Carroll v. Fortuna Auction LLC
1:23-cv-07410
| S.D.N.Y. | Apr 7, 2025Background
- Plaintiff Anissa Carroll sued Fortuna Auction LLC and Herbert John Saxon, alleging violations of the Fair Labor Standards Act and New York Labor Law.
- Fortuna filed for Chapter 11 bankruptcy on April 1, 2025, which triggered the automatic stay provisions of the Bankruptcy Code.
- Plaintiff sought to hold both defendants jointly and severally liable on multiple claims.
- Fortuna notified the court of its bankruptcy, prompting consideration of whether the suit could proceed against Saxon individually.
- The court analyzed whether litigation against the non-bankrupt defendant (Saxon) should also be stayed due to its impact on the bankruptcy estate.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Should the automatic bankruptcy stay extend to non-debtor co-defendant Saxon? | Case can proceed against Saxon independently. | Litigation against Saxon would impact Fortuna's estate. | Stay extended to Saxon; litigation paused against all. |
Key Cases Cited
- Queenie, Ltd. v. Nygard Int’l, 321 F.3d 282 (2d Cir. 2003) (automatic stay may extend to non-debtors if action will have immediate adverse economic consequences for debtor's estate)
- Teachers Ins. & Annuity Ass’n v. Butler, 803 F.2d 61 (2d Cir. 1986) (stays under § 362(a) are generally limited to debtors)
- In re Fogarty, 39 F.4th 62 (2d Cir. 2022) (automatic stay protects bankruptcy estates and their asset administration)