In re Casey Marie Anthony, Bankr. M.D. Fla., Case No. 8:13-bk-00922-KRM
Although this blog typically focuses on Michigan bankruptcy cases, last week’s Chapter 7 filing by Casey Anthony raises interesting questions about the impact of bankruptcy on public figures.
Casey Anthony held the national spotlight for nearly three years after being charged with murdering her two-year-old daughter, Caylee. Anthony initially alleged that Caylee was kidnapped by her nanny, then claimed that Caylee accidentally drowned in the family pool. After a jury found her not guilty on all charges except some misdemeanors, Anthony faced a barrage of lawsuits, including claims for defamation and for reimbursement by private investigators who searched for Caylee in the months before her remains were found.
Those lawsuits ground to a halt when Anthony filed a voluntary Chapter 7 petition in the Middle District of Florida on January 25, 2013. In her bankruptcy papers, Anthony lists few assets (comprised mostly of household goods) but discloses unsecured debts of nearly $800,000, plus numerous debts of unknown amounts. The debts include the pending lawsuits against her and $500,000 in legal fees owed to her criminal defense attorney.
If Anthony obtains a discharge, many of those debts – including her legal fees and other costs arising out of her nationally televised murder trial – will be wiped away. The dischargeability of the defamation claims is more questionable, as Florida’s bankruptcy courts have recognized that defamatory statements can be a “willful and malicious injury” – and thus excluded from discharge1 – if the debtor knew the statements were false.2 The plaintiffs in the defamation actions would be required to file lawsuits in bankruptcy court to determine whether the debts are nondischargeable.
Some may question the fairness of Anthony’s bankruptcy filing, as it is conceivable that she could discharge her significant debts and then immediately pursue a book or movie deal worth millions. Indeed, her status as a public figure may be her most valuable asset. But is the potential value of her fame (or, as courts describe it, the “right of publicity”) property of the bankruptcy estate that the trustee can use to pay creditors? Is fame an asset?
In Chapter 7 bankruptcy cases, a trustee liquidates the debtor’s non-exempt property to pay creditors. Few courts have addressed the question of whether a public figure’s “right of publicity” – including such intangibles as name recognition, likeness, and life story – is an asset that can be liquidated for the benefit of creditors. One California state court, in litigation against O.J. Simpson, rejected the notion that an individual’s right of publicity can be assigned for the benefit of his creditors.3 And though case law is sparse, some legal scholars argue that allowing the right of publicity to be treated as a bankruptcy asset raises constitutional concerns about involuntary servitude.4 If the right of publicity were an asset in her bankruptcy, could the trustee compel Anthony to make public appearances, with the proceeds going to her creditors? Could she be forced to cooperate in publishing her life story? No courts have yet gone so far.
If fame is an asset, bankruptcy courts also will have to grapple with whether future use of that fame arises out of pre-bankruptcy property (which can be used to pay creditors) or whether it is post-petition property (which is safe from creditors). Certainly, if Anthony had written a book before her bankruptcy filing, the proceeds of that book would be property of the bankruptcy estate. But if she tells her life story after the bankruptcy, would her profits be traceable to pre-bankruptcy property (i.e., her fame – or infamy – which arose before the bankruptcy), or are they treated like post-petition job earnings, which would not be reachable by the Chapter 7 trustee?5
Case law offers no clear answer to these questions, and it is too early to know whether the bankruptcy court handling Anthony’s case will address them. But it remains possible that Casey Anthony could walk away from her debts and then try to profit from her public notoriety, without having to pay a penny to her creditors – assuming, of course, that the world will pay to hear her story.
Categories: Chapter 7
Laura's practice focuses on bankruptcy, municipal law, collections, and trial-level and appeals litigation. In the bankruptcy arena, she represents primarily Chapter 7 trustees. Laura has handled a wide range of trial and appellate matters for individual and business clients and has appeared before the U.S. Sixth Circuit Court of Appeals, the Michigan Court of Appeals, and the United States Bankruptcy Court for the Western District of Michigan, as well as Michigan circuit and district courts across the state.View All Posts by Author ›