Pereira v. U.S. Dep't of Justice
| Decision Date | 11 May 2016 |
| Docket Number | 16 Civ. 2599 (NRB) |
| Parties | JOHN S. PEREIRA, Plaintiff, v. UNITED STATES DEPARTMENT OF JUSTICE; UNITED STATES TRUSTEES PROGRAM; LORETTA LYNCH, Attorney General for the United States; CLIFFORD J. WHITE III, Director of the United States Trustee Program; WILLIAM K. HARRINGTON, United States Trustee for Region 2, Defendants. |
| Court | U.S. District Court — Southern District of New York |
Plaintiff John S. Pereira brings this action to challenge his one-year suspension as a chapter 7 bankruptcy panel trustee in the Southern and Eastern Districts of New York. The suspension, first imposed by the United States Trustee in connection with Pereira's conduct at three Section 341(a) meetings in April and July of 2014, was affirmed by the Director for the Executive Office of the United States Trustee Program (the "Director") in March of 2016. Plaintiff contends that the agency action violated: (1) the Administrative Procedure Act, 5 U.S.C. § 701 et seq. (the "APA"); (2) a provision of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 providing for district court review of panel trustee suspensions, 28 U.S.C. § 586(d)(2) ("Section 586(d)(2)"); and (3) Section 504 of the Rehabilitation Act of 1973, 29 U.S.C. § 794 ("Section 504").
With the parties' consent, we consolidate plaintiff's request for preliminary injunctive relief with the merits of the claims asserted. See Fed. R. Civ. P. 65(a)(2). For the following reasons, we conclude the administrative agency's action violated neither the APA nor Section 586(2), and that the Rehabilitation Act does not provide plaintiff with a private cause of action. Therefore, we affirm the decision of the Director to uphold the suspension.
The United States Trustee Program is a component of the Department of Justice ("DOJ") responsible for overseeing the administration of bankruptcy cases and private trustees under 28 U.S.C. § 586 and 11 U.S.C. § 101 et seq. Harrington Decl. ¶ 3. The Attorney General of the United States appoints a U.S. Trustee for each of 21 regions of federal judicial districts. 28 U.S.C. § 581(a). "Region 2" includes the judicial districts in the state of New York. 28 U.S.C. § 581(a)(2). The Executive Office for United States Trustees in Washington, D.C., provides general policy and legal guidance, oversees the Program's substantive operations, and handles administrative functions. Harrington Decl. ¶ 3. The Executive Office, overseen by a Director whose authority derives from the Attorney General, provides administrative and management support to individual U.S. Trustee Offices in their implementation of the federal bankruptcy laws. Id.
The U.S. Trustees for each judicial district establish, maintain, and supervise panels of private trustees ("panel trustees") who administer cases commenced under chapter 7 of the Bankruptcy Code. 28 U.S.C. § 586(a)(1). "To be eligible for appointment to the panel and to retain eligibility therefor," 28 C.F.R. § 58.3(a), the panel trustee must meet the qualifications listed in 28 CFR § 58.3(b). Among these qualifications are that the trustee is "courteous and accessible to all parties with reasonable inquiries or comments about a case for which such individual is serving as private trustee" and "free of prejudices against any individual, entity, or group of individuals or entities which would interfere with unbiased performance of a trustee's duties." 28 C.F.R. §§ 58.3(b)(3) and (4). Cases are assigned to active panel trustees using an "automated blind rotation system." Harrington Decl. ¶ 8.
Chapter 7 panel trustees have a range of responsibilities. See 11 U.S.C. § 704(a). Among their responsibilities in every case is to convene and preside over a meeting of creditors pursuant to 11 U.S.C. § 341(a) (a "Section 341(a) meeting"). Harrington Decl. ¶ 5. The debtor is statutorily obligated to appear at this meeting and answer under oath questions from the trustee and creditors regarding the estate. 11 U.S.C. § 343. "The role of a chapter 7 trustee at Section 341(a) meetings is to conduct the meeting in an orderly, yet flexible manner, and to provide for a wide range of questions to the debtor as to matters affecting the debtor's financial affairs and conduct." Harrington Decl. ¶ 5. In the Eastern District of New York, Section 341(a) meetings are held in large rooms in the United States Bankruptcy Courthouse in Brooklyn, New York. Id. ¶ 7. They are public proceedings, and the meeting rooms are frequently crowded with parties waiting to be examined. Id.
In conformity with an Executive Order requiring Federal agencies to develop and implement systems to provide needed services to persons with limited English proficiency, see Exec. Order No. 13166, 65 Fed. Reg. 50121 (Aug. 11, 2000), the U.S. Trustee Program has issued a Language Access Plan ("LAP"). See AR530-AR540.2 The LAP requires chapter 7 panel trustees to notify people who possess limited English proficiency that, for participation at creditors' meetings, they may either use a telephonic interpreter service at DOJ expense, or secure a qualified interpreter of their choice at their own expense. AR534. The Executive Office for United States Trustees also promulgates a Handbook for chapter 7 panel trustees that details trustees' roles and responsibilities. See Handbook For Chapter 7 Trustees (Oct. 1, 2012), AR429-AR529 (the "Handbook"). The Handbook states that panel trustees "must" advise individuals with limited English proficiency of the available free interpreter service, and that these individuals "may not use family members, friends, the debtor's attorney or the attorney's employees" as an interpreter "unless the telephone service as the meeting site is not available to reach the interpreter services." Handbook § 3.D.6, AR453.
A U.S. Trustee may suspend or terminate the assignment of new cases to a panel trustee pursuant to the procedures set out in 28 C.F.R. § 58.6. The regulations enumerate a non-exclusive list of 14 grounds for suspension or termination of a panel trustee, including as relevant here:
28 C.F.R. § 58.6(a). A U.S. Trustee must deliver a written notification to the panel trustee stating the reasons for the suspension or termination and explaining the panel trustee's right to seek a review from the Director. 28 C.F.R. §§ 58.6(a)-(b). A panel trustee's request for review "shall be accompanied by all documents and materials that the trustee wants the Director to consider in reviewing the decision." 28 C.F.R. § 58.6(f). The U.S. Trustee must submit a response to the Director within 15 days, 28 C.F.R. § 58.6(g), and the Director "shall issue a written decision no later than 30 calendar days" thereafter, unless the panel trustee and U.S. Trustee agree to a longer period of time. 28 C.F.R. § 58.6(i). The Director's decision "shall determine whether the United States Trustee's decision is supported by the record and the action is an appropriate exercise of the United States Trustee's discretion." Id. This decision constitutes a final agency action. Id.
John S. Pereira is a long-serving chapter 7 panel trustee. He was the first chapter 7 panel trustee ever appointed both the Southern and Eastern Districts of New York in 1979 and 1981, respectively, and has served continuously ever since. Compl. ¶¶ 19-20. Plaintiff has conducted more than 60,000 Section 341(a) meetings over the course of his over 35-year tenure. Id. ¶ 21. He has served as a trustee in a wide variety of chapter 7 and chapter 11 cases. Id.
Plaintiff is a veteran who served in the Vietnam War and suffered hearing loss during his military service. Id. ¶ 28. He wears two hearing aids to correct for his hearing loss, which are visible to the public. Id. ¶ 30. Plaintiff asserts that he "occasionally has difficulty hearing and questioning witnesses in an appropriate volume during the Section 341(a) Meetings, which occur in a crowded room with loud ambient noise," and that he "can correct for the disability with his hearing aids and/or when the speaker is properly amplified." Id. ¶ 31.
The disciplinary action against plaintiff was taken in connection with his conduct during three Section 341(a) meetings he conducted in the Eastern District of New York in the cases of In re Castro, No. 14-43095-ess (Bankr. E.D.N.Y. 2014); In re Alvarez, No. 14-43096-nhl (Bankr. E.D.N.Y. 2014); and In re Cota-Birenbaum, No. 13-47467-ess (Bankr. E.D.N.Y. 2013). See AR272-AR295 (docket sheets); AR264-AR267 (audio recordings); AR192-AR263 (transcripts).
Luz Castro filed a chapter 7 bankruptcy petition on June 18, 2014. AR272. At that time, her gross monthly income was $884.43 from work as a cleaner; her son-in-law was giving her an additional $400 per month; she did not own a home or car; her personal property was worth $2,830; and her only other asset was her interest in a class action lawsuit for injuries sustained as a result of "9/11 terrorism." See Final Decision at 6, AR550.4 She owed her creditors $37,346.00. Id. Ms. Castro was represented by Attorney David Brodman. AR272.
Plaintiff conducted Ms. Castro's Section 341(a) meeting on July 16, 2014. AR192. Attorney Renee Frank appeared with Ms. Castro in lieu of Mr. Brodman. AR244.5 At the start of the meeting, Ms. Frank...
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