Bankruptcy Judge Jeffery A. Deller of Pittsburgh refused to be drawn into deciding whether Pennsylvania’s virus pandemic regulations violate the U.S. Constitution. He modified the automatic stay so state authorities could shut down a restaurant operating in violation of pandemic rules.
Judge Deller told the debtor to litigate the constitutionality of state regulations in federal district court, where the debtor was already a plaintiff in a civil rights suit.
In his January 7 decision, Judge Deller summarized the progression of state and local regulations in Pennsylvania in response to the pandemic. By July, the state health department had required that masks be worn indoors and limited restaurants to operating at 25% of capacity.
Before filing a chapter 11 petition in October, the restaurant was in violation of the regulations, according to the county. A civil enforcement action to shut down the restaurant was pending when the chapter 11 petition was filed.
County health authorities filed a motion to modify the automatic stay, ostensibly to allow the state court to shut down the debtor’s operations. The county noted that more than 16,500 Pennsylvania residents had died of the virus, including more than 1,000 in the county where the debtor was located.
The case turned on Section 362(b)(4), which excepts police and regulatory powers from the automatic stay.
The debtor conceded that enforcement of the regulations would be a valid exercise of police and regulatory powers if the regulations themselves were valid. Judge Deller said that the debtor’s defense to the motion was “an overt challenge to the legality or constitutionality of the Covid-19 Control Measure Orders.”
In other words, “Debtor’s defense to the motion is to essentially request that this Court declare the Covid-19 Control Measure Orders unconstitutional,” Judge Deller said. He “decline[d] to accept the Debtor’s invitation to insert itself into the fray.”
Judge Deller said that nothing in Section 362(b)(4) conditions the exception to the automatic stay on finding a proper exercise of police or regulatory power. Furthermore, he said that the statute is unambiguous.
Judge Deller surveyed some of the litigation around the country surrounding the propriety of Covid regulations. He stopped short of deciding whether the Pennsylvania regulations were valid and enforceable.
Judge Deller observed that the “Debtor’s case is hardly the proverbial ‘slam-dunk’” and “does not lend itself to an obvious ruling in the Debtor’s favor.” He therefore left “the determination of these issues to the court of competent jurisdiction that will ultimately preside over this dispute.”
Judge Deller granted the county’s motion to modify the automatic stay. In the district court suit where the debtor was already a plaintiff, he said the debtor could modify the complaint to seek an injunction against enforcement of the state regulations.
Bankruptcy Judge Jeffery A. Deller of Pittsburgh refused to be drawn into deciding whether Pennsylvania’s virus pandemic regulations violate the U.S. Constitution. He modified the automatic stay so state authorities could shut down a restaurant operating in violation of pandemic rules.
Judge Deller told the debtor to litigate the constitutionality of state regulations in federal district court, where the debtor was already a plaintiff in a civil rights suit.
In his January 7 decision, Judge Deller summarized the progression of state and local regulations in Pennsylvania in response to the pandemic. By July, the state health department had required that masks be worn indoors and limited restaurants to operating at 25% of capacity.
Before filing a chapter 11 petition in October, the restaurant was in violation of the regulations, according to the county. A civil enforcement action to shut down the restaurant was pending when the chapter 11 petition was filed.
County health authorities filed a motion to modify the automatic stay, ostensibly to allow the state court to shut down the debtor’s operations. The county noted that more than 16,500 Pennsylvania residents had died of the virus, including more than 1,000 in the county where the debtor was located.
The case turned on Section 362(b)(4), which excepts police and regulatory powers from the automatic stay.