Company Bankruptcy Blocks Employment Discrimination Claim
Today’s National Law Journal covers a recent 1st Circuit ruling that allows pending employment discrimination claims to be flushed down the bankruptcy toilet. The article says that this was a case of first impression.
In that case, an employee filed a disability discrimination claim against U.S. Airways with the EEOC and the Rhode Island Human Rights Commission. The airline then filed bankruptcy and the discrimination claim became part of the bankruptcy case.
The plaintiff received a notice of claim and did not respond because she thought her claim was covered by the airline’s insurance policy. The bankruptcy court later approved the airline’s reorganization plan and the company emerged anew from bankruptcy.
The Rhode Island Commission on Human Rights later dismissed the plaintiff’s claim and she filed a federal discrimination claim against U.S. Airways. But the plaintiff had her claim promptly thrown out of court because the judge ruled that her case had been discharged in the airline’s prior bankruptcy case. The plaintiff appealed and lost.
The Court of Appeals for the 1st Circuit reasoned that a pending discrimination claim is just like any other claim for money and is subject to discharge in bankruptcy. According to the Court, a discrimination claim is just like a pending invoice from plumber or the water company. But wait, isn’t there a difference between vender invoices and unconstitutional conduct?
