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Black U.S. Bankruptcy Trustee Employee Fails In Bid to Revive State Law Race Bias Claim

Wednesday, January 8, 2014
By Patrick Dorrian

Jan. 2 — A federal bankruptcy trustee in Louisiana was entitled to dismissal of a former employee's race discrimination claim because he wasn't an “employer” as defined by Louisiana employment bias law, the U.S. Court of Appeals for the Fifth Circuit ruled Dec. 30 (Bell v. Thornburg, 2013 BL 358320, 5th Cir., No. 13-30155, 12/30/13).

Affirming summary judgment in favor of Jon Thornburg, the standing bankruptcy trustee for the U.S. District Court for the Western District of Louisiana, the appeals court agreed with a lower court that Tammy Bell didn't show that Thornburg employed the 20 or more workers for 20 or more calendar weeks needed to trigger liability as an “employer” under the Louisiana Employment Discrimination Law.

Judge Edward C. Prado said Bell didn't argue that Thornburg himself “employed the requisite number of people to qualify as an employer” under the LEDL, but instead asserted that Thornburg should be viewed as part of the larger Chapter 13 bankruptcy system, which employs more than 125 people in Louisiana.

However, Bell not only failed to provide any evidence supporting her assertion, but “[n]othing Bell claims bears on whether Thornburg himself employed a sufficient number of people to be held liable under the LEDL,” the appeals court found. As a result, summary judgment to Thornburg was proper because he didn't qualify as an LEDL employer, the court held.

The court also rejected Bell's attempt to challenge Thornburg's removal of her case—which she originally filed in state court—to federal court under the federal officer removal statute, 28 U.S.C. § 1442. Because Thornburg was acting under an officer of the U.S. Trustee—the U.S. Trustee, an office established by the Bankruptcy Reform Act of 1978—and asserted “a colorable federal defense” to Bell's race bias claim, removal was proper, the appeals court ruled. 

Discharge Followed Peer Review

According to the opinion, Bell is a black woman who worked in the Western District of Louisiana's office of the Chapter 13 standing trustee for 14 years. At the time of her April 4, 2011, discharge, she was serving as the office manager.

Thornburg was named standing trustee for Chapter 13 bankruptcies in the Western District of Louisiana in 2008. According to Bell, the two frequently disagreed, causing the quality of her work life to deteriorate.

In October 2010, Bell was required to submit to a “peer review,” which was administered by three trustees from the National Organization of Chapter 13 Trustees. As part of the review process, Bell was interviewed by two of the trustees, and the third trustee sought input from the local bankruptcy judge.

The bankruptcy judge apparently expressed a dislike for Bell, leading the peer review panel to recommend that Bell be fired. Thornburg disagreed, however, and instead decided that Bell should be transferred to a different position within the standing trustee's office.

She remained on the office payroll while Thornburg tried to identify another suitable position for her. However, Thornburg later decided to fire Bell before finding her a new position when the problems between the two workers persisted, the court recounted.

Bell, who was replaced by an allegedly less qualified white woman, sued Thornburg in Louisiana state court, claiming she was discharged on the basis of race in violation of the LEDL. Thornburg removed the case to the Western District of Louisiana under the federal officer removal statute.

The district court denied Bell's motion to remand the case to state court. It also granted Thornburg's motion for summary judgment on the ground that he hadn't employed 20 or more employees for 20 or more weeks, as required to qualify as an “employer” under the state anti-bias statute. 

Appeals Court Affirms Removal Order

Bell appealed both the denial of her motion to remand and the district court's grant of summary judgment in favor of Thornburg. The appeals court found no reversible error.

Prado said the federal officer removal statute states that the U.S. and any of its agencies or officers may remove to federal court a civil action or criminal prosecution brought against the U.S., or one of its agencies or officers, in a state court. An individual seeking to invoke the federal officer removal statute must show both that he acted under an officer of the U.S. in connection with the matter in dispute and that he averred a colorable federal defense to the lawsuit.

Bell established both elements needed for federal officer removal, the appeals court found. It said in regard to the first prong that the Bankruptcy Reform Act created the position of U.S. Trustee as a new job within the Justice Department, tasked with performing many of the administrative duties necessary for the fair adjudication of the rights of debtors, creditors and third parties in federal bankruptcy proceedings.

Prado rejected Bell's contention that Thornburg nevertheless didn't qualify for federal officer removal, regardless of the status of the U.S. Trustee, because “Chapter 13 standing trustees are private citizens.” The U.S. Supreme Court has held that the statute is to be construed liberally and that it may apply to private citizens who lawfully assist a federal officer in the performance of the officer's official duties, Prado said.

“Chapter 13 standing trustees like Thornburg are appointed pursuant to federal law by the U.S. Trustee for the purpose of assisting the U.S. Trustee with especially heavy Chapter 13 bankruptcy caseloads,” the judge wrote. “They both ‘assist' and ‘carry out' the duties and tasks of their federal superiors,” and don't simply comply with the law.

Bell's contention that removal to federal court was improper because Thornburg didn't offer any evidence establishing his alleged federal defense to her state law job bias claim also was unpersuasive, the appeals court decided. It said Thornburg only needed to assert a colorable federal defense to warrant removal of Bell's case from state court, and that any evidence supporting his alleged defense was for a federal court to review.

The court said Thornburg met that standard by alleging that his employment actions with regard to Bell were undertaken under the color of his office and in the performance of his duties, based on input from the peer review panel and following communication with the U.S. Trustee and a federal bankruptcy judge. “[T]he only claims Bell makes stem from employment actions performed in the course of the administration of Thornburg's federal duties,” the court wrote. 

‘Employer' Status Not Shown

Summary judgment on Bell's LEDL claim was proper because she failed to establish the employee-numerosity element of her claim, the appeals court concluded. It said the state anti-bias law applies only to employers that are shown to have employed 20 or more workers for 20 or more calendar weeks during the time period relevant to the alleged employment discrimination.

The court said Bell's sole argument on the issue was that Thornburg should be considered part of the larger “association” of the state's Chapter 13 system. But that argument only concerned the number of workers employed within the state system as a whole, not by Thornburg, her alleged employer, the court ruled.

Chief Judge Carl E. Stewart and Judge Carolyn Dineen King joined the opinion.

Malcolm X. Larvadain of Law Offices of Malcolm X. Larvadain in Alexandria, La., represented Bell. Robert J. David and Alyse S. Richard of Juneau David APLC in Lafayette, La., represented Thornburg.

To contact the reporter on this story: Patrick Dorrian in Washington at pdorrian@bna.com

To contact the editor responsible for this story: Susan J. McGolrick at smcgolrick@bna.com

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