Aerobox Composite Structures LLC

1Since the filing of the Motion, Jada Hollinger filed a Motion to Allow Late-Filed Proof
of Claim by Jada Hollinger (Docket # 249) and a Motion for Allowance of Administrative Claim
by Jada Hollinger (Docket # 247) (together, “Hollinger Motions”). 	Although the Hollinger
Motions relate to the judgment issued by the NM-HRC, they will not be considered in
connection with the Debtor’s Motion.
1
UNITED STATES BANKRUPTCY COURT
DISTRICT OF NEW MEXICO
In re: AEROBOX COMPOSITE STRUCTURES, LLC, 	No. 11-07-10138 MA
Debtor.
ORDER DENYING DEBTOR’S MOTION FOR ORDER
(I) IMPOSING SANCTIONS FOR VIOLATIONS OF THE STAY BY
JADA HOLLINGER AND (ii) ENFORCING SECTION 362 & CHAPTER 11
PLAN INJUNCTIONS AGAINST JADA HOLLINGER AND RELATED RELIEF
THIS MATTER is before the Court on the Debtor’s Motion for Order (I) Imposing
Sanctions for Violations of Stay by Jada Hollinger and (ii) Enforcing Section 362 & Chapter 11
Plan Injunctions Against Jada Hollinger and Related Relief (“Motion”). 1 The Motion asserts
that Ms. Hollinger’s actions in connection with a proceeding before the human rights
commission (“NM-HRC”), which is part of the State of New Mexico Department of Labor,
Human Rights Division, that resulted in a judgment against Aerospace Composite Structures,
now known as Aerobox Composite Structures, LLC (“Aerobox” or “Debtor”) issued after the
Debtor filed its voluntary petition under Chapter 11 of the Bankruptcy Code violated the
automatic stay imposed by 11 U.S.C. § 362, and requests the Court to enter an order against Jada
Hollinger enforcing the automatic stay and declaring the judgment void.
At the final hearing on the Motion, counsel for the Debtor stated that the Debtor does not
seek an award of monetary damages or attorneys’ fees against Ms. Hollinger as part of its
Case 07-10138-m11 Doc 256 Filed 04/10/08 Entered 04/10/08 12:01:24 Page 1 of 8

2Section 362(b)(4) provides, in relevant part:
The filing of a petition under section 301, 302, or 303 of this title . . . does not
operate as a stay --
(4) under paragraph (1), (2), (3), or (6) of subsection (a) of this section, of
the commencement or continuation of an action or proceeding by a
governmental unit . . . to enforce such governmental unit’s . . . police and
regulatory power, including the enforcement of a judgment other than a
money judgment, obtained in an action or proceeding by the governmental
unit to enforce such governmental unit’s . . . police or regulatory power[.]
11 U.S.C. § 362(b)(4).
2
requested relief. 	Ms. Hollinger opposes the Motion, asserting that the actions taken as part of
the grievance process before the NM-HRC are specifically excepted from the automatic stay
under 11 U.S.C. § 362(b)(4) 2 as an exercise of a governmental unit’s police or regulatory power.
The Court held a final hearing on the Motion on March 20, 2008 and took the matter
under advisement. 	After consideration of the undisputed facts in light of the record of this
proceeding, and being otherwise sufficiently informed, the Court finds that the proceeding before
the NM-HRC, which process was initiated by Ms. Hollinger before the filing of the Debtor’s
voluntary petition, but continued and concluded post-petition, including Ms. Hollinger’s post-
petition participation in that proceeding, falls within the scope of 11 U.S.C. § 362(b)(4)’s
exception to the automatic stay. Consequently, the Motion will be DENIED.
FACTS
The relevant facts are not disputed. Debtor filed a voluntary petition under Chapter 11 of
the Bankruptcy Code on January 23, 2007. 	In 2006, Jada Hollinger notified the NM-HRC of an
alleged violation of the Human Rights Act, NMSA 1978 § 28-1-1 thru § 28-1-15, asserting that
the Debtor’s termination of her employment in May of 2006 was retaliatory and based on sexual
discrimination. 	In October of 2006, the NM-HRC issued a letter to the Debtor stating that
Case 07-10138-m11 Doc 256 Filed 04/10/08 Entered 04/10/08 12:01:24 Page 2 of 8

3See In re Sullivan, 357 B.R. 847, 853 (Bankr.D.Colo. 2006)(“The scope of the automatic
stay is extremely broad.”)(citing In re Gagliardi, 290 B.R. 808, 814 (Bankr.D.Colo. 2003)).
3
attempts to mediate the dispute were unsuccessful and that the matter would be investigated
pursuant to the Human Rights Act. See Motion, Exhibit A. 	In June of 2007, a complaint was
filed against the Debtor by the NM-HRC pursuant to NMSA 1978 § 28-1-7 (Cum. Supp. 2007)
(See Motion, Exhibit B), and on August 31, 2007, a Final Order was issued by the NM-HRC
awarding Ms. Hollinger actual damages in the amount of $31,714.40. See Motion, Exhibit D.
The Final Order also required Defendant to provide the Chairman of the NM-HRC with proof of
a diversity and sexual harassment training program by an approved consulting firm within sixty
days of the date of entry of the Final Order. Id. 	Jada Hollinger is listed as a creditor on
Debtor’s schedules and was included on the Debtor’s mailing matrix. 	She received notice of the
filing of Debtor’s bankruptcy proceeding.
DISCUSSION
Upon the filing of a voluntary petition under the Bankruptcy Code, 11 U.S.C. § 362
imposes an automatic stay applicable to all entities which prohibits actions against the debtor or
against property of the bankruptcy estate. 	11 U.S.C. § 362(a). 	The scope of the automatic stay
is very broad 3 and specifically prohibits
the commencement or continuation, including the issuance or employment of process, of
a judicial, administrative, or other action or proceeding against the debtor that was or
could have been commenced before the commencement of the case under this title, or to
recover a claim against the debtor that arose before the commencement of the case under
this title[.]
11 U.S.C. § 362(a)(1).
An exception to the broad scope of the automatic stay is a governmental unit’s enforcement of its
Case 07-10138-m11 Doc 256 Filed 04/10/08 Entered 04/10/08 12:01:24 Page 3 of 8

4See also, Universal Life Church, Inc. v. United States (In re Universal Life Church,
Inc.), 128 F.3d 1294, 1297 (9th Cir. 1997) (“If the government action is pursued solely to
advance a pecuniary interest of the governmental unit, the stay will be imposed.”)(citing
Thomassen v. Division of Med. Quality Assurance (In re Thomassen), 15 B.R. 907, 909 (9th Cir.
BAP 1981)).
4
police or regulatory power. 	11 U.S.C. § 362(b)(4). 	The Bankruptcy Code does not define the
meaning of “police or regulatory power” within the context of 11 U.S.C. § 362(b)(4). In re
Mohawk Greenfield Motel Corp., 239 B.R. 1, 6 (Bankr.D.Mass. 1999). 	Consequently, in
applying the “police or regulatory power” exception to the automatic stay, courts have developed
the following tests: (1) the “pecuniary purpose” test; and (2) the “public policy” test. Id.;
Eddleman v. U.S. Dept. of Labor, 923 F.2d 782, 790 (10 th Cir. 1991), overruled in part on other
grounds, Temex Energy, Inc. v. Underwood, Wilson, Berry, Stein & Johnson, 968 F.2d 1003
(10th Cir. 1992).
“Under the ‘pecuniary purpose’ test, the court asks whether the government’s proceeding
relates primarily to the protection of the government’s pecuniary interest in the debtor’s property
and not to matters of public policy” such that the government proceeding will not fall within the
exception to the automatic stay if the primary purpose is the protection of the government’s
pecuniary interests. Eddleman, 923 at 791 (citing NLRB v. Edward Cooper Painting, Inc., 804
F.2d 934, 942 (6th Cir. 1986) and In re State of Missouri, 647 F.2d 768, 776 (8th Cir. 1981)).4
The “public policy” test, on the other hand, distinguishes between government proceedings
aimed primarily at effecting public policy (which are excepted from operation of the automatic
stay), and those proceedings aimed primarily at adjudicating or advancing private rights (which
are not excepted from the stay). Id. (citing Edward Cooper Painting, 804 F.2d at 942).
Ms. Hollinger contends that the action before the HRC falls within the police and
Case 07-10138-m11 Doc 256 Filed 04/10/08 Entered 04/10/08 12:01:24 Page 4 of 8

5That section provides, in relevant part:
The complainant may seek a trial de novo in the district court in lieu of a hearing
before the commission, provided the complainant requests from the director, in
writing, a waiver of complainant’s right to hearing within sixty days of service of
written notice of a probably cause determination by the director.
NMSA 1978 § 28-1-10(J) (Cum. Supp. 2007).
5
regulatory power exception to the automatic stay. 	The Debtor counters that because the action
was initiated by Ms. Hollinger and resulted in a monetary award in favor of Ms. Hollinger, the
action before the HRC and Ms. Hollinger’s participation in that action advanced Ms. Hollinger’s
private rights. Consequently, Debtor argues that the proceeding does not fall within the
exception to the automatic stay. 	This Court disagrees.
The grievance procedure under the Human Rights Act is contained in NMSA 1978 § 28-
1-10 (Cum. Supp. 2007). It provides that a person aggrieved by unlawful discriminatory practice
may file a written complaint with the NM-HRC. NMSA 1978 § 28-1-10(A) (Cum. Supp. 2007).
The director of the NM-HRC must investigate the claim and determine whether there is probable
cause; if so, the director will attempt “to achieve a satisfactory adjustment of the complaint
through persuasion and conciliation.” NMSA 1978 § 28-1-10(C)(Cum. Supp. 2007). The
aggrieved party can elect to seek a trial of the matter before the district court instead of
proceeding before the NM-HRC. NMSA 1978 § 28-1-10(J)(Cum. Supp. 2007).5 If resolution of
the matter through “persuasion and conciliation” fails, and the complainant has not elected to
seek a trial of the matter before the district court, “the commission shall issue a written
complaint in its own name against the respondent.” NMSA 1978 § 28-1-10(F)(Cum. Supp.
2007)(emphasis added). This language supports a finding that the process before the NM-HRC
constitutes a governmental unit’s exercise of its police and regulatory powers to prevent and
Case 07-10138-m11 Doc 256 Filed 04/10/08 Entered 04/10/08 12:01:24 Page 5 of 8

6See Mohawk, 239 B.R. at 8-9 (stating that “back pay awards are a necessary
methodology to serve the public purpose envisioned by the underlying statutes[ ]” and
concluding that “[t]he preservation of MCAD [Massachusetts Commission Against
Discrimination]’s authority to determine damages on account of discriminatory acts is consistent
with public policy and the protection of protection of public safety and welfare; and the benefit
to the public arising from the continuing capability of MCAD to identify and sanction
discriminatory behavior overshadows any associated pecuniary benefit to the victim of that
discrimination.”). See also, General Telephone Co. of the Northwest, Inc. v. EEOC, 446 U.S.
318, 326, 100 S.Ct. 1698, 64 L.Ed.2d 319 (1980)(“When the EEOC acts, albeit at the behest of
and for the benefit of specific individuals, it acts also to vindicate the public interest in
preventing employment discrimination.”)(citation omitted).
7See 11 U.S.C. § 362(b)(4) (“. . . including the enforcement of a judgment other than a
money judgment, obtained in an action or proceeding by the governmental unit to enforce such
governmental unit’s . . . police or regulatory power.”)(emphasis added); EEOC v. McLean
Trucking Co., 834 F.2d 398, 402 (4th Cir. 1987)(holding that when the EEOC sues to enjoin
violations of anti-discrimination laws and couples such action with a claim for back pay, the
EEOC is exercising its police and regulatory power, and is not subject to the automatic stay until
the monetary claims are reduced to judgment).
6
deter discriminatory practices in the workplace. 	This is true despite the fact that the direct
beneficiary of the process, when the resulting order includes a monetary award, is the
complainant.6 Furthermore, the Final Order included a directive for the Debtor to obtain and
provide proof of attendance for a diversity and sexual harassment training program. This
additional requirement clearly falls within the exception to the automatic stay under either the
“pecuniary” or “public policy” tests. 	And when such exercise of police and regulatory power is
coupled with a monetary award of back pay, the entire action remains within the exception,
provided there has been no action to collect the monetary award. 7
In re Pincombe, 256 B.R. 774 (Bankr.N.D.Ill. 2000) involves facts similar to those
present here. 	In Pincombe, a default order was entered against the debtor and his corporations
by the Illinois Department of Human Rights (“IDHR”). 256 B.R. at 777. Thereafter, the default
order was served upon the Illinois Human Rights Commission (“IHRC”) which, in turn, entered
Case 07-10138-m11 Doc 256 Filed 04/10/08 Entered 04/10/08 12:01:24 Page 6 of 8

7
an order of default against the debtor based on charges of sex discrimination, sexual harassment,
and retaliatory discharge. Id. Both orders were entered after the entry of the debtor’s chapter 7
discharge. Id. The bankruptcy court had little trouble determining that the actions of the IDHR
and the IHRC fell within the exception to the automatic stay as a governmental unit’s exercise of
police and regulatory power. Id. at 781. 	In considering whether the individual complainant
violated the automatic stay, the bankruptcy court noted that the complainant first participated
with the IDHR more than five months before the debtor filed his bankruptcy petition. Id.
Furthermore, the complainant’s participation in a fact finding conference relating to
complainant’s charges against the debtor also occurred before the filing of the bankruptcy
proceeding. Id. The court then considered whether the complainant’s acquiescence in the
continued proceedings before the IDHR violated the proceeding. The court rejected debtor’s
argument that complainant’s refusal to withdraw the charge violated the automatic stay, finding
that the applicable federal statutes governing the withdrawal of a discrimination charge allows
the EEOC to proceed based on its own authority, even if the complainant were to withdraw its
charges. Id. at 781-782. 	Based on the EEOC’s independent power to pursue the claim, and the
fact that the complainant took no independent action outside the administrative proceedings, the
bankruptcy court concluded that the complainant did not violate the automatic stay. Id. at 782.
In the instant case, there is no evidence before the Court that Ms. Hollinger took any
action with regard to her discrimination action against the Debtor other than filing the initial
grievance with the NM-HRC, which occurred before the Debtor filed its voluntary petition, and
participating in the action brought by the commission after the bankruptcy was filed. Thus,
similar to Pincombe, Ms. Hollinger’s only post-petition activities consisted of her ongoing
Case 07-10138-m11 Doc 256 Filed 04/10/08 Entered 04/10/08 12:01:24 Page 7 of 8

8
participation in the grievance process before the NM-HRC which was initiated well before the
Debtor filed its Chapter 11 proceeding. The Human Rights Act provides for a complainant to
forgo proceedings before the NM-HRC and instead file a lawsuit in the district court. See
NMSA 1978 § 28-1-10(F) (Cum Supp. 2007). 	There is no evidence that Ms. Hollinger elected
to initiate proceedings on her own in state district court. 	Nor has any action been taken post-
petition to attempt to collect the monetary award granted in the Final Order. 	As noted by the
Tenth Circuit in Eddleman, “[a]ctual collection of the back-pay claims must proceed according
to normal bankruptcy procedures.” 923 F.2d at 791.
Based on the foregoing, IT IS HEREBY ORDERED that the Motion is DENIED.
_______________________________________
MARK B. McFEELEY
United States Bankruptcy Judge
Date entered on docket: April 10, 2008
COPY TO:
Peter Lubitz
Traiger & Hinckley llp
Attorney for Debtor
880 Third Avenue
New York, NY 10022
Charles R. Hughson
Attorney for Jada Hollinger
6709 Academy NE, Suite A
Albuquerque, NM 87109
Case 07-10138-m11 Doc 256 Filed 04/10/08 Entered 04/10/08 12:01:24 Page 8 of 8