An employee of a car care business accused the co-owner's business partner of sexually harassing her. Incredibly (and as an example of what not to do about a sexual harassment claim), the co-owner told her to stop flirting with his partner and asked her to sign a memo that "anything that happened was of a consensual nature." The employee was told she would be fired if she did not sign the memo. She refused to sign and did not return to work.
Based on these facts, the employee sued and won a $250,000 judgment, plus costs and attorneys' fees, against the co-owner. The co-owner filed a bankruptcy petition. Usually a bankruptcy results in the discharge of all debts and obligations of the debtor. But it did not in this case. Rather, the Bankruptcy Appellate Panel for the Eighth Circuit Court of Appeals found that the jury had concluded that the co-owner's conduct was "willful and malicious" and, under bankruptcy law, a debt for willful and malicious injury by a debtor is not dischargeable. (In re Porter, No. 07- 6008EA, (B.A.P 8th Cir 2007).