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David v. Wal-Mart Stores, Inc.

United States District Court, N.D. Illinois, Eastern Division

October 24, 2014

GEORGE DAVID, Plaintiff,
v.
WAL-MART STORES, INC., Defendant.

MEMORANDUM OPINION AND ORDER

GARY FEINERMAN, District Judge.

George David alleges in this suit that his former employer, Wal-Mart Stores, Inc., discriminated against him in violation of the Americans with Disabilities Act ("ADA"), 42 U.S.C. § 12101 et seq. Doc. 8. David initiated the suit pro se. Doc. 3. Two attorneys appeared for him about a year later, Docs. 9, 14, but within a few weeks they sought and were given leave to withdraw, Docs. 19, 21. Wal-Mart was served while David was represented and soon moved to dismiss the case under Federal Rule of Civil Procedure 12(b)(1) for lack of standing and under Rule 12(b)(6) on judicial estoppel grounds. Doc. 29. After the motion was fully briefed, the court directed David to contact his bankruptcy trustee and allowed Wal-Mart to depose David. Docs. 40, 43. The presiding judge then recused himself, and the case was reassigned to the undersigned judge, Docs. 46-47, who requested and received supplemental briefs on Wal-Mart's judicial estoppel argument, Docs. 50-52. The motion to dismiss is denied.

Background

Wal-Mart's Rule 12(b)(1) motion accepts as true the facts alleged in the complaint, so its challenge to David's standing is facial rather than factual. See Apex Digital, Inc. v. Sears, Roebuck & Co., 572 F.3d 440, 443-44 (7th Cir. 2009). On a facial challenge to subject matter jurisdiction, as on a Rule 12(b)(6) motion, the court must accept the complaint's well-pleaded factual allegations, with all reasonable inferences drawn in the plaintiff's favor, but not its legal conclusions. See Munson v. Gaetz, 673 F.3d 630, 632 (7th Cir. 2012); Apex Digital, 572 F.3d at 443-44; Patel v. City of Chicago, 383 F.3d 569, 572 (7th Cir. 2004). The court must also consider "documents attached to the complaint, documents that are critical to the complaint and referred to in it, and information that is subject to proper judicial notice, " along with additional facts set forth in David's briefs opposing dismissal, so long as those facts "are consistent with the pleadings." Geinosky v. City of Chicago, 675 F.3d 743, 745 n.1 (7th Cir. 2012). The papers filed and orders entered in David's bankruptcy case are subject to judicial notice. See Kimble v. Donahoe, 511 F.App'x 573, 575 n.2 (7th Cir. 2013); In re Salem, 465 F.3d 767, 771 (7th Cir. 2006). The following facts are set forth as favorably to David as permitted by those materials. See Gomez v. Randle, 680 F.3d 859, 864 (7th Cir. 2012).

In October 2008, David was hired by a Wal-Mart store in Niles, Illinois, "as a temporar[y] employee for the holidays." Doc. 8 at 7. Wal-Mart terminated his employment in December 2008. Ibid. In May 2009, David filed a discrimination charge against Wal-Mart with the Equal Employment Opportunity Commission ("EEOC"). Id. at 8, 11.

On June 8, 2009, less than a month after filing his EEOC charge, David filed for Chapter 7 bankruptcy. Doc. 29-2 at 1; Doc. 29-4 at 1-28; see In re David, No. 09-20765 (N.D. Ill. Bankr.). He handled the bankruptcy case pro se. Doc. 31 at 6. On the bankruptcy petition's schedule of assets, David listed $500 worth of clothing, $3000 worth of furniture and electronics, a car worth $750, and two parakeets worth $35; however, he did not list his EEOC charge under the line item calling for "[o]ther contingent and unliquidated claims of every nature." Doc. 29-4 at 8-12. Nor did David list his EEOC charge in his Statement of Financial Affairs under the line item calling for "all suits and administrative proceedings to which the debtor is or was a party within one year immediately preceding the filing of this bankruptcy case." Doc. 51-2 at 54, 64. As David explains in his briefs in this case, he "was never aware that the EEOC charge was an asset, " and he did not understand that the charge was a "contingent and unliquidated asset[]." Doc. 38 at 2; Doc. 52 at 4-5. David received a bankruptcy discharge on September 24, 2009, and the bankruptcy case was closed. Doc. 29-2 at 2; Doc. 51-2 at 65-67.

David received a right-to-sue letter from the EEOC about two years later, on September 21, 2011. Doc. 8 at 9. He filed this suit on December 13, 2011. Doc. 1. On October 30, 2012, counsel appeared for him and promptly effected service on Wal-Mart. Doc. 9, 13. Less than a month later, his attorneys moved for and were granted leave to withdraw. Docs. 17, 21. As David explains, and as counsel's email to David confirms, the attorneys withdrew due to concerns that his failure to disclose his EEOC charge during the bankruptcy case could negatively impact the viability of this case. Doc. 31 at 8; Doc. 52 at 5-6, 23.

Having learned of the mistake he made during his bankruptcy case, David quickly contacted the bankruptcy trustee and moved to reopen the bankruptcy to file an amended schedule of assets. Doc. 29-2 at 2; Doc. 29-3; Doc. 31 at 9-10; Doc. 38 at 1; Doc. 52 at 6. As David stated in his letter to the trustee: "In June of 2009 I filed for bankruptcy as a Pro Se, and was discharged in September, but didn't know that I had to disclose the EEOC charge." Doc. 31 at 28. And as the motion to reopen stated, David moved to reopen his case "so that he might file an amended Schedule B and C to reflect his discrimination claim." Doc. 29-3 at 2; see also id. at 6 (listing "[a]n employment discrimination 2009 EEOC charge, currently in court to be heard. Case # CV 11 8833" under the line item calling for "[o]ther contingent and unliquidated claims of every nature"). The bankruptcy court granted David's motion and then re-closed the bankruptcy case, and the trustee did not take any action concerning David's claim against Wal-Mart. Doc. 29-2 at 2-3; In re David, No. 09-20765, Docs. 39-40 (Bankr. N.D. Ill.). On June 25, 2013, the trustee wrote a letter to David saying that "as a matter of bankruptcy law 11 U.S.C. § 554(c), I have abandoned the estate's interest in the lawsuit against Walmart." Doc. 41.

Discussion

I. Subject Matter Jurisdiction

Wal-Mart contends that David lacks standing to pursue this case because his ADA claim is an asset of his Chapter 7 bankruptcy estate. Doc. 29 at 4-6. Because standing implicates the court's subject matter jurisdiction, it must be addressed at the threshold. See Spaine v. Cmty. Contacts, Inc., 756 F.3d 542, 546 (7th Cir. 2014); Citizens Against Ruining the Env't v. EPA, 535 F.3d 670, 675 (7th Cir. 2008); McCready v. White, 417 F.3d 700, 702 (7th Cir. 2005).

David's claim against Wal-Mart was an asset of his Chapter 7 bankruptcy estate because his claim existed at the time he filed for bankruptcy. See Matthews v. Potter, 316 F.App'x 518, 521 (7th Cir. 2009) ("Under § 541 of the Bankruptcy Code, all of a debtor's property, including legal claims, become part of the bankruptcy estate at the time the petition is filed."); Becker v. Verizon N., Inc., 2007 WL 1224039, at *1 (7th Cir. Apr. 25, 2007) (holding that a pre-petition ADA claim was part of the bankruptcy estate); Cannon-Stokes v. Potter, 453 F.3d 446, 448 (7th Cir. 2006) ("the estate in bankruptcy, not the debtor, owns all pre-bankruptcy claims"). This is so even though David failed to schedule that claim in his bankruptcy petition. See Kleven v. Walgreen Co., 373 F.App'x 608, 610-11 (7th Cir. 2010); Matthews, 316 F.App'x at 521. Accordingly, only David's bankruptcy trustee, and not David, had standing to pursue that claim, unless and until the trustee abandoned that claim under § 554(c) of the Bankruptcy Code. See Matthews, 316 F.App'x at 521; Cannon-Stokes, 453 F.3d at 448.

Section 554(c) provides that "any property scheduled under section 521(a)(1) of this title not otherwise administered at the time of the closing of a case is abandoned to the debtor and administered for purposes of section 350 of this title." 11 U.S.C. § 554(c). That is precisely what happened here. Although David did not initially schedule his ADA claim against Wal-Mart, the bankruptcy court reopened his case to permit him to schedule the claim, and then quickly re-closed the case without the trustee "otherwise administering" the claim. The trustee thus abandoned the estate's interest in the claim, whose ownership reverted to David. See Spaine, 756 F.3d at 546 ("The bankruptcy case had been reopened and then closed again after the trustee undoubtedly knew about the civil case. That sequence of events indicated that the trustee had abandoned the lawsuit as property of the Chapter 7 estate, so the property reverted to the debtor."); Matthews, 316 F.App'x at 521 ("Matthews's discrimination claims reverted ...


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