Jeremy Porter v. Nabors Drilling USA, L.P.
854 F.3d 1057
| 9th Cir. | 2017Background
- Nabors Drilling USA filed Chapter 11, triggering the automatic stay under 11 U.S.C. § 362(a)(1).
- Porter, a former Nabors employee, filed a civil complaint including a PAGA claim after LWDA declined to act on his notice of alleged California Labor Code violations.
- Nabors removed the case to federal court and successfully moved to compel arbitration of all claims; Porter reserved the right to appeal as to the PAGA claim.
- After Porter appealed, Nabors notified the court of its bankruptcy filing and moved to recognize the automatic stay; Porter argued the action is exempt under 11 U.S.C. § 362(b)(4).
- LWDA never intervened or directed Porter to pursue the suit; Porter retained control over the PAGA litigation and any settlement.
- The Ninth Circuit panel concluded the governmental-unit exception does not apply to a privately controlled PAGA action and stayed further appellate proceedings.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the automatic bankruptcy stay applies to Porter's PAGA claim | PAGA is enforcement "by a governmental unit" because PAGA deputizes private plaintiffs to enforce public labor laws; thus § 362(b)(4) exempts the action from the stay | The exception applies only to actions actually brought by a governmental unit; Porter is a private litigant who controls the suit and LWDA has not intervened or directed the action | The § 362(b)(4) governmental-unit exception does not apply; the automatic stay applies to Porter's PAGA action and the appeal is suspended |
Key Cases Cited
- Arias v. Superior Court, 209 P.3d 923 (Cal. 2009) (explaining PAGA deputizes employees as state proxies for labor enforcement)
- Iskanian v. CLS Transp. Los Angeles, LLC, 327 P.3d 129 (Cal. 2014) (characterizing PAGA representative actions as a form of qui tam)
- Sakkab v. Luxottica Retail N. Am., Inc., 803 F.3d 425 (9th Cir. 2015) (addressing PAGA in the arbitration context)
- In re Wardrobe, 559 F.3d 932 (9th Cir. 2009) (automatic stay is self-executing upon bankruptcy filing)
- Eskanos & Adler, P.C. v. Leetien, 309 F.3d 1210 (9th Cir. 2002) (automatic stay is a central protection in bankruptcy)
- Alpern v. Lieb, 11 F.3d 689 (7th Cir. 1993) (distinguishing private initiation of sanctions from governmental enforcement actions)