Equal Employment Opportunity Commission v. Lehi Roller Mills

Filing 140

MEMORANDUM DECISION AND ORDER granting 136 Motion for Reconsideration of 135 Order permitting defendant's counsel to withdraw: this case is not stayed as to EEOC, but Intervenor's claims are stayed by reason of the bankruptcy automatic stay. Lehi Roller Mills shall file a Notice of Appearance of Counsel within 21 days of this order or be subject to sanctions. Signed by Judge David Nuffer on 10/28/13 (alt)

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF UTAH, CENTRAL DIVISION
EQUAL EMPLOYMENT OPPORTUNITY
COMMISSION,

v.

MEMORANDUM DECISION AND
ORDER GRANTING PLAINTIFF’S
MOTION FOR RECONSIDERATION OF
ORDER GRANTING MOTION FOR
WITHDRAWAL OF COUNSEL

LEHI ROLLER MILLS CO., INC.,

Case No.: 2.08-cv-00591 DN

Plaintiff,

Defendant.

District Judge David Nuffer

Plaintiff Equal Employment Opportunity Commission (EEOC) moves 1 to amend an
order 2 permitting Defendant’s counsel to withdraw. Defendant’s counsel moved to withdraw 3
after Defendant Lehi Roller Mills Co. Inc. (LRM) filed bankruptcy. 4 The amendment EEOC
seeks would require LRM to retain counsel within twenty-one days of this order rather than
twenty-one days after the bankruptcy stay is lifted. Having reviewed the submissions,5 EEOC’s
motion to amend is GRANTED.
BACKGROUND
As EEOC notes, the court vacated the trial date because LRM had filed bankruptcy
proceedings. 6 The order allowing LRM’s counsel to withdraw states, “Client or new counsel for
Client must file a Notice of Appearance within twenty-one (21) days after the Bankruptcy stay is
1

Plaintiff’s Motion for Reconsideration Re Order Granting Motion for Withdrawal of Counsel, docket no. 136, filed
Feb. 22, 2013.
2

Order Granting Motion for Withdrawal of Counsel, docket no. 135, filed Feb. 22, 2013.

3

Motion for Withdrawal of Counsel, docket no. 134, filed Feb. 20, 2013.

4

Defendant Lehi Roller Mills Co., Inc.’s Suggestion of Bankruptcy and Notice of Automatic Stay, docket no. 133,
filed Dec. 14, 2012.
5
6

Plaintiff’s Motion for Reconsideration Re Order Granting Motion for Withdrawal of Counsel.

Notice Vacating Final Pretrial Conference Set 2/7/2013 and Jury Trial Set for 2/25/2013, filed Dec. 17, 2013. See
Plaintiff’s Motion for Reconsideration Re Order Granting Motion for Withdrawal of Counsel at 2.

no longer in effect as to this case, unless otherwise ordered by the Court.” 7 The EEOC requests
the court “amend its prior order to clarify that the Defendant [LRM] shall file a notice of
appearance by counsel within 21 days of its [new] Order or be subject to sanction pursuant to
Federal Rule of Civil Procedure 16(f)(1).” 8
ANALYSIS
Because the EEOC is an exempt governmental unit, the bankruptcy stay is not effective
against the EEOC when the EEOC is “enforc[ing] . . . police and regulatory power, including the
enforcement of a judgment other than a money judgment, obtained in an action or proceeding by
the governmental unit to enforce such governmental unit’s or organization’s police or regulatory
power.” 9 Thus, for the reasons set forth below: (1) the EEOC is not subject to the bankruptcy
automatic stay even though the requested relief includes both injunctive and monetary relief; and
(2) the EEOC will be subject to the automatic stay if a monetary judgment is entered.
First, the EEOC is not subject to an automatic stay even if the EEOC’s requested relief
against a debtor includes both injunctive and monetary relief. In EEOC v. McLean, the EEOC
had filed two lawsuits against McLean Trucking Company alleging violations of the Age
Discrimination in Employment Act and Title VII of the Civil Rights Act. 10 The EEOC sought
both injunctive and monetary relief “including back pay, with interest, [and] liquidated
damages.” 11 In response to McLean’s motion, the bankruptcy court held the stay was effective
against the EEOC. 12 But the Fourth Circuit reversed, holding the EEOC is not subject to an
7

Order Granting Motion for Withdrawal of Counsel at 1.

8

Plaintiff’s Motion for Reconsideration Re Order Granting Motion for Withdrawal of Counsel at 2–3.

9

11 U.S.C § 362(b)(4).

10

EEOC v. McLean Trucking Co., 834 F.2d 398, 399 (4th Cir. 1987).

11

Id.

12

Id. at 400 (citing the bankruptcy court’s decision against the EEOC motion for relief from section 362’s automatic
stay provision and the district court’s affirmance of the bankruptcy court’s decision).

2

automatic stay because the “EEOC is still proceeding in the exercise of its police or regulatory
power when it seeks to recover back pay for the victims of alleged unlawful discrimination so as
to be exempt from the automatic stay until its prayer for monetary relief is reduced to
judgment.” 13 The Fourth Circuit relied on the Senate committee notes: “[W]here a governmental
unit is suing a debtor to prevent or stop violation of fraud, environmental protection, consumer
protection, safety, or similar police or regulatory law, or attempting to fix damages for violation
of such a law, the action or proceeding is not stayed under the automatic stay.” 14 Similarly, in
this case the EEOC claim against LRM is not subject to the automatic stay even though the
EEOC’s requested relief includes both injunctive and monetary relief.
Second, the stay will be effective if the EEOC obtains a monetary judgment. In EEOC v.
Noble Metal Processing, the EEOC filed a lawsuit on behalf of employees alleging violations
under Title VII of the Civil Rights Act. 15 After a court order administratively closed the civil
suit due to the bankruptcy stay, the EEOC moved to set aside the order due to its exemption as a
governmental unit. 16 The defendant, Noble Metal Processing, opposed the EEOC’s motion
arguing “the EEOC is attempting to enforce ‘a monetary judgment.’” 17 The court found this
argument “without merit” 18 because the “EEOC has not yet obtained a money judgment against
[the employer], and will be subject to the automatic stay only after it has secured a money

13

Id. at 402.

14

Id. at 401 (quoting S.Rep. 989, 95th Cong. 2d Sess. 52, reprinted in 1978 U.S.C. C.A.N. 5787, 5838).

15

EEOC v. Noble Metal Processing, No. 08-CV-14713, 2009 WL 1868002, at *1 (E.D. Mich. June 29, 2009).

16

Id.

17

Id.

18

Id.

3

judgment.” 19 Because the EEOC has not yet obtained a monetary judgment in this case, it will
not be stayed against the EEOC until EEOC obtains a monetary judgment.
ORDER
IT IS HEREBY ORDERED that Plaintiff Equal Employment Opportunity Commission’s
Motion for Reconsideration 20 is GRANTED and this case is not stayed as to EEOC.
IT IS FURTHER ORDERED that claims of Intervener, James Alan Breece are stayed by
reason of the bankruptcy automatic stay under 11 U.S.C. § 362. 21 Defendant Lehi Roller Mills
Co. Inc. shall file a notice in this case if the stay in the Bankruptcy Court is lifted or modified.
IT IS FURTHER ORDERED that Defendant Lehi Roller Mills Co. Inc. shall file a Notice
of Appearance of Counsel within twenty-one (21) days of this order pursuant to DUCivR 831.4(c)(3)(ii).
IT IS FURTHER ORDERED that if such an Appearance is not made, Defendant Lehi
Roller Mills Co. Inc. will be subject to sanctions pursuant to Federal Rule of Civil Procedure
16(f)(1) and DUCivR 83-1.4(c)(5), including but not limited to default judgment for failure to
file a Notice of Appearance of Counsel as ordered.
Signed October 28, 2013.
BY THE COURT

________________________________________
District Judge David Nuffer

19

Id.

20

Plaintiff’s Motion for Reconsideration Re Order Granting Motion for Withdrawal of Counsel, docket no. 136,
filed Feb. 22, 2013.
21

Order Granting Motion for Withdrawal of Counsel.

4