## Facts

- Evans Plumbing Co. (Evans) employed workers represented by a union under a collective-bargaining relationship.
- On or around February 15, 1980, Evans discharged employees Jack T. Lee and F. J. Meeks after they complained to their union about alleged mismanagement of vacation funds.
- Unfair-labor-practice charges were filed with the National Labor Relations Board (NLRB), and the matter was set for a hearing before an administrative law judge (ALJ).
- Evans filed a Chapter 11 bankruptcy petition on August 8, 1980.
- One day later, on August 9, 1980, the ALJ hearing began on the allegation that Evans discriminatorily discharged Lee and Meeks.
- On September 30, 1980, the ALJ found Evans unlawfully discharged the two employees and ordered reinstatement with back pay.
- Evans did not file timely exceptions to the ALJ’s decision, so the NLRB adopted the ALJ’s decision as the Board’s order.
- Evans petitioned the Fifth Circuit, arguing the Bankruptcy Code’s automatic stay, 11 U.S.C. § 362(a), required the NLRB hearing (and resulting order) to stop once the Chapter 11 petition was filed.
- The NLRB sought summary entry of judgment enforcing its order.

## Issues

1. Does the automatic stay in 11 U.S.C. § 362(a) halt an NLRB unfair-labor-practice hearing and resulting Board order after the employer files a Chapter 11 petition?
2. If § 362(a) would otherwise apply, does the “police or regulatory power” exception in 11 U.S.C. § 362(b)(4) (and related limits in § 362(b)(5)) permit the NLRB to proceed and obtain enforcement of its order?

## Decision

- The Fifth Circuit granted the NLRB’s request for summary enforcement of the Board’s order.
- The court rejected Evans’s argument that the Chapter 11 filing automatically stayed the NLRB unfair-labor-practice proceeding.
- The court treated the NLRB’s unfair-labor-practice case as an action by a governmental unit to enforce federal labor law, bringing it within the § 362(b)(4) exception for governmental police or regulatory power.
- Because Evans failed to file timely exceptions to the ALJ’s decision, the Board’s order stood as issued, and the court enforced it.

## Legal Principles

- The Bankruptcy Code’s automatic stay in § 362(a) is broad, but it does not stop “an action or proceeding by a governmental unit” to enforce its police or regulatory power. 11 U.S.C. § 362(b)(4).
- NLRB unfair-labor-practice proceedings are governmental enforcement actions aimed at enforcing the National Labor Relations Act and public labor policy, not ordinary private debt-collection litigation.
- A remedial order arising from a regulatory enforcement proceeding (such as reinstatement and back pay in an unfair-labor-practice case) may be reduced to an enforceable order even though bankruptcy may affect how monetary components are collected.
- When a party does not timely file exceptions to an ALJ decision, the Board may adopt the ALJ’s decision as its own order, limiting later challenges to the order in enforcement proceedings.

## Conclusion

NLRB v. Evans Plumbing Co. holds that an employer’s Chapter 11 filing does not automatically stop an NLRB unfair-labor-practice hearing or invalidate the resulting Board order, because the NLRB’s case is an exercise of governmental police or regulatory authority within 11 U.S.C. § 362(b)(4); the Fifth Circuit therefore granted summary enforcement of the Board’s reinstatement-and-back-pay order after Evans failed to file timely exceptions.


NLRB v. Evans Plumbing Co., 639 F.2d 291 (1981)