Equal Employment Opportunity Commission v. Rath Packing Co.

The Equal Employment Opportunity Commission (EEOC) (plaintiff) sued Rath Packing Company (Rath) (defendant) for allegedly discriminating against women in hiring in violation of Title VII of the Civil Rights Act of 1964 (Title VII). The EEOC sought injunctive relief and back pay (including interest). Rath subsequently filed for bankruptcy under Chapter 11 of the Bankruptcy Code (code). The district court, which ruled that the code’s automatic stay (11 U.S.C. § 362) did not apply to the EEOC’s Title VII claim, awarded more than $1 million in back pay (including postjudgment interest) and ordered injunctive relief. Additionally, the district court set up a payment plan for Rath, which required Rath to make installment payments and permitted the EEOC to accelerate Rath’s debt if Rath missed a payment. Rath appealed, arguing that it was entitled to an automatic stay of the Title VII proceedings because the stay was a fundamental debtor protection that was inapplicable only in cases in which the government sought to protect public health and safety. Per Rath, the EEOC sought to compensate aggrieved individuals rather than to protect public health and safety. In the alternative, Rath contended that the district court should have exercised its discretion to stay the EEOC proceeding. Rath also contended that (1) even if an exception to the automatic stay applied, the stay barred the EEOC from enforcing a money judgment against it and (2) code § 502(b) barred the award of postjudgment interest. The EEOC countered that (1) the automatic stay was inapplicable because EEOC Title VII suits served an overriding public interest in the federal enforcement of equal-employment opportunity, (2) the district court did not abuse its discretion in denying a discretionary stay, and (3) it would not attempt to enforce its money judgment via a writ of execution or a contempt order.