United States District Court

For the Northern District of California

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IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

LORRAINE PLACIDO,

Plaintiff,

 v.

THE PRUDENTIAL INSURANCE

COMPANY OF AMERICA; NORTEL

NETWORKS LONG TERM DISABILITY

PLAN,

Defendants. /

No. C 09-00668 WHA

ORDER GRANTING MOTION

TO LIFT STAY 

INTRODUCTION

In this action to recover benefits under the Employment Retirement Income Security Act

of 1974, plaintiff Lorraine Placido moves to lift the stay imposed by the Court’s order on April 3,

2009. For the following reasons, the motion is GRANTED. 

STATEMENT

 On January 14, 2009, Nortel Networks Inc. filed a petition for bankruptcy. On February

13, 2009, plaintiff filed an action against defendants The Prudential Insurance Company of

America and Nortel Networks Long Term Disability Plan to recover benefits under ERISA. 

Defendants filed a suggestion of bankruptcy and applicability of automatic stay on March 19, 

Case 3:09-cv-00668-WHA Document 37 Filed 01/22/10 Page 1 of 3
United States District Court

For the Northern District of California

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2009. Neither the Plan nor Prudential have filed for bankruptcy. On April 3, 2009, this Court

issued an order to stay the case and vacate the previously scheduled deadlines and/or hearings. In

the present motion, plaintiff requests that the stay be lifted. 

ANALYSIS

Defendants contend that the automatic stay applies to the Plan and Prudential because a

judgment against either party would be paid by debtor Nortel. In order to apply the automatic

stay outlined in 11 U.S.C. 362 to a non-debtor party, the bankruptcy court must issue an extension

of the stay under its jurisdiction. Boucher v. Shaw, 572 F.3d 1087, 1093 (9th Cir. 2009). In the

case that “the liability of the non-debtor party were to affect the property of the bankruptcy estate,

such as by requirement that the debtor indemnify the non-debtor” it may be necessary to extend

the automatic stay to the non-debtor party. Ibid. In that circumstance, however:

 [T]he bankruptcy court would first need to extend the automatic stay under its

equity jurisdiction. Such extensions, although referred to as extensions of the

automatic stay, are in fact injunctions issued by the bankruptcy court after hearing

and the establishment of unusual need to take this action to protect the

administration of the bankruptcy estate.

Id. at note 3 (citations and quotation marks omitted). The Boucher decision further supports this

principle by citing to 28 U.S.C. 1334(b) which “establish[es] the bankruptcy court’s jurisdiction

over matters that are related to the bankruptcy.” Ibid (quotation marks omitted). Although neither

plaintiff nor defendants cited to the Boucher decision, it is controlling on this issue. 

It is undisputed that both the Plan and Prudential have not filed for bankruptcy and are

therefore “non-debtor” parties. In order to extend the automatic stay to defendants because of

their alleged financial connection to the debtor, the extension would have to be issued by the

bankruptcy court. Even if defendants’ reasoning for applying the automatic stay were accepted,

this Court does not have the jurisdiction to extend the stay to a non-debtor party. Since

defendants fail to address this issue of jurisdiction, it is unnecessary for this order to address

defendants’ counter arguments. 

Case 3:09-cv-00668-WHA Document 37 Filed 01/22/10 Page 2 of 3
United States District Court

For the Northern District of California

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CONCLUSION

The plaintiff’s motion to lift stay is hereby GRANTED. A separate case management order

will issue. 

IT IS SO ORDERED.

Dated: January 21, 2010 

WILLIAM ALSUP

UNITED STATES DISTRICT JUDGE

Case 3:09-cv-00668-WHA Document 37 Filed 01/22/10 Page 3 of 3