National Cattle v. IA Racing & Gaming ( 1996 )

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No. 95-3774
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In Re: National Cattle *
Congress, Inc., *
*
Debtor. *
------------------------------- *
*
National Cattle Congress, Inc., * Appeal from the United States
* District Court for the
Plaintiff - Appellee, * Northern District of Iowa.
*
v. * [TO BE PUBLISHED]
*
Iowa Racing & Gaming *
Commission, *
*
Defendant - Appellant. *
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Submitted: April 8, 1996
Filed: August 2, 1996
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Before MAGILL, Circuit Judge, HENLEY, Senior Circuit Judge, and LOKEN,
Circuit Judge.
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PER CURIAM.
In 1986, the National Cattle Congress, Inc. ("NCC"), a nonprofit
corporation, began operating a pari-mutuel dog track in Iowa, the Waterloo
Greyhound Park, under license from the Iowa Racing and Gaming Commission
(the "Commission"). The track began to suffer losses in 1992, and NCC
filed for Chapter 11 bankruptcy protection on December 16, 1993. In
November 1994, the Commission passed a resolution to revoke NCC's pari-
mutuel license (absent voluntary surrender) on the ground that NCC lacked
financial responsibility sufficient to operate the track. See Iowa Code
Ann. §§ 99D.9(3)(b) and (7).
To avoid loss of its license, NCC as debtor-in-possession moved the
bankruptcy court to declare that the Commission's revocation resolution
violates the automatic stay provisions of 11 U.S.C. §§ 362(a)(1) and
(a)(3). The Commission responded that its revocation is a regulatory
action exempt from the § 362(a)(1) stay under § 362(b)(4), and that
§ 362(a)(3) does not apply because the Commission does not seek to
"exercise control over property of the estate." The bankruptcy court1
granted NCC's motion, concluding that the Commission's resolution to revoke
was an exempt exercise of its regulatory powers, but revocation is an
exercise of control over property of NCC's estate (the license) which
violates §§ 362(a)(1) and (a)(3) unless and until the Commission seeks and
obtains a lift-stay order. In re National Cattle Congress, Inc., 179 B.R.
588, 597-98 (Bankr. N.D. Iowa 1995). The district court2 affirmed, and
this appeal followed. We have jurisdiction over an appeal from an order
enforcing the automatic stay in bankruptcy under either 28 U.S.C. § 158(d)
or 28 U.S.C. § 1292(a)(1). See In re James Wilson Assocs., 965 F.2d 160,
166 (7th Cir. 1992); In re Apex Oil Co., 884 F.2d 343, 347 (8th Cir. 1989);
In re Leimer, 724 F.2d 744, 746 (8th Cir. 1984).
While the case was pending on appeal, the Supreme Court decided
Seminole Tribe of Fla. v. Florida, 116 S. Ct. 1114 (1996). Seminole holds
that the Indian Commerce Clause, U.S. Const. art. I, § 8, cl. 3, does not
grant Congress the power to abrogate a State's immunity under the Eleventh
Amendment. Seminole expressly overrules Pennsylvania v. Union Gas Co., 491
U.S. 1 (1989), which held that the Interstate Commerce Clause, U.S. Const.
art. I, § 8, cl. 3, granted Congress the power to abrogate Eleventh
Amendment immunity. The Commission suggests that an order enforcing the
1
The HONORABLE PAUL J. KILBURG, United States Bankruptcy Judge
for the Northern District of Iowa.
2
The HONORABLE EDWARD J. MCMANUS, United States District Judge
for the Northern District of Iowa.
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automatic stay against the Commission violates the State of Iowa's Eleventh
Amendment immunity as construed in Seminole. There is much to indicate
that this may be a complex and serious issue. See Seminole, 116 S. Ct. at
1131-32 n.16; Ohio Agric. Commodity Depositors Fund v. Mahern, 116 S. Ct.
1411 (1996), vacating In re Merchants Grain, Inc., 59 F.3d 630 (7th Cir.
1995) (remanding a bankruptcy case for further consideration in light of
Seminole); In re Martinez, 196 B.R. 225, 230 (D.P.R. 1996); 11 U.S.C.
§ 106(a). Accordingly, without reaching the merits of the bankruptcy and
district court orders under review, and without expressing a view as to the
Eleventh Amendment issue, we remand this case to the district court with
instructions to remand to the bankruptcy court for further consideration
in light of Seminole.
A true copy.
Attest:
CLERK, U. S. COURT OF APPEALS, EIGHTH CIRCUIT.
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