[00:00:09] Speaker 02:
The next case will hold argument in this morning is number 2216463, Bercy versus City of Phoenix.

[00:00:56] Speaker 02:
Mr. Montoya.

[00:01:00] Speaker 04:
Good morning, and may it please the Court.

[00:01:03] Speaker 04:
This is an interesting case, but it's a simple case as a matter of bankruptcy law.

[00:01:11] Speaker 04:
This Court's well-established authority holds that a bankruptcy petitioner's assets and liabilities

[00:01:27] Speaker 04:
are in the control of the bankruptcy estate, specifically the bankruptcy trustee.

[00:01:34] Speaker 04:
However, assets and liabilities of the debtor that arise subsequent to the filing of a bankruptcy petition are the debtors.

[00:01:47] Speaker 02:
Does Ms.

[00:01:47] Speaker 02:
Bursey have a stand-alone claim for a hostile work environment?

[00:01:51] Speaker 04:
Yes, she does.

[00:01:52] Speaker 04:
Post-petition, yes.

[00:01:54] Speaker 04:
Why?

[00:01:56] Speaker 04:
The discriminatory harassment she suffered on the job at the City of Phoenix post-petition was sufficiently severe and pervasive to constitute a hostile work environment under this court's case law.

[00:02:15] Speaker 00:
But that wasn't the case she filed.

[00:02:17] Speaker 04:
Pardon me?

[00:02:18] Speaker 00:
The case that she filed was included pre-petition and post-petition.

[00:02:24] Speaker 04:
That is true, but nevertheless, even if you were to ignore what transpired pre-petition, what transpired post-petition was sufficiently actionable.

[00:02:39] Speaker 03:
Moreover... Is this a divisible cause of action, Mr. Montoya?

[00:02:42] Speaker 03:
Yes, it is.

[00:02:43] Speaker 03:
But see, I'm having trouble with that because, and I know it occurs in the statute of limitations context, but the Morgan case at least suggests that it's the course

[00:02:54] Speaker 03:
of conduct that gives rise to the hostile work environment claim.

[00:02:59] Speaker 04:
In some cases, it is.

[00:03:01] Speaker 03:
And here, the great bulk of the bad conduct, at least in terms of the number of incidents that you allege, occurred before.

[00:03:09] Speaker 04:
That's incorrect, Your Honor.

[00:03:10] Speaker 03:
Don't you only allege two incidents afterwards?

[00:03:13] Speaker 04:
No, Your Honor.

[00:03:14] Speaker 04:
Even though there are two specific incidents that occurred thereafter, where all, you know, I guess stupid is a black thing, then the use of the N-word, those were two significant, severe incidents that transpired after.

[00:03:29] Speaker 04:
But there were other similar incidents that is undisputed because the city's EOD department investigated and found that, that all those happened afterwards.

[00:03:40] Speaker 03:
But moreover... Is that into complaint?

[00:03:42] Speaker 03:
Pardon me?

[00:03:43] Speaker 03:
Is that in the complaint?

[00:03:44] Speaker 04:
No, Your Honor.

[00:03:46] Speaker 04:
However, it is in the record, and this is not a question of what's in the complaint.

[00:03:51] Speaker 04:
This is a summary judgment case, so it's a question of what's in the record at summary judgment, and that is definitely in the record at summary judgment.

[00:04:00] Speaker 04:
And moreover, Your Honor, it doesn't

[00:04:07] Speaker 04:
This court's opinion in O'Loughlin, the bankruptcy case, O'Loughlin versus County of Orange, Judge Fletcher, the second Judge Fletcher of this court said, hey, listen, even if it's a continuous pattern, damages are in a hostile work environment case, even if there's a continuous pattern that starts pre-petition,

[00:04:38] Speaker 04:
If it continues post-petition, it's still actionable post-petition.

[00:04:44] Speaker 04:
You just don't get any damages for what transpired pre-petition.

[00:04:50] Speaker 04:
And, Your Honor, the only case that the defendants cite in their favor is actually a bankruptcy case out of the Western District of New York, and that actually holds against them.

[00:05:05] Speaker 04:
In that case,

[00:05:06] Speaker 04:
because the constructive discharge claim arose post-petition.

[00:05:14] Speaker 04:
Even though some of the reasons that gave rise to the constructive discharge, the intolerable work, a persistent pattern of discriminatory comments transpired pre-petition, the bankruptcy court in the case they rely on actually said,

[00:05:33] Speaker 04:
the constructive discharge case, because it primarily arose post-petition, was actionable.

[00:05:39] Speaker 02:
I guess the one possible distinction here is that your client is bringing a hostile work environment claim, and these other cases involve cases that aren't controlled by Morgan that involve other discrete acts.

[00:06:00] Speaker 02:
And you don't contest that.

[00:06:03] Speaker 02:
Your sole claim here under Title VII is a hostile work environment claim.

[00:06:07] Speaker 04:
Well, it's under Section 1981-2, Your Honor.

[00:06:13] Speaker 04:
But yes, I do.

[00:06:14] Speaker 04:
And once again, Your Honor, if you look at what happened, pretend there was no discriminatory misconduct pre-petition and only look at what transpired post-petition and ask yourself, is that actionable?

[00:06:32] Speaker 04:
And if it is actionable, Your Honor, then she does have a claim that's entirely her claim because it arose post-petition.

[00:06:41] Speaker 02:
But isn't her claim that she filed a hostile work environment claim that covers the entire course of conduct?

[00:06:47] Speaker 04:
Well, yes, Your Honor.

[00:06:49] Speaker 04:
However, once the bankruptcy court intervened, then it became necessary to ask, was there an actionable claim post-petition?

[00:06:58] Speaker 02:
But again, back to Judge Hurwitz's question, where we are

[00:07:03] Speaker 02:
another court held, notwithstanding Morgan, that a hostile work environment claim is divisible in the way that you suggest.

[00:07:09] Speaker 04:
Many times, Your Honor, because remember... You give me one?

[00:07:14] Speaker 04:
Yeah.

[00:07:15] Speaker 04:
For example, I'll give you the first case, Merritter versus savings... Merritter savings bank versus Vincent.

[00:07:24] Speaker 04:
Yes, Your Honor.

[00:07:25] Speaker 04:
Thank you.

[00:07:26] Speaker 04:
There's a long established...

[00:07:28] Speaker 04:
discriminatory harassment in order to be actionable only has to be severe or pervasive.

[00:07:37] Speaker 04:
In fact, this court has repeatedly said one extreme act of discrimination alone can give rise to a hostile environment.

[00:07:47] Speaker 04:
So the whole notion that, oh, there has to be a chain of misconduct, a series of discriminatory acts is not true.

[00:07:55] Speaker 04:
It's never been true.

[00:07:56] Speaker 04:
It's never been true.

[00:07:58] Speaker 04:
under Supreme Court precedent or this court's precedent, if something is severe or pervasive subsequent to filing of a petition for bankruptcy, then it is independently actionable and it is the claim of the debtor, not the bankruptcy estate.

[00:08:21] Speaker 04:
And if I could, I'd like to save some time.

[00:08:25] Speaker 04:
Yes, Your Honor.

[00:08:27] Speaker 00:
It doesn't matter.

[00:08:28] Speaker 00:
that the complaint that you're actually trying to litigate.

[00:08:32] Speaker 00:
Maybe you could file a different case, but the one that you actually are litigating or want to litigate encompasses the pre-petition and post-petition period.

[00:08:43] Speaker 04:
matter, Your Honor, because oftentimes in the context of summary judgment, as Your Honors were pointing out in the prior case, some elements of the claim are thrown out, but other elements of the claim survive.

[00:08:58] Speaker 04:
So it doesn't really matter how we plead it.

[00:09:02] Speaker 00:
What you plead was one continuing violation.

[00:09:05] Speaker 04:
Well, we didn't use that terminology.

[00:09:07] Speaker 04:
We just talked about what happened.

[00:09:09] Speaker 03:
There were no separate counts.

[00:09:11] Speaker 04:
No, there were not.

[00:09:12] Speaker 02:
And the entire complaint from the state's position has been settled pre-end post.

[00:09:18] Speaker 04:
Well, that remains to be seen.

[00:09:20] Speaker 04:
They settled, but as far as the entire complaint, Your Honor, that's actually for this court to decide, not for the parties to decide in the context of a settlement.

[00:09:31] Speaker 03:
Well, the settlement, I take it as I read, and I know you want to save some time, and I'm sure Judge Johnston will give you a minute or two, but as I understand it, the settlement agreement was approved, conditioned on a court finding that the trustee

[00:09:47] Speaker 03:
was settling the estate.

[00:09:49] Speaker 03:
Settlement agreement does away with all claims, does it not?

[00:09:52] Speaker 04:
No, the district court did away with all claims, Your Honor.

[00:09:55] Speaker 03:
No, I understand.

[00:09:56] Speaker 03:
Well, the settlement agreement does, but it said, but the bankruptcy court said, but I'm approving it, conditioned on you district court saying that these were the property of the estate, and the trustee had the ability to settle them.

[00:10:10] Speaker 03:
So one way or the other, however we decide this, we'll decide whether the claims are settled or not, right?

[00:10:15] Speaker 04:
That is correct, Your Honor.

[00:10:17] Speaker 03:
Can you spend just a few seconds on judicial estoppel?

[00:10:21] Speaker 03:
Yes, Your Honor.

[00:10:25] Speaker 03:
It's clear to me that several of the elements of the judicial estoppel are present here.

[00:10:29] Speaker 03:
Your client made two inconsistent statements in court proceedings.

[00:10:34] Speaker 03:
One of them in the bankruptcy court, I have no employment related claims.

[00:10:38] Speaker 03:
One of them in the district court, yes I do.

[00:10:41] Speaker 03:
What I'm trying to figure out is

[00:10:43] Speaker 03:
Is that enough, or must there be something more here?

[00:10:48] Speaker 04:
No.

[00:10:48] Speaker 04:
Your Honor, there's a dramatic example of why the district court is wrong in that regard.

[00:10:53] Speaker 04:
It's this case opinion in Aquinn versus County of Kauai.

[00:11:00] Speaker 04:
And in that case, a plaintiff had a pending discrimination lawsuit

[00:11:07] Speaker 04:
Then she filed for bankruptcy and she did not list her pending federal discrimination case in her bankruptcy.

[00:11:18] Speaker 04:
So the trial court threw the case out based upon the doctrine of judicial estoppel saying, hey, listen, you know, you forgot to list this lawsuit.

[00:11:28] Speaker 04:
But nevertheless, this court said because it was inadvertent,

[00:11:32] Speaker 04:
and not in bad faith, the doctrine of judicial estoppel did not apply.

[00:11:37] Speaker 04:
Let's look at what happened in this case.

[00:11:39] Speaker 04:
Yes, Your Honor.

[00:11:40] Speaker 02:
Well, I think Anna was corrected.

[00:11:42] Speaker 02:
Has your client, after all this time, ever amended the bankruptcy schedule?

[00:11:49] Speaker 04:
She didn't have to, Your Honor.

[00:11:50] Speaker 04:
It became moot because the trustee intervened in the case and took...

[00:11:56] Speaker 04:
and attempted to take over the case and successfully settled the case.

[00:12:01] Speaker 04:
And because the trustee intervened and resolved the case, there was no need to amend anything.

[00:12:08] Speaker 04:
The issue of amending it became moot.

[00:12:10] Speaker 00:
Well, except that you're now claiming that it didn't.

[00:12:13] Speaker 04:
Well, at least in the district at the time, it seemed moot because the trustee was there, the trustee knew all about it, and the trustee had taken over the case.

[00:12:27] Speaker 02:
Thank you, Mr. Montoya.

[00:12:28] Speaker 02:
We'll give you a couple of minutes on rebuttal.

[00:12:29] Speaker 04:
Thank you, Your Honor.

[00:12:35] Speaker 02:
Ms.

[00:12:35] Speaker 02:
Burns.

[00:12:43] Speaker 01:
Good morning, Your Honors, and may it please the court.

[00:12:44] Speaker 01:
My name is Christine Burns, and I represent the City of Phoenix.

[00:12:48] Speaker 01:
I'd like to start, if I may, by speaking briefly about what this case is not about and then what this case really is about on appeal.

[00:12:57] Speaker 01:
Despite Ms.

[00:12:58] Speaker 01:
Bursey's arguments in her reply brief and today regarding the element of severe and pervasive in the Meritor Savings Bank case, this case and this appeal is not about whether or not Ms.

[00:13:10] Speaker 01:
Bursey has alleged sufficient facts to create a fact dispute as to whether or not the conduct was sufficiently severe and pervasive.

[00:13:18] Speaker 01:
That is not the grounds upon which the city moves for summary judgment.

[00:13:24] Speaker 01:
And that is not the grounds upon which the district court granted summary judgment.

[00:13:28] Speaker 00:
We know that.

[00:13:29] Speaker 00:
I think we know that.

[00:13:30] Speaker 01:
Yes.

[00:13:31] Speaker 01:
Thank you, Your Honor.

[00:13:32] Speaker 01:
The only issues are really whether the district court erred in applying its standing analysis or in the alternative, whether the district court abused its discretion in determining that the claim should be judicially stopped because Ms.

[00:13:44] Speaker 01:
Bursey concealed her claim from the bankruptcy court and then achieved a $325,000 discharge.

[00:13:49] Speaker 00:
So why isn't the O'Loughlin case?

[00:13:53] Speaker 00:
pretty on point and in support of the plaintiff.

[00:13:57] Speaker 01:
Thank you, Your Honor.

[00:13:59] Speaker 01:
Yes, O'Loughlin is completely inapposite from this case.

[00:14:01] Speaker 03:
What's not completely inapposite?

[00:14:03] Speaker 03:
It may not distinguish it for us, but it's not on its face completely inapposite.

[00:14:09] Speaker 01:
Sure, Your Honor.

[00:14:09] Speaker 01:
The distinction is, in the case in O'Loughlin, there was no issue of standing.

[00:14:15] Speaker 01:
there was no issue about whether a claim could be split into two claims.

[00:14:19] Speaker 03:
I was going to ask about that.

[00:14:21] Speaker 03:
It seems to be assumed in O'Loughlin that the post-petition claims belonged to a plaintiff.

[00:14:30] Speaker 01:
The fundamental difference between O'Loughlin and Bursey is that O'Loughlin was a Chapter 11 case where the debtor was the defendant.

[00:14:39] Speaker 01:
The claim in the O'Loughlin case was actually

[00:14:45] Speaker 01:
The plaintiff for that claim was a creditor.

[00:14:49] Speaker 03:
The claim was a debt.

[00:14:51] Speaker 03:
Help me with this.

[00:14:52] Speaker 03:
When I read the case, it seems to be not being litigated by the debtor outside of bankruptcy.

[00:15:01] Speaker 01:
Exactly.

[00:15:02] Speaker 03:
Had this claim become the property of a creditor?

[00:15:06] Speaker 03:
Why was the creditor of the plaintiff in the case?

[00:15:09] Speaker 01:
Yes.

[00:15:09] Speaker 01:
There's no question in the O'Loughlin case about whether or not that claim was property of the bankruptcy estate.

[00:15:15] Speaker 01:
The debtor was the defendant in the O'Loughlin case.

[00:15:19] Speaker 01:
Therefore, the plaintiff in this case, it was the County of Orange who employed the plaintiff.

[00:15:24] Speaker 03:
Right.

[00:15:24] Speaker 03:
So why wasn't the claim of the plaintiff, the creditor in that case, discharged by the bankruptcy?

[00:15:31] Speaker 01:
It was.

[00:15:32] Speaker 01:
The claim of the creditor... No, only part of it was.

[00:15:33] Speaker 01:
That's what the case felt.

[00:15:35] Speaker 01:
That's right.

[00:15:36] Speaker 01:
The claim of the creditor, that case analyzed whether or not the claim from the plaintiff was a debt.

[00:15:44] Speaker 01:
It was a debt that was dischargeable in the bankruptcy.

[00:15:47] Speaker 01:
And the court determined that the claim that was a part of the bankruptcy was dischargeable as a debt.

[00:15:55] Speaker 01:
The portion of the claim that arose after the bankruptcy had been completed

[00:16:03] Speaker 01:
could continue for that creditor.

[00:16:06] Speaker 01:
Compare it to a credit card.

[00:16:07] Speaker 03:
Well, so why doesn't that tell us, at least in a different factual context, to be sure that sometimes claims can be split to stuff that happened pre-petition and the stuff that happens post-petition?

[00:16:20] Speaker 02:
Could it be that it's a different statutory context as well?

[00:16:23] Speaker 01:
It's a completely different statutory context.

[00:16:25] Speaker 01:
It's Chapter 11 versus Chapter 7.

[00:16:27] Speaker 01:
There's no question of standing.

[00:16:29] Speaker 01:
There's no question of who owns the asset.

[00:16:31] Speaker 03:
Well, but the standing issue here

[00:16:33] Speaker 03:
is really the same one as you pose, which is that the standing issue is whether or not it was discharged in the bankruptcy.

[00:16:39] Speaker 03:
Correct.

[00:16:41] Speaker 03:
Because if it was part property of the bankruptcy estate, Ms.

[00:16:45] Speaker 03:
Bursey has no standing.

[00:16:47] Speaker 03:
But it's really the same question.

[00:16:50] Speaker 03:
So in that case, the post-petition claim was discharged, you're saying.

[00:16:57] Speaker 01:
In the O'Loughlin case, the claim was a debt.

[00:17:02] Speaker 01:
It was a debt that was dischargeable in the bankruptcy.

[00:17:06] Speaker 01:
In our case, the claim is an asset.

[00:17:09] Speaker 01:
It is an asset of the bankruptcy court.

[00:17:12] Speaker 00:
But isn't the question still, in both instances, what was discharged in bankruptcy or dischargeable in bankruptcy, and what was not?

[00:17:22] Speaker 00:
And O'Loughlin seems to say that you can take a continuing violation, because they specifically say it was a continuing violation, and split it up.

[00:17:32] Speaker 00:
depending on, so that the damages for the later period are not discharged.

[00:17:40] Speaker 00:
If they're not discharged, then they're not the property of the bankruptcy estate in a chapter 7.

[00:17:50] Speaker 01:
No, Your Honor.

[00:17:51] Speaker 01:
And the reason is this.

[00:17:52] Speaker 01:
In O'Loughlin, the claim was not a asset.

[00:17:58] Speaker 01:
In our claim, it is.

[00:17:59] Speaker 01:
So therefore, it is not dischargeable in the Chapter 7 case.

[00:18:04] Speaker 01:
Only the creditor's claims are dischargeable in Ms.

[00:18:06] Speaker 01:
Bursey's bankruptcy.

[00:18:08] Speaker 01:
The asset is property of the bankruptcy estate.

[00:18:12] Speaker 01:
So it is the property of the estate to distribute to the creditors, whereas in O'Loughlin, it was the creditor's claim that the creditor was trying to obtain.

[00:18:24] Speaker 01:
from the assets of the bankruptcy.

[00:18:26] Speaker 01:
And also, sorry, go ahead.

[00:18:28] Speaker 02:
Well, continuing on this, I guess I'd be interested in trying to, in your distinction of O'Loughlin, there's the sufficiently rooted policy and the fresh start policy for the debtor.

[00:18:41] Speaker 02:
Where does that come in, in this distinction, if any?

[00:18:45] Speaker 01:
That doesn't come into play in the O'Loughlin case, Your Honor, because if you compare the O'Loughlin creditor situation to, say, a credit card,

[00:18:53] Speaker 01:
You know, the debtor defendant has racked up some credit card debt and the creditor loses their claim, right, because it becomes discharged in the bankruptcy.

[00:19:04] Speaker 01:
But then if the debtor continues to rack up credit card fees after being discharged in bankruptcy,

[00:19:11] Speaker 01:
He is going to be responsible for that debt because the bankruptcy is long behind him and he can no longer shield himself from liability because of the bankruptcy it's closed.

[00:19:25] Speaker 01:
Also in O'Loughlin, the claim was never split.

[00:19:28] Speaker 01:
There was no claim that was divided in two.

[00:19:31] Speaker 01:
The claim that existed that was discharged as part of the bankruptcy went away.

[00:19:38] Speaker 01:
It was discharged.

[00:19:39] Speaker 03:
What you're saying is a LUFF one stands for the principle that when you have a claim against a bankrupt, to use the old term that we used to use, a claim against a bankrupt that arises post-petition, that claim is not discharged, right?

[00:20:01] Speaker 01:
That's true.

[00:20:02] Speaker 01:
If it arises post-petition, correct.

[00:20:04] Speaker 03:
Tell me what that means when Mr. Martoya says,

[00:20:09] Speaker 03:
I'm not a claimant against the bankrupt.

[00:20:12] Speaker 03:
I am the bankrupt.

[00:20:14] Speaker 03:
And I have a claim that arose post-petition.

[00:20:18] Speaker 03:
Does O'Loughlin have any relevance to that?

[00:20:20] Speaker 01:
It does not, Your Honor.

[00:20:21] Speaker 01:
That's completely the lifetime Morgan.

[00:20:23] Speaker 03:
So let's again go back, and maybe it's factual in this case.

[00:20:29] Speaker 03:
You do agree that if a city employee had driven a car into Ms.

[00:20:34] Speaker 03:
Bursey pre-petition,

[00:20:38] Speaker 03:
And then the same city employee drove a car into her post-petition that her claim for damages arising from those two things, one would be discharged and the other would not.

[00:20:49] Speaker 01:
I would agree with that, Your Honor.

[00:20:50] Speaker 01:
Those are two discrete acts.

[00:20:51] Speaker 03:
Well, they're two different acts.

[00:20:52] Speaker 01:
Separate claims.

[00:20:53] Speaker 03:
Yeah.

[00:20:54] Speaker 03:
They may be the same acts.

[00:20:55] Speaker 03:
In other words, it may be the same stupid employee who says, I hate her and I'm going to hit her.

[00:21:00] Speaker 03:
So why is this different?

[00:21:02] Speaker 01:
Because under Morgan and under this court's jurisprudence under Christian v. Emqua Bank,

[00:21:07] Speaker 01:
A hostile work environment claim constitutes one unlawful employment practice.

[00:21:14] Speaker 00:
Suppose that she had filed a claim which only began post-petition, even though there were earlier ones, but she just didn't allege them in her complaint.

[00:21:28] Speaker 00:
She said the harassment is, my pattern of harassment is these

[00:21:36] Speaker 00:
things that all of them happen post-petition, but even though there were earlier ones, and even though she might presumably, as a matter of evidence, be able to bring them up in litigating the later ones, would that be a problem?

[00:21:52] Speaker 01:
I think under Morgan, Your Honor, if she had discrete acts of discrimination that were separate acts, then they could be- No, no, I'm not talking discrete acts of discrimination.

[00:22:00] Speaker 00:
I'm talking about a harassment claim.

[00:22:02] Speaker 00:
Okay.

[00:22:04] Speaker 00:
A hostile environment harassment claim.

[00:22:07] Speaker 00:
but the incidents alleged were post-petition, even though there were also other ones pre-petition.

[00:22:15] Speaker 01:
I think in that case, Your Honor, you would look to the law of whether or not the claim is sufficiently rooted in the pre-bankruptcy past and make a determination as to whether or not the claim has accrued.

[00:22:25] Speaker 01:
And the claim has accrued when

[00:22:28] Speaker 01:
facts necessary for the underlying cause of action have occurred.

[00:22:32] Speaker 00:
And in this case, there's no doubt.

[00:22:34] Speaker 00:
So she can't shape the complaint to focus on later incidents, even though there were also earlier incidents?

[00:22:40] Speaker 01:
Absolutely not, Your Honor.

[00:22:41] Speaker 01:
That has never happened.

[00:22:43] Speaker 01:
That can't be right.

[00:22:43] Speaker 01:
Where a case has been determined into separate different claims because the plaintiff just chose to ignore certain facts.

[00:22:51] Speaker 01:
And of course, in this case, it's not a coincidence that Ms.

[00:22:53] Speaker 01:
Bursey would like to ignore or pretend, as she said to you earlier today,

[00:22:58] Speaker 01:
that the prior allegations and conduct didn't happen, because that is the conduct and allegations that required her to report this on her bankruptcy paperwork.

[00:23:06] Speaker 01:
So, of course, she wants to ignore those, but she cannot.

[00:23:08] Speaker 03:
Can you deal with that?

[00:23:09] Speaker 03:
I know you're over your time, but can you deal with the judicial estoppel issue briefly?

[00:23:14] Speaker 03:
And let me tell you what the part I'm having trouble with on judicial estoppel.

[00:23:18] Speaker 03:
Yes.

[00:23:18] Speaker 03:
I don't doubt that there's two inconsistent statements here made to a court.

[00:23:22] Speaker 03:
The bankruptcy court is part of the district court, so that's not a problem.

[00:23:27] Speaker 03:
I'm trying to figure out who was prejudiced by the inconsistent statements.

[00:23:34] Speaker 03:
I could see a creditor claiming they were prejudiced by them, but how was the city prejudiced?

[00:23:41] Speaker 01:
Well, the city was prejudiced.

[00:23:42] Speaker 01:
Your Honor, the question in the third element of a judicial estoppel analysis is whether or not the

[00:23:53] Speaker 01:
First of all, of course, whether there's inconsistent statements, whether the court accepted the previous representation.

[00:23:57] Speaker 01:
Right.

[00:23:58] Speaker 03:
And I'm assuming both of those to be established.

[00:24:00] Speaker 03:
Get to the prejudice.

[00:24:00] Speaker 01:
Of course.

[00:24:01] Speaker 01:
And the third is, did the plaintiff benefit unfairly as a result of the inconsistent representation?

[00:24:06] Speaker 03:
So how did this plaintiff benefit by that?

[00:24:10] Speaker 01:
Because she was discharged from $325,000 in debt.

[00:24:15] Speaker 03:
And the case law is clear.

[00:24:17] Speaker 03:
So the benefit doesn't have to relate to the city at all.

[00:24:20] Speaker 01:
No, Your Honor.

[00:24:21] Speaker 01:
The benefit has to be an unfair benefit to the plaintiff, which under the Hamilton case, under the Ninth Circuit, as well as under the New Hampshire versus Maine from the United States.

[00:24:31] Speaker 03:
Okay, so how did she benefit if, how did she benefit if in the end the trustee captured?

[00:24:38] Speaker 03:
Well, I guess the answer is the settlement goes away.

[00:24:40] Speaker 03:
She may have benefited, but, but, but at least for the pre-pre-pre petition claims that the trustee has now gotten some recompense for that.

[00:24:48] Speaker 01:
Yes, Your Honor.

[00:24:49] Speaker 01:
Well, the benefit is, and the case law is clear, that obtaining an automatic stay and a discharge in bankruptcy is sufficient to satisfy that element.

[00:24:58] Speaker 01:
That is the benefit that the debtor obtains.

[00:25:01] Speaker 01:
They lose their claim because the claim becomes property of the bankruptcy estate so that the bankruptcy estate can use it to pay the debt.

[00:25:08] Speaker 03:
So you don't have to – and I'm taking you over, but I'm just – the city doesn't have to have been misled.

[00:25:13] Speaker 03:
It wasn't a creditor.

[00:25:15] Speaker 03:
It wasn't part of the bankruptcy, right?

[00:25:16] Speaker 01:
Exactly, Your Honor.

[00:25:17] Speaker 01:
It's about whether the bankruptcy estate obtained the claim.

[00:25:19] Speaker 00:
But also, with regard to judicial estoppel, we do have case law that says that the district court can, that it's an equitable doctrine, and that if the mistake was inadvertent, it doesn't need to be, there won't be judicial estoppel.

[00:25:35] Speaker 00:
And in this instance, I mean, is there any evidence that she had ever determined that she was going to make a claim?

[00:25:42] Speaker 00:
I understand that that may not matter.

[00:25:45] Speaker 00:
in terms of what she thought, whether she thought she had a claim or whether she had even considered whether she had a claim.

[00:25:51] Speaker 01:
Absolutely, Your Honor.

[00:25:52] Speaker 01:
Under this case, and it's set forth in the briefs and it was the foundation of Judge Bolton's decision,

[00:25:58] Speaker 01:
Ms.

[00:25:58] Speaker 01:
Bursey testified under oath that at the time that she filed for her bankruptcy, she knew the conduct was wrong.

[00:26:05] Speaker 01:
She knew it was a violation of the city's policies.

[00:26:07] Speaker 01:
She knew it was a violation of the law.

[00:26:09] Speaker 01:
And she testified that the very reason that she filed for bankruptcy was because of the hostile work environment at the city.

[00:26:17] Speaker 00:
Under those facts, she could not possibly.

[00:26:19] Speaker 00:
But if she had never said to herself, and I'm going to do something about this at that point,

[00:26:25] Speaker 01:
She had done something about it.

[00:26:27] Speaker 01:
She had complained twice under her claims.

[00:26:29] Speaker 00:
Right.

[00:26:29] Speaker 00:
And that's all she had done.

[00:26:30] Speaker 00:
She had not filed with the EEOC.

[00:26:31] Speaker 00:
She had not filed with the state agency.

[00:26:34] Speaker 00:
She had not filed her lawsuit.

[00:26:35] Speaker 00:
That's correct, Your Honor.

[00:26:36] Speaker 01:
Go ahead.

[00:26:37] Speaker 01:
And this court's decision in Aachen makes clear that the filing of an EEOC charge and those other requirements for bringing a claim are not necessary.

[00:26:47] Speaker 01:
All that matters is whether or not the claim accrues.

[00:26:50] Speaker 00:
Well, I understand that as to whether she had the obligation, but not as to the inadvertence.

[00:26:55] Speaker 00:
In other words, the question is whether, in the circumstances in which she had done nothing over it, what would negate the notion that she just, you know, didn't think about this because she wasn't doing anything about it?

[00:27:11] Speaker 01:
Yes, Your Honor.

[00:27:12] Speaker 01:
The Aukin case examines that context and that framework for examining that question, the mistaken inadvertence exception, and Judge Bolton followed it precisely.

[00:27:22] Speaker 01:
by analyzing first that she did not ever amend her bankruptcy schedules to identify this claim and therefore there's a presumption of deceit.

[00:27:30] Speaker 01:
But even had she done that, the district court goes through the analysis.

[00:27:33] Speaker 00:
But it's not like nobody knew about it.

[00:27:36] Speaker 00:
Everybody knew about it because I gather what she did or what Laura did was go to the trustee and the trustee then went into intervened.

[00:27:46] Speaker 00:
the result was the same in terms of whether it was known.

[00:27:51] Speaker 01:
Well, the case law actually says, Your Honor, that just an email is insufficient, but regardless, Judge Bolton went through the second part of the analysis and specifically analyzed whether the mistaken inadvertence exception applied from a broader perspective and determined that there was no possible way that it could have under the facts and circumstances of this case given Ms.

[00:28:12] Speaker 01:
Bursey's prior testimony under oath.

[00:28:14] Speaker 01:
which was blatantly contradicted by her declaration in this case.

[00:28:18] Speaker 01:
And there are multiple cases out of the Ninth Circuit.

[00:28:21] Speaker 01:
Specifically, Aukin calls into question and specifically calls out the sham affidavit rule and indicates that the district court is required to examine the sham affidavit rule in its discretion when evaluating whether or not there is a true mistake and inadvertence.

[00:28:37] Speaker 01:
And since Aukin, there have been multiple cases in this district

[00:28:41] Speaker 01:
that make clear that just simply submitting a declaration saying, I didn't know, is insufficient under Aachen, especially when the allegations in this affidavit are blatantly contradicted by prior testimony.

[00:28:56] Speaker 03:
There is some testimony in this, as I recall, that she says, I was aware that these actions were illegal before I filed.

[00:29:04] Speaker 01:
That is correct, Your Honor.

[00:29:06] Speaker 03:
Isn't it only that you be aware of the

[00:29:09] Speaker 03:
existence of the facts that would give rise to a cause of action?

[00:29:13] Speaker 01:
It is that the claim accrues when the facts necessary for the underlying cause of action have occurred.

[00:29:19] Speaker 03:
Have occurred.

[00:29:19] Speaker 03:
And in the case of someone who are discovered by it, but in this case, she knew them because they happened to her.

[00:29:26] Speaker 01:
That's correct.

[00:29:28] Speaker 02:
My colleagues have no further questions.

[00:29:30] Speaker 02:
I'll let you close.

[00:29:31] Speaker 01:
Thank you, your honor.

[00:29:32] Speaker 01:
Just in closing, under the facts of this case and given Ms.

[00:29:35] Speaker 01:
Bursey's prior testimony,

[00:29:36] Speaker 01:
Ms.

[00:29:36] Speaker 01:
Bursey simply cannot overcome the significant bodies of law of the bankruptcy court, and when a claim accrues for the purposes of a bankruptcy property, she cannot overcome the body of law of Morgan and this court's determination in Christian v. Umpqua Bank, which holds that a hostile work environment is one continuous claim and it cannot be split into two, particularly for something as random as the plaintiff's decision to file bankruptcy.

[00:30:05] Speaker 01:
And moreover, Ms.

[00:30:06] Speaker 01:
Bursey cannot identify a single error or abuse of discretion in Judge Bolton's application of the law on standing or judicial estoppel.

[00:30:14] Speaker 01:
So for those reasons, the City of Phoenix respectfully requests that this court affirm the district court's decision.

[00:30:19] Speaker 01:
Thank you, Ms.

[00:30:20] Speaker 01:
Burns.

[00:30:20] Speaker 01:
Thank you.

[00:30:22] Speaker 02:
Mr. Montoya.

[00:30:23] Speaker 04:
Thank you.

[00:30:25] Speaker 04:
A few things.

[00:30:27] Speaker 04:
First of all, you can split hostile work environment claims under this court's case law.

[00:30:34] Speaker 04:
And the prime example is this court's opinion in O'Loughlin versus County of Orange, which I have in my hand.

[00:30:40] Speaker 00:
876.

[00:30:43] Speaker 04:
ADA claim.

[00:30:45] Speaker 04:
Pardon me?

[00:30:45] Speaker 04:
ADA claim.

[00:30:46] Speaker 04:
But it was a continuing violation under the ADA, and you can have continuing

[00:30:56] Speaker 04:
And what they were arguing is that a hostile work environment claim is necessarily a continuing violation claim, even though as Judge Berzen recognized, that is wrong.

[00:31:09] Speaker 04:
Severe harassment doesn't have to be continuing to be actionable.

[00:31:14] Speaker 04:
And the record is clear based upon the city's own findings.

[00:31:18] Speaker 00:
I said no such thing, but go ahead.

[00:31:20] Speaker 00:
I understand that should be the case, but I had to say it.

[00:31:23] Speaker 04:
I think you suggested that, but I'm not speaking for your honor.

[00:31:27] Speaker 04:
So this court has split continuing violation claims.

[00:31:32] Speaker 02:
Do you have another one for us?

[00:31:33] Speaker 02:
Part of me?

[00:31:34] Speaker 02:
Other than of Laughlin.

[00:31:35] Speaker 02:
Assuming if we think Laughlin's distinguishable, do we have a Title VII hostile workplace environment claim that we have found divisible?

[00:31:43] Speaker 04:
Yes, Your Honor, but once again, remember, a hostile work environment claim, according to them, is necessarily a continuing violation claim.

[00:31:52] Speaker 04:
And the continuing violation claim was a claim in O'Loughlin.

[00:31:56] Speaker 04:
But moreover, in O'Loughlin, the court also said, hey, if it's not a continuing violation, if the misconduct's sufficiently actionable post-petition, that is recoverable too.

[00:32:13] Speaker 04:
So this case falls squarely under O'Loughlin and it also falls squarely under bankruptcy principles.

[00:32:21] Speaker 04:
Debts occurred post bankruptcy are not dischargeable.

[00:32:26] Speaker 04:
Assets obtained post bankruptcy petition are the debtors.

[00:32:34] Speaker 04:
You do not have to disclose to the trustee in a bankruptcy petition assets that accrue post bankruptcy.

[00:32:46] Speaker 03:
Even under your view, your client did fail to disclose to the trustee

[00:32:51] Speaker 03:
an asset of the estate.

[00:32:52] Speaker 04:
She did, and guess what?

[00:32:53] Speaker 04:
She was punished for it, Your Honor.

[00:32:55] Speaker 04:
She lost that part of her claim.

[00:32:57] Speaker 03:
Well, she wasn't punished.

[00:32:58] Speaker 03:
She was never, it wasn't her property.

[00:32:59] Speaker 04:
Well, there was a penalty for it, Your Honor, and the penalty is she lost any recovery for the pre-petition part of her claim.

[00:33:08] Speaker 02:
Well, it offset the estate.

[00:33:11] Speaker 00:
That was to be part of the estate no matter what.

[00:33:14] Speaker 00:
I don't understand what you mean.

[00:33:16] Speaker 04:
Well, she lost it.

[00:33:17] Speaker 04:
which is fair under the bankruptcy.

[00:33:20] Speaker 03:
There's a consequence that she suffered.

[00:33:22] Speaker 03:
I think you can argue on the third element of estoppel.

[00:33:26] Speaker 03:
But it seems to me it's quite clear she did not disclose to the trustee a claim that was the property of the bankruptcy estate.

[00:33:35] Speaker 04:
A claim that, as Judge Berzen I believe suggested, a claim that the record is uncontradicted

[00:33:42] Speaker 04:
she never sought any money for.

[00:33:45] Speaker 04:
When she decided to file for bankruptcy, she was going to quit her job.

[00:33:50] Speaker 04:
That's why she filed for bankruptcy.

[00:33:53] Speaker 04:
There was no intent for her to seek any benefit from it until long after.

[00:33:58] Speaker 00:
With regard to the other issue, the question.

[00:34:02] Speaker 04:
Your Honor, I'm a little hard of hearing.

[00:34:04] Speaker 00:
I'm sorry.

[00:34:05] Speaker 00:
With regard to the other issue, whether she can recover for the post-petition.

[00:34:10] Speaker 00:
Yes.

[00:34:11] Speaker 00:
What concerns me

[00:34:13] Speaker 00:
the most is that it seems to me you could file a separate lawsuit, but you didn't.

[00:34:19] Speaker 00:
You were still talking about the original lawsuit, which alleges a continuing violation rooted in the pre-petition passed, and now you want to split that one lawsuit up into pieces.

[00:34:30] Speaker 04:
Well, here's my response to that.

[00:34:33] Speaker 04:
And Judge Hurwitz mentioned there was an analogy with the statute of limitations.

[00:34:38] Speaker 04:
The statute of limitations is an affirmative defense.

[00:34:41] Speaker 04:
Judicial estoppel is also an affirmative defense.

[00:34:44] Speaker 04:
I'm not talking about judicial estoppel now.

[00:34:46] Speaker 04:
Well, Your Honor, oftentimes you find, as I know Your Honor was an experienced litigator before she became a judge,

[00:34:54] Speaker 04:
In your complaint, sometimes part of your complaint goes by the wayside after discovery in its summary judgment.

[00:35:02] Speaker 04:
But just because your complaint is truncated doesn't mean your entire complaint fails.

[00:35:09] Speaker 00:
But if you had filed, if you filed the separate lawsuit for the two post-petition incidents, it would be a much harder lawsuit to prevail on.

[00:35:21] Speaker 00:
In other words, by taking out

[00:35:23] Speaker 00:
the whole of it and having just two incidents, you'd have to litigate whether there was sufficiently severe and you'd have to litigate and that gathers some claim that one of the statements was just overheard by her.

[00:35:36] Speaker 00:
It wasn't actually said to her and you'd have a different lawsuit.

[00:35:40] Speaker 00:
So you want to litigate this lawsuit that has the whole of it in there and just truncate the damages as I understand it.

[00:35:49] Speaker 00:
And that's a different situation.

[00:35:51] Speaker 00:
Is that where we are?

[00:35:54] Speaker 04:
No, Your Honor.

[00:35:55] Speaker 04:
A couple of points in response to that.

[00:35:57] Speaker 04:
First of all, in O'Loughlin, the court said, hey, the pre-petition conduct is still relevant.

[00:36:05] Speaker 00:
I understand that.

[00:36:06] Speaker 00:
That's a problem for you.

[00:36:08] Speaker 00:
So what I'm saying is, if you are willing to go forward on a different lawsuit that only had the later incidents in it, that might be one thing, but you're not doing that.

[00:36:19] Speaker 04:
No, we are willing to do that, Your Honor, but we can use the pre-petition misconduct as evidence in the case under O'Loughlin and also under other Supreme Court cases and also under other cases decided by this Court that we cited in our brief.

[00:36:36] Speaker 00:
But then you're alleging a continuing violation that began before the petition.

[00:36:40] Speaker 04:
Well, but it's kind of like the statute of limitations, Your Honor.

[00:36:44] Speaker 04:
What transpired before the statute of limitations is not actionable, however it is relevant.

[00:36:50] Speaker 04:
But Your Honor, I also want to correct any misunderstanding that there were only two incidents post-petition.

[00:36:57] Speaker 04:
There were two egregious incidents post-petition, but there were other incidents post-petition that also lended to the viability of the claim.

[00:37:09] Speaker 04:
So we believe that under traditional bankruptcy principles, anything that transpired post-petition was actionable.

[00:37:17] Speaker 04:
And to say that it wasn't actionable, really that's a very difficult factual dispute that only can be resolved by the finder of fact.

[00:37:28] Speaker 04:
I don't think that you can decide in the context of summary judgment that what transpired post-petition wasn't severe enough to violate Section 1981 or Section Title VII.

[00:37:42] Speaker 04:
That's for the finder of fact to decide.

[00:37:44] Speaker 04:
In fact, we cited cases in our brief from this Bureau.

[00:37:47] Speaker 02:
Mr. Montoya, you're about five minutes into your rebuttal.

[00:37:49] Speaker 02:
Do you want to close?

[00:37:50] Speaker 04:
I do want to close, Your Honor, and I'll close this way.

[00:37:53] Speaker 04:
And thank you for your attention and thank you for your patience and thank you for the extra time.

[00:37:59] Speaker 02:
Thank you, both counsel, for your presentations today.

[00:38:02] Speaker 02:
The case is submitted.