. SCOTT MEDICAL HEALTH CENTER, P.C.

Filing 92

ORDER. For the reasons set forth in the filing at this docket entry, Renu Medical and Weight Loss Center, PLLC shall comply with Plaintiff's subpoena. Plaintiff shall promptly serve a copy of this Order upon Renu Medical and Weight Loss Center, PLLC and its counsel. See contents of this filing. Signed by Judge Cathy Bissoon on 10/26/18. (rdl)

IN THE UNITED STATES DISTRICT COURT
FOR THE WESTERN DISTRICT OF PENNSYLVANIA
U.S. EQUAL EMPLOYMENT
OPPORTUNITY COMMISSION,

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Plaintiff,
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v.
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SCOTT MEDICAL HEALTH CENTER, P.C., )
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Defendant.
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Civil Action No. 16-225
Judge Cathy Bissoon

MEMORANDUM ORDER
For the reasons that follow, the Court finds that Renu Medical and Weight Loss Center,
PLLC (“Renu”) has failed to show good cause and must comply with Plaintiff’s subpoena.
BACKGROUND
On October 10, 2018, Plaintiff filed a Motion for an Order to Show Cause (Doc. 86),
requesting that the Court order Renu to show good cause as to why it should not be compelled to
comply with Plaintiff’s discovery subpoena, which Plaintiff served on Renu pursuant to Federal
Rules of Civil Procedure 69(a)(2) and 45. Specifically, Plaintiff indicated that it sought
discovery against Renu in order to assess whether Renu is a successor in interest to Defendant
for purposes of enforcing its judgment; however, Renu did not comply with the subpoena or file
a motion to quash. (See Mem. in Support of Pl.’s Motion 1-3, Doc. 87.) The Court granted
Plaintiff’s Motion and ordered Renu to show good cause as to why it should not be compelled to
comply with the subpoena. (Order to Show Cause, Doc. 89.) Renu timely responded to the
Court’s Order to Show Cause. (Docs. 90, 91.)

ANALYSIS
Renu argues that the automatic stay in Defendant’s bankruptcy proceeding applies to
Plaintiff’s action to enforce its judgment against Renu, and thus to Plaintiff’s ability to subpoena
Renu to take discovery. (Mem. in Opp. to Pl.’s Motion 5-6, Doc. 91.) First, Renu contends that
actions against a successor in interest 1 to the debtor in a bankruptcy proceeding are subject to the
automatic stay. See, e.g., Cedarbrook Plaza v. Gottfried, 1997 U.S. Dist. 8026 (E.D. Pa. June 4,
1997). Renu also contends that the automatic stay bars Plaintiff from taking any actions to
enforce its money judgment, as 11 U.S.C. § 362(b)(4) provides that a government enforcement
agency’s exemption from the automatic stay fails to reach an action to enforce a money
judgment. 11 U.S.C. § 362(b)(4) (bankruptcy petition does not stay “an action or proceeding by
a governmental unit . . . to enforce . . . [its] police and regulatory power, including the
enforcement of a judgment other than a money judgment” (emphasis added)).
Plaintiff argues that Renu is not subject to the automatic bankruptcy stay because Renu is
not the debtor and the bankruptcy court has not extended the stay to Renu, as required for the
stay to apply to third parties whose obligations may impact the debtor during bankruptcy. E.g.,
In re Conference of African Union First Colored Methodist Protestant Church, 184 B.R. 207, 215
(Bankr. D. Del. 1995). Even if Renu is subject to the stay, Plaintiff argues that it may enforce
the nonmonetary portion of its judgment against Renu and take discovery for that purpose. See
Penn Terra, Ltd. v. Dept. of Environmental Resources, 733 F.2d 267, 275-78 (3d Cir. 1984)
(action by state agency to obtain and enforce injunction requiring debtor to remediate

1

Renu disputes that it is a successor in interest to Defendant, and the Court makes no findings on
this matter.

environmental hazards was exercise of police power exempted from automatic stay under 11
U.S.C. § 362(b)(4)).
Renu’s argument against complying with the subpoena fails to address Plaintiff’s
argument that this Court’s Judgment (Doc. 81) contains an injunctive component to protect the
civil rights of future employees. (See id. at ¶ 1 (“Defendant, its owners, officers, directors,
employees, and any successors are PERMANENTLY ENJOINED from engaging in any
employment practice that discriminates because of sex”); id. at ¶ 2 (requiring ongoing reporting
of complaints of sex harassment for the next five years).) The statute, 11 U.S.C. § 362(b)(4),
explicitly exempts only the enforcement of money judgments, implying that government
agencies retain the power to enforce injunctions against a debtor in bankruptcy. Penn Terra,
Ltd., 733 F.2d at 274. Further, the cases that Renu cites to support the application of the
automatic stay to third parties rely on the principle that creditors should collectively have access
to property brought into the bankruptcy estate by an action against a third party. E.g., St. Paul
Fire & Marine Ins. Co. v. PepsiCo, Inc., 884 F.2d 688, 700-05 (2d Cir. 1989) (“If a claim is a
general one . . . [that] could be brought by any creditor of the debtor, the trustee is the proper
person to assert the claim, and the creditors are bound by the outcome of the trustee’s action . . . .
The claims, if proved, would have the effect of bringing the property of the third party into the
debtor’s estate, and thus would benefit all creditors. It therefore would be illogical to distinguish
between this type of claim against a third party and a claim against the debtor.”). Government
action to enforce an injunction against a third party lacks this quality—if successful, such action
does not serve to bring additional property into the debtor’s bankruptcy estate or otherwise affect
the estate.

Because Plaintiff—a government agency exercising its police and regulatory power—
may bring an action to enforce an injunction against a successor in interest to Defendant,
Plaintiff must have the ability to subpoena a putative successor in interest for the purpose of
assessing whether that entity is a successor. At this juncture, without clarity on Renu’s status,
there is no need for the Court to address whether the automatic stay would apply to an action
against Renu to enforce a money judgment.
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Accordingly, IT IS ORDERED that Renu Medical and Weight Loss Center, PLLC shall
comply with Plaintiff’s subpoena.
IT IS FURTHER ORDERED that Plaintiff shall promptly serve a copy of this Order
upon Renu Medical and Weight Loss Center, PLLC and its counsel.
IT IS SO ORDERED.

October 26, 2018

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s\Cathy Bissoon
Cathy Bissoon
United States District Judge