Brown v. UAL Corp. (In Re UAL Corp.)

809 F.3d 361, 2015 U.S. App. LEXIS 22913, 61 Bankr. Ct. Dec. (CRR) 263, 99 Empl. Prac. Dec. (CCH) 45,466, 2015 WL 9584144
CourtCourt of Appeals for the Seventh Circuit
DecidedDecember 31, 2015
Docket13-2800
StatusPublished
Cited by3 cases

This text of 809 F.3d 361 (Brown v. UAL Corp. (In Re UAL Corp.)) is published on Counsel Stack Legal Research, covering Court of Appeals for the Seventh Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

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Brown v. UAL Corp. (In Re UAL Corp.), 809 F.3d 361, 2015 U.S. App. LEXIS 22913, 61 Bankr. Ct. Dec. (CRR) 263, 99 Empl. Prac. Dec. (CCH) 45,466, 2015 WL 9584144 (7th Cir. 2015).

Opinion

HAMILTON, Circuit Judge.

Jeffrey Brown, a former flight attendant for United Airlines, appeals from a district court decision upholding the bankruptcy court’s denial of his motion to reopen the company’s Chapter 11 bankruptcy, which was closed in 2009. Brown wanted the bankruptcy case reopened so that he could pursue pre-petition state-law claims of employment discrimination arising from his discharge in 2001. The district court agreed with the bankruptcy judge that Brown’s years of inaction had amounted to an abandonment of those claims. We affirm. The bankruptcy court did not abuse its discretion by denying Brown’s motion to reopen.

Brown worked as a flight attendant for United from 1991 until he was fired in 2001. He suffered from depression and undiagnosed bipolar disorder, which worsened in 1995 and led to discipline for repeated absenteeism and unprofessionalism. By October 2000 his condition had deteriorated to the point that he required psychiatric hospitalization. Although his newly diagnosed bipolar disorder had stabilized with treatment, United still fired him based on his prior misconduct. Brown, through counsel, contested that discharge to the United Airlines Flight Attendants System Board of Adjustment, an arbitration panel comprised of two representatives from the union, two from United, and a neutral chair. In December 2003 the Board of Adjustment ruled that Brown’s bipolar disorder mitigated the seriousness of his misconduct and directed that he be permitted to return to work provided, among other conditions, that his treating physician and a doctor for United could agree that he was medically fit. Brown never complied, though, with the Board of Adjustment’s requirement that he submit to a medical examination, so United did not reinstate him. In March 2005, the Board of Adjustment unanimously affirmed United’s decision.

Meanwhile, UAL Corporation and more than two dozen subsidiaries had filed for Chapter 11 bankruptcy in the Northern District of Illinois in December 2002. In May 2003, a week before the deadline for creditors to submit claims, Brown filed a proof of claim seeking almost $80,000 in back pay. Then in March 2004, the attorney representing Brown before the Board of Adjustment also sued United on behalf of Brown in a California state court. That lawsuit claimed violations of California laws prohibiting workplace discrimination on the basis of disability and sexual orientation, as well as retaliation and termination of employment in violation of California public policy. Brown alleged that these state-law violations began in 1995 and continued into 2004. He asked for $500,000 in lost wages and benefits, plus unspecified amounts for emotional distress and punitive damages. Although the airline deemed the filing of the state-court lawsuit to be a violation of the automatic *363 stay in the bankruptcy case, see 11 U.S.C. § 362, the company opted to remove the suit to the bankruptcy court for the Central District of California and asked not for dismissal but for transfer to the bankruptcy court in Illinois.

In response to the removal, Brown’s lawyer asked the bankruptcy court for the Northern District of Illinois to modify the automatic stay so that Brown could litigate his state-law claims against United in the California state courts. The bankruptcy court denied that request in June 2004, reasoning that Brown’s state lawsuit alleged pre-petition claims that had to be resolved through the bankruptcy case. The bankruptcy judge did modify the stay, however, so that the then-pending arbitration proceedings before the Board of Adjustment could continue to a conclusion. For the next 18 months after that ruling, Brown’s lawyer did nothing more to pursue the case in California or Illinois, even though United’s motion to transfer the lawsuit to Illinois was sitting dormant in the bankruptcy court in California. Finally, in January 2006, the bankruptcy court in California granted United’s motion to transfer Brown’s lawsuit, which that court characterized as an adversary proceeding, to the Northern District of Illinois.

During all of this time, the Chapter 11 case also had proceeded without Brown’s participation. Brown had never filed, before the May 2003 deadline, a new or amended proof of claim identifying specifically his state-law claims or his demands for more than $500,000. Neither did his lawyer, who entered his appearance in the Chicago bankruptcy court in June 2004, object to United’s plan of reorganization. That plan was confirmed in January 2006, just three days after Brown’s lawsuit had been transferred from the bankruptcy court in California to the Northern District of Illinois. The plan discharged “all Proofs of Claim filed by Union-represented employees pertaining to rights collectively bargained for,” and further provided that all such disputes would be resolved in accordance with the relevant collective bargaining agreement, i.e., by arbitration before the Board of Adjustment.

In April 2006, with United’s plan already confirmed, a district judge in the Northern District of Illinois entered a minute order confirming that Brown’s lawsuit, which the judge designated an adversary proceeding with case number 6 C 745, had been referred automatically to the bankruptcy court for disposition. See N.D. Ill. Internal Operating Procedure 15(a). The minute entry directed that the lawsuit be “Remanded to the Bankruptcy Court as related to United Airlines Case No. 02 B 48191,” which the clerk of the district court apparently understood to mean remanded back to the bankruptcy court in California. The clerk’s office mailed the file back to that court instead of forwarding it to the bankruptcy judge handling United’s Chapter 11 case in the Northern District of Illinois.

None of the three courts took any further action in connection with Brown’s adversary proceeding. And neither did Brown. Although the clerk of the district court in the Northern District of Illinois noted on the docket that the case file had been returned to California, Brown and his counsel of record did not call that mistake to anyone’s attention.

Some four years later, after the bankruptcy closed in 2009, Brown hired a new lawyer. That attorney, says Brown, contacted United’s lawyers and was told— incorrectly — that Brown’s claim in the bankruptcy court had already been paid. Brown again let the matter drop. Not until another two and a half years had passed, in January 2013, did he take further action. Only then, through yet anoth *364 er attorney, did he move to reopen United’s bankruptcy so that his claims in the March 2004 California state-court complaint could be litigated. The bankruptcy court in Northern Illinois denied that motion, reasoning that Brown had failed to prosecute his claims by ignoring them for years. The district court affirmed that decision.

On appeal Brown argues that the bankruptcy court should have reopened the Chapter 11 case, primarily because his adversary proceeding was never properly docketed in the bankruptcy court. A bankruptcy court has the power to i’eopen a closed bankruptcy case “to administer assets, to accord relief to the debtor, or for other cause.” 11 U.S.C. § 350(b). This court “reviews a district court’s decision to affirm the decision of the bankruptcy court de novo,

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809 F.3d 361, 2015 U.S. App. LEXIS 22913, 61 Bankr. Ct. Dec. (CRR) 263, 99 Empl. Prac. Dec. (CCH) 45,466, 2015 WL 9584144, Counsel Stack Legal Research, https://law.counselstack.com/opinion/brown-v-ual-corp-in-re-ual-corp-ca7-2015.