Opinion
Case No. 06-34312-H4-13, Adversary No. 08-03239.
October 14, 2008
MEMORANDUM OPINION ON THE DEFENDANT'S MOTION TO DISMISS UNDER RULE 12(b)(6) [Adv. Docket Nos. 7 and 10]
I. INTRODUCTION
Plaintiff Shani Burnett alleges in her Complaint for Adversary Proceeding to [sic] for Damages, Declaratory and Other Relief [Adv. Docket No. 1] that Stewart Title, Inc. violated 11 U.S.C. § 525(b). She makes this allegation because she claims that Stewart Title, Inc. refused to hire her based upon her filing of a Chapter 13 petition.
This Memorandum Opinion will address whether 11 U.S.C. § 525(b) applies to the hiring decisions of private employers. This Court holds that 11 U.S.C. § 525(b) does not prohibit private employers from discriminating against prospective employees based on their bankruptcy status. Set forth below are the Court's written findings of fact and conclusions of law. The Court reserves its right to make additional findings of facts and conclusions of law as it deems appropriate or as may be requested by any of the parties.
II. FINDINGS OF FACT
In its amended Motion to Dismiss Under Rule 12(b)(6), Stewart Title expressly stated that "Stewart Title could not have violated Section 525(b) of the United States Bankruptcy Code when it made the hiring decision to withdraw its job offer due to Burnett's bankruptcy status, because hiring is not a decision governed by the statute." [Adv. Docket No. 10, Part III.]
III. CONCLUSIONS OF LAW
A. Jurisdiction and Venue
This Court has jurisdiction over this matter pursuant to 28 U.S.C. §§ 1334(b) and 157(b). This dispute is a core proceeding under 28 U.S.C. § 157(b)(2)(A). Venue is proper pursuant to 28 U.S.C. § 1409.B. Background of 11 U.S.C. § 525
Section 525 of the Bankruptcy Code protects individuals from discriminatory treatment. Section 525 provides two standards: one for the government in § 525(a) and one for private employers in § 525(b). Subsection (a) of § 525 provides that
a governmental unit may not . . . deny employment to, terminate the employment of, or discriminate with respect to employment against, a person that is or has been a debtor under this title or a bankrupt or a debtor under the Bankruptcy Act . . . solely because such bankrupt or debtor is or has been a debtor under this title or a bankrupt or debtor under the Bankruptcy Act, has been insolvent before the commencement of the case under this title, or during the case but before the debtor is granted or denied a discharge, or has not paid a debt that is dischargeable in the case under this title or that was discharged under the Bankruptcy Act.
Subsection (b) of § 525 has language that is somewhat different from § 525(a):
No private employer may terminate the employment of, or discriminate with respect to employment against, an individual who is or has been a debtor under this title, a debtor or bankrupt under the Bankruptcy Act, or an individual associated with such debtor or bankrupt, solely because such debtor or bankrupt —
(1) is or has been a debtor under this title or a debtor or bankrupt under the Bankruptcy Act;
(2) has been insolvent before the commencement of a case under this title or during the case but before the grant or denial of a discharge; or
(3) has not paid a debt that is dischargeable in a case under this title or that was discharged under the Bankruptcy Act.
C. Section 525(b) does not apply to hiring practices of private employers.
A close reading and comparison of the language in subsections (a) and (b) leads to the following conclusions: subsection (a) prohibits government employers from "deny[ing] employment to" a person because of his or her bankruptcy status, whereas subsection (b) does not contain such a prohibition for private employers; rather the private sector is prohibited only from discriminating against those persons who are already employees. For whatever reason, Congress intentionally omitted any mention of denial of employment from subsection (b) but specifically provided that denial of employment was actionable in subsection (a). Pastore v. Medford Savs. Bank, 186 B.R. 553, 555 (D. Mass. 1995). "Where Congress has carefully employed a term in one place but excluded it in another, it should not be implied where excluded." J. Ray McDermott Co., Inc. v. Vessel Morning Star, 457 F.2d 815, 818 (5th Cir. 1972).
Because of Congress' careful drafting, the language in § 525(b) — "discriminate with respect to employment" — was not meant to serve as a catch-all to cover hiring decisions in the private sector. The only case holding otherwise — and consequently, the only case supporting Burnett's position — is Leary v. Warnaco, Inc., 251 B.R. 656 (S.D.N.Y. 2000). There, the court interpreted § 525(b)'s language, "discriminate with respect to employment," to encompass "all aspects of employment including hiring, firing and material changes in job conditions." Leary, 251 B.R. at 659. The Leary court's holding with respect to § 525(b) has been rejected by Martin v. American Family Mutual Insurance Co. (In re Martin), No. 07-7067, 2007 WL 2893431 (Bankr. D. Kan. Sept. 28, 2007) and by Stinson v. BB T Investment Services, Inc. (In re Stinson), 285 B.R. 239 (Bankr. W.D. Va. 2002). In Martin, the court, agreeing with the majority of courts, held that Congress did not intend § 525(b) to affect the hiring practices of private employers. Martin, 2007 WL 2893431, at *3 ("This Court is unwilling to discard well established canons of statutory interpretation to find that Congress' failure to include a specific reference to hiring in § 525(b), after expressly including it in subsection (a), was merely the result of a less verbose scrivener."). In Stinson, the court noted that if Congress intended the phrase "discriminate with respect to employment" to be broad enough to encompass the hiring process, then the "terminate employment" language from subsection (a) and (b) and the "deny employment to" language in subsection (a) are redundant, as both of those actions would fall under the broader discrimination prohibition. Stinson, 285 B.R. at 248. This Court agrees with the reasoning from Martin and Stinson.
This Court disagrees with the Leary court's holding that § 525(b) includes discrimination during the hiring process in the private sector. When § 525(a) and (b) are read together, the language in § 525(b) cannot possibly be construed to include denial of employment; if that was Congress' intent, then Congress would have included the phrase from subsection (a) — "deny employment to" — in subsection (b). "[W]here Congress includes particular language in one section of a statute but omits it in another section of the same Act, it is generally presumed that Congress acts intentionally and purposely in the disparate inclusion or exclusion." Russello v. United States, 464 U.S. 16, 23 (1983) (citing United States v. Wong Kim Bo, 472 F.2d 720, 722 (5th Cir. 1972)). It is not mere serendipity that the vast majority of the courts have held that § 525(b) does not prohibit discrimination during the hiring process in the private sector. See, e.g., In re Hardy, 209 B.R. 371 (Bankr. E.D. Va. 1997); In re Hopkins, 81 B.R. 491 (Bankr. W.D. Ark. 1987); In re Madison Madison Int'l of Ill., 77 B.R. 678 (Bankr. E.D. Wis. 1987); Pastore v. Medford Savs. Bank, 186 B.R. 553, 555 (D. Mass. 1995); Fiorani v. CAC1, 192 B.R. 401 (E.D. Va. 1996); Cord v. Skinner Nurseries, Inc. (In re Cord), No. 01-20256, 2004 WL 2923845 (Bankr. M.D. Fla. 2004).
D. Result in This Case
If Stewart Title had actually offered Burnett a position and if she had accepted the offer, then an employment relationship would have arisen, and any discrimination thereafter based upon Burnett's bankruptcy status would have been unlawful under § 525(b). See Hopkins, 81 B.R. at 494. However, because Burnett was never formally hired and never had an employment relationship with Stewart Title, Stewart Title did not violate § 525(b) by refusing to hire Burnett based on her bankruptcy status.
This decision also disposes of the breach of contract claim Burnett filed against Stewart Title because no such employment contract was ever formed. Additionally, "[a]bsent an express agreement to the contrary, Texas is an employment-at-will state." Thomas v. Long, 207 S.W.3d 334, 341 (Tex. 2006) (citing City of Odessa v. Barton, 967 S.W.2d 834, 835 (Tex. 1998)).
IV. CONCLUSION
Based upon the findings of fact and conclusions of law set forth in this Memorandum Opinion, the Court holds that 11 U.S.C. § 525(b) does not prohibit private employers from discriminating against prospective employees based on their bankruptcy status. "[F]ederal courts do not sit as councils of revision, empowered to rewrite legislation in accord with their own conceptions of prudent public policy." United States v. Rutherford, 442 U.S. 544, 555 (1979). This Court must respect and adhere to the Bankruptcy Code as written and may not inject words into Section 525(b) which are plainly missing, no matter how unpalatable the result.
An order consistent with this Opinion will be entered on the docket simultaneously with the entry on the docket of this Opinion.