Opinion
98-C-3613
May 20, 1999
Plaintiff Equal Employment Opportunity Commission ("Commission" or "EEOC") negotiated a settlement agreement ("agreement") with Suburban Health Care Benefits, Inc. ("Suburban") on behalf of Bernard Foulks, a former employee of Suburban, for alleged violations of the Americans with Disabilities Act (ADA). When Suburban failed to pay the full amount owed under the agreement, the EEOC filed suit against the company and against Frank C. Rousseau ("Rousseau"), in his individual capacity as relief defendant, seeking specific performance and money damages. (Paragraph 7 of the agreement provides that it "may be specifically performed in court.") Neither party has filed an answer, which both were required to do by July 27, 1998, or has defended the suit in any way. Accordingly, the EEOC has moved for entry of default judgment against both defendants.
Rousseau opposes the motion. He argues that the suit is subject to an automatic stay issued pursuant to 11 U.S.C. § 364 by the Bankruptcy Court for the District of Arizona. The EEOC counters that the automatic stay provision does not apply here, as the suit is subject to the § 362(b)(4) exception for the "commencement or continuation of an action or proceeding by a governmental unit to enforce police or regulatory powers." 11 U.S.C. § 362(b)(4). Rousseau responds that an action by a governmental unit to enforce contractual rights — which he submits this is — does not qualify as an exercise of police powers for purposes of the exception. More precisely, he argues that the EEOC completed its police and regulatory action when it signed the settlement agreement and that its current effort therefore constitutes a separate breach of contract action.
The EEOC is acting within its police or regulatory powers — and thus is entitled to the § 362(b)(4) exemption — when it brings suit under the ADA against persons or corporations for violations of the law, even when it is seeking monetary relief. See EEOC v. McLean Trucking Co., 834 F.2d 398, 402 (4th Cir. 1987); see also NLRB v. P*I*E Nationwide, Inc., 923 F.2d 506, 511 (7th Cir. 1991). This Circuit has held that an action brought to enforce a pre-determination settlement agreement is one brought pursuant to the anti-discrimination statute itself. See Ruedlinger v. Jarrett, 106 F.3d 212, 216 (7th Cir. 1997) (private plaintiff's enforcement of pre-determination settlement agreement is action brought pursuant to same) ; EEOC v. Liberty Trucking Co., 695 F.2d 1038, 1040 (7th Cir. 1990) (EEOC enforcement of conciliation agreement is action brought pursuant to Title VII). All the EEOC seeks here is entry of a default judgment; it concedes that it must turn to the bankruptcy court to enforce such a judgment. Accordingly, I find that this action is brought pursuant to its police or regulatory powers and is subject to the § 362(b)(4) exemption to the automatic stay.
Neither case cited by Rousseau — In re Corporacion de Servicios Medicos Hospitalarios de Fajardo v. Mora, 805 F.2d 440 (1st Cir. 1986) and In re Psychotherapy and Counseling Center, Inc., 195 B.R. 522 (D.C. 1996) — persuades me to hold otherwise.
Rousseau next argues that, as he was not a party to the settlement agreement, any judgment against him personally must be limited to the amount of any distribution he received from the dissolution of Suburban. See Matos v. Nellis, Inc., 101 F.3d 1193, 1195 (7th Cir. 1996). The EEOC concedes this point.
Accordingly, entry of default judgment is entered against Suburban, and entry of partial default judgment is entered against Ro Rousseau up to the amount of the distribution he received from Suburban's dissolution.