United States District Court, W.D. Louisiana, Monroe Division
ONETHA WESLEY, ET AL.
UNIQUE GUIDANCE PROVIDER SERVICES, INC., and REGINA WRIGHT
L. HAYES MAG. JUDGE
A. DOUGHTY UNITED STATES DISTRICT JUDGE
a suit filed by Plaintiff Onetha Wesley
(“Wesley”) on behalf of herself and on behalf of
others similarly situated, under the Fair Labor Standards Act
(“FLSA”), Title 29 United States Code §
216(b), to collect allegedly unpaid wages as well as other
damages from Defendants Unique Guidance Provider Services,
Inc. (“Unique”) and Regina Wright
(“Wright”). Unique has filed for the protection
of the Bankruptcy Court for the Western District of Louisiana
[Doc. No. 3]. Title 11 United States Code § 362(a)(1)
provides for an automatic stay of any judicial proceeding
against the debtor. All claims against Unique are, therefore,
subject to an automatic stay.
in their answers [Doc. Nos. 5, 6] assert that the claims
against Wright, the sole shareholder and principle executive
of Unique, are so intertwined with the claims against Unique
that such claims should also be litigated in the Bankruptcy
Court. Defendants, therefore, move the Court to stay all
proceedings against Wright, as well.
has filed a response to the motion to stay requesting that
the claims against Unique be severed and stayed, but that the
claims against Wright be allowed to proceed [Doc. No. 9].
Wesley contends that, under the FLSA, corporate officers with
the type of operational control exercised by Wright are
jointly and severally liable for FLSA violations because the
FLSA treats such officers as “employers” that can
be sued in their individual capacities, and, therefore, since
Wesley's claims against Wright are independent of and do
not depend in any way on her claims against Unique, there is
no reason to stay her claim against Wright while Unique's
bankruptcy proceeds. Wesley also argues that staying this
case in its entirety would work great prejudice to potential
class members, who have no way to know about this case or how
to protect their clams from erosion by the statute of
have filed a reply [Doc. No. 10], in which they argue that
they have a good faith defense to penalties, and allowing the
cases to proceed on parallel lines could result in
conflicting decisions on the penalties and even on any
amounts owed. They agree that there is a closeness of
identity between Wright and Unique; however, they argue that
the jurisprudence favors applying the stay to non-debtors in
that situation. They contend that Wright should be required
to present her defense (and the defense of the company) only
once, and, further, the judiciary should be required to try
it only once.
support of her argument, Wesley cites Uranga v. Holiday
Mkt., Inc., 2014 U.S. Dist. LEXIS 12497 (N.D. Tex. Jan.
31, 2014), where a corporate entity and an individual were
named as defendants and were alleged to be jointly and
severally liable for the FLSA claims asserted by the
plaintiff. After the individual defendant filed a suggestion
of bankruptcy, a District Court in this Circuit held that the
Section 362 stay provisions did not extend to the non-debtor
co-defendant corporate entity. However, this case is
different from Uranga, in that here it is the
corporate entity, the party that is primarily responsible for
the FLSA claims, that has filed bankruptcy.
automatic stay generally forestalls any action against
debtors in bankruptcy, but not against co-debtors,
co-tortfeasors, or other non-debtors. See Reliant Energy
Servs., Inc. v. Enron Can.
Corp., 34 F.3d 816, 825 (5th Cir. 2003).
automatic stay of the bankruptcy court does not divest all
other courts of jurisdiction to hear every claim that is in
any way related to the bankruptcy proceeding. As we have
noted, other district courts retain jurisdiction to determine
the applicability of the stay to litigation pending before
them, and to enter orders not inconsistent with the terms of
the stay.” Picco v. Global Marine Drilling
Co., 900 F.2d 846, 850 (5th Cir. 1990).
circuits hold that the district court has jurisdiction to
determine the applicability of the automatic stay under
§ 362(a) to proceedings before it.” Arnold v.
Garlock, Inc., 288 F.3d 234, 236 (5th Cir.
2002) ((citing 2B Bankr.Service L.Ed. § 19:65(2002),
reporting that the Second, Third, Fifth, Sixth, Seventh,
Eighth, and Tenth Circuits so rule)).
enjoy the discretionary authority to stay proceedings
“in the interest of justice and in control of their
dockets.” Wedgeworth v. Fibreboard Corp. 706
F.2d 541, 545 (5th Cir. 1983). The court's
discretion is not limitless, however. Id. In
deciding whether to grant a stay, the courts “must
weigh competing interests and maintain an even
balance.” Id. (citing Landis v. North
American Co., 299 U.S. 248, 254-55 (1936)). Accordingly,
the court's decision to grant a stay should contemplate
the following factors, “1) hardship and inequity on the
moving party without a stay; 2) prejudice the non-moving
party will suffer if a stay is granted, and 3) judicial
economy.” Falgoust v. Microsoft Corp., No.
CIV.A. 00-0779, 2000 WL 462919 (E.D. La. April 19, 2000).
these considerations, the Court recognizes that Wesley has a
keen interest in the timely resolution of her FLSA claim.
Nonetheless, Wesley's FLSA claim against Wright
substantially overlaps, and is practically identical to, her
claim against Unique. Given the relatedness of the claims,
the Court finds that it is in the strong interest of judicial
economy to stay the claim against Wright pending Unique's
bankruptcy proceeding. This will avoid the possibility of
conflicting decisions, and, negate the burden on both parties
of having to litigate the same issues twice. Further, the
judiciary will not have to try the same case twice.
these reasons, the motion to stay [Doc. Nos. 5, 6] is
GRANTED. This matter is STAYED pending ...