Question

Janelle Rederford suffered from systemic lupus erythematosus when she was terminated from US Airways. Rederford brought suit against US Airways under the Americans with Disabilities Act (ADA), alleging that she had been wrongfully terminated because of her condition. Concurrently, US Airways filed a petition for relief under Chapter 11 with the bankruptcy court. Through the bankruptcy proceedings, Rederford was required to request a hearing to establish her personal injury tort, which was covered by US Airways' insurance policy. Rederford did not file any such request with the bankruptcy court. The bankruptcy court accordingly disallowed any litigation pertaining to personal injuries US Airways caused prior to its bankruptcy proceedings. Rederford later filed suit in federal court against US Airways to seek compensation. US Airways filed a motion to dismiss, claiming that the case had been discharged in bankruptcy court. Rederford argued that because she sought an equitable remedy of reinstatement to her position that her case could not have been resolved in bankruptcy court. Do you find Rederford's argument convincing? Why or why not? [Rederford v. US Airways, Inc., 2009 U.S. App. Lexis 27258.]

Answer 1

Solution:-

Do you find Rederford's argument convincing? Why or why not:-

Because money damages are an alternative remedy for reinstatement following wrongful termination, Rederford's claim was within the jurisdiction of the bankruptcy court and so disallowed and discharged. Rederford cannot preserve her right to reinstatement by limiting her recovery to equitable relief. Allowing her to do so would grant her the equivalent of a preference over other creditors, who only had claims for monetary damages or who agreed to accept liquidated damages for their equitable claims, by allowing her to avoid the prioritization of claims established in the bankruptcy proceeding. It would also thwart the finality of that proceeding and U.S. Airways' reorganization plan by enabling her to pursue a suit arising before the discharge from bankruptcy.