Dalvit v. United Air Lines, Inc., No. 08-1283 (10th Cir. Dec. 21, 2009)

By Paul Mollica

Although the plaintiffs ultimately lose this Title VII discrimination/retaliation appeal on the merits, the Tenth Circuit in an unpublished decision holds that a bankruptcy does not necessarily discharge a Title VII claim redressable with injunctive relief. It also affirms that, under the right circumstances, a disciplinary letter may constitute an “adverse employment action.”

Dalvit v. United Air Lines, Inc., No. 08-1283 (10th Cir. Dec. 21, 2009):  Just last week we reviewed a First Circuit ADA case which held that a claim for reinstatement may be discharged in bankruptcy.  This week, we have another bankrupt air carrier fighting off civil rights claims (here, under Title VII) by two ramp supervisors, arguing that their claims were snuffed out by the 2006 confirmation of its Chapter 11 bankruptcy in the U.S. District Court for the Northern District of Illinois.  Though the issue occupied 400 pages of briefing in the district court, it was cursorily resolved (in a footnote) against the company.  Ultimately, the district court granted summary judgment against the two plaintiffs on the merits.

The panel affirms, though it pauses a little more contemplatively over the bankruptcy issue.  The court observes that there is a split in the circuits (unsettled in the Tenth Circuit) about whether a discharge in bankruptcy is an affirmative defense or implicates subject-matter jurisdiction. â€œTo further complicate
matters, even assuming that such a discharge was jurisdictional, factual issues remain concerning whether the discharge here applies to plaintiffs’ claims. Plaintiffs contend that at least some of their claims accrued after the bankruptcy was confirmed and that they received inadequate notice of the confirmation, factors that could preclude application of the discharge to at least some of their claims.”

The panel understandably, then, sidesteps the issue by holding that at least one of the plaintiffs’ prayers for relief survives discharge.  “[E]quitable remedies, such as a request for prospective injunctive relief, may survive the debtor’s discharge if not reducible to a monetary obligation. . . .  Benjamin’s claim for ‘removal of any and all disciplinary actions and notations in [her personnel] files,’ Aplt. App., Vol. I at 13, 29, has no monetary equivalent. We therefore conclude that at least one of Benjamin’s equitably based claims is justiciable, irrespective of UAL’s bankruptcy discharge. We will proceed to adjudicate the summary judgment issues as to that claim.”  The panel also notes that if the merits of the plaintiffs’ claims failed as to the personnel-file prayer, then it would be unnecessary to resolve the jurisdictional issue as to the balance of the case, for which the result would be “foreordained.”

The panel also holds, in contrast to some other decisions, that a disciplinary letter in the file might constitute an “adverse employment action.” The record included testimony by the plaintiff and a supervisor familiar with the process that the disciplinary letters (termed “Letters of Counsel”) “are used to weed out candidates for promotion or job change. The letters were discipline and would remain in plaintiffs’ files for five years, poisoning their chances for advancement. Benjamin testified she was told that she would not be interviewed for jobs at UAL because of the disciplinary letter in her file.” The plaintiff thus presented a genuine issue of material fact on this issue.  Ultimately, though, the panel holds that the plaintiff was unable to demonstrate that the manager’s reason for placing the letter in her file was pretextual.