Pub. Emps. Ret. Ass'n of N.M. v. Earley (In re PG&E Corp. Sec. Litig.)
- Summarized by David Treacy , U.S. Bankruptcy Court, Eastern District of Kentucky
- 1 year 9 months ago
- Case Type:
- Business
- Case Status:
- Reversed and Remanded
- Citation:
- No. 22-16711 (9th Circuit, May 03,2024) Published
- Tag(s):
-
- Ruling:
- The U.S. Court of Appeals for the Ninth Circuit held a district court abused its discretion in imposing a "docket management" stay on a securities class action lawsuit related to a pending bankruptcy case. The district court did not properly weigh three non-exclusive factors: (1) the possible damage that may result from the granting of a stay; (2) the hardship or inequity that a party may suffer in being required to go forward; and (3) judicial efficiency.
- Procedural context:
- The Ninth Circuit reviewed the district court's order imposing a stay for an abuse of discretion--but explained that, in the context of a decision on a stay, "the standard is 'somewhat less deferential' than the abuse of discretion standard used in other contexts." "It is more likely that a district court has abused its discretion when the party seeking relief from the stay establishes the stay 'will result in irreparable injury and a miscarriage of justice.'" As to its jurisdiction to decide this interlocutory appeal, the Ninth Circuit followed a Supreme Court decision, Moses H. Cone Mem'l Hosp. v. Mercury Constr. Corp., 460 U.S. 1 (1983), in which the Court held "a stay order is appealable as a final decision under 28 U.S.C. § 1291 if the order places the plaintiff 'effectively out of court.'" The Ninth Circuit explained, "[t]he stay entered in this case is indefinite because its end date is triggered by the occurrence of an external event that is not time limited. . . . Although the stay could be lifted at some point in the future, the simple fact that 'litigation may eventually resume' does not deprive us of appellate jurisdiction."
- Facts:
- Northern California experienced wildfires in 2017 and 2018. Thereafter, several retirement and pension funds filed a securities class action in the U.S. District Court for the Northern District of California against PG&E Corporation and Pacific Gas & Electric Company (collectively, PG&E), along with some of its current and former officers, directors, and bond underwriters. Some time later, PG&E filed a chapter 11 petition in the U.S. Bankruptcy Court for the Northern District of California. That led to the imposition of the automatic stay as against PG&E--but not the individual defendants. While PG&E confirmed a reorganization plan in the bankruptcy case, which contained a mechanism to address certain of the securities claims in the class action case, the individual defendants filed motions to dismiss in the district court case. Instead of issuing a decision on those motions to dismiss, sua sponte, the district court stayed the class action as against the individual defendants for the pendency of PG&E's bankruptcy case. The plaintiffs filed an interlocutory appeal.
- Judge(s):
- Wallace, Boggs, Forrest
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