## Facts

- Shani Burnett filed a Chapter 13 bankruptcy petition in September 2006.
- In July 2007, Burnett applied for a job with Stewart Title, Inc., a private employer.
- Stewart Title extended a conditional offer of employment contingent on a drug test and a background check.
- The background check revealed Burnett’s pending bankruptcy case.
- Stewart Title rescinded the conditional offer because of Burnett’s bankruptcy filing.
- Burnett filed an adversary proceeding in her bankruptcy case alleging Stewart Title violated 11 U.S.C. § 525(b) by discriminating against her solely because she was a bankruptcy debtor.

## Issues

1. Whether 11 U.S.C. § 525(b) prohibits a private employer from refusing to hire (or rescinding a conditional offer to) an applicant solely because the applicant is a bankruptcy debtor.

## Decision

- The Fifth Circuit affirmed dismissal for failure to state a claim.
- The court held § 525(b) does not prohibit private employers from refusing to hire or rescinding an offer based solely on an applicant’s bankruptcy status.
- The court relied on the textual contrast between § 525(a) (governmental units), which expressly includes “deny employment to,” and § 525(b) (private employers), which does not.
- The court rejected the argument that “discriminate with respect to employment” in § 525(b) includes hiring decisions, reading the phrase in context as addressing discrimination within an existing employment relationship.

## Legal Principles

- Statutory text controls: when Congress includes language in one subsection and omits it in another, courts generally presume the omission was intentional.
- Under 11 U.S.C. § 525(a), governmental employers are expressly barred from denying employment based on bankruptcy.
- Under 11 U.S.C. § 525(b), private employers are barred from terminating employment or discriminating with respect to employment solely because of bankruptcy, but the provision does not extend to refusal-to-hire decisions.
- Courts will not add a prohibition Congress did not enact, even if broader coverage might align with the Bankruptcy Code’s “fresh start” policy.

## Conclusion

The Fifth Circuit held that § 525(b) provides limited protection against bankruptcy-based discrimination by private employers and does not reach a private employer’s decision to refuse to hire or rescind an offer solely because an applicant filed for bankruptcy.


Burnett v. Stewart Title, Inc. (In re Burnett), 635 F.3d 169 (5th Cir. 2011)