By: Megan Quail
St. John’s Law Student
American Bankruptcy Institute Law Review Staff
Recently, in Myers v. Toojay’s Management Corp., the Court of Appeals for the Eleventh Circuit affirmed a grant of summary judgment in favor of a private business, Toojay’s, which refused to hire Myers, an individual, based on his prior bankruptcy filing.[1] Myers claimed that Toojay’s violated section 525(b) of the Bankruptcy Code (“the Code”) by declining to offer him employment after learning of his previously filed bankruptcy petition.[2] The court held that section 525(b) of the Code does not prohibit a private employer from declining to hire a person because of a prior bankruptcy despite prohibiting public employers from taking similar action.[3] As the third United States Court of Appeals ruling of its kind, Myers v. Toojay’s Management Corp. continues the trend of protecting the discriminatory hiring decisions of private employers.[4]
Section 525 contains two subsections: 1) one applying to the public sector and 2) one applying to private employers. Subsection (a) states that government employers may not deny employment to, terminate the employment of, or discriminate with respect to employment against a person who has filed bankruptcy solely because of that filing.[5] Subsection(b) provides no private employer “may terminate the employment of, or discriminate with respect to employment against” individuals for declaring bankruptcy.[6] The court applied the plain meaning of the statute and agreed with Myers that a private employer cannot “discriminate with respect to employment.”[7] However, the court noted the difference in subsections (a) and (b) of Section 525, holding that subsection (b)’s exclusion of language prohibiting a private employer to “deny employment” entails something other than discrimination in hiring.[8] Myers, however, argued the Code’s broad purpose is to give debtors that file for bankruptcy protection a fresh start and the court should interpret the statute in order to better achieve that goal.[9] The court rejected this argument, stating that its job was to “interpret and apply statutes, not congressional purposes.”[10]
The Eleventh Circuit reaffirmed protections for private employers because private employers can decline to offer employment based on a prior bankruptcy filing. This case may affect the propensity of individuals to file for bankruptcy protection because it weakens the protections for individual debtors working in the private sector, who may fear being discriminated against in future employment. Furthermore, the inconsistency between subsections (a) and (b) may confuse individuals who have expectations of certain protections against discrimination. The Eleventh Circuit’s presumption that Congress omitted the denial of employment from section 525(b) “for a reason”[11] may affect future Eleventh Circuit interpretations of regulations regarding rights and duties of private employers.
[1] Myers v. Toojay’s Management Corp., 640 F.3d 1278, 1288 (11th Cir. 2011).
[2] Id. at 1283.
[3] Id.
[4] See generally Rea v. Federated Investors, 627 F.3d 937 (3d Cir. 2010) (dismissing a case of discrimination in hiring by a private employer for the same reasons employed in Myers). But see Leary v. Warnaco, Inc., 251 B.R. 656 (S.D.N.Y. 2000) (concluding that section 525 (b) prohibited private employers from discriminating in hiring based on bankruptcy). See generally In re Burnett v. Steward Title, Inc., 635 F.3d 169 (5th Cir. 2011) (rejecting the plaintiff’s reliance on Leary and focusing on the presumption that an inclusion of particular language in one section of a statute but exclusion of it in another section of the same Act is purposeful in its holding that discrimination in hiring by a private employer is allowed). The general agreement by the three circuits that have addressed this issue indicates that any chance of a different interpretation of section 525 would have to come in the form of legislation, rather than from a judicial decision. The unanimous agreement of all circuits that have ruled on a certain issue tends to show that the courts have the same opinion on the matter.
[5] 11 U.S.C. § 525(a) (2006).
[6] 11 U.S.C. § 525(b).
[7] Myers, 640 F.3d at 1283.
[8] 11 U.S.C. § 525(a); Id.
[9] Id.
[10] Id. (citing Friends of the Everglades v. S. Fla. Water Mgmt. Dist., 570 F.3d 1210, 1226 (11th Cir. 2009)).
[11] Id. at 1285.
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