Judges: WRITTEN BY: Don Stenberg, Attorney General Alfonza Whitaker, Assistant Attorney General
Filed Date: 10/16/1995
Status: Precedential
Modified Date: 7/5/2016
REQUESTED BY: Ed Mims, Acting Director, Nebraska Equal Opportunity Commission QUESTION: What action, if any, may be taken by a hearing examiner in a case if the respondent has a bankruptcy stay? Particularly, can the Commission close a case if the respondent is in bankruptcy?
ANSWER: The NEOC may pursue litigation against an employer in bankruptcy in the exercise of its regulatory power, but may be stayed in the exercise of its quasi-judicial functions. The NEOC may also close a case when the respondent is in bankruptcy.
You have asked what action, if any, may be taken by a hearing examiner in a case if the respondent is in bankruptcy. Particularly, you want to know whether the Commission may close such a case.
Upon the filing of petition in bankruptcy, an automatic stay is imposed pursuant to
In EEOC v. Rath Packing Co.,
Even though the NEOC has a right to pursue litigation against employers in bankruptcy, it may be necessary to determine whether the NEOC is pursuing litigation or merely acting as an independent fact-finding body.
Bankruptcy courts have applied two tests in deciding which governmental proceedings are excepted from the stay by section 362 (b)(4): the pecuniary purpose test and the public policy test. These tests are derived from language in the legislative history of the Bankruptcy Code:
[S]ection [362 (b)(4)] is intended to be given a narrow construction in order to permit governmental units to pursue actions to protect the public health and safety and not to apply to actions by a governmental unit to protect a pecuniary interest in property of the debtor or property of the estate.
124 Cong. Rec. H11,092 (daily ed. Sept. 28, 1978) (statement of Rep. Edwards), reprinted in 1978 U.S. Code Ad. News 5787, 6436, 6444-45.
Courts have defined the exception in terms of pecuniary purpose: "State and local governmental units cannot, by an exercise of their policy or regulatory powers, subvert the relief afforded by the federal bankruptcy laws. When they seek to do so for a pecuniary purpose, they are automatically stayed, notwithstanding the exception found at
A major concern in determining whether an administrative agency is exercising a legislative or judicial function is whether the agency's action concerns only parties who are immediately affected or a wider group of those subject to the authority of the agency or even the public as a whole. BeaconNat'l Ins. Co. v. Texas State Board of Insurance,
If the Commission is acting in a quasi-judicial capacity seeking to adjudicate private rights rather than effectuate public policy, the Commission should be stayed from proceeding. Quasi-judicial proceedings involve, in essence, an adjudication of private rights.
In the example given in your letter, the case was set for public hearing; therefore, the case was before the NEOC as an independent fact-finding body. The NEOC would not be exercising its police powers in such a case, but would be acting in a quasi-judicial capacity as a neutral finder-of-fact. As such, its proceedings would be stayed by the respondent's filing of bankruptcy.
Because the automatic stay voids all actions taken by the creditor outside of the bankruptcy court, the Commission may close any case that is subject to a bankruptcy stay. The complainant would be required to seek relief, if any, through the bankruptcy court.
Sincerely yours,
DON STENBERG Attorney General
Alfonza Whitaker Assistant Attorney General
Approved:
Don Stenberg Attorney General