Eddleman v. U.S. Dept. of Labor

• Decision Date: 15 January 1991
• Docket Number: No. 88-2793,88-2793
• Citation: 923 F.2d 782
• Parties: 30 Wage & Hour Cas. (BN 209, 59 USLW 2451, 118 Lab.Cas. P 35,454, 24 Collier Bankr.Cas.2d 822, 21 Bankr.Ct.Dec. 454, Bankr. L. Rep. P 73,781 C. James EDDLEMAN also known as Jim Eddleman; Jane B. Eddleman, d/b/a J & J Cattle Company, Inc. and Blue Fin Transport, Plaintiffs-Appellees, v. UNITED STATES DEPARTMENT OF LABOR, Defendant-Appellant.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 782

923 F.2d 782

30 Wage & Hour Cas. (BN 209, 59 USLW 2451,

118 Lab.Cas. P 35,454, 24 Collier Bankr.Cas.2d 822,

21 Bankr.Ct.Dec. 454, Bankr. L. Rep. P 73,781

C. James EDDLEMAN also known as Jim Eddleman; Jane B.

Eddleman, d/b/a J & J Cattle Company, Inc. and Blue Fin Transport, Plaintiffs-Appellees, v. UNITED STATES DEPARTMENT OF LABOR, Defendant-Appellant.

No. 88-2793.

United States Court of Appeals, Tenth Circuit.

Jan. 15, 1991.

Jeffrey A. Clair, Atty., Appellate Staff, Civ. Div., Dept. of Justice, Washington, D.C. (Stuart M. Gerson, Asst. Atty. Gen., William Kanter, Atty., Appellate Staff, Civ. Div., Dept. of Justice, Washington, D.C., and Michael J. Norton, U.S. Atty., D. Colo., Denver, Colo., with him on the briefs), for defendant-appellant.

Matthew D. Skeen (Christopher E. Bench, with him on the brief) of Skeen &amp Pearlman, P.C., Denver, Colo., for plaintiffs-appellees.

Before McKAY, BARRETT, and ANDERSON, Circuit Judges.

McKAY, Circuit Judge.

This appeal arises from an attempt by the appellant, United States Department of Labor ("DOL"), to maintain an administrative action against a chapter 11 debtor. The United States Bankruptcy Court for the District of Colorado ruled that DOL's action was stayed by the automatic stay provision of the Bankruptcy Code, and the district court affirmed. We reverse.

I. Facts

Appellees James and Jane Eddleman owned a mail-hauling business. They did most of their work under a contract with the United States Postal Service. On August 6, 1986, the Eddlemans filed a petition for relief under chapter 11 of the Bankruptcy Code. See generally 11 U.S.C. Secs. 1101-1174 (1988). They continued to operate the business as debtors-in-possession.

On May 27, 1987, DOL filed an administrative action against the Eddlemans, alleging pre-petition violations of the Service Contract Act ("SCA"), 41 U.S.C. Secs. 351-358 (1988). The SCA requires all federal government contractors to pay certain minimum wages and fringe benefits. See 41 U.S.C. Sec. 351. DOL alleges that the Eddlemans underpaid workers and failed to keep adequate records of hours worked and wages paid.

As part of the administrative enforcement action, DOL sought to liquidate claims for back wages due the Eddlemans' employees. ¹ DOL also sought to include the Eddlemans on an official list of SCA violators. Persons on the list are debarred from contracting with the government for three years. 41 U.S.C. Sec. 354. If debarred under section 354, the Eddlemans stood to lose the benefit of renewal options included in their contract.

The Eddlemans responded by filing this adversary proceeding in bankruptcy court, requesting the court to enforce the automatic stay provision of the Bankruptcy Code against the DOL's administrative action. See 11 U.S.C. Sec. 362 (1988). ² The Eddlemans sought, and were granted, a "Preliminary Injunction to Enjoin Violation of Automatic Stay." The Eddlemans also sought damages under 11 U.S.C. Sec. 362(h) (1988) for DOL's alleged willful violation of the automatic stay.

DOL moved to dismiss, arguing that its administrative action was taken to "enforce [its] police or regulatory power," and was therefore specifically exempted from the automatic stay provisions by 11 U.S.C. Sec. 362(b)(4) (1988). The bankruptcy court denied the motion to dismiss, holding that the DOL action was not within the "police or regulatory power" exemption, and that any continuation of DOL's enforcement effort was stayed. The district court affirmed the bankruptcy court's denial of the motion to dismiss and remanded the case to the bankruptcy court for further proceedings on the issue of damages. From that order, DOL appeals to this circuit.

As a preliminary matter, we must decide whether appellate jurisdiction exists for this appeal. Later, we consider whether the "police or regulatory power" exemption applies to DOL's enforcement proceeding.

II. Jurisdiction

The jurisdiction of this court over appeals from district courts acting in their bankruptcy appellate capacity is limited to "final decisions, judgments, orders, and decrees." 28 U.S.C. Sec. 158(d) (1988); In re Kaiser Steel, 911 F.2d 380, 385-86 (10th Cir.1990). The Eddlemans argue that this court lacks jurisdiction to hear this appeal because the district court's order affirming the bankruptcy court and remanding for further proceedings is not "final" within the meaning of section 158(d). DOL counters that the district court's order is final because it settles the question of whether the automatic stay applies to DOL's enforcement proceeding. DOL argues that, without the opportunity to appeal now, it would be effectively denied meaningful appellate review on the automatic stay issue. Alternatively, DOL argues that the lower court order, applying the automatic stay to the DOL proceeding, operates as an injunction over which this court has appellate jurisdiction under 28 U.S.C. Sec. 1292(a)(1). ³

DOL's argument that jurisdiction lies under section 1292 has been foreclosed by this court's recent decision in Kaiser Steel. In that case we held that section 158(d) is the exclusive basis of circuit court jurisdiction over appeals from orders of district courts acting in their bankruptcy appellate capacity. Section 1292 is therefore unavailable as a basis for appellate jurisdiction. 911 F.2d at 386.

We nonetheless hold that the district court order affirming the bankruptcy court's application of the automatic stay to DOL's enforcement proceeding is a final order appealable to this court under section 158(d).

A.

The circuit courts consistently hold that orders granting or denying relief from the automatic stay are appealable final orders. ⁴ See, e.g., In re Dixie Broadcasting, Inc., 871 F.2d 1023, 1026 (11th Cir.), cert. denied, --- U.S. ----, 110 S.Ct. 154, 107 L.Ed.2d 112 (1989); In re West Elecs., Inc., 852 F.2d 79, 81-82 (3d Cir.1988); In re Sun Valley Foods Co., 801 F.2d 186, 190 (6th Cir.1986); In re Kemble, 776 F.2d 802, 805 (9th Cir.1985); In re Boomgarden, 780 F.2d 657, 659-60 (7th Cir.1985); Grundy Nat'l Bank v. Tandem Mining Corp., 754 F.2d 1436, 1439 (4th Cir.1985); In re Leimer, 724 F.2d 744, 745 (8th Cir.1984); In re Taddeo, 685 F.2d 24, 26 n. 4 (2d Cir.1982). While this court has not heretofore specifically addressed the issue of appealability, it has treated orders granting or denying relief from the automatic stay as appealable final orders. See In re Thompson, 894 F.2d 1227 (10th Cir.1990) (affirming district court affirmance of bankruptcy court denial of relief from stay); Pursifull v. Eakin, 814 F.2d 1501 (10th Cir.1987) (affirming district court order lifting stay). Likewise, the United States Supreme Court has ruled on the merits of circuit court decisions granting or denying relief from stay without questioning appellate jurisdiction. See Norwest Bank Worthington v. Ahlers, 485 U.S. 197, 108 S.Ct. 963, 99 L.Ed.2d 169 (1988) (reversing Eighth Circuit opinion which had reversed district court order granting relief from stay); United Savings Ass'n of Texas v. Timbers of Inwood Forest Assocs., Ltd., 484 U.S. 365, 108 S.Ct. 626, 98 L.Ed.2d 740 (1988) (affirming Fifth Circuit opinion which had reversed district court order granting relief from stay).

The legislative history of the Bankruptcy Code shows that Congress views the imposition of the automatic stay to be analogous to a permanent injunction. The House Report states:

Because the stay is essentially an injunction, the three stages of the stay may be analogized to the three stages of an injunction. The filing of the petition which gives rise to the automatic stay is similar to a temporary restraining order. The preliminary hearing is similar to the hearing on a preliminary injunction, and the final hearing and order is similar to a permanent injunction.

H.R.Rep. No. 595, 95th Cong., 2d Sess. 344, reprinted in 1978 U.S.Code Cong. & Admin.News 5787, 5963, 6300. Because a permanent injunction is appealable as a final order, Vicksburg v. Henson, 231 U.S. 259, 266-67, 34 S.Ct. 95, 97-98, 58 L.Ed. 209 (1913), we may infer that Congress intended the grant or denial of stay to be similarly appealable. Leimer, 724 F.2d at 746; Taddeo, 685 F.2d at 26 n. 4.

Additional evidence of Congress' intent to expedite adjudication of claims relating to the automatic stay is found in 11 U.S.C. Sec. 362(e), (f) (1988), which provide for speedy hearings and ex parte proceedings to resolve requests for relief from stay. Immediate appeal from district court orders granting or denying relief from the automatic stay is necessary to effectuate Congress' intent to settle these matters quickly. Kemble, 776 F.2d at 805; In re American Mariner Indus., Inc., 734 F.2d 426, 429 (9th Cir.1984).

Our belief that this is the correct rule is reinforced when we consider the results of a contrary ruling. If we designate orders granting or denying relief from stay to be interlocutory orders, we render them virtually unreviewable by the circuit courts. This is so because the stay remains in effect only during the pendency of the bankruptcy proceedings. 11 U.S.C. Sec. 362(c) (1988). Therefore, in most cases, by the time the bankruptcy case is complete the issue of the stay will be moot. ⁵ It is inconceivable to us that Congress intended to insulate such orders from review above the district court level.

We recognize that all the cases cited above arose from petitions for relief from stay brought by creditors under section 362(d). This case differs because the DOL was not a creditor moving for relief from stay. Instead, the DOL, believing that its administrative action was exempt from the stay under section 362(b), properly initiated its administrative action without first seeking relief under section 362(d). See NLRB v. Edward Cooper Painting, Inc., 804 F.2d 934, 940 (6th Cir.1986) (governmental unit which determines that its police power or regulatory proceeding is excepted from automatic stay is not required to petition ...