2010 Decisions

Opinions of the United

States Court of Appeals

for the Third Circuit

12-15-2010

Dean Rea v. Federated Investors

Precedential or Non-Precedential: Precedential

Docket No. 10-1440

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Recommended Citation

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http://digitalcommons.law.villanova.edu/thirdcircuit_2010/10
 PRECEDENTIAL

UNITED STATES COURT OF APPEALS 

FOR THE THIRD CIRCUIT

________

No. 10-1440

_________

DEAN REA, 

 Appellant

v.

FEDERATED INVESTORS

________

On Appeal from the United States District Court

for the Western District of Pennsylvania

(D.C. No. 2-09-cv-01205)

District Judge: Honorable Gary L. Lancaster

_______

Submitted Under Third Circuit LAR 34.1(a)

December 13, 2010

Before: SLOVITER, GREENAWAY, JR., and 

STAPLETON, Circuit Judges.

(Filed: December 15, 2010)

________

Joseph H. Chivers, III

100 First Avenue

Suite 1010

Pittsburgh, PA l5222

Attorney for Appellant

Christian C. Antkowiak

Gregory A. Miller

Buchanan Ingersoll & Rooney

One Oxford Centre

301 Grant Street, 20 Fl.

Pittsburgh, PA 15219

Attorneys for Appellee
2

Tara A. Twomey

National Assoc. of Consumer

Bankruptcy Attorneys

1501 The Almeda

San Jose, CA 95126

Attorney for Amicus Appellant 

______

OPINION OF THE COURT

______

SLOVITER, Circuit Judge.

Appellant Dean Rea filed a complaint in the United 

States District Court of the Western District of Pennsylvania 

alleging that Federated Investors violated 11 U.S.C. § 525(b) 

when it refused to hire Rea because he had previously 

declared bankruptcy. The District Court granted Federated‟s 

motion under Rule 12(b)(6), Fed. R. Civ. P., to dismiss for 

failure to state a claim, holding, in accordance with the 

majority of other courts to have addressed the issue, that § 

525(b) does not create a cause of action against private 

employers who engage in discriminatory hiring. We will 

affirm.

I.

The facts are not in dispute. Rea filed for bankruptcy 

in 2002 and his debts were discharged in 2003. In 2009, Rea

applied for employment with Federated through the 

placement firm Infinity Tech Services. Although it appeared 

after Federated interviewed him that Rea would be hired by 

Federated, Infinity later informed Rea that Federated had 

refused to hire him because of his bankruptcy. 

Section 525 of the Bankruptcy Code, which prohibits 

discrimination against an individual solely because he or she 

is or has been a debtor or bankrupt, provides:

(a) . . . [A] governmental unit may not deny, revoke, 

suspend, or refuse to renew a license, permit, charter, 

franchise, or other similar grant to, condition such a 
3

grant to, discriminate with respect to such a grant 

against, deny employment to, terminate the 

employment of, or discriminate with respect to 

employment against, a person that is or has been a 

debtor under this title or a bankrupt or a debtor under 

the Bankruptcy Act, or another person with whom 

such bankrupt or debtor has been associated, solely 

because such bankrupt or debtor is or has been a 

debtor under this title or a bankrupt or debtor under the 

Bankruptcy Act, has been insolvent before the 

commencement of the case under this title, or during 

the case but before the debtor is granted or denied a 

discharge, or has not paid a debt that is dischargeable 

in the case under this title or that was discharged under 

the Bankruptcy Act.

(b) No private employer may terminate the 

employment of, or discriminate with respect to 

employment against, an individual who is or has been 

a debtor under this title, a debtor or bankrupt under the 

Bankruptcy Act, or an individual associated with such 

debtor or bankrupt, solely because such debtor or 

bankrupt--

(1) is or has been a debtor under this title or a 

debtor or bankrupt under the Bankruptcy Act; 

(2) has been insolvent before the 

commencement of a case under this title or 

during the case but before the grant or denial of 

a discharge; or 

(3) has not paid a debt that is dischargeable in a 

case under this title or that was discharged 

under the Bankruptcy Act. 

Federated moved to dismiss Rea‟s action, arguing that 

§ 525(b) does not prohibit a private employer from refusing 

to hire an individual because that individual has claimed 

bankruptcy. Rea asserted that the Court was required to read 

§ 525(b) broadly to effect its remedial purpose, and that under 

that expansive reading, § 525(b) does include such a 

proscription. 
4

Noting that there was a lack of binding precedent to 

inform its determination, the District Court employed basic 

principles of statutory construction to reach its conclusion. 

As the Supreme Court stated in Russello v. United States, 464 

U.S. 16, 23 (1983), “[w]here Congress includes particular 

language in one section of a statute but omits it in another 

section of the same Act, it is generally presumed that 

Congress acts intentionally and purposefully in the disparate 

inclusion or exclusion.” (internal quotations and brackets 

omitted).

Applying this precept, the District Court found no 

merit in “[Rea]‟s suggestion that the phrase „discriminate 

with respect to employment‟ found in both subsections 525(a) 

and (b) be read to encompass the phrase „deny employment 

to,‟ found only in subsection 525(a).” Rea v. Federated 

Investors, 431 B.R. 18, 23 (W.D. Pa. 2010). It thus 

“decline[d] to impose the prohibition set forth in [§] 525(a) 

upon [§] 525(b), because Congress clearly opted to exclude 

it.” Id. The Court agreed with Federated that “[Rea] lack[ed] 

a statutorily cognizable cause of action under 11 U.S.C. § 

525(b) against [Federated], a private employer, for denying 

[Rea] employment when [Rea] readily admits to having filed 

for bankruptcy and was declared to have been bankrupt.” Id. 

It granted Federated‟s motion to dismiss accordingly. Rea 

appeals.1

II.

Rea contends that the District Court erred as a matter 

of law. We conduct a plenary review of the District Court‟s 

order granting a motion to dismiss for failure to state a claim. 

Gelman v. State Farm Mut. Auto. Ins. Co., 583 F.3d 187, 190 

(3d Cir. 2009). We accept all factual allegations as true, 

construe the Complaint in the light most favorable to Rea, and 

determine whether, under any reasonable reading of the 

Complaint, Rea may be entitled to relief. See id.

 

1

 The District Court had jurisdiction under 28 U.S.C. § 1331, 

and we have jurisdiction under 28 U.S.C. § 1291. 
5

Relying on Leary v. Warnaco, Inc., 251 B.R. 656, 658 

(S.D.N.Y. 2000), Rea asserts that the plain meaning of the 

prohibition in § 525(b) against “discrimination with respect to 

employment” is broad enough to encompass discrimination in 

the denial of employment. In Leary, the District Court was 

not persuaded by the argument that Congress purposefully 

omitted from § 525(b) the phrase “deny employment to,” 

which is contained in § 525(a), instead attributing the 

difference to a “scrivener [who] was more verbose in writing 

§ 525(a).” Id. In reasoning that “[t]he evil being legislated 

against is no different when an employer fires a debtor simply 

for seeking refuge in bankruptcy, as contrasted with refusing 

to hire a person who does so,” the Court concluded that the 

plain meaning of “discrimination with respect to 

employment” in § 525(b) and the “fresh start” policy 

underlying the provision supported the construction that Rea 

now urges us to adopt. Id.

We find Rea‟s reliance on Leary unavailing. Leary

appears to be the only court to conclude that § 525(b) 

prohibits private employers from engaging in discriminatory 

hiring, contrary to overwhelming authority otherwise. See, 

e.g., Burnett v. Stewart Title, Inc., 431 B.R. 894 (S.D. Tex. 

2010); Myers v. TooJay’s Mgmt. Corp., 419 B.R. 51 (M.D. 

Fla. 2009); In re Stinson, 285 B.R. 239 (Bankr. W.D. Va. 

2002); Fiorani v. Caci, 192 B.R. 401 (E.D. Va. 1996); 

Pastore v. Medford Sav. Bank, 186 B.R. 553 (D. Mass. 1995); 

In re Madison Madison Int’l of Ill., 77 B.R. 678 (Bankr. E.D. 

Wis. 1987); see also In re Hopkins, 81 B.R. 491 (Bankr. 

W.D. Ark. 1987) (§ 525(b) proscribes discriminatory conduct 

after offer of full-time employment extended to a part-time 

employee). The decision has been widely criticized because 

it elevates the assumption that a scrivener erred over the plain 

meaning of the statute. See, e.g., Burnett, 431 B.R. at 900-01. 

Where the language of the statute is plain, “the sole 

function of the courts is to enforce it according to its terms.” 

W. Va. Univ. Hosps., Inc. v. Casey, 499 U.S. 83, 99 (1991)

(internal quotations omitted). Although § 525(b) was enacted 

years after § 525(a), its language regarding employment 

discrimination is nearly identical to that used in § 525(a) and 

Congress chose to place the two subsections adjacent to each 

other in the Bankruptcy Code. It is abundantly clear that 
6

Congress modeled § 525(b) off of § 525(a) and that any 

differences between the two are a result of Congress acting 

intentionally and purposefully. As the Supreme Court stated 

in Russello, “[w]here Congress includes particular language 

in one section of a statute but omits it in another section of the 

same Act, it is generally presumed that Congress acts 

intentionally and purposely in the disparate inclusive or 

exclusion.” 464 U.S. at 23 (internal quotations and brackets 

omitted).

Section 525(a) provides that the Government may not 

“deny employment to, terminate the employment of, or 

discriminate with respect to employment against” any person 

that has been bankrupt. (emphasis added). In § 525(b), on 

the other hand, Congress omitted the language prohibiting a 

private employer from “deny[ing] employment to” a person 

that has been bankrupt. As the Supreme Court stated in 

Russello, “[w]e refrain from concluding here that the differing 

language in the two subsections has the same meaning in 

each. We would not presume to ascribe this difference to a 

simple mistake in draftsmanship.” 464 U.S. at 23.

We will not contravene congressional intent by 

implying statutory language that Congress omitted. In re 

Lord Abbett Mut. Funds Fee Litig., 553 F.3d 248, 254 (3d 

Cir. 2009) (“The role of the courts in interpreting a statute is 

to give effect to Congress‟s intent.”) (internal quotations

omitted). Nor will we interpret statutory language in a way 

that would render any part thereof superfluous. United States 

v. Cooper, 396 F.3d 308, 312 (3d Cir. 2005). The District 

Court properly declined Rea‟s request to read the phrase 

“discrimination with respect to employment” in § 525(b) as 

broad enough to encompass discrimination in the denial of 

employment. Congress did not so provide. Neither will we.

III.

For the foregoing reasons, we will affirm the judgment 

of the District Court.