In re Tauscher, Bankruptcy No. 80-00903
| Decision Date | 07 January 1981 |
| Docket Number | Bankruptcy No. 80-00903,Adv. No. 80-0307. |
| Citation | 7 BR 918 |
| Parties | In re Madeline Alma TAUSCHER, Gerald Joseph Tauscher, Debtors. Ray MARSHALL, Secretary of Labor, United States Department of Labor, Plaintiff, v. Gerald Joseph TAUSCHER, individually and doing business as Wagon Master, Trout Creek Enterprises, Inc., and Wagon Master, Ltd., Wisconsin Corporations, Defendant. |
| Court | U.S. Bankruptcy Court — Eastern District of Wisconsin |
Phyllis B. Dolinko, U.S. Dept. of Labor, Chicago, Ill., for plaintiff.
James F. Pressentin, Green Bay, Wis., for defendant.
D.E. IHLENFELDT, Bankruptcy Judge.
The plaintiff, Secretary of Labor of the United States, has assessed civil money penalties in the amount of $3100 against the defendant debtor, Gerald Joseph Tauscher, for child labor violations of § 16(e) of the Fair Labor Standards Act of 1938, 29 U.S.C. 201, et seq. Plaintiff now seeks a determination that these penalties are nondischargeable pursuant to § 523(a)(7) of the Bankruptcy Code, and that further enforcement proceedings are within the exception provided by § 362(b)(4) to the automatic stay provisions of § 362(a).1
Prior to the commencement of this bankruptcy proceeding, a representative of the U.S. Department of Labor conducted an investigation of Tauscher's place of business under the Fair Labor Standards Act. The investigation led to charges that Tauscher, contrary to the Act, had employed 28 minors in the operation of heavy power equipment which was hazardous for such persons, and he was assessed civil money penalties of $3100. Tauscher filed an exception to the assessment, but the matter was not referred for administrative hearing due to a challenge to the constitutionality of § 16(e) of the Act.2 On April 28, 1980, in Marshall v. Jerrico, Inc., 446 U.S. 238, 100 S.Ct. 1610, 64 L.Ed.2d 182 (1980), the Supreme Court determined that § 16(e) was constitutional, but Tauscher had filed a petition under Chapter 13 of the Bankruptcy Code five days earlier.3 Plaintiff now wishes to proceed with the hearing before an administrative law judge, and has moved for a summary judgment by this court declaring that § 362(a) of the Bankruptcy Code does not prevent him from so doing. Since the facts herein are not in dispute, the only issue being a question of law, this is an appropriate case for summary judgment. F.R.C.P. 56(c); Bankruptcy Rule 756.
The sections of the Bankruptcy Code here in issue provide as follows:
As pointed out in 3 Collier on Bankruptcy (15th ed.) § 523.17, the Bankruptcy Act of 1898 made no specific provision concerning the dischargeability of fines and penalties due to a governmental unit, but it became well settled that such obligations were not provable and therefore held to be not dischargeable. Collier states further that in contrast to the Act, § 523(a)(7) of the Code "specifically excepts certain fines, penalties, or forfeitures that are payable to and for the benefit of a governmental unit." The legislative intent is set out succinctly in House Report No. 95-595, 95th Cong., 1st Sess. 365 (1977), U.S.Code Cong. & Admin. News 1978, p. 5787.
"Paragraph (7) excepts from discharge a debt for a fine, penalty, or forfeiture payable to and for the benefit of a governmental unit, that is not compensation for actual pecuniary loss."
In addition to the administrative proceedings described above, which resulted in the assessment of the disputed penalties for child labor violations, the plaintiff filed a civil action in the U.S. District Court on February 14, 1979. The civil action sought recovery of unpaid minimum wage and overtime compensation for Tauscher's employees, and injunctive relief against various violations of the Fair Labor Standards Act, including the child labor violations which gave rise to the $3100 penalty assessment. At a pretrial conference early in these proceedings, the parties agreed that the back wages were dischargeable, and that the civil action might be stayed as to them, but that the injunctive portion of the action, by reason of § 362(b)(4), should not be stayed. Accordingly, an order was entered staying the civil action as to unpaid wages, but permitting it to continue with respect to the injunctive portion of the case.
Tauscher has referred to that portion of § 523(a)(7) which provides that tax penalties are nondischargeable only if the underlying tax is itself nondischargeable. He argues that since the back wages were admittedly dischargeable, the administrative penalties should also be discharged. The difficulty with the argument is that back wages are not taxes so as to be covered by that language in § 523(a)(7). Furthermore, the child labor penalties are independent of and not related to the claim for unpaid wages. This court believes and does find that the penalties here in dispute are not...
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