Carroll v. Fortuna Auction LLC
- Gregory Woods
- 1:23-cv-07410
- U.S. District Court · Southern District of New York
- 3
In Carroll v. Fortuna Auction LLC, Judge Woods stayed the Fair Labor Standards Act and New York labor-law case after Fortuna filed for bankruptcy.
Anissa Carroll’s wage-law case against Fortuna Auction LLC and Herbert John Saxon is paused. The stay also terminates pending motions and postpones remaining court dates while Fortuna’s bankruptcy-related stay remains in effect.
What happened
In Carroll v. Fortuna Auction LLC, Anissa Carroll sued Fortuna Auction LLC and Herbert John Saxon under federal and New York wage laws. Fortuna later told the court that it had filed for Chapter 11 bankruptcy.
The bankruptcy filing automatically paused the case against Fortuna. The court also paused the case against Saxon because Carroll sought to hold Fortuna and Saxon jointly responsible for most of her claims, so continuing against Saxon could financially affect Fortuna’s bankruptcy estate.
Judge Gregory H. Woods ordered that the stay remain in effect until the bankruptcy court or this court lifts it. He also directed the clerk to terminate pending motions and postpone remaining dates, and required Carroll to provide status updates about every three months.
The detailed version
- Carroll v. Fortuna Auction LLC · No. 1:23-cv-07410
- Gregory Woods
- Apr. 7, 2025
Background
Anissa Carroll brought this action against Fortuna Auction LLC and Herbert John Saxon, alleging violations of the Fair Labor Standards Act and New York Labor Law. The opinion states that Carroll asserted six claims, five of them against both Fortuna and Saxon, and sought to hold them jointly and severally liable. Joint and several liability means that each defendant may be responsible for the full amount of the same liability.
On April 1, 2025, Fortuna filed for Chapter 11 bankruptcy. Fortuna notified the district court of that filing on April 2, 2025.
Court’s analysis
Under 11 U.S.C. § 362(a), a bankruptcy filing creates an automatic stay, which pauses lawsuits and other actions against the bankruptcy debtor. The court explained that this stay ordinarily applies only to the debtor, not to non-bankrupt co-defendants such as Saxon.
The court also explained that the stay may be extended to a non-debtor in unusual circumstances when continuing the case would have an immediate adverse economic effect on the debtor’s bankruptcy estate. The court found that circumstance present here. Because Carroll sought joint and several liability against Fortuna and Saxon, a favorable result against Saxon could impose corresponding liability on Fortuna. The court compared Fortuna’s potential exposure to that of a guarantor of Saxon’s liability.
Order
The court held that trying the action against Saxon was sufficiently likely to materially affect Fortuna’s bankruptcy estate. It therefore ordered that the case be stayed as to both Fortuna and Saxon.
The stay will remain in effect until the U.S. Bankruptcy Court for the Southern District of New York lifts the stay as to Fortuna or Saxon, or until this court orders the stay lifted as to Saxon. Carroll must file a letter updating the court about the case on or about September 1, 2025, and every three months afterward until the stay is lifted. The court also directed the clerk to note the stay on the docket, terminate all pending motions, and adjourn all remaining dates.
The order addressed whether the litigation could continue during Fortuna’s bankruptcy; it did not decide the merits of Carroll’s wage claims.
Read the full 3-page opinion on CourtListener, the free public archive maintained by the Free Law Project.