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Lack of Standing, Judicial Estoppel Bar Debtor's Unscheduled Discrimination Claims

Friday, January 25, 2013
A female employee who received a discharge in bankruptcy may not pursue her Title VII sexual harassment and retaliation claims, because she lacks standing to pursue claims that belong to her bankruptcy estate, or, in the alternative, because judicial estoppel bars her from litigating claims she failed to disclose in her bankruptcy petition, a federal district court held Jan. 2 (Vanderheyden v. Peninsula Airport Commission, E.D. Va., No. 4:12-cv-00046-MSD-DEM, 1/2/13).

The court addressed the issue of standing sua sponte as a question of subject matter jurisdiction. It court found that, regardless of the employee's failure to list her claims, she could not pursue them because they are property of her bankruptcy estate. As such, only the trustee of her estate had standing to file suit on her claims, unless he had abandoned them, the court said. However, “there is nothing in the record… indicating that the bankruptcy trustee abandoned her Title VII claims,” the court found, adding that her “bankruptcy action is closed and there is no acting trustee.”

Alternatively, the doctrine of judicial estoppel bars her claims because she failed to disclose them as assets in her bankruptcy schedules, the court ruled. It found her failure to disclose to be intentional based on the fact that she filed her EEOC charge eight months before filing her bankruptcy case. “Therefore, she knew of her Title VII claims when she filed her bankruptcy action,” the court said. Furthermore, she could not rely on a state law provision that exempts certain causes of action from her bankruptcy estate, the court ruled, because the exemption applies only to claims that are properly disclosed.

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