11TH CIRCUIT FINDS FAILURE TO DISCLOSE TITLE VII LAWSUIT IN BANKRUPTCY PROCEEDINGS BARS CLAIM
On February 5, the 11th Circuit decided the case of Robinson v. Tyson Foods. Robinson worked for Tyson Foods, and resigned in September, 2005 by a letter of resignation stating, in part, that she was subjected to "harassment, racial abuse and intimidation." In October, 2006, she brought a civil suit against Tyson under Title VII, and claimed compensatory, punitive and liquidated damages. In April, 2002, Robinson voluntarily dismissed her Chapter 13 bankruptcy cased because she could not make her payments, and filed a second Chapter 13 proceeding. The plan was confirmed in May, 2002, and the judge ordered, in part, that "the property of the estate shall not vest in the Debtor until a discharge is granted under Section 1328 or the case is dismissed". In May, 2007, one of Robinson's debtors moved to dismiss the bankruptcy plan because her payments were delinquent. Before a hearing on the motion, she became current on her payments. In July, 2007, her bankruptcy plan was completed, she repaid all her debts, and she received a full discharge from Bankruptcy.
Tyson took her deposition in September, 2007, and learned that she had not disclosed her suit against Tyson in the bankruptcy court. Tyson also learned that her husband died in 1997, and she had a workers' compensation claim against her husbands employer when she declared bankruptcy in April, 2002. That lawsuit was not disclosed either. The 11th Circuit upheld the trial courts decision dismissing Robinson's claim against Tyson, under the theory of judicial estoppel, which is designed to "prevent a party from asserting a claim in a legal proceeding that is inconsistent with a claim taken by the party in a previous preceding". Since full and honest disclosure in a bankruptcy proceeding is "critical" to the effective functioning of the system, and a debtor has a statutory duty to disclose all assets, or potential assets to the bankruptcy court, and Robinson failed to do so, she was prohibited from pursuing her claim against Tyson.
Practice pointer. This decision reinforces the need for individuals to be completely open and honest when they file for bankruptcy. If they fail to disclose an asset, or potential asset, such as a law suit, it may bar them from pursuing those claims not disclosed to the bankruptcy court. This logic also applies in many unemployment compensation appeals, where claimants' change the reason for termination from what they originally listed on their claim for unemployment, (for example, lack of work) to a claim under Title VII (for example, sexual harassment).
