Kurisu v. Svenhard Swedish Bakery Supplemental Key Management Retirement Plan

Background

The court had ordered the parties to meet and confer after Mr. Kunkel and Mr. Svenhard, called the “Individual Defendants,” notified the court that Svenhard’s Swedish Bakery had filed for bankruptcy in December 2019, before this lawsuit was filed. They stated that the bankruptcy caused this case to be stayed and that scheduled mediation would not proceed.

The parties later filed a status report stating that they had been unable to reach an agreement. The plaintiffs asked the court to reject the bankruptcy-stay notice and give the parties 30 days to complete mediation. The Individual Defendants asked for an opportunity to brief whether the claims against them should be stayed.

Court’s analysis

The court noted that, on its face, the bankruptcy statute’s automatic stay applies to claims “against the debtor,” while the Individual Defendants are not debtors. The court nevertheless directed the Individual Defendants to address in a stay motion the legal source of the court’s authority to stay the case, whether they should instead seek relief from the bankruptcy court, and why mediation should not proceed. The court cited decisions discussing possible stays involving nondebtors and the bankruptcy court’s authority to extend or impose a stay in appropriate circumstances.

Ruling and effect

The court allowed the Individual Defendants to file a motion to stay proceedings, including deferring mediation, within two weeks of the order. If no motion is filed, the parties must proceed with mediation. If a motion is filed, the court will resolve it before any further litigation, including mediation, proceeds. This order did not decide whether the claims against the Individual Defendants are stayed or whether mediation ultimately must be deferred.