It was wrong to throw out a Kauai bus driver’s gender discrimination lawsuit because she didn’t disclose the suit when she filed for bankruptcy protection, a federal appeals court ruled.
The 9th U.S. Circuit Court of Appeals ruled Wednesday that Kathleen Ah Quin’s lawsuit against the County of Kauai Transportation Department must return to U.S. District Court. The lower court applied the wrong legal standard in determining whether her omission was "mistaken" or "inadvertent," the opinion said.
Ah Quin and her attorney declined to comment Friday. Attorneys for the county didn’t immediately respond to requests for comment.
Ah Quin sued the county, claiming her work hours were reduced and she was denied full-time status because of her gender. She told a District Court judge she valued her discrimination lawsuit between $350,000 and $6 million. She was required to disclose the lawsuit as an asset when she filed for Chapter 7 bankruptcy protection after her husband lost his job, because if she prevailed, she could have won enough money to cover her debts of about $75,000.
She later amended her bankruptcy schedules to list the pending lawsuit, the ruling said, but the county moved to dismiss the discrimination case. The District Court granted the county summary judgment, finding that she had a motive to conceal the discrimination claim and keep potential proceeds from her creditors. Ah Quin appealed.
"A key factor is that (Ah Quin) reopened her bankruptcy proceedings and filed amended bankruptcy schedules that properly listed this claim as an asset," said the opinion by Judge Susan Graber. "Also, in her bankruptcy schedules, she listed her lawyer as a creditor for $5,000; she claims that, if she ‘was truly seeking to hide the lawsuit from the bankruptcy court,’ she would have not listed that lawyer."
Ah Quin claimed she didn’t realize she had to disclose the discrimination suit.
A dissenting judge said her omission was deceitful and not simply an innocent mistake. "To the contrary, on this record, it is hard to see anything but a debtor who was caught in a lie and now seeks to avoid the consequences," dissenting Judge Jay Bybee wrote.
Bybee noted that when a bankruptcy judge asked her about any pending claims, she replied there weren’t any.
The two 9th Circuit judges on the majority opinion said she thought the judge was referring to any claims for her husband.