FOR PUBLICATION

UNITED STATES COURT OF APPEALS

FOR THE NINTH CIRCUIT

JEREMY PORTER, an individual,

Plaintiff-Appellant,

v.

NABORS DRILLING USA, L.P., a 

Limited Partnership organized under 

the laws of the State of Delaware,

Defendant-Appellee.

No. 15-16985

D.C. No.

1:15-cv-00805-

MCE-JLT

OPINION

Motion to Recognize Automatic Stay of Appeal 

from the United States District Court

for the Eastern District of California

Morrison C. England, Jr., District Judge, Presiding

Submitted to Motions Panel February 27, 2017

Filed April 20, 2017

Before: William C. Canby, Richard R. Clifton,

and Michelle T. Friedland, Circuit Judges.

Opinion by Judge Clifton
2 PORTER V. NABORS DRILLING USA

SUMMARY*

California Private Attorney General Act / 

Automatic Stay

The panel granted the motion of Nabors Drilling USA, 

L.P. to recognize an automatic stay, triggered by its filing for 

reorganization under Chapter 11 of the Bankruptcy Code, in 

a lawsuit file by plaintiff Jeremy Porter, who asserted a claim 

under California’s Private Attorney General Act of 2004 

(“PAGA”).

The panel held that the exception to an automatic stay 

established in 11 U.S.C § 362(b)(4), described as the 

governmental regulatory or governmental unit exception, 

did not apply to a claim brought by a private party under 

PAGA. Because the governmental unit exception to the 

automatic bankruptcy stay did not apply to Porter’s PAGA 

action, the panel concluded that the automatic stay did not 

apply to the action, including the appeal currently before the 

court. The panel suspended further activity in this appeal.

COUNSEL

Arnold P. Peter, Peter Law Group, Manhattan Beach, 

California, for Plaintiff-Appellant.

 * This summary constitutes no part of the opinion of the court. It 

has been prepared by court staff for the convenience of the reader.
PORTER V. NABORS DRILLING USA 3

Tamara I. Devitt and Matthew E. Costello, Haynes and 

Boone LLP, Costa Mesa, California, for DefendantAppellee.

OPINION

CLIFTON, Circuit Judge:

Movant-Appellee Nabors Drilling USA, L.P. has filed 

for reorganization under Chapter 11 of the Bankruptcy Code. 

That filing triggered the automatic stay under 11 U.S.C. 

§ 362(a)(1), which generally applies to protect a debtor after 

it has filed for bankruptcy protection. The question 

presented by the current motion is whether that stay applies 

to a lawsuit filed by a plaintiff, Appellant Jeremy Porter, who 

has asserted a claim under California’s Private Attorney 

General Act of 2004 (“PAGA”), Cal. Labor Code §§ 2698 et 

seq. Porter contends that the exception established in 

11 U.S.C. § 362(b)(4), sometimes described as the 

governmental regulatory or governmental unit exception, 

applies to exempt his PAGA claim from the automatic stay. 

We conclude that the exception does not apply to a claim 

brought by a private party under PAGA, and we therefore 

grant Nabors’s motion to recognize the automatic stay in this 

case.

I. Background

Porter alleges that he was formerly an employee of 

Nabors. He notified the California Labor & Workforce 

Development Agency (“LWDA”) that he believed that 

Nabors had violated various provisions of the California 

Labor Code. LWDA did not respond to Porter or take further 

action regarding his allegations. Under PAGA, after LWDA 
4 PORTER V. NABORS DRILLING USA

had been notified of possible labor code violations and 

declined to take action within a certain period of time, Porter 

was authorized to file a civil action seeking to recover 

penalties for the alleged code violations. See Cal. Lab. Code 

§§ 2698 et seq. He did so by filing a complaint against 

Nabors in state court. Porter’s complaint contained eight 

causes of action, including one PAGA claim.

After removing the action to federal court, Nabors 

moved to compel arbitration on all of Porter’s claims 

pursuant to an arbitration agreement. Porter agreed to 

arbitrate all of his claims except for the PAGA claim. Over 

Porter’s objection, the district court granted Nabors’s motion 

to compel arbitration of the PAGA claim and dismissed the 

complaint. Porter filed the current appeal. LWDA has never 

moved to intervene in the action.

After the appeal was filed, Nabors filed in this court a 

“Notice of Suggestion of Bankruptcy.” The notice stated 

that Nabors and its parent companies filed voluntary 

petitions seeking bankruptcy protection under Chapter 11 in 

the United States Bankruptcy Court for the Southern District 

of Texas, Houston Division. The notice stated that pursuant 

to 11 U.S.C. §§ 362(a)(1)–(3), the filing of the bankruptcy 

petition automatically stayed all proceedings with respect to 

Nabors. Porter then filed with this court a motion for 

summary disposition arguing that the automatic bankruptcy 

stay does not apply to these proceedings.

As discussed below, there are a small number of 

exceptions to the automatic bankruptcy stay. Among those 

exceptions is a provision for proceedings brought “by a 

governmental unit . . . to enforce such governmental unit’s 

. . . police and regulatory power.” 11 U.S.C. § 362(b)(4). 

Porter argued that his PAGA claim is brought “by a 

governmental unit” to enforce “police and regulatory 
PORTER V. NABORS DRILLING USA 5

power,” and thus the bankruptcy stay does not apply. A 

motions panel of this court referred Porter’s motion for 

summary disposition to the panel that will be assigned to 

decide the merits of the appeal and ordered briefing to 

proceed.

Two months later, Nabors filed the current motion, 

entitled “Emergency Motion Under Circuit Rule 27-3 to 

Recognize Automatic Stay.” Nabors argues that requiring it 

to brief this appeal would violate the automatic bankruptcy 

stay. Porter has filed an opposition to that motion, and 

Nabors filed a reply.

II. California’s Private Attorney General Act

LWDA is assigned responsibility under California law 

for bringing actions to enforce the state’s labor laws. See, 

e.g., Caliber Bodyworks, Inc. v. Superior Court, 36 Cal. 

Rptr. 3d 31, 33 & 33 n.1 (Ct. App. 2005). In response to a 

concern that labor law enforcement agencies like LWDA 

“were unlikely to keep pace with the future growth of the 

labor market,” the California legislature passed PAGA. 

Arias v. Superior Court, 209 P.3d 923, 929 (Cal. 2009). 

Under PAGA, “civil penalt[ies] to be assessed and collected 

by the Labor and Workforce Development Agency . . . for a 

violation of th[e Labor] code, may, as an alternative, be 

recovered through a civil action brought by an aggrieved 

employee.” Cal. Lab. Code § 2699(a). To be eligible to file 

a claim under PAGA, an aggrieved employee must first 

submit his allegations of labor code violations to LWDA as 

well as to the employer. Id. § 2699.3(a)(1)(A). If LWDA 

does not respond or take action on the allegations within a 

certain period, the aggrieved employee is permitted to 

“commence a civil action pursuant to Section 2699.” Id.

§ 2699.3(a)(2)(A).
6 PORTER V. NABORS DRILLING USA

If LWDA declines to intervene in a PAGA proceeding, 

the plaintiff “pursues the PAGA action in his own name, 

exercises complete control over the lawsuit, and is not 

restrained by any provision of the PAGA statute from 

settling or disposing of the claim as he sees fit.”1 Nanavati 

v. Adecco USA, Inc., 99 F. Supp. 3d 1072, 1083 (N.D. Cal. 

2015). As the California Supreme Court has explained, 

“[a]n employee plaintiff [bringing a PAGA claim] does so 

as the proxy or agent of the state’s labor law enforcement 

agencies” and “with the understanding that labor law 

enforcement agencies [are] to retain primacy over private 

enforcement efforts.” Arias, 209 P.3d at 933, 929–30. If 

successful, twenty-five percent of the civil penalties are 

distributed to the aggrieved employees, and the remaining 

seventy-five percent of the penalties go to LWDA. Cal. Lab. 

Code § 2699(i). The PAGA plaintiff is also entitled to 

reasonable attorney’s fees and costs. Id. § 2699(g)(1).

When looking at PAGA claims in the context of 

arbitration agreements, both the California Supreme Court 

and this court have concluded that “[a] PAGA representative 

action is . . . a type of qui tam action.” Iskanian v. CLS 

Transp. Los Angeles, LLC, 327 P.3d 129, 148 (Cal. 2014); 

see Sakkab v. Luxottica Retail N. Am., Inc., 803 F.3d 425, 

429 (9th Cir. 2015). A qui tam action for citizen 

enforcement traditionally has three elements: “(1) that the 

statute exacts a penalty; (2) that part of the penalty be paid 

to the informer; and (3) that, in some way, the informer be 

authorized to bring suit to recover the penalty.” Iskanian, 

 1 LWDA has since expanded its oversight of PAGA litigation. For 

cases filed after July 1, 2016, aggrieved employees must submit to 

LWDA copies of their filed complaints, proposed settlement agreements, 

and court orders denying an award of civil penalties. Cal. Lab. Code 

§ 2699(l)(1)–(3).
PORTER V. NABORS DRILLING USA 7

327 P.3d at 148 (quoting Sanders v. Pac. Gas & Elec. Co., 

126 Cal. Rptr. 415, 421 (Ct. App. 1975)). 

III. The Automatic Bankruptcy Stay

Under federal bankruptcy law, “a petition [for 

bankruptcy] . . . operates as a stay [of] the commencement 

or continuation . . . of a judicial, administrative, or other 

action or proceeding against the debtor that was . . . 

commenced before the commencement of the case under this 

title.” 11 U.S.C. § 362(a)(1). The stay is self-executing and 

effective upon filing a bankruptcy petition. Griffin v. 

Wardrobe (In re Wardrobe), 559 F.3d 932, 934 (9th Cir. 

2009).

The sweep of the automatic stay is broad and “serves as 

one of the most important protections in bankruptcy law.” 

Eskanos & Adler, P.C. v. Leetien, 309 F.3d 1210, 1214 (9th 

Cir. 2002) (citing Hillis Motors, Inc. v. Hawaii Auto 

Dealers’ Ass’n, 997 F.2d 581, 585 (9th Cir. 1993)). The stay 

“provides debtors with protection against hungry creditors” 

and “assures creditors that the debtor’s other creditors are 

not racing to various courthouses to pursue independent 

remedies to drain the debtor’s assets.” Dean v. Trans World 

Airlines, Inc., 72 F.3d 754, 755–56 (9th Cir. 1995). It also 

provides the debtor with some “breathing space” so that the 

debtor can focus on reorganization rather than the defense of 

pending litigation. Hillis Motors, 997 F.2d at 585.

The bankruptcy statute provides certain exceptions to the 

automatic stay. One of the exceptions is for actions “by a 

governmental unit . . . to enforce such governmental unit’s 

. . . police and regulatory power.” 11 U.S.C. § 362(b)(4). 

The bankruptcy code defines “governmental unit” as:
8 PORTER V. NABORS DRILLING USA

United States; State; Commonwealth; 

District; Territory; municipality; foreign 

state; department, agency, or instrumentality 

of the United States (but not a United States 

trustee while serving as a trustee in a case 

under this title), a State, a Commonwealth, a 

District, a Territory, a municipality, or a 

foreign state; or other foreign or domestic 

government. 

11 U.S.C. § 101(27).

Porter concedes that he is not a governmental unit. He 

argues instead that a private party can invoke the 

governmental unit exception when it acts as an agent of the 

government, as long as the private party seeks to protect the 

public health and safety. In doing so, however, Porter 

effectively asks us to read the phrase “by a governmental 

unit” out of the governmental unit exception. We decline to 

do so. We are not persuaded that the government’s creation 

of a private right of action to enforce laws aimed to protect 

the health and safety of the public is sufficient governmental 

involvement to invoke the exception to the bankruptcy stay.

As noted above, a PAGA action has been identified as a 

kind of qui tam action, an action in which a private citizen is 

authorized to sue on behalf of the government. Courts have 

consistently held that the automatic stay applies to those 

cases, at least when the government has not intervened, 

because they do not fall within the governmental unit 

exception. See, e.g., In re Edison Mission Energy, 502 B.R. 

830 (Bankr. N.D. Ill. 2013); United States ex rel. Kolbeck v. 

Point Blank Sols., Inc., 444 B.R. 336 (E.D. Va. 2011); 

United States ex rel. Goldstein v. P & M Draperies, Inc., 

303 B.R. 601 (D. Md. 2004); In re Chateaugay Corp., 
PORTER V. NABORS DRILLING USA 9

118 B.R. 19 (Bankr. S.D.N.Y. 1990); United States (EPA) v.

Envtl. Waste Control, Inc., 131 B.R. 410 (N.D. Ind. 1991); 

In re Revere Copper & Brass, Inc., 29 B.R. 584 (Bankr. 

S.D.N.Y. 1983). This is because, unlike in traditional 

government enforcement actions, the qui tam relators in 

these cases were proceeding without the involvement of the 

governmental unit on whose behalf the action is purportedly 

brought. See, e.g., Edison Mission Energy, 502 B.R. at 836 

(declining to apply governmental unit exception in part 

because “the record indicates that [no state agency] has

requested or directed the [claimant] to act in its stead”); 

Kolbeck, 444 B.R. at 340 (declining to apply governmental 

unit exception in part because “the government decline[d] to 

intervene in [the] qui tam [False Claims Act] action” and 

“the proceedings [were] thereafter conducted solely by the 

qui tam relator”).

We reach the same conclusion in this case. Porter’s 

claim against Nabors was filed by Porter, and it remains 

under his control. Despite having received notice of Porter’s 

allegations pursuant to PAGA’s notice provisions, the state 

of California, through LWDA, did not request, direct, or join 

in the filing. Nor has the state attempted to intervene in the 

action since its filing. Under these circumstances, the action 

cannot properly be understood to be an action “by a 

governmental unit . . . to enforce such governmental unit’s 

. . . police and regulatory power.” 11 U.S.C. § 362(b)(4).

Porter argues that his PAGA claim is analogous to a 

claim for sanctions brought by a litigant requesting that the 

court discipline a party for violating court rules. It is true 

that actions by courts to impose sanctions in order to enforce 

their own rules or police the members of their bar may fall 

within the governmental regulatory exception for purposes 

of the bankruptcy stay. See, e.g., Dingley v. Yellow 
10 PORTER V. NABORS DRILLING USA

Logistics, LLC (In re Dingley), — F.3d —, No. 14-60055, 

2017 WL 1208454, at *1 (9th Cir. 2017) (holding that, in 

certain situations, state court “civil contempt proceedings are 

exempted from the automatic stay under the Bankruptcy 

Code’s government regulatory exemption”); Berg v. Good 

Samaritan Hosp. (In re Berg), 230 F.3d 1165, 1166 (9th Cir. 

2000) (holding that federal appellate court’s “award of 

sanctions falls under the ‘government regulatory power’ 

exemption of § 364(b)(4)”); Wade v. State Bar of Ariz. (In re 

Wade), 948 F.2d 1122, 1124 (9th Cir. 1991) (per curiam) 

(holding that a state bar association “exercises this delegated 

authority under the ‘direction and control’ of the Arizona 

Supreme Court” (citation omitted)).

Relying on this line of cases, Porter contends that 

because he also acts as an agent of a governmental unit in 

bringing his PAGA claim and because the PAGA claim will 

ultimately be adjudicated, like a sanctions award, by a court, 

the governmental unit exception should apply to him. We 

are not persuaded. In the context of judicially imposed 

sanctions, the governmental unit whose interests are being 

enforced—that is, the court—itself conducts additional 

proceedings to advance its own interests and uses its own 

resources to do so. Ultimately, the “sanction is meted out by 

a governmental unit, the court,” even if the sanction is 

initially “sought by a private individual or organization—a 

nongovernmental litigant.” Alpern v. Lieb, 11 F.3d 689, 690 

(7th Cir. 1993). Porter does not contend that his action is 

taken on behalf of the court, however. He claims to be acting 

as a private attorney general in place of LWDA. The 

subsequent involvement of the court does not bring his 

PAGA action within the language of the exception: “by a 

governmental unit . . . to enforce such governmental unit’s 

. . . police and regulatory power.” 11 U.S.C. § 362(b)(4). 

That a court might ultimately decide the fate of Porter’s 
PORTER V. NABORS DRILLING USA 11

PAGA action does not mean that the court decision is an 

action to enforce its own power. Although a litigant may 

initially request the imposition of sanctions, ultimately the 

sanctions proceedings are conducted by a governmental unit, 

the court, to advance its own interest in enforcing its 

authority. See Alpern, 11 F.3d at 690.

IV. Conclusion

We conclude that the governmental unit exception to the 

automatic bankruptcy stay does not apply to Porter’s PAGA 

action. As a result, the automatic bankruptcy stay does apply 

to that action, including the appeal that is currently pending 

before this court. Accordingly, we suspend further activity 

in this appeal and direct the parties to notify this court 

promptly of relevant developments in the bankruptcy 

proceeding.

The motion to stay appellate proceedings is GRANTED.