Lockyer

The Attorney General of California, Bill Lockyer, sues under section 16 of the Clayton Act, 15 U.S.C. § 26 , seeking divestiture by the Mirant defendants (collectively, “Mirant”) of three electrical generating plants. The district court granted a stay pursuant to Landis v. North American Co., 299 U.S. 248 , 57 S.Ct. 163 , 81 L.Ed. 153 (1936), pending the resolution of Mir-ant’s Chapter 11 petitions in a bankruptcy court in Texas. We hold that the district court had jurisdiction to determine whether the automatic stay of the Texas bankruptcy court applied to the Attorney General’s suit, and that the Attorney General’s suit comes within the “police or regulatory power” exception of 11 U.S.C. § 362 (b)(4) to the automatic stay. We further hold, in the circumstances of this case, that a Lan-dis stay is not justified. Accordingly, we vacate the stay and remand to allow the Attorney General’s suit to proceed on the merits.

I. Background

In 1996, California passed Assembly Bill 1890, which required large investor-owned utilities to divest certain electrical generating plants as part of the state’s deregulation of its electrical generation industry. Pursuant to this mandatory…