Ellis v. United States Department of Homeland Security (In re Ellis)

493 B.R. 818
CourtUnited States Bankruptcy Court, D. Colorado
DecidedMay 13, 2013
DocketBankruptcy Case No. 08-24670-SBB; Adversary Proceeding No. 10-01013-SBB
StatusPublished
Cited by2 cases

This text of 493 B.R. 818 (Ellis v. United States Department of Homeland Security (In re Ellis)) is published on Counsel Stack Legal Research, covering United States Bankruptcy Court, D. Colorado primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Ellis v. United States Department of Homeland Security (In re Ellis), 493 B.R. 818 (Colo. 2013).

Opinion

MEMORANDUM OPINION AND ORDER

Sidney B. Brooks, United States Bankruptcy Judge.

THIS MATTER came before the Court on the trial of Plaintiffs Complaint con[821]*821ducted on February 7 and 8, 2013. The Court, having reviewed the evidence and the within case file, makes the following findings of fact, conclusions of law, and enters the following Order.

I. Introduction

Rolland Nelson Ellis (“Plaintiff’) brings this action against the U.S. Department of Homeland Security (“Defendant” or “DHS”) asserting that Defendant discriminated against him in violation of 11 U.S.C. § 525(a) by temporarily denying him employment as a government contract security worker.

Defendant contends that it is not the proper defendant in the action and that DECO, Inc. (“DECO”), a contractor with Defendant, is responsible for any improper conduct. Moreover, Defendant asserts that the denial of employment was not “solely” based on the Chapter 13 bankruptcy of Plaintiff.

This case is of particular importance in the posW9/ll era. This is especially true with respect to security staff hiring decisions in federal office buildings. This opinion will discuss fundamental determinations and guidelines with respect to the reach of Section 525(a). Moreover, it examines the level of discretion that is permissible by governmental employers in assessing the suitability of a candidate for employment when the issues of security clearance and personal debt serves as a threat to the position of trust placed in an employment candidate.

The Court herein finds that, under the facts and circumstances of this case, Defendant did not violate Section 525(a).

II. Background

On October 31, 2008, Defendant awarded DECO a contract (“Contract”) to perform armed guard services in and around Denver, Colorado.1 DECO currently performs services pursuant to the Contract. Under the Statement of Work provisions of the Contract, all personnel performing work under the Contract must pass a suitability determination conducted by Defendant.2 Contractor personnel are not permitted to perform under the Contract until appropriate suitability determinations have been made.

Section 17.3A of the Statement of Work provides, in relevant part:

DHS shall have and exercise full control over granting, denying, withholding or terminating unescorted access to a Government facility and or sensitive Government information access for Contractor employees, based upon the results of a background investigation. DHS may, as it deems appropriate, authorize and make favorable entry on duty (EOD) decision [sic] based on preliminary security checks. The favorable EOD decision would allow the employees to commence work temporarily prior to the completion of the full investigation. The granting of a favorable EOD decision shall not be considered as assurance that a full employment suitability authorization will follow as a result thereof. The granting of a favorable EOD decision or a full employment suitability determination shall in no way prevent, preclude, or bar the withdrawal or termination of any such access by DHS, at any time during the term of the Contract.3

[822]*822DECO, as the contractor, must ensure that its employees receive a formal suitability determination by the Federal Protective Service (“FPS”), and such determinations must be made in accordance with 5 C.F.R. § 731.202.4

As part of the suitability determination, contractor employees must submit several forms and other information as specified in the Contract. Section 17.4 of the Statement of Work provides that FPS shall have and exercise “full and complete control over granting, denying, withholding, or terminating suitability clearances for [contractor] employees.”5

At all relevant times,6 Plaintiff was employed with DECO as a security guard. DHS Instruction Handbook 121-101-007, Chapter 3, provides, in relevant part, that “moderate risk” positions “have the potential for moderate to serious impact on the integrity and efficiency of Federal service. These positions involve duties that are im[823]*823portant to the agency or program mission with significant program responsibility or delivery or service.”7 Defendant has designated Plaintiffs armed security guard position as a Moderate Risk Public Trust Position under 5 C.F.R. § 731.106(b), and requires a successful suitability determination therefrom.8

On March 10, 2009, Jerry Williams, Defendant’s Chief Security Officer, modified the “bad debt threshold” standard to be used in background investigations for all of Defendant’s employees and contractors by way of a memorandum issued to DHS Component Chief Security Officers.9 Mr. Williams, by and through his directive in [824]*824the memorandum, set a bad debt threshold “of $7,500.00 for all employees/applicants and $1,500.00 for all individuals requesting [top secret] SCI access.”10 “Bad debt,” according to the memorandum, means:

any delinquent debt 120 days past due; however, certain types of indebtedness, regardless of the amount, will be treated as suitability or security concerns in every situation and must be satisfactorily resolved before an affirmative adjudicative decision is made. These are bankruptcies, court-imposed judgments; liens; Federal [sic] debts; defaulted student loans; delinquent child support payments; and delinquent Federal [sic], State [sic], or local taxes.11

As part of the forms that Plaintiff submitted for his background investigation, Plaintiff executed an Authorization for Release of Information; Plaintiff also executed a Disclosure and Authorization Pertaining to Consumer Reports Pursuant to the Fair Credit Reporting Act. On April 4, 2009, FPS made a preliminary suitability decision of “favorable” regarding Plaintiffs background investigation.

On August 28, 2009, Clayton Porter, an FPS personnel security specialist (“Mr. Porter”), notified Plaintiff that during his suitability determination his credit summary report indicated that he owed many debts to various creditors that appeared to be unpaid (“August 28, 2009 Letter”).12 Mr. Porter requested that Plaintiff review the credit summary report and “provide all documents showing payment completion or debt resolution in each of these cases.” Mr. Porter gave Plaintiff until September 17, 2009, to provide the information. Based on the credit summary report, there was $47,837.00 of debt for Plaintiff to mitigate or resolve.

On September 3, 2009, Plaintiff sent a letter to Mr. Porter, which stated:

I am under Federal Bankruptcy Protection for 5 years as per my Chapter 13. I am current with the U.S. Bankruptcy Court at this time. I don’t understand your issue with my Chapter 13. These issues you have raised on my credit report are under Chapter 13.

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Bluebook (online)
493 B.R. 818, Counsel Stack Legal Research, https://law.counselstack.com/opinion/ellis-v-united-states-department-of-homeland-security-in-re-ellis-cob-2013.