In re Dingley (Dingley v. Yellow Logistics, LLC)

Proceedings in non-bankruptcy courts to enforce sanctions against the debtor for litigation misconduct—including, as here, discovery sanctions—are exempt from the automatic stay.  Under 11 USC 362(b)(4), proceedings to enforce sanctions imposed by a non-bankruptcy court on the debtor for litigation misconduct—such as filing a frivolous appeal (see In re Berg (9th Cir. 2000) 230 F.3d 1165) or in this case, discovery sanctions—are exempt from the automatic stay in bankruptcy.  So the bankruptcy court erred in sanctioning Yellow Logistics here for attempting to collect discovery sanctions awarded it in a state court action despite the automatic stay.

Ninth Circuit Court of Appeals (Clifton, J.); April 3, 2017; 2017 WL 1208454

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