EDWARD J. EMMONS, CLERK of □□ NO S. □□□ NORTHERN DISTRICT OF CALIFORNIA 3( □□□ □ aS □□ □ □□□□ 1 Signed and Filed: February 25, 2020 □□□□□□□ run, Mund, A DENNISMONTALL U.S. Bankruptcy Judge 5 6 7 8 UNITED STATES BANKRUPTCY COURT 9 NORTHERN DISTRICT OF CALIFORNIA 10 1 In re: ) Bankruptcy Case ) No. 19-30088-DM 12 PG&E CORPORATION, ) ) Chapter 11 «13 - and - ) 4 ) Jointly Administered PACIFIC GAS AND ELECTRIC COMPANY, _ ) 15 ) 5 Debtors. ) 16 ) 17 Affects PG&E Corporation ) L Affects Pacific Gas and Electric Company ) 18 Affects both Debtors 19 * All papers shall be filed in the Lead Case, No. 20 || 19-30088 (DM). ) 21 ) 22 23 MEMORANDUM DECISION REGARDING MOTION FOR RELIEF FROM STAY 24 Todd Hearn (“Hearn”) moved for relief from the automatic stay on November 20, 2019 25 pursue his employment claims in the Napa County Superior Court. Debtors filed an 26 opposition, and the matter was heard on December 17, 2019. Following that hearing, the 27 parties filed further briefing on the issue and the matter was submitted on January 14, 2020. 28 || For the reasons stated below, the court will grant the motion and allow Hearn to pursue his state court action. -]-
1 Background 2 Hearn worked as a lineman for Debtors until Debtors removed him from work in 2018 3 to investigate alleged timekeeping misconduct. After an investigation, Debtors terminated 4 Hearn on January 22, 2019, for violations of the Employee Code of Conduct. Debtors then 5 filed for bankruptcy on January 29, 2019. In his proposed state court complaint, Hearn alleges 6 that he was terminated in retaliation for raising complaints regarding Debtors’ safety practices, 7 and that this violates California’s whistleblower statutes.1 8 Following Hearn’s termination, the International Brotherhood of Electrical Workers 9 filed a grievance pursuant to procedures found in the applicable Collective Bargaining 10 Agreement, which agreement covers wages, hours, and working conditions (“CBA”). The filed 11 grievance alleges that Hearn was terminated “without just and sufficient cause.” Pacheco Decl. 12 ¶ 6 (dkt. #5239-1). The grievance does not include allegations of whistleblower retaliation or 13 violations of the California Labor Code. Id. ¶ 7. The CBA contains five steps for dispute 14 resolution, with the last step being binding arbitration. An Arbitration Board then has the 15 discretion to issue an award that binds the parties. Here, the grievance process is at the end of 16 the second step and will be forwarded to the third step (fact finding). Campos Decl. ¶ 11 (dkt. 17 #5098). If Hearn prevails, he could be reinstated and awarded lost wages, but general or 18 punitive damages will not be available. Pacheco Decl. ¶ 12. 19 Standard 20 A bankruptcy court shall lift the automatic stay for cause, which is not defined in the 21 Bankruptcy Code but is decided on a case-by-case basis. See 11 U.S.C. § 362(d)(1); 22 Christensen v. Tucson Estates, Inc. (In re Tucson Estates, Inc.), 912 F.2d 1162, 1166 (9th Cir. 23 1990). To determine whether cause exists, courts often use the twelve factors set forth in In re 24 Curtis, 40 B.R. 795, 800 (Bankr. D.Utah 1984) (the “Curtis factors”), which are as follows 25 1 Specifically, Hearn alleges that Debtors unsafely installed ‘TripSavers,’ which are devices 26 used to automatically de-energize power lines when a problem is detected and re-energize them 27 when the problem is cleared. According to the proposed complaint, the ‘TripSavers’ eliminated the need for Debtors’ employees to physically travel to the location of a problem on a power 28 line. The proposed complaint also states that Debtors improperly and haphazardly installed these devices. Hearn also alleges that Debtors improperly downgraded repairs orders for 1 (excluding the factors irrelevant to this proceeding): whether the relief will result in a partial or 2 complete resolution of the issues; the lack of any connection with or interference with the 3 bankruptcy case; whether a specialized tribunal has been established to hear the particular cause 4 of action and that tribunal has the expertise to hear such cases; the interest of judicial economy 5 and the expeditious and economical determination of litigation for the parties; whether the 6 foreign proceedings have progressed to the point where the parties are prepared for trial; and the 7 impact of the stay on the parties and the “balance of hurt.” See also (Kronemyer v. Am. 8 Contractors Indemn. Co. ( In re Kronemyer), 405 B.R. 915, 921 (B.A.P. 9th Cir. 2009) (“We 9 agree that the Curtis factors are appropriate, nonexclusive, factors to consider in deciding 10 whether to grant relief from the automatic stay to allow pending litigation to continue in another 11 forum.”). 12 Analysis 13 (1) Whether the CBA Mandates Denial 14 Debtors preliminarily argued that Hearn should not be permitted to file his state court 15 complaint in part due to the terms of the CBA, which they claim compels Hearn to pursue his 16 claim through the grievance process briefly laid out above. (Dkt. #5095, p. 11).2 After 17 discussion of this point and some confusion at the hearing, the court invited further briefing on 18 this issue. Hearn’s supplemental brief provides authority for the proposition that a collective 19 bargaining agreement does not compel a party to arbitrate statutory claims unless they are 20 explicitly waived. See Carmago v. California Portland Cement Company, 86 Cal. App. 4th 21 995, 1018 (2001) (federal claims of a union member could only be resolved by arbitration if the 22 agreement to do so in the collective bargaining agreement was clear and unmistakable); see also 23 Vasquez v. Superior Court, 80 Cal. App. 4th 430, 434 (2000) (citing Wright v. Universal 24 Maritime Service Corp., 525 U.S. 70 (1998) for the conclusion that a requirement to arbitrate 25 statutory claims “must be particularly clear” and that “[a] union-negotiated waiver of 26 27
28 2 Debtors argue, “[n]otably, the CBA compels [Hearn] to pursue his claims solely through the 1 employees' statutory rights to a judicial forum for claims of employment discrimination must be 2 “ 'clear and unmistakable.' ”). 3 Debtors’ supplemental brief provides little on this point—in fact, Debtors concede that 4 Hearn will be unable to bring his whistleblower claims in the arbitration and do not provide 5 evidence to show that the CBA explicitly waives state whistleblower protections. Instead 6 Debtors argue that lifting the stay is unnecessary and duplicative. The court will address that 7 argument below. 8 As Debtors appear to concede part of this point and provide little in opposition, and 9 Hearn has provided compelling authority in support, the court concludes that the CBA in this 10 case does not compel Hearn to pursue these claims through the grievance process. 11 (2) Whether the Lawsuit is Preempted by Federal Law 12 Debtors also argue that Hearn’s whistleblower claims may be preempted by the Labor 13 Management Relations Act (“LMRA”), 29 U.S.C. § 185(a). This issue is more properly 14 litigated in state court rather than preliminarily dealt with in the context of this motion. 15 Whether or not the lawsuit is preempted is an issue for the state court to decide if the complaint 16 is filed there. Nevertheless, as Debtors assert that this possibility may provide grounds for 17 denial, the court will address the possibility of preemption. 18 Per Section 301 of the LMRA, federal courts have jurisdiction over claims that arise out 19 of labor contracts. See Burnside v. Kiewit Pac.
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EDWARD J. EMMONS, CLERK of □□ NO S. □□□ NORTHERN DISTRICT OF CALIFORNIA 3( □□□ □ aS □□ □ □□□□ 1 Signed and Filed: February 25, 2020 □□□□□□□ run, Mund, A DENNISMONTALL U.S. Bankruptcy Judge 5 6 7 8 UNITED STATES BANKRUPTCY COURT 9 NORTHERN DISTRICT OF CALIFORNIA 10 1 In re: ) Bankruptcy Case ) No. 19-30088-DM 12 PG&E CORPORATION, ) ) Chapter 11 «13 - and - ) 4 ) Jointly Administered PACIFIC GAS AND ELECTRIC COMPANY, _ ) 15 ) 5 Debtors. ) 16 ) 17 Affects PG&E Corporation ) L Affects Pacific Gas and Electric Company ) 18 Affects both Debtors 19 * All papers shall be filed in the Lead Case, No. 20 || 19-30088 (DM). ) 21 ) 22 23 MEMORANDUM DECISION REGARDING MOTION FOR RELIEF FROM STAY 24 Todd Hearn (“Hearn”) moved for relief from the automatic stay on November 20, 2019 25 pursue his employment claims in the Napa County Superior Court. Debtors filed an 26 opposition, and the matter was heard on December 17, 2019. Following that hearing, the 27 parties filed further briefing on the issue and the matter was submitted on January 14, 2020. 28 || For the reasons stated below, the court will grant the motion and allow Hearn to pursue his state court action. -]-
1 Background 2 Hearn worked as a lineman for Debtors until Debtors removed him from work in 2018 3 to investigate alleged timekeeping misconduct. After an investigation, Debtors terminated 4 Hearn on January 22, 2019, for violations of the Employee Code of Conduct. Debtors then 5 filed for bankruptcy on January 29, 2019. In his proposed state court complaint, Hearn alleges 6 that he was terminated in retaliation for raising complaints regarding Debtors’ safety practices, 7 and that this violates California’s whistleblower statutes.1 8 Following Hearn’s termination, the International Brotherhood of Electrical Workers 9 filed a grievance pursuant to procedures found in the applicable Collective Bargaining 10 Agreement, which agreement covers wages, hours, and working conditions (“CBA”). The filed 11 grievance alleges that Hearn was terminated “without just and sufficient cause.” Pacheco Decl. 12 ¶ 6 (dkt. #5239-1). The grievance does not include allegations of whistleblower retaliation or 13 violations of the California Labor Code. Id. ¶ 7. The CBA contains five steps for dispute 14 resolution, with the last step being binding arbitration. An Arbitration Board then has the 15 discretion to issue an award that binds the parties. Here, the grievance process is at the end of 16 the second step and will be forwarded to the third step (fact finding). Campos Decl. ¶ 11 (dkt. 17 #5098). If Hearn prevails, he could be reinstated and awarded lost wages, but general or 18 punitive damages will not be available. Pacheco Decl. ¶ 12. 19 Standard 20 A bankruptcy court shall lift the automatic stay for cause, which is not defined in the 21 Bankruptcy Code but is decided on a case-by-case basis. See 11 U.S.C. § 362(d)(1); 22 Christensen v. Tucson Estates, Inc. (In re Tucson Estates, Inc.), 912 F.2d 1162, 1166 (9th Cir. 23 1990). To determine whether cause exists, courts often use the twelve factors set forth in In re 24 Curtis, 40 B.R. 795, 800 (Bankr. D.Utah 1984) (the “Curtis factors”), which are as follows 25 1 Specifically, Hearn alleges that Debtors unsafely installed ‘TripSavers,’ which are devices 26 used to automatically de-energize power lines when a problem is detected and re-energize them 27 when the problem is cleared. According to the proposed complaint, the ‘TripSavers’ eliminated the need for Debtors’ employees to physically travel to the location of a problem on a power 28 line. The proposed complaint also states that Debtors improperly and haphazardly installed these devices. Hearn also alleges that Debtors improperly downgraded repairs orders for 1 (excluding the factors irrelevant to this proceeding): whether the relief will result in a partial or 2 complete resolution of the issues; the lack of any connection with or interference with the 3 bankruptcy case; whether a specialized tribunal has been established to hear the particular cause 4 of action and that tribunal has the expertise to hear such cases; the interest of judicial economy 5 and the expeditious and economical determination of litigation for the parties; whether the 6 foreign proceedings have progressed to the point where the parties are prepared for trial; and the 7 impact of the stay on the parties and the “balance of hurt.” See also (Kronemyer v. Am. 8 Contractors Indemn. Co. ( In re Kronemyer), 405 B.R. 915, 921 (B.A.P. 9th Cir. 2009) (“We 9 agree that the Curtis factors are appropriate, nonexclusive, factors to consider in deciding 10 whether to grant relief from the automatic stay to allow pending litigation to continue in another 11 forum.”). 12 Analysis 13 (1) Whether the CBA Mandates Denial 14 Debtors preliminarily argued that Hearn should not be permitted to file his state court 15 complaint in part due to the terms of the CBA, which they claim compels Hearn to pursue his 16 claim through the grievance process briefly laid out above. (Dkt. #5095, p. 11).2 After 17 discussion of this point and some confusion at the hearing, the court invited further briefing on 18 this issue. Hearn’s supplemental brief provides authority for the proposition that a collective 19 bargaining agreement does not compel a party to arbitrate statutory claims unless they are 20 explicitly waived. See Carmago v. California Portland Cement Company, 86 Cal. App. 4th 21 995, 1018 (2001) (federal claims of a union member could only be resolved by arbitration if the 22 agreement to do so in the collective bargaining agreement was clear and unmistakable); see also 23 Vasquez v. Superior Court, 80 Cal. App. 4th 430, 434 (2000) (citing Wright v. Universal 24 Maritime Service Corp., 525 U.S. 70 (1998) for the conclusion that a requirement to arbitrate 25 statutory claims “must be particularly clear” and that “[a] union-negotiated waiver of 26 27
28 2 Debtors argue, “[n]otably, the CBA compels [Hearn] to pursue his claims solely through the 1 employees' statutory rights to a judicial forum for claims of employment discrimination must be 2 “ 'clear and unmistakable.' ”). 3 Debtors’ supplemental brief provides little on this point—in fact, Debtors concede that 4 Hearn will be unable to bring his whistleblower claims in the arbitration and do not provide 5 evidence to show that the CBA explicitly waives state whistleblower protections. Instead 6 Debtors argue that lifting the stay is unnecessary and duplicative. The court will address that 7 argument below. 8 As Debtors appear to concede part of this point and provide little in opposition, and 9 Hearn has provided compelling authority in support, the court concludes that the CBA in this 10 case does not compel Hearn to pursue these claims through the grievance process. 11 (2) Whether the Lawsuit is Preempted by Federal Law 12 Debtors also argue that Hearn’s whistleblower claims may be preempted by the Labor 13 Management Relations Act (“LMRA”), 29 U.S.C. § 185(a). This issue is more properly 14 litigated in state court rather than preliminarily dealt with in the context of this motion. 15 Whether or not the lawsuit is preempted is an issue for the state court to decide if the complaint 16 is filed there. Nevertheless, as Debtors assert that this possibility may provide grounds for 17 denial, the court will address the possibility of preemption. 18 Per Section 301 of the LMRA, federal courts have jurisdiction over claims that arise out 19 of labor contracts. See Burnside v. Kiewit Pac. Corp., 491 F.3d 1053, 1059 (9th Cir. 2007). 20 For the first step in determining whether preemption applies, courts determine whether the 21 asserted cause of action “involves a right of action conferred upon an employee by virtue of 22 state law, not by a [collective bargaining agreement].” Id. If the right exists solely as a result of 23 the bargaining agreement, the analysis ends there, but if the right exists independently of the 24 agreement, then the court moves on to the second step to consider whether the cause of action 25 substantially depends on analysis of that agreement. Id. If it is deemed dependent, then the 26 claim is preempted. Id. 27 To determine whether the claim is grounded in state law or the CBA, the court considers 28 its legal character. See id. at 1060. Per the draft complaint, the claims allege unlawful retaliation under California Labor Code §§ 1102.5 and 6310 and wrongful demotion. A 1 preliminary review indicates that these claims do not involve the portions of the CBA submitted 2 to this court, which involve termination for just cause and not whistleblower retaliation as 3 alleged in the draft complaint. Debtors will likely litigate the preemption issue if and when the 4 state court complaint is filed. The court declines to step into the shoes of that court by deciding 5 whether preemption applies now. The possibility is not sufficient to warrant denial of this 6 motion. 7 (3) The Curtis Factors 8 Applying the relevant Curtis factors, cause exists to grant relief from stay. Relief from 9 stay will allow complete resolution of Hearn’s issues through the state court process. Although 10 state court is not a specialized tribunal for retaliation cases, the court acknowledges that the 11 state court is suited to hear state law claims, but does not weigh this factor significantly in its 12 decision. 13 Debtors assert that the second factor, the lack of any connection/interference with the 14 bankruptcy case, weighs in their favor because the proposed lawsuit would overlap with the 15 ongoing grievance process and Debtors would have to commit further resources to adjudicate 16 similar issues in state court. Debtors also claim that granting relief from stay will invite future, 17 similar, requests from individual plaintiffs. Relatedly, Debtors claim that the twelfth factor, the 18 impact of the stay on the parties and the “balance of hurt,” weighs heavily in their favor, 19 asserting that Hearn is free to continue the grievance process if his motion is denied, and that 20 granting of the motion will interfere with their reorganization at this critical time. However, as 21 stated above, the grievance process does not deal with Hearn’s statutory claims. Further, this 22 dispute is unrelated to the wildfires that precipitated this bankruptcy and it is best left for 23 resolution without regard to the bankruptcy. Hearn will also have to expend resources to move 24 forward, but the court prefers to allow Hearn to choose between awaiting conclusion of the 25 grievance proceeding or to pursue state court remedies. In addition, while the court does not 26 invite a flood of individual plaintiffs bringing relief from stay motions, it is not prepared to 27 deny this motion due to that possibility. As such, these factors weigh in favor of Hearn. 28 1 Similarly, Debtors argue that the tenth factor, the interests of judicial economy, is not 2 met because the grievance procedure and proposed lawsuit address the same questions. The 3 court is not persuaded by this argument: the grievance procedures and state court lawsuit may 4 involve similar facts, but they bring different causes of action under separate authorities. 5 The eleventh factor, whether the foreign proceedings have progressed to the point where 6 the parties are prepared for trial, weighs in favor of Debtors. The state court litigation has yet to 7 be filed and consequently the parties are nowhere near being prepared for trial. However, this 8 factor, by itself, is insufficient to outweigh the other factors. 9 Conclusion 10 Because the court weighs the applicable Curtis factors in Hearn’s favor, the court 11 exercises its discretion and GRANTS Hearn’s motion for relief from stay. Counsel for Hearn 12 should serve and upload an appropriate order. 13 *** END OF MEMORANDUM *** 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28