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Law360 (December 14, 2020, 7:50 PM EST) -- A Pittsburgh restaurant that opposes face mask use during the COVID-19 pandemic can't send its civil rights lawsuit to bankruptcy court or pause its debtor's obligation to creditors in its Chapter 11 suit, Allegheny County has told two Pennsylvania courts, saying the cases are unrelated.
Allegheny County and its health department said Friday in separate filings in Pennsylvania federal court and bankruptcy court that the civil rights suit brought by The Cracked Egg LLC, owner of The Crack'd Egg restaurant, may be related to the case under Chapter 11, but it does not arise from it.
The Cracked Egg filed for bankruptcy shortly after the county sued it for ignoring mask mandates and shutdown orders, but the county said its claims that the restaurant broke state law and the countersuit claiming the orders violate constitutional rights are unrelated enough that the countersuit shouldn't be referred to the bankruptcy court and subject to an automatic stay on all litigation.
According to the county's opposition to The Cracked Egg's Oct. 23 motion to refer the civil rights case to bankruptcy court, the constitutional claims aren't "core" claims and thus have no place in the bankruptcy court because the court can't enter final judgment.
Further, the Allegheny County Health Department urged the bankruptcy court to deny the restaurant's bid to pause its obligations to its creditors with an automatic stay, saying that the ACHD doesn't seek to enforce a money judgment but rather wants the federal court to order a shutdown of the eatery's operations to protect the public's health.
"The ACHD's relief requesting the court to order The Crack'd Egg to close operations until a satisfactory COVID-19 plan has been submitted and approved by the ACHD does not achieve what a money judgment would attempt to accomplish," the department said. "The purpose of this relief [is] to protect against future transmission of COVID-19, not compensate for past wrongful acts."
When the restaurant filed its voluntary petition for bankruptcy relief on Oct. 9, it was the subject of various investigations and proceedings instituted by the health department, the ACHD noted. Over the summer on multiple occasions, the department said, it received many complaints from the public regarding The Crack'd Egg's failure to comply with COVID-19 control measures issues by the state.
On about a dozen visits by ACHD representatives in July, August and September, public-facing employees were seen to be working without wearing face masks, while patrons were admitted into the restaurant without face masks and outdoor seating space wasn't sufficiently spaced, the ACHD said.
Also on Friday, Allegheny County and its health department moved to dismiss the restaurant's civil suit, saying The Crack'd Egg flouted the statewide COVID-19 mask mandate. All the restaurant had to do for its health permit to be reinstated was comply with the facial covering mandate, the county said.
The Crack'd Egg sued the county and the Allegheny County Health Department in September, claiming the rule had no "rational or scientific basis" for preventing the spread of COVID-19 and cited due process and equal protection violations.
The restaurant's case came as a countersuit against a county suit filed earlier in September asking a Pennsylvania state judge to shut down the family-owned restaurant for allegedly defying the state's mask mandate and ignoring county orders to shut down. On Oct. 15, The Cracked Egg filed a notice of removal for the state court case, removing jurisdiction to bankruptcy court.
A representative for the Allegheny County Health Department declined to comment Monday.
Counsel for The Crack'd Egg did not immediately respond to a request for comment.
The Crack'd Egg is represented by James R. Cooney, Robert O. Lampl, Sy O. Lampl, Alexander L. Holmquist and Ryan J. Cooney of Robert O. Lampl Law Office.
Allegheny County and the Allegheny County Health Department are represented in-house by Frances M. Liebenguth. The health department is additionally represented in-house by Vijyalakshmi Patel.
The case is The Cracked Egg LLC v. County of Allegheny et al., case number 2:20-cv-01434, in the U.S. District Court for the Western District of Pennsylvania.
The bankruptcy case is In re: The Cracked Egg LLC, case number 20-22889, in the U.S. Bankruptcy Court for the Western District of Pennsylvania.
--Additional reporting by Grace Dixon and Diamond Naga Siu. Editing by Bruce Goldman.
For a reprint of this article, please contact reprints@law360.com.
