Myers v. TOOJAY'S MANAGEMENT CORP.
65 Collier Bankr. Cas. 2d 1221, 640 F.3d 1278, 32 I.E.R. Cas. (BNA) 398 (2011)
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Rule of Law:
11 U.S.C. § 525(b) prohibits private employers from terminating or discriminating with respect to employment against an individual due to bankruptcy, but, unlike § 525(a) for governmental units, it does not prohibit private employers from denying employment based on bankruptcy status.
Facts:
- In January 2008, Eric Myers filed a Chapter 7 bankruptcy petition in North Carolina, and his debts were discharged in May 2008.
- Myers, seeking a fresh start in central Florida, applied for a managerial position at a TooJay’s Gourmet Deli restaurant and interviewed with regional manager Thomas Thornton.
- TooJay's scheduled Myers for a two-day 'on-the-job evaluation' (OJE) on July 31 and August 1, 2008, for which he was paid $100 per day.
- During the OJE, Myers completed various personnel forms, some marked 'OJE' and others with spaces designated for 'Employee.'
- On August 4, 2008, Myers gave two weeks' notice to his current employer, Starbucks, the same day TooJay’s sent him a letter.
- On August 12, 2008, Myers received a letter from TooJay’s rescinding its 'previous offer of employment' based 'in whole or in part' on information in a consumer report, which included his credit history.
- Sharon Polinski, from TooJay's human resources department, informed Myers that he was not hired solely because he had filed for bankruptcy, stating it was company policy.
Procedural Posture:
- Eric Myers filed a lawsuit against TooJay’s in the United States District Court for the Middle District of Florida, alleging discrimination in violation of 11 U.S.C. § 525(b) for refusing to hire him or, alternatively, terminating him after hiring.
- TooJay’s and Myers filed cross-motions for summary judgment on the refusal to hire claim.
- The district court granted TooJay’s motion for summary judgment on the refusal to hire claim, concluding that § 525(b) does not prohibit private employers from refusing to hire someone due to bankruptcy.
- The district court denied TooJay’s motion for summary judgment on the wrongful termination claim, finding a genuine issue of material fact regarding the existence of an employment relationship.
- The wrongful termination claim proceeded to a two-day jury trial.
- At the close of the evidence, Myers moved for judgment as a matter of law, which the district court denied.
- The jury returned a verdict in favor of TooJay’s, specifically finding in response to a special interrogatory that Myers did not become an employee of TooJay’s.
- The district court entered judgment against Myers.
- Myers filed a renewed motion for judgment as a matter of law and a motion for new trial, both of which the district court denied.
- Myers filed a notice of appeal to the Eleventh Circuit, challenging the summary judgment ruling on his refusal to hire claim and the denial of his renewed motion for judgment as a matter of law and motion for a new trial on his wrongful termination claim.
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Issue:
Does 11 U.S.C. § 525(b) prohibit a private employer from denying employment to an individual on the ground that they are or have been in bankruptcy, despite the subsection's omission of the phrase 'deny employment to' which is present in § 525(a)?
Opinions:
Majority - CARNES, Circuit Judge
No, 11 U.S.C. § 525(b) does not prohibit a private employer from denying employment to an individual based on their bankruptcy status. The court affirmed the district court's decision, relying on established principles of statutory construction. First, the court noted the conspicuous difference in language between § 525(a) (for governmental units) and § 525(b) (for private employers). Section 525(a) explicitly forbids governmental units from 'deny[ing] employment to, terminate[ing] the employment of, or discriminate[ing] with respect to employment against' a person due to bankruptcy. In contrast, § 525(b) omits 'deny employment to,' only stating that private employers may not 'terminate the employment of, or discriminate with respect to employment against' such an individual. Citing Supreme Court precedent like Dean v. United States and Russello v. United States, the court held that 'where Congress has carefully employed a term in one place but excluded it in another, it should not be implied where excluded.' This intentional omission demonstrates that Congress did not intend to cover hiring decisions for private employers under § 525(b). Second, the court applied the anti-superfluity canon of statutory interpretation. The phrase 'or discriminate with respect to employment' appears in both subsections. If this phrase in § 525(a) were interpreted to include the denial of employment, then the specific words 'deny employment to' in § 525(a) would be rendered meaningless and superfluous. To avoid such an illogical interpretation, the court concluded that 'discriminate with respect to employment' must mean something other than discrimination in hiring (e.g., discrimination in promotions, demotions, hours, or pay). Given the principle that identical words in the same statute should normally be given the same meaning, the phrase in § 525(b) also cannot include discrimination in hiring. Third, the court rejected Myers' argument for a broad construction of § 525(b) to effectuate the Bankruptcy Code’s remedial purpose of giving debtors a fresh start. The court emphasized that its role is to 'interpret and apply statutes, not congressional purposes,' and courts are 'not licensed to practice statutory remodeling.' The text of a statute reflects legislative compromises, and judges should not bend that text to fit perceived policy goals. Finally, regarding Myers' wrongful termination claim, the court affirmed the jury's finding that Myers was never an employee of TooJay's. This finding was supported by evidence including Myers' inconsistent testimony about his employment status, the clear 'OJE' designation on some forms, his lower OJE pay, and his subsequent letter acknowledging the job offer was 'withdrawn . . . prior to the commencement of my employment' and expressing hope to 'becoming a member of the TooJay’s family.'
Analysis:
This case is significant for solidifying the narrow interpretation of 11 U.S.C. § 525(b), confirming that private employers retain the discretion to deny employment to individuals based on their bankruptcy status. By emphasizing the distinct language used in subsections (a) and (b), the Eleventh Circuit reinforces the principle that courts must adhere to the plain text of a statute, even when a broader interpretation might align more closely with general legislative purposes. This decision establishes circuit precedent consistent with the Third and Fifth Circuits, creating a clear jurisdictional understanding that private employers are not prohibited from refusing to hire applicants solely due to bankruptcy.
