In Peterson et al v. Avantair et al, Avaintair informed its employees that it could not make payroll almost simultaneously with its bankruptcy filing. Mr. Peterson, along with some other employees, personally sued Avantair’s corporate officers and senior managers for breach of contract, failure to pay minimum wage and several other causes of action.
The defendants argued that the case should be stayed as to the individual defendants while it was stayed as to Avantair under Section 362 of the Bankruptcy code, , while the plaintiffs stated that their case should be allowed to proceed, as the defendants had not technically filed bankruptcy.
The district court agreed with the defendants and stayed the case. Citing a 1936 case, the court stated that it had broad powers to stay a case to avoid “duplicative discovery, multiple hearings and inconsistent results.”
The court was convinced that, although there may have been some minor differences, the essentials of the case against the defendants and Avantair’s bankruptcy were substantially similar. The evidence would have been the same and the legal arguments for each side would have been much the same as well. The district court issued an order staying the case.
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