Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca10-88-02793/USCOURTS-ca10-88-02793-0/pdf.json

Nature of Suit Code: 422
Nature of Suit: Bankruptcy Appeals Rule 28 USC 158
Cause of Action: 

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PUBLISH 

UNITED STATES COURT OF APPEALS 

FOR THE TENTH CIRCUIT 

c. JAMES EDDLEMAN also known as ) 

Jim Eddleman; JANE B. EDDLEMAN, ) 

d/b/a J & J Cattle Company, Inc. ) 

and Blue Fin Transport, ) 

Plaintiffs-Appellees, 

14" I L 1]· .lJ 

United Stau=t (;tnr . ti Y.f•:,->adc 

Tonth circuit 

JAN 151991 

ROBERT L. HOECKr~ 

· Clerk 

v. 

) 

) 

) 

) 

) 

) 

) 

) 

) 

No. 88-2793 

UNITED STATES DEPARTMENT OF 

LABOR, 

Defendant-Appellant. 

APPEAL FROM THE UNITED STATES DISTRICT COURT 

FOR THE DISTRICT OF COLORADO 

(D.C. Civil No. 87-C-1891) 

Jeffrey A. Clair, Attorney, Appellate Staff, Civil Division, 

Department of Justice, Washington, D.C. (Stuart M. Gerson, 

Assistant Attorney General; William Kanter·, Attorneys, Appellate 

Staff, Civil Division, Department of Justice, Washington, D.C.; 

and Michael J. Norton, United States Attorney for the District of 

Colorado, Denver, Colorado, with him on the briefs), for 

Defendant-Appellant. 

Matthew D. Skeen (Christopher E. Bench with him on the brief) of 

Skeen & Pearlman, P.C., Denver, Colorado, for PlaintiffsAppellees. 

Before McKAY, BARRETT, and ANDERSON, Circuit Judges. 

McKAY, Circuit Judge. 

Appellate Case: 88-2793 Document: 010110016204 Date Filed: 01/15/1991 Page: 1 
This appeal arises from an attempt by the appellant, United 

States Department of Labor ("DOL"), to maintain an administrative 

action against a chapter 11 debtor. The United States Bankruptcy 

Court for the District of Colorado ruled that DOL's action was 

stayed by the automatic stay provision of the Bankruptcy Code, and 

the district court affirmed. We reverse. 

I. Facts 

Appellees James and Jane Eddleman owned a mail-hauling business. They did most of their work under a contract with the 

United States Postal Service. On August 6, 1986, the Eddlemans 

filed a petition for relief under chapter 11 of the Bankruptcy 

Code. See generally 11 u.s.c. §§ 1101-1174 (1988). They continued to operate the business as debtors-in-possession. 

On May 27, 1987, DOL filed an administrative action against 

the Eddlemans, alleging pre-petition violations of the Service 

Contract Act ("SCA"), 41 U.S.C. §§ 351-358 (1988). The SCA 

requires all federal government contractors to pay certain minimum 

wages and fringe benefits. See 41 u.s.c. § 351. POL alleges that 

the Eddlemans underpaid workers and failed to keep adequate 

records of hours worked and wages paid. 

As part of the administrative enforcement action, DOL sought 

to liquidate claims for back wages due the Eddlemans' employees. 1 

1 DOL concedes that, after the wage claims are liquidated in an 

administrative proceeding, those wage claims must be treated as 

claims against the estate, and any actual collection of back wages 

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( 

DOL also sought to include the Eddlemans on an official list of 

SCA violators. Persons on the list are debarred from contracting_ 

with the government for three years. 41 u.s.c. § 354. If debarred under section 354, the Eddlemans stood to lose the benefit 

of renewal options included in their contract. 

The Eddlemans responded by filing this adversary proceeding 

in bankruptcy court, requesting the court to enforce the automatic 

stay provision of the Bankruptcy Code against the DOL's administrative action. See 11 u.s.c. § 362 (1988). 2 The Eddlemans 

sought, and were granted, a "Preliminary Injunction to Enjoin Violation of Automatic Stay." The Eddlemans also sought damages 

must proceed in accordance with the provisions of the Bankruptcy 

Code. 

2 The applicable portions of the automatic stay provision, 11 

u.s.c. §362, state: 

(a) Except as provided in subsection (b) of this section, a 

[bankruptcy] petition ... operates .as a stay, applicable to 

all entities, of--

(1) the commencement or continuation ... of a judicial, 

administrative, or other action or proceeding against the 

debtor that was or could have been commenced before the 

commencement of the case under this title, or to recover a 

claim against the debtor that arose before the 

commencement of the case under this title ... . 

(b) The filing of a [bankruptcy] petition ... does not 

operate as a stay--

(4) under subsection (a)(l) of this section, of the 

commencement or continuation of an action or proceeding by 

a governmental unit to enforce such governmental unit's 

police or regulatory power .... 

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under 11 u.s.c. § 362(h) (1988) for DOL's alleged willful violation of the automatic stay. 

DOL moved to dismiss, arguing that its administrative action 

was taken to "enforce [its] police or regulatory power," and was 

therefore specifically exempted from the automatic stay provisions 

by 11 u.s.c. § 362(b)(4) (1988). The bankruptcy court denied the 

motion to dismiss, holding that the DOL action was not within the 

"police or regulatory power" exemption, and that any continuation 

of DOL's enforcement effort was stayed. The district court affirmed the bankruptcy court's denial of the motion to dismiss and 

remanded the case to the bankruptcy court for further proceedings 

on the issue of damages. From that order, DOL appeals to this 

circuit. 

As a preliminary matter, we must decide whether appellate 

jurisdiction exists for this appeal. Later, we consider whether 

the "police or regulatory power" exemption applies to DOL's enforcement proceeding. 

II. Jurisdiction 

The jurisdiction of this court over appeals from district 

courts acting in their bankruptcy appellate capacity is limited to 

"final decisions, judgments, orders, and decrees." 11 u.s.c. § 

158(d) (1988); In re Kaiser Steel, 911 F.2d 380, 385-86 (10th Cir. 

1990). The Eddlemans argue that this court lacks jurisdiction to 

hear this appeal because the district court's order affirming the 

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bankruptcy court and remanding for further proceedings is not 

"final" within the meaning of section 158(d). DOL counters that 

the district court's order is final because it settles the question of whether the automatic stay applies to DOL's enforcement 

proceeding. DOL argues that, without the opportunity to appeal 

now, it would be effectively denied meaningful appellate review on 

the automatic stay issue. Alternatively, DOL argues that the 

lower court order, applying the automatic stay to the DOL proceeding, operates as an injunction over which this court has appellate 

jurisdiction under 28 u.s.c. § 1292(a)(l). 3 

DOL's argument that jurisdiction lies under section 1292 has 

been foreclosed by this court's recent decision in Kaiser Steel. 

In that case we held that section 158(d) is the exclusive basis of 

circuit court jurisdiction over appeals from orders of district 

courts acting in their bankruptcy appellate capacity. Section 

1292 is therefore unavailable as a basis for appellate jurisdiction. 911 F.2d at 386. 

We nonetheless hold that the district court order affirming 

the bankruptcy court's application of the automatic stay to DOL's 

3 "[T]he courts of appeals shall have jurisdiction of appeals from: 

(1) Interlocutory orders of the district courts of the United 

States •.• granting, continuing, modifying, refusing or 

dissolving injunctions •.• ;" 

28 U.S.C. § 1292(a)(l) (1988). 

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enforcement proceeding is a final order appealable to this court 

under section 158(d). 

A. 

The circuit courts-consistently hold that orders granting or 

denying relief from the automatic stay are appealable final 

4 orders. See,~, In re Dixie Broadcasting, Inc., 871 F.2d 

1023, 1026 (11th Cir.), cert. denied, 110 S. Ct. 154 (1989); In re 

West Elecs., Inc., 852 F.2d 79, 81-82 (3d Cir. 1988); In re Sun 

Valley Foods Co., 801 F.2d 186, 190 (6th Cir. 1986); In re Kemble, 

776 F.2d 802, 805 (9th Cir. 1985); In re Boomgarden, 780 F.2d 657, 

659-60 (7th Cir. 1985); Grundy Nat'l Bank v. Tandem Mining Corp., 

754 F.2d 1436, 1439 (4th Cir. 1985); In re Leimer, 724 F.2d 744, 

745 (8th Cir. 1984); In re Taddeo, 685 F.2d 24, 26 n.4 (2d Cir. 

1982). While this court has not heretofore specifically addressed 

the issue of appealability, it has treated orders granting or 

denying relief from the automatic stay as appealable final orders. 

See In re Thompson, 894 F.2d 1227 (10th Cir. 1990) (affirming district court affirmance of bankruptcy court denial of relief from 

stay); Pursifull v. Eakin, 814 F.2d 1501 (10th Cir. 1987) (affirming district court order lifting stay). Likewise, the United 

States Supreme Court has ruled on the merits of circuit court 

4 Prior to 1984, appellate jurisdiction in bankruptcy was 

governed by 28 u.s.c. § 1293(b). Because sections 158(d) and 

1293(b) are virtually identical, we apply decisions made under 

section 1293(b) in this case. See In re Commercial Contractors, 

771 F.2d 1373, 1374 n.1 (10th Cir. 1985) (courts accord same 

meaning to sections 1293(b) and 158(d)); In re Teleport Oil Co., 

759 F.2d 1376, 1377 n.1 (9th Cir. 1985) (section 1293(b) decisions 

applicable in section 158 cases). 

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Appellate Case: 88-2793 Document: 010110016204 Date Filed: 01/15/1991 Page: 6 
decisions granting or denying relief from stay without questioning 

appellate jurisdiction. See Norwest Bank Worthington v. Ahlers, 

485 U.S. 197 (1988) (reversing Eighth Circuit opinion which had 

reversed district court order granting relief from stay); United 

Savings Ass'n of Texas v. Timbers of Inwood Forest Assocs., Ltd., 

484 U.S. 365 (1988) (affirming Fifth Circuit opinion which had 

reversed district court order granting relief from stay). 

The legislative history of the Bankruptcy Code shows that 

Congress views the imposition of the automatic stay to be analogous to a permanent injunction. The House Report states: 

Because the stay is essentially an injunction, the three 

stages of the stay may be analogized to the three stages 

of an injunction. The filing of the petition which 

gives rise to the automatic stay is similar to a temporary restraining order. The preliminary hearing is similar to the hearing on a preliminary injunction, and the 

final hearing and order is similar to a permanent 

injunction. 

H.R. Rep. No. 595, 95th Cong., 2d Sess. 344, reprinted in 1978 

U.S. Code Cong. & Admin. News 5787, 5963, 6300. Because a permanent injunction is appealable as a final order, Vicksburg v. 

Henson, 231 U.S. 259, 266-67 (1913), we may infer that Congress 

intended the grant or denial of stay to be similarly appealable. 

Leimer, 724 F.2d at 746; Taddeo, 685 F.2d at 26 n.4. 

Additional evidence of Congress' intent to expedite adjudication of claims relating to the automatic stay is found in 11 

U.S.C. § 362(e), (f) (1988), which provide for speedy hearings and 

ex parte proceedings to resolve requests for relief from stay. 

Immediate appeal from district court orders granting or denying 

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Appellate Case: 88-2793 Document: 010110016204 Date Filed: 01/15/1991 Page: 7 
relief from the automatic stay is necessary to effectuate 

Congress' intent to settle these matters quickly. Kemble, 776 

F.2d at 805; In re American Mariner Indus., Inc., 734 F.2d 426, 

429 (9th Cir. 1984). 

Our belief that this is the correct rule is reinforced when 

we consider the results of a contrary ruling. If we designate 

orders granting or denying relief from stay to be interlocutory 

orders, we render them virtually unreviewable by the circuit 

courts. This is so because the stay remains in effect only during 

the pendency of the bankruptcy proceedings. 11 u.s.c. § 362(c) 

(1988). Therefore, in most cases, by the time the bankruptcy case 

is complete the issue of the stay will be moot. 5 It is inconceivable to us that Congress intended to insulate such orders from 

review above the district court level. 

We recognize that all the cases cited above arose from petitions for relief from stay brought by creditors under section 

362(d). This case differs because the DOL was not a creditor moving for relief from stay. Instead, the DOL, believing that its 

administrative action was exempt from the stay under section 

362(b), properly initiated its administrative action without first 

seeking relief under section 362(d). See NLRB v. Edward Cooper 

Painting, Inc., 804 F.2d 934, 940 (6th Cir. 1986) (governmental 

5 In this case, even though the reorganizati~n plan has been 

approved and discharge has been granted, the question of whether 

the stay properly applies is not moot because of the remanded 

damages issues. 

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unit which determines that its police power or regulatory proceeding is excepted from automatic stay is not required to petition 

bankruptcy court for relief from stay prior to continuing its proceeding). It was the debtor in this case who obtained an order 

enforcing the stay against DOL. 

But the effect of the order on DOL is the same as if DOL had 

been denied relief from the stay: DOL is precluded by section 362 

from pursuing its legal rights and remedies during the pendency of 

the bankruptcy. In terms of finality, we see no reason to treat 

this order differently from an order denying relief from the stay. 

See United States v. Nicolet, 857 F.2d 202 (3d Cir. 1988) (circuit 

court has jurisdiction to review district court order holding that 

stay is inapplicable to environmental cleanup action); Edward 

Cooper Painting, 804 F.2d at 939 (circuit court has jurisdiction 

to determine applicability of automatic stay to unfair labor practice proceeding). Rather, when the government is stayed from enforcing its police or regulatory power, prompt circuit review is 

particularly important. 

It is clear from the legislative history that Congress 

intended to give government even greater protection from unfair 

application of the automatic stay than it gave to private creditors. In drafting the present Bankruptcy Code, Congress attempted 

to correct the problem of undue interference with governmental 

regulation by bankruptcy courts. See H.R. Rep. 95-595, 95th 

Cong., 2d Sess. § 174, reprinted in U.S. Code Cong. & Admin. News 

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Appellate Case: 88-2793 Document: 010110016204 Date Filed: 01/15/1991 Page: 9 
5787, 5963, 6135. Congress deliberately excepted regulatory 

actions from the stay in order to force the courts to examine each 

case carefully, with a view to protecting important governmental 

·interests. The legislative history states: 

Under present law, there has been some overuse of 

the stay in the area of governmental regulation. For 

example, in one Texas bankruptcy court, the stay was 

applied to prevent the State of Maine from closing down 

one of the debtor's plants that was polluting a Maine 

river in violation of Maine's environmental protection 

laws. In a Montana case, the stay was applied to prevent Nevada from obtaining an injunction against a principal in a corporation who was acting in violation of 

Nevada's anti-fraud consumer protection laws. The bill 

excepts these kinds of actions from the automatic stay. 

The States6 will be able to enforce their police and 

regulatory powers free from the automatic stay. The 

bankruptcy court has ample additional power to prevent 

damage to the bankrupt estate by such actions on a caseby-case basis. By exempting these State actions from 

the scope of the automatic stay, the court will be 

required to examine the State actions more carefully, 

and with a view to protecting the legitimate interests 

of the State as well as of the estate, before it may 

enjoin actions against the debtor or the estate. 

Id. (footnotes omitted) (emphasis added). Considering the important governmental interests at stake, Congress could not have 

intended to shield such orders from circuit review by deeming them 

to be interlocutory orders, unreviewable under section 158(d). 

B. 

Having determined that an order applying the automatic stay 

to a regulatory action is an appealable f~nal order, we must now 

address the question of whether the remanded damages issues 

6 Although the legislative history speaks of state action, the 

language of the statute clearly applies to federal governmental 

actions as well. Section 362(b)(4) excepts "an action or 

proceeding by a governmental unit" from the stay. 

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destroy finality in this case. In a recent decision, we stated: 

The Tenth Circuit has interpreted "final order" for purposes of§ 158(d) in traditional finality terms ••. 

rather than according to the more flexible standard 

adopted by other circuits for identifying "final orders" 

of bankruptcy judges. We have held that adhering to the 

more traditional view of finality for our review of district court orders, i.e. that "[t]o be final and appealable, the district court's order must end the litigation 

and leave nothing to be done except execute the judgment," •.. furthers the policy underlying the finality 

doctrine by controlling piecemeal adjudication and eliminating delays caused by interlocutory appeals. 

In re Magic Circle Energy Corp., 889 F.2d 950, 953 (10th Cir. 

1989) (citations omitted) (quoting In re Glover, Inc., 697 F.2d 

907, 909 (10th Cir. 1983)). Thus, we must look to traditional 

finality rules--and traditional exceptions to those rules--to 

determine whether the order in this case is final and appealable 

despite the remanded issues. 7 

7 Magic Circle's ostensible flat rejection of the flexible 

finality rule in bankruptcy is somewhat misleading. The flexible 

rule developed because, if "traditional" rules of finality 

applied in bankruptcy, no appeals would be heard in any bankruptcy matter until a final order issued as to the entire bankruptcy case. See In re County Management·, 788 F.2d 311, 313 (5th 

Cir. 1986) (rules differ in bankruptcy because case need not be 

appealed as single judicial unit at termination of whole proceeding); In re Saco Local Dev. Corp., 711 F.2d 441, 443 (1st Cir. 

1983) ("Traditionally, every civil action in a federal court has 

been viewed as a 'single judicial unit,' from which only one 

appeal would lie."). "Viewed realistically, a bankruptcy case is 

simply an aggregation of controversies, many of which would constitute individual lawsuits had a bankruptcy petition never been 

filed." In re Martin Bros. Toolmakers, Inc., 796 F.2d 1435, 1437 

(11th Cir. 1986). Every circuit, including this one, recognizes 

explicitly or implicitly that "traditional" rules of finality 

must be adapted to allow appeals of separate disputes within the 

bankruptcy case, without waiting for the entire case to become 

final. See Commercial Contractors, 771 F.2d at 1375 (quoting In 

re Riggsby, 7 45 P. 2d 1153, 1155 ( 7th Cir. 1984) ("'[A] single 

bankruptcy can give rise to numerous claims which are litigable 

to final judgments appealable while the bankruptcy proceeding is 

still going on .•.• '"). See also In re Delta Services Indus., 

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In a similar case, the Third Circuit, applying traditional 

finality principles, held that it lacked jurisdiction to hear an 

appeal. In re Brown, 803 F.2d 120 (3d Cir. 1986). In Brown, a 

782 F.2d 1267, 1269 (5th Cir. 1986); In re Morse Elec. Co., Inc., 

805 F.2d 262, 264 (7th Cir. 1986); Martin Bros., 796 F.2d at 1437 

(Eleventh Circuit opinion); In re Sun Valley Foods, 801 F.2d at 

190 (Sixth Circuit opinion); American Colonial Broadcast Corp., 

758 F.2d 794, 801 (1st Cir. 1985); Sumy v. Schlossberg, 777 F.2d 

921, 923 (4th Cir. 1984); Leimer, 724 F.2d at 745 (Eighth Circuit 

opinion); Comer, 716 F.2d at 171-72 (Third Circuit opinion); In 

re White, 727 F.2d 884, 885-86 (9th Cir. 1984); 16 C. Wright, A. 

Miller & E. Cooper, Federal Practice and Procedure§ 3926 (Supp. 

1990). Thus, while Magic Circle purports to reject the flexible 

approach to finality in bankruptcy, this court, in fact, routinely adopts the flexible approach by treating discrete matters 

within a bankruptcy case as final orders which may be heard on 

appeal before the entire bankruptcy is finished. See,~, In 

re Electronic Metal Products, Inc., No. 89-1354 (10th Cir. 

Oct. 19, 1990) (appealing order in adversary proceeding to 

recover preference); In re Gardner, 913 F.2d 1515 (10th Cir. 

1990) (appealing order in adversary proceeding to compel _debtor 

to turn over property); Kaiser Steel Corp. v. Charles Schwab & 

Co., Inc., 913 F.2d 846 (10th Cir. 1990) (adversary proceeding to 

recover fraudulent transfer); In re Brayshaw, 912 F.2d 1255, 1256 

(10th Cir. 1990) (holding that grant or denial of debtor's claim 

of property exemption is final, appealable order); In re Roberts, 

906 F.2d 1440 (10th Cir. 1990) (appealing order determining dischargeability of a debt); In re B & L Oil Co., 834 F.2d 156 

(10th Cir. 1987) (appealing order transferring venue of turnover 

proceeding) • 

It is clear that, despite the "traditional" rule announced in 

Magic Circle, this court has not completely rejected the flexible 

rule. Rather, we have placed limits on its application. We are 

flexible in allowing appeals of discrete disputes within a bankruptcy case. We demand, however, that each discrete dispute come 

to this court in a posture which satisfies "traditional" finality 

principles. Interpreted in this way, Magic Circle may be reconciled with the other opinions of this court cited above. This 

interpretation is also consistent with the our opinion in In re 

O'Connor, 808 F.2d 1393 (10th Cir. 1987). In O'Connor, the 

debtor moved for permission to use cash collateral. The bankruptcy court granted the motion and the district court reversed. 

This court entertained an appeal, stating: 

Appellee ... suggests we do not have jurisdiction 

because the order of the district court was not final as 

it "merely dispos(ed] of an incidental matter regarding 

proceedings of the Bankruptcy Court •... " The argument is unfounded ..•. (G]iven the nature of bank-

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chapter 7 debtor received a letter from her credit union explaining that unless she reaffirmed her credit union debt, the credit 

union would refuse to supply future services. The debtor filed a 

complaint with the bankruptcy court alleging that the letter violated the automatic stay. The bankruptcy court held that the 

credit union had violated the stay, but refused to award damages 

to the debtor because the violation was only technical. On 

appeal, the district court held that the violation was more than 

technical and remanded to the bankruptcy court to determine damages. The circuit court dismissed an appeal from the district 

court's order, stating: "[W]here a district court's order does 

not affect the distribution of the debtor's assets or the relationship among the creditors, the traditional finality requirements must generally be satisfied before the order is appealable." 

Id. at 123. Under Brown, the district court order in this case 

could not be appealable because it did not "end the litigation and 

ruptcy proceedings and the appellate rights arising 

therefrom, an order of a district court reversing a 

bankruptcy court order is final unless the district 

court remands the case for "further significant 

proceedings." 

Id. at 1395 n.l (citations omitted). Accord County Management, 

788 F.2d at 313 (quoting In re Emerald Oil Co., 694 F.2d 88, 89 

(5th Cir. 1982) (although appeal of discrete disputes is allowed 

in bankruptcy, "there must be a final determination of the rights 

of the parties to secure the relief they seek in this suit for an 

order to be considered final."); In re Charter Co., 778 F.2d 617, 

621 (11th Cir. 1985) (quoting Leimer, 724 F.2d at 745) ("Although 

courts 'take a more liberal view of what constitutes a separate 

dispute for purposes of appeal' in bankruptcy cases •.. the 

separate dispute being assessed must have been finally resolved 

and leave nothing more for the bankruptcy court to do."). 

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leave nothing to be done except execute the judgment." Magic· 

Circle, 889 F.2d at 953. 

This case, however, is distinguishable from Brown. Brown 

involved a private creditor whose actions were within the scope of 

the stay. This case involves a government action which, DOL 

argues, Congress has excepted from the stay. While Congress 

intended private actions against the bankruptcy estate to be 

stayed automatically until the courts declare otherwise, see 11 

u.s.c. § 362(a), (c), (d), Congress intended that government regulatory actions never be subject to the stay. In this regard, governmental exemption from the stay is analogous to governmental 

immunity from suit. Therefore, an order applying the automatic 

stay to a government police or regulatory action is immediately 

appealable under the collateral order exception, as applied in 

Mitchell v. Forsyth, 472 U.S. 511 (1985). 

In Mitchell, the Supreme Court held that an order denying a 

claim of qualified immunity, "to the extent that it turns on an 

issue of law, is an appealable 'final decision' ••. notwithstanding the absence of a final judgment." Id. at 530. The Court 

held that such an order fits within the collateral order exception 

to the finality rule, as set forth in Cohen v. Beneficial Industrial Loan Corp., 337 U.S. 541 (1949), for "claims of right separable from, and collateral to, rights asserted in the action, too 

important to be denied review and too independent of the cause 

itself to require that appellate consideration be deferred until 

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the whole case is adjudicated." Id. at 546. The government's 

right to conduct its police and regulatory activities free from 

undue interference by bankruptcy courts is an important right 

which should be protected by prompt judicial review, as Congress 

intended. The rationale of Mitchell provides the means whereby 

prompt review of a "final decision" applying the stay to a police 

or regulatory action can be guaranteed, notwithstanding the 

absence of a final judgment. 8 

Mitchell explains that governmental immunity is an entitlement not to stand trial, and that this entitlement is forever lost 

if the order denying immunity is not reviewed until after the completion of a trial. 472 U.S. at 526. Thus, an order denying 

immunity meets the first prong of the Cohen test, which requires 

that the order is "effectively unreviewable on appeal from a final 

judgment." Id. at 527. Likewise, in this case the government 

claimed a right not to be stayed during the bankruptcy proceedings. Because of the remanded issues, however, that right has 

been irretrievably lost. 

8 Circuit court review of such a "final decision" comports with 

the language of section 158(d). That section allows the circuit 

courts to hear appeals from "final decisions, judgments orders, 

and decrees." 28 U.S.C. § 158(d) (emphasis added). Compare this 

provision to section 158(a), which allows the district courts to 

hear appeals only from "final judgments, orders and decrees." 

Although the bankruptcy court's application of the stay in this 

case may not amount to a final judgment, order or decree, we 

conclude that it does constitute a final decision under section 

158(d). 

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By the time DOL briefed this appeal, this proceeding had languished in the bankruptcy court for two years, with no attempt by 

that court to determine damages on remand. The bankruptcy court 

has, in the interim, approved a reorganization plan. During the 

entire pendency of the bankruptcy proceeding, the government was 

forced, by virtue of the automatic stay, to continue to contract 

with a violator of the SCA. 9 Such occurrences are unpreventable 

unless circuit courts immediately review orders imposing the stay 

on police or regulatory actions. The potential exists that a 

bankruptcy court could prevent the government from stopping polluters or other persons threatening the public welfare, or even 

from pursuing civil enforcement actions against drug dealers, simply by inaction on remanded' issues. 10 

9 The government contract was the most valuable asset of the 

bankruptcy estate. Apparently, reorganization was possible only 

if the government contract continued in force. Because the 

damages issues "do[] not affect the distribution of the debtor's 

assets or the relationship among the creditors," Brown, 803 F.2d 

at 123, the bankruptcy court has no incentive to settle the 

remanded issues quickly. On the contrary,·the temptation exists 

to delay as long as possible in order to keep the government 

contract within the estate. 

10 Significantly, Congress intended, when it drafted the 

Bankruptcy Code, to prevent the bankruptcy court from maintaining 

the stay by inaction. The legislative history states: 

Creditors may obtain relief from the stay if their 

interests would be harmed by continuance of the stay. 

The bill ... provides that unless the court acts 

quickly, the relief is automatic on request by a 

creditor. Too often today, court delay in handling 

requests for relief amounts to a complete denial of 

relief. The court can thus avoid the issue, and yet 

rule in the debtor's favor. 

H.R. Rep. 95-595, 95th Cong., 2d Sess. § 175, reprinted in U.S. 

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The second Cohen prong, that the order "conclusively determine the disputed question," was satisfied in Mitchell, because 

there will be nothing in the subsequent course of the 

proceedings ... that can alter the court's conclusion 

that the defendant is not immune .... [T]he court's 

denial of summary judgment finally and conclusively 

determines the defendant's claim of right not to stand 

trial on the plaintiff's allegations, and ... "[t]here 

are simply no further steps that can be taken .•. to 

avoid the trial the defendant maintains is barred." 

427 U.S. at 527 (quoting Abney v. United States, 431 U.S. 651, 659 

(1977)) (emphasis in original). Similarly, in this case the bankruptcy court decided as a matter of law that the DOL's action is 

within the scope of the stay. That issue will not be revisited on 

remand. The DOL could do nothing further in the bankruptcy court 

or the district court to avoid the stay. 

The final prong of Cohen requires that "the question must 

involve a claim of right separable from, and collateral to, rights 

asserted in the action." Id. at 527. This prong is the most 

troublesome, both in Mitchell and in this case, because claims of 

immunity or of exemption from the stay are decided on many of the 

same facts as are the merits of the underlying actions. In 

Mitchell, the government actor was immune from suit if his actions 

did not violate "clearly established law." Id. at 530. Thus, the 

court would examine the purported violations in order to decide 

the immunity question, then examine those.same violations again to 

decide the merits of the underlying action. Similarly, in this 

case, the bankruptcy court determined that the actions of DOL fell 

Code Cong. & Admin. News 5787, 5963, 6136 (footnotes omitted). 

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within the scope of the stay. The bankruptcy court will then reexamine those actions on remand to see if they constitute a willful violation of the stay. It is difficult, in either case, to 

establish separability. 

The Supreme Court, however, held that the order in Mitchell 

was sufficiently separable to satisfy Cohen. The Court reasoned: 

[I]t follows from the recognition that qualified immunity is in part an entitlement not to be forced to 

litigate the consequences of official conduct that a 

claim of immunity is conceptually distinct from the 

merits of the plaintiff's claim that his rights have 

been violated .... All it need determine is a question of law: whether the legal norms allegedly violated 

by the defendant were clearly established at the time of 

the challenged action •.•• To be sure, the resolution of these legal issues will entail consideration of 

the factual allegations that make up the plaintiff's 

claim for relief; the same is true, however, when a 

court must consider whether a prosecution is barred by a 

claim of former jeopardy or whether a Congressman is 

absolutely immune from suit because the complained of 

conduct falls within the protections of the Speech and 

Debate Clause .... In holding these and similar 

issues of absolute immunity to be appealable under the 

collateral order doctrine, the Court has recognized that 

a question of immunity is separate from the merits of 

the underlying action for purposes of the Cohen test 

even though a reviewing court must consider the plaintiff's factual allegations in resolving the immunity 

issue. 

Id. at 527-29 (footnotes and citations omitted). The question of 

law decided in this case, that the DOL action is within the scope 

of the stay, is also conceptually distinct from the question of 

whether the stay was willful. 

We conclude that an order applying the automatic stay to a 

governmental action which is arguably taken to enforce the government's police or regulatory power is an appealable collateral 

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order under the Cohen doctrine, as applied in Mitchell. Thiscourt, therefore, has jurisdiction to hear this appeal. We now 

address the merits of DOL's challenge. 

III. Exemption from Automatic Stay 

DOL appeals the ruling of the bankruptcy court, affirmed by 

the district court, that its administrative action to enforce the 

provisions of the SCA is stayed by section 362(a) of the 

Bankruptcy Code. We review this question of law de novo, giving 

no special weight to the district court's determination. In re 

Ruti-Sweetwater, Inc., 836 F.2d 1263, 1266 (10th Cir. 1988); 

Ocelot Oil Corp. v. Sparrow Indus., 847 F.2d 1458, 1464 (10th Cir. 

1988). 

Under the automatic stay provision, a petition filed in bankruptcy "operates as a stay, applicable to all entities of--(1) the 

commencement or continuation .•• of a judicial, administrative, 

or other action or proceeding against the debtor that was or could 

have been commenced before the commencement of the [bankruptcy] 

case II 11 u.s.c. § 362(a). However, "[t]he filing of a 

petition. does not operate as a stay-- ..•• (4) . of 

the commencement or continuation of an action or proceeding by a 

governmental unit to enforce such governmental unit's police or 

regulatory power • . 11 11 U.S.C. § 362(b). 

The bankruptcy court held that DOL's enforcement proceedings 

were not within the 362(b)(4) exception. The district court 

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affirmed noting that "section 362(b)(4) was intended to except 

only proceedings •.. that are attempting to prevent or stop violations of fraud, environmental protection, consumer protection, 

safety or similar police or regulatory laws." Order, Sept. 13, 

1988, at 7. The court reasoned that DOL was not attempting to 

prevent any of the foregoing or similar acts. Id. The court further reasoned that "regulatory laws that conflict directly with 

control of the res or property by the Bankruptcy Court are not 

excepted by § 362(b) (4)." Id. 

At the outset, we reject the district court's conclusion that 

the 362(b)(4) exception does not apply to government actions that 

conflict with the bankruptcy court's control over assets of the 

debtor. The language of section 362(b)(4) contains no such limitations. Under the plain language of the statute, governmental 

action must simply be taken for the purpose of exercising "police 

or regulatory" power in order to qualify for the exemption. Furthermore, the statute specifically allows the government to 

enforce any judgments obtained in the exercise of its police or 

regulatory powers, with the exception of money judgments. 11 

11 u.s.c. § 362(b)(5). We must assume that Congress chose its language with the full recognition that the exception would allow 

governmental actions to encroach on the court's control of 

debtors' affairs. Accordingly, we conclude that the section 

11 DOL was not seeking to enforce a money judgment in its 

administrative action. Instead, it sought liquidation of the 

damage claims, so that proofs of claim could be filed on behalf 

the Eddlemans' employees. 

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362(b)(4) exception can apply to agency actions, even though such 

actions may affect debtor assets. 

We now consider whether the 362(b)(4) exception applies to 

the DOL proceedings involved in this case. Most courts that have 

faced this issue have determined that the exception applies. 12 Of 

course, not every agency action against a debtor can be characterized as one that enforces "police or regulatory power." Consequently, courts have developed two tests for determining whether 

agency actions fit within the exception. Under the "pecuniary 

purpose" test, the court asks whether the government's proceeding 

relates primarily to the protection of the government's pecuniary 

interest in the debtor's property and not to matters of public 

policy. See Edward Cooper Painting, 804 F.2d at 942; In re State 

of Missouri, 647 F.2d 768, 776 (8th Cir. 1981), cert. denied, 454 

U.S. 1162 (1982). If it is evident that a governmental action is 

12 See,~, Pension Ben. Guar. Corp. v. LTV Corp., 875 F.2d 

1008, 1020 (2d Cir. 1989) (action to enforce ERISA within exception), rev'd on other grounds, 58 U.S.L.w.· 4831 (June 18, 1990); 

NLRB v. Twin Cities Elec. & Eng'g, Inc., 907 F.2d 108 (9th Cir. 

1990) (NLRB enforcement proceedings not stayed); Brock v. Rusco 

Indus., Inc., 842 F.2d 270, 273 (11th Cir.) (Secretary's action to 

enforce Fair Labor Standards Act not subject to automatic stay), 

cert. denied, 488 U.S. 889 (1988); EEOC v. Mcclean Trucking Co., 

834 F.2d 398 (4th Cir. 1987) (action under Age Discrimination in 

Employment Act and Title VII exempt from stay); Edward Cooper 

Painting, 804 F.2d at 934 (enforcement proceedings based on unfair 

labor practice exempt from stay); EEOC v. Rath Packing Co., 787 

F.2d 318 (8th Cir.) (EEOC action seeking injunctive relief and 

back pay not subject to stay as action was for purpose of protecting public policy), cert. denied, 497 U.S. 910 (1986); Ahrens Aircraft, Inc. v. NLRB, 703 F.2d 23 (1st Cir. 1983) (enforcement proceeding seeking back-pay exempt from automatic stay); NLRB v. 

Evans Plumbing Co., 639 F.2d 291 (5th Cir. 1981) (proceeding based 

on unfair labor practice seeking reinstatement with back-pay not 

subject to stay). 

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primarily for the purpose of protecting a pecuniary interest,·then 

the action should not be excepted from the stay. In contrast, the 

"public policy" test distinguishes between government proceedings 

aimed at effectuating public policy and those aimed at adjudicating private rights. See Edward Cooper Painting, 804 F.2d at 942. 

Under this second test, actions taken for the purpose of advancing 

private rights are not excepted from the stay. See id. 

In the case at bar, we conclude that DOL's enforcement proceedings are exempt from the stay under either test. The remedies 

sought by DOL are not designed to advance the government's pecuniary interest. DOL's pursuit of debarment and liquidation of backpay claims was primarily to· prevent unfair competition in.the market by companies who pay substandard wages. Although we do not 

feel bound to apply it, we also conclude that the "public policy" 

test presents no barrier to DOL's actions. Despite the fact that 

DOL sought liquidation of back-pay claims for specific individuals, we do not characterize the use of that remedy as an 

assertion of private rights. We conclude instead that the request 

for liquidation of back-pay claims was but another method of 

enforcing the policies underlying the SCA. Our conclusion is bolstered by the fact that the back-pay claimants would not receive 

any extra priority by virtue of the DOL action. Actual collection 

of the back-pay claims must proceed according to normal bankruptcy 

procedures. Accordingly, we hold that DOL's enforcement proceedings in this case were exempt from the automatic stay under 

section 362(b)(4). 

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IV. Conclusion 

We hold that appellate jurisdiction exists for this appeal 

because the district court's order must be considered a final 

decision under 28 u.s.c. § 158(d). On the merits of DOL's challenge, we hold that the enforcement action at issue was exempt 

from the automatic stay under 11 U.S.C. § 362(b)(4). Accordingly, 

we REVERSE the holding of the district court and REMAND with 

instructions to dissolve the stay against DOL. 

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