D. M. Barber, Inc. v. Valverde (In Re D. M. Barber, Inc.)D. M. Barber, Inc. v. Valverde (In Re D. M. Barber, Inc.)
MEMORANDUM OPINION
This case arose out of a complaint filed by the debtor to hold the above-named defendants in contempt and for injunctive relief. At the hearing before the court on March 19,1981 the debtor amended its complaint so as to waive its request for an order of contempt against the defendants and further waived its request for an injunction against the defendants from continuing with the initial stages of the Board’s unfair labor practice proceeding. The debtor instead urged the court to enjoin the Board from holding a compliance proceeding in which the Board would deter *963 mine the dollar аmount of contributions owed by the debtor to its employees. At the conclusion of this hearing, the court preliminarily enjoined the defendants from conducting any administrative or judicial proceedings tо liquidate the amount of any claimed monetary liability of the debtor.
On April 6, 1981 the Board’s Administrative Law Judge issued an opinion finding that the debtor had violated certain provisions of the National Labor Relations Act. At issue is whether § 362(a)(1) of the Bankruptcy Code automatically enjoins the National Labor Relations Board from proceeding into the “compliance” stage which fixes the amount of the debtor’s liability for having committed an unfair labor practice, and if not whether the court should exercise its discretionary powers to enjoin the Board under § 105 of the Code.
THE AUTOMATIC STAY
A petition filed under the Bankruptcy Code operates as a stay applicable to all entities of the commencement or continuation of a judicial, administrative or other proceeding against the dеbtor that was or could have been commenced before the commencement of the case under the Code,
In a recent decision,
Volkswagen of America, Inc. v. Dan Hixson Chevrolet Co.,
Proceedings before the National Labor Relations Board are commenced by the initiative of aggrieved individual pеrsons and thus have some characteristics of private litigation. However the case law reflects that the proceedings by the Board are not to adjudicate private rights but to effeсtuate public policy,
N.L.R.B. v. Shipbuilding Local 22,
Consequently I find proceedings before the Board to enforce the provisions of the National Labor Relations Act are proceedings within the
“Thus, where a governmental unit is suing a debtor to prevent or stop violations of fraud, environmental protection, safety, or similar poliсe or regulatory laws, or attempting to fix damages for violation of such a law, the action or proceeding is not stayed under the automatic stay, (emphasis added) House Report No. 95-595, 95th Cong., 2nd Session at 343, U.S.Code Cong. & Admin.News 1978, 5787, 6299.
The exceptions in
THE DISCRETIONARY STAY
The debtor urges in the alternative that the court exercise its discretionary powers pursuant to § 105 of the Bankruptcy Code tо enjoin the Board from fixing the debtor’s liability. The debtor notes that the Fifth Circuit Court of Appeals expressly left this issue unresolved in the
Evans
decision, see
Evans
at 293, fn. 3. It is clear that the Bankruptcy Courts may enjoin the Board if such injunction is necessary or appropriate to carry out the provisions of the bankruptcy laws, see § 105(a) of the Bankruptcy Code and
The Supreme Court rejected a similar theory asserted by the trustee in a case arising under the Bankruptcy Act and concluded that the Board, not the referee in bankruptcy nor the court, has been entrusted by Congress with authority to determine what measures will remedy unfair labor practices,
Nathanson v. National Labor Relations Board,
“The computation of the amount due may not be a simple matter. It may require, in addition to the projection of earnings which the employee would have enjoyed had he not been discharged and the computation of actual interim earnings, the determination whether the employee wilfully incurred losses, whether the back pay period should be terminatеd because of offers of reinstatement or the withdrawal of the employee from the labor market, whether the employee recovered equivalent employment and the like. Congrеss made the relation of remedy to policy an administrative matter, subject to limited judicial review, and chose the Board as its agent for the purpose.” Na-thanson at 29, 30,73 S.Ct. at 83 .
I am unconvinced that Congress in enaсting the Bankruptcy Reform Act of 1978 intended to overrule the
Nathanson
decision. A comparison of the jurisdictional grants under the Bankruptcy Act of 1898 with the Bankruptcy Code reveals no material distinction which would alter the result of
Nathanson.
Section two of the Bankruptcy Act created the bankruptcy courts and gave them jurisdiction over bankruptcy cases under the Act. Although that section does not use the word “exclusive,” the jurisdictional grant has been so interpreted, see Collier on Bankruptcy, ¶ 2.06, page 152 et seq. (14th Edition). The Bankruptcy Reform Act grants to the bankruptcy court exclusive jurisdiction of bankruptcy cases arising under the Code,
Two recent cases have dealt with the question of the stay of N.L.R.B. proceedings under the Bankruptcy Act. In the case of
In re Bel Air Chateau Hospital,
This is a liquidation case and it is not necessary to explore the parameters of discretionary stays in reorganization matters. The question here is whether a discretionary stay should be issued becausе this is a liquidation case. In both Shippers and Bel Air, the courts were dealing with Board proceedings requiring remedial action on the part of an ongoing business such as bargaining with the union or reinstatement of discharged emрloyees. Board orders of that type would obviously be inappropriate in most liquidation cases. Both courts expressed concern for any regulatory proceedings which might threaten thе assets of the liquidation estate. Under the automatic stay provisions of the Bankruptcy Code discussed herein, that fear is unfounded here because money judgments may not be enforced. Accordingly, I see no reason to grant a discretionary stay to prohibit the Board from liquidating its claim against the debtor for purposes of filing a claim in the bankruptcy estate. However this court retains the еxclusive jurisdiction to determine the extent to which any such proof of claim should be allowed and priority treatment accorded it under the distribution hierarchy set forth in the Bankruptcy Code. Defensive issues outside the scope of the National Labor Relations Act such as payment, the extent of the credits, untimeliness or improper form of the claim, etc. will all be handled exclusively in the bаnkruptcy court.
Some remedial actions ordered by the board may be rendered moot where employment has been terminated at the place of business. For example, the Board mаy require the posting of notices to inform the past employees of the Board’s action. Where the trustee in a liquidation case has no employees and is in the process of selling the аssets, the posting of such notices indeed interferes with the orderly liquidation of the estate. Accordingly all acts of the Board other than collection of facts to liquidate the claim and its actual liquidation will be enjoined under
Notes
. The Board in its brief acknowledged it would make no effort to satisfy judgment other than by filing a claim in the bankruptcy proceeding.