Case LSS Doc 511 Filed 06/27/16 Page 1 of 5 UNITED STATES BANKRUPTCY COURT DISTRICT OF DELAWARE. Chapter 11. Adv. No.

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1 Case LSS Doc 511 Filed 06/27/16 Page 1 of 5 UNITED STATES BANKRUPTCY COURT DISTRICT OF DELAWARE In re PACIFIC SUNWEAR OF CALIFORNIA, INC., a California corporation et al., 1 Debtors. Chapter 11 Case No.: (LSS) (Jointly Administered) Adv. No. PACIFIC SUNWEAR OF CALIFORNIA, INC., MIRALOMA BORROWER CORPORATION, and PACIFIC SUNWEAR STORES CORP., v. Plaintiffs, TAMAREE BEENEY and CHARLES PFEIFFER, Defendants. COMPLAINT FOR DECLARATORY RELIEF Pacific Sunwear of California, Inc., Miraloma Borrower Corporation, and Pacific Sunwear Stores Corp. (collectively, Plaintiffs ), as and for their complaint (the Complaint ) against Tamaree Beeney ( Beeney ) and Charles Pfeiffer ( Pfeiffer, and together with Beeney, Defendants ), allege as follows: JURISDICTION AND VENUE 1. Plaintiffs are debtors and debtors in possession in the above-captioned jointly administered chapter 11 cases styled In re Pacific Sunwear of California, Inc., Case No The Debtors and the last four digits of their respective federal taxpayer identification numbers are as follows: Pacific Sunwear of California, Inc. (9463-CA); Miraloma Borrower Corporation (0381-Del.); and Pacific Sunwear Stores Corp. (5792-CA). The Debtors address is 3450 East Miraloma Avenue, Anaheim, CA

2 Case LSS Doc 511 Filed 06/27/16 Page 2 of (LSS) (Bankr. D. Del.) (the Cases ), pending in the United States Bankruptcy Court for the District of Delaware (the Court ). Plaintiffs bring this Complaint against two individuals Beeney and Pfeiffer who have filed Claim No. 986 and Claim No. 989 (together, the Disputed Proofs of Claim ) in the Cases and have accordingly submitted themselves to the jurisdiction of this Court. 2. This Court has jurisdiction over the Cases and this Complaint pursuant to 28 U.S.C. 157(a) and 1334(a), and the Amended Standing Order of Reference from the United States District Court for the District of Delaware dated February 29, Jurisdiction to grant declaratory relief exists pursuant to 28 U.S.C and 2202, 11 U.S.C. 105 and Fed. R. Bankr. P. 7001(9). 3. This is a core proceeding under 28 U.S.C. 157(b)(2)(A), (B) and (O). 4. Venue of the Cases and this adversary proceeding in this district is proper under 28 U.S.C and Pursuant to Fed. R. Bankr. P. 7008(a) and Local Rule , Plaintiffs consent to the Court s entry of a final judgment or order with respect to the adversary proceeding if it is determined that the Court, absent consent of the parties, cannot enter final orders or judgments consistent with Article III of the United States Constitution. PARTIES 6. Plaintiffs are corporate entities that are the debtors and debtors-in-possession in the Cases, which were commenced on April 7, 2016 (the Petition Date ). Plaintiffs are authorized to continue to operate their business and manage their property as debtors in possession pursuant to sections 1107(a) and 1108 of the Bankruptcy Code. 7. Defendants are two individuals who have jointly filed the Disputed Proofs of Claim seeking $135,374,113, of which $14,777,571 is allegedly entitled to wage priority under 2

3 Case LSS Doc 511 Filed 06/27/16 Page 3 of 5 11 U.S.C. 507(a)(4). In addition to the general unsecured claims and wage-priority claims articulated in the Disputed Proofs of Claim, Defendants have indicated that they intend to assert millions of dollars in alleged administrative expense liability arising out of the same wage-andhour issues that are the subject of the Disputed Proofs of Claim. THE PARTIES DISPUTE 8. In their Objection of the Class and PAGA Claimants to (A) Disclosure Statement for the Joint Plan of Reorganization of Pacific Sunwear of California, Inc. and Subsidiary Debtors and (B) Motion to Approve Disclosure Statement and Solicitation Procedures [Docket No. 372], Defendants contend, inter alia, that they are entitled to administrative treatment under 11 U.S.C. 507(a) for the balance of their claims, without providing a specific dollar amount. 9. Similarly, in their Motion of the Class and PAGA Claimants for Leave to File Class Proof of Claim [Docket No. 378], Defendants contend that they have claims entitled to administrative priority, again without providing a specific dollar amount. 10. Plaintiffs dispute that Defendants have any entitlement to administrative expenses, including under 11 U.S.C. 503 and 507, given that: (i) they were not employed after the Petition Date and thus have no right themselves to any payment for such period or ability to share in any award, and as such they lack standing to assert any such right to payment; and (ii) the civil wage-and-hour penalties sought by Defendants do not qualify as administrative expenses as a matter of controlling precedent under Pennsylvania Department of Environmental Resources v. Tri-State Clinical Labs., Inc., 178 F.3d 685 (3d Cir. 1999). 11. On June 22, 2016, counsel for Plaintiffs contacted counsel for Defendants via and set forth in detail why Defendants have no valid entitlement to administrative expense reimbursement, which correspondence concluded by asking that [t]o the extent [Defendants] 3

4 Case LSS Doc 511 Filed 06/27/16 Page 4 of 5 disagree with the preceding, we welcome any suggestions for resolving those disagreements efficiently and expeditiously. To date, neither Defendants nor their counsel have responded. CLAIM FOR DECLARATORY RELIEF 12. Plaintiffs repeat and re-allege Paragraphs 1 11, supra, as if fully set forth herein. 13. An actual controversy has arisen and exists between Plaintiffs and Defendants regarding whether Defendants, or either of them, have any valid claims or rights to payment of administrative expenses under the Bankruptcy Code, including pursuant to 11 U.S.C. 503 and The controversy between Plaintiffs and Defendants is genuine, definite, concrete, real, and immediate. 15. Under 11 U.S.C. 105 and 28 U.S.C & 2202, Plaintiffs are entitled to a declaratory judgment that Defendants have no valid claims or rights to payment of administrative expenses under the Bankruptcy Code, including pursuant to 11 U.S.C. 503 and 507. [The remainder of this page is blank.] 4

5 Case LSS Doc 511 Filed 06/27/16 Page 5 of 5 PRAYER WHEREFORE, Plaintiffs pray that this Court enter judgment in favor of Plaintiffs and against Defendants declaring that Defendants have no valid claims or rights to payment of administrative expenses under the Bankruptcy Code, including pursuant to 11 U.S.C. 503 and 507, and for such other and further relief as is just and proper. DATED: June 27, 2016 /s/ Shane M. Reil Michael R. Nestor, Esq. (Bar No. 3526) Joseph M. Barry, Esq. (Bar No. 4221) Maris Kandestin, Esq. (Bar No. 5294) Shane M. Reil, Esq. (Bar No. 6195) Young Conaway Stargatt & Taylor, LLP Rodney Square 1000 North King Street Wilmington, Delaware Tel: (302) Fax: (302) mnestor@ycst.com jbarry@ycst.com mkandestin@ycst.com sreil@ycst.com and Michael L. Tuchin, Esq. David M. Stern, Esq. Jonathan M. Weiss, Esq. Klee, Tuchin, Bogdanoff & Stern LLP 1999 Avenue of the Stars, Thirty-Ninth Floor Los Angeles, California Tel: (310) Fax: (310) mtuchin@ktbslaw.com dstern@ktbslaw.com jweiss@ktbslaw.com Counsel to Plaintiffs 5