United States District Court, D. New Jersey
October 20, 2005.
COSTANTINO CIPOLLA, Plaintiff,
HMS HOST CORPORATION, Defendant.
The opinion of the court was delivered by: FAITH HOCHBERG, District Judge
This matter comes before the Court upon Defendant's motion for
summary judgment. Plaintiff alleges employment discrimination due
to his filing for bankruptcy, in violation of (1) § 525(b) of the
Bankruptcy Act and (2) New Jersey common law prohibiting
employment termination that is contrary to a clear mandate of
public policy (in this case, that of § 525). The Court decides
the motion on the papers in accordance with Fed.R.Civ.P. 78.
Plaintiff Costantino Cipolla ("Plaintiff") was first hired by
defendant HMS Host Corporation ("Defendant" or "Host") in
September 1999 as an assistant manager for two restaurants in New
Jersey. Defendant is a food and beverage retail concessionaire
that operates concessions under brand names. Plaintiff worked for
Defendant for nearly three years and received several promotions until becoming manager of Chili's
Restaurant in Times Square, New York City. He resigned on or
about August 30, 2002.
On or about September 1, 2003, Plaintiff recommenced working
with Defendant for his former supervisor at Chili's, Rick Biglin,
who had become the general manager of HMS's Newark Liberty
Airport concessions. Mr. Biglin had been partially responsible
for Plaintiff's prior promotions. The two occasionally socialized
outside of work and remained in touch after Plaintiff's
resignation in 2002. Plaintiff wanted to work for Defendant again
because of his good working relationship with Mr. Biglin, so
Plaintiff quit his job to do so. Plaintiff underwent training at
Newark airport and began his duties as a store manager at one of
Mr. Biglin's terminals.
Defendant's Human Resources Manager who oversaw Defendant's
Newark Airport facilities was Noelle Voska who was responsible
for hiring, maintaining employee files, and handling day to day
human resources issues. She was on a leave of absence when Mr.
Biglin offered Plaintiff employment in August 2003. When she
returned in early September 2003, she learned that Plaintiff had
already been working without the completion of formal hiring
procedures. She quickly provided Plaintiff with a formal offer
letter, backdated to September 1, 2003, and a background check
authorization form. The letter and authorization form both stated
that employment was contingent upon successful completion of the
Plaintiff consented to the routine background investigation and
was told by Mr. Biglin and Ms. Voska that he did not need to fill
out his entire employment application because of his prior
experience with Defendant. Plaintiff received his first paycheck
from HMS on September 19, 2003, compensating him for services
performed through September 11, 2003. Defendant's background investigation policy, instituted in the
summer of 2002, prohibits an employee in a supervisory capacity
from commencing employment until the results of a credit check
are performed. The checks are done post-offer because Defendant
needs the applicant's birth date for the check, but under
Defendant's policy the offer is expressly contingent upon
successful completion of the check and the applicant is not
officially hired until the background check is complete. The
employee may only attend a one-day welcome orientation and a
one-day computer-based training before the check results are
reported. The checks are performed by an outside agency called
American Background Information Service ("American Background")
which emails results to HMS, in this case to Ms. Voska. The
criteria and scoring model was established by American
Background, following industry standards, with input and final
approval from Defendant. The email results only provide a red
(Cannot Hire), yellow (Dept. of Loss Prevention/Human Resources
will decide after further review), or green (Okay to Hire) flag
based on the scoring model analyzing the candidate's debt payment
On or about September 17, 2003, Ms. Voska received an email
from American Background indicating that Plaintiff's credit
report generated a red flag. Thomas Stein, the Director of Loss
Prevention who worked out of corporate headquarters in Maryland,
later reviewed the details of Plaintiff's credit report. It
indicated late debt payments and a bankruptcy filing dated August
1, 2003. Mr. Stein does not review the results of every
background check. He has the authority and discretion to change a
red flag to a green flag, and exercises such authority when
extenuating or special circumstances may have caused the bad
credit. Ms. Voska does not know the criteria that determine a flag's color, never
sees an applicant's underlying credit report, and has no
authority to change a flag's color.
On or about the same day, Mr. Biglin informed Plaintiff that
his background check produced a red flag. Plaintiff stated that
he was taking care of his debt obligations through bankruptcy and
offered to provide his bankruptcy documentation as evidence of
taking responsibility. He provided the documentation to Mr.
Biglin later that day who turned the materials over to Ms. Voska
that night. Ms. Voska represented that she would provide the
materials to Mr. Stein.*fn2 Mr. Biglin told Plaintiff not to
worry because the matter would be resolved.*fn3
Mr. Stein first heard from Ms. Voska regarding Plaintiff's red
flag soon after Ms. Voska received the red flag by email. Without
knowing whom the candidate was, Mr. Stein indicated that a red
flag meant the candidate could not be hired. Later that night,
Sam Chandler, director of recruiting, called Mr. Stein regarding
the red flag. Mr. Stein then reviewed Plaintiff's credit report
for the first time. It showed that Plaintiff had four accounts
120 days past due and four accounts that were sent to collection,
which exceeds the condition necessary to automatically generate a
red flag. It also showed that Plaintiff had filed for bankruptcy.
The next day, Ms. Voska's supervisor, Valerie Kane-Curtis,
contacted Mr. Stein to see if Plaintiff's flag could be changed
to green, but Mr. Stein insisted it remain red. Ms. Kane-Curtis
also contacted Senior Vice President Essi Pourhadi to see if he
could influence the flag's color, but Mr. Pourhadi said he could
not. Mr. Stein testified in deposition that he made the decision to
leave Plaintiff's flag red because he saw nothing that warranted
changing it. Mr. Stein stated that he considered that Plaintiff
had filed for bankruptcy as evidence that he was attempting to
deal with his debts, but he did not take the bankruptcy into
consideration regarding changing the flag's color because it is
not a part of the scoring criteria.
In 2003, the year Plaintiff was terminated, Defendant had 85
applicants who received red flags and none were hired by
Defendant. 23 of the applicants had bankruptcy indicated on their
credit report, and 62 did not.*fn4
Within one week of the return of Plaintiff's red flag, Ms.
Voska terminated Plaintiff from his position. Plaintiff later
received a letter confirming his termination, citing his credit
history as the reason.
STANDARD OF REVIEW
Pursuant to Fed.R.Civ.P. 56(c), a motion for summary
judgment will be granted if the pleadings, depositions, answers
to interrogatories, and admissions on file, together with the
affidavits, if any, show that there is no genuine issue as to any
material fact and that the moving party is entitled to judgment
as a matter of law. See Anderson v. Liberty Lobby, Inc.,
477 U.S. 242, 247 (1986); Celotex Corp. v. Catrett, 477 U.S. 317, 322
(1986). In other words, "summary judgment may be granted only if
there exists no genuine issue of material fact that would permit
a reasonable jury to find for the nonmoving party." Miller v.
Indiana Hosp., 843 F.2d 139, 143 (3d Cir. 1988). All facts and
inferences must be construed in the light most favorable to the
non-moving party. Peters v. Delaware River Port Auth.,
16 F.3d 1346, 1349 (3d Cir. 1994). The judge's function is not to weigh
the evidence and determine the truth of the matter, but to
determine whether there is a genuine issue for trial. See
Anderson, 477 U.S. at 249. "Consequently, the court must ask
whether, on the summary judgment record, reasonable jurors could
find facts that demonstrated, by a preponderance of the evidence,
that the nonmoving party is entitled to a verdict." In re Paoli
R.R. Yard PCB Litigation, 916 F.2d 829, 860 (3d Cir. 1990).
The party seeking summary judgment always bears the initial
burden of production. Celotex Corp., 477 U.S. at 323. This
burden requires the moving party to establish either that there
is no genuine issue of material fact and that the moving party
must prevail as a matter of law, or to demonstrate that the
nonmoving party has not shown the requisite facts relating to an
essential element of an issue on which it bears the burden. Id.
at 322-23. This burden can be "discharged by showing . . . that
there is an absence of evidence to support the nonmoving party's
case." Id. Once the party seeking summary judgment has carried
this initial burden, the burden shifts to the nonmoving party.
To avoid summary judgment, the nonmoving party must then
demonstrate facts supporting each element for which it bears the
burden, thus establishing the existence of a "genuine issue of
material fact" justifying trial. Miller, 843 F.2d at 143;
accord Celotex Corp., 477 U.S. at 324. The nonmoving party
"must do more than simply show that there is some metaphysical doubt as to material facts." Matsushita Elec.
Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586 (1986).
"Where the record taken as a whole could not lead a rational
trier of fact to find for the nonmoving party, there is no
`genuine issue for trial.'" Id. at 587 (quoting First National
Bank of Arizona v. Cities Serv. Co., 391 U.S. 253, 289 (1968)).
Further, summary judgment may be granted if the nonmoving party's
"evidence is merely colorable or is not significantly probative."
Anderson, 477 U.S. at 249-50.
The Bankruptcy Act prohibits a private employer from
terminating a debtor-employee who has filed for bankruptcy, or
from discriminating against him in any way with respect to his
employment. 11 U.S.C. § 525(b). A goal of bankruptcy law is to
permit honest debtors a "fresh start," which is dependant on the
debtor's continued employment. Re McNeely, 82 B.R. 628, 632
(S.D. Ga. 1987). In order to obtain relief, the Bankruptcy Act
requires that any adverse employment action taken against the
employee be "solely because" of the employee's bankruptcy.
11 U.S.C. § 525(b).
The parties disagree as to whether or not Plaintiff was truly
an employee. Assuming for purposes of this motion that Plaintiff
was an employee,*fn5 Plaintiff must show that his bankruptcy
filing provided the "sole reason" for termination. Comeaux v.
Brown & Williamson Tobacco Co., 915 F.2d 1264, 1268-69 (9th Cir.
1990) (holding that "In order to maintain a cause of action under
section 525(b), a plaintiff must show that [his bankruptcy
filing] provided the sole reason for termination"); White v.
Kentuckiana Livestock Market, Inc., 397 F.3d 420, 426 (6th Cir. 2005) (rejecting a liberal
interpretation of the words "solely because" and stating that a
stricter reading is "sounder"); Laracuente v. Chase Manhattan
Bank, 891 F.2d 17, 21-23 (1st Cir. 1989) (holding that "a
fundamental element of a § 525(b) claim is that . . . the filing
of bankruptcy . . . is the sole reason for discriminatory
treatment by an employer"); Everett v. Lake Martin Area United
Way, 46 F.Supp.2d 1233, 1237 (M.D. Ala. 1999) (holding "the term
`solely' as used in the statute means what it says i.e. that
a person seeking relief under [§ 525(b)] for a termination must
prove that the filing of a bankruptcy was the sole reason for
termination"); Stockhouse v. Hines Motor Supply, Inc.,
75 B.R. 83, 85 (D.Wyo. 1987); Sweeney v. Ameritrust Co., N.A.,
113 B.R. 359, 362-363 (Bankr.N.D. Ohio 1990); In re Hopkins,
66 B.R. 828, 831 (Bankr.W.D. Ark. 1986).
Plaintiff produces no direct evidence that Plaintiff's
bankruptcy was the sole reason for Mr. Stein's decision.
Plaintiff provides neither testimony nor documentation that he
was terminated for his bankruptcy and proffers no motive.
Plaintiff produces circumstantial evidence, two years after the
events at issue here, of a single employee who was not bankrupt
and whose red flag was reversed.
Defendant's policy since implementing the background credit
check in 2003 has been to deny employment to those whose credit
reports generate red flags.*fn6 In 2003, of 85 conditional
employees whose credit checks produced red flags, none was hired
by Host and the majority of the applicants (62 of 85) were not
bankrupt. Plaintiff does not dispute the accuracy of his credit
report nor does he dispute that his report would generate a red
flag regardless of his bankruptcy. Plaintiff proffers that Mr.
Biglin (and perhaps Ms. Voska) assured him that the red flag would be reversed. Viewing the evidence in the light most
favorable to Plaintiff, Plaintiff proffers that these two
individuals appreciated Plaintiff's work, wanted Plaintiff to
remain in his position, and tried to convince Mr. Stein to
reverse the flag's color. However, this evidence, without any
evidence that there was any distinction drawn between the
non-bankrupt and bankrupt 85 other employees terminated in 2003,
is insufficient to lead a reasonable jury to conclude that Mr.
Stein refused to reverse the flag's color "solely because"
Plaintiff was bankrupt.
For the reasons stated above, Defendant's motion for summary
judgment is granted. An appropriate order will issue.
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