Consumer Bankruptcy Journal Winter 2016 - Page 20

NACBA Takes On 11th Circuit Judicial Estoppel Doctrine N CBRC has filed an amicus brief in the Eleventh Circuit on behalf of the NACBA membership to address the issue of that circuit’s approach to judicial estoppel. Slater v. U.S. Steel, No. 12-15568 (filed October 24, 2016). Twenty one months after filing an employment discrimination suit in federal district court against her former employer, U.S. Steel, Sandra Slater filed for bankruptcy. (The original case was filed under chapter 7 and later converted to chapter 13). She failed to list the pending federal case in her bankruptcy schedules. U.S. Steel then moved the district court to bar the discrimination suit based on the doctrine of judicial estoppel. The district court granted the motion and Ms. Slater appealed. The Eleventh Circuit affirmed with a concurring opinion by Judge Tjoflat in which he agreed that the holding was compelled by the Eleventh Circuit decisions in Burnes v. Pemco Aeroplex, Inc., 291 F.3d 1282 (11th Cir. 2002), and Barger v. City of Cartersville, 348 F.3d 1289 (11th Cir. 2003), but argued that those cases were wrongly decided. He maintained that application of Eleventh Circuit judicial estoppel precedent led to the resulted that: “U.S. Steel is granted a windfall, Slater’s creditors are deprived of an asset, and the Bankruptcy Court is stripped of its discretion.” Slater v. U.S. Steel Corp., 820 F.3d 1193, 1235 (11th Cir. 2016). The court then vacated that decision and granted Ms. Slater’s motion for reconsideration en banc. In its brief, NACBA argues that, as interpreted by Burnes and Barger and their progeny, the doctrine of judicial estoppel has strayed from its original purpose of protecting the integrity of the judicial process and become an inappropriate remedy for debtor error 20 CONSUMER BANKRUPTCY JOURNAL or misconduct. The Eleventh Circuit applies a twoprong test for application of judicial estoppel under which: 1) there must be an inconsistent position taken under oath and in a prior proceeding, and 2) there must be a motive to conceal the claim. In its brief, NACBA argues that the way these prongs are applied in the Eleventh Circuit renders the application of judicial estoppel non-discretionary. Under the holdings in Burnes and Barger, when a debtor omits a legal claim from her bankruptcy, even if that omission is inadvertent, she has taken an inconsistent position that may not be corrected once that position is challenged. Also, so long as the debtor knows of the claim or has a motive to conceal it, “intentional manipulation” of the bankruptcy process is likewise inferred as a matter of law. This lack of judicial discretion is counter to the Supreme Court’s admonition in New Hampshire v. Maine, 532 U.S. 742 (2001), that judicial estoppel not be rigidly applied. Generally, the brief argues that it is usually the district court in the prior legal action that makes the decision as to the application of the doctrine even though the non-disclosure takes place in the bankruptcy court. By putting judicial estoppel in the hands of the district court, the procedures available in bankruptcy, such as amendments to schedules and reopening of closed cases under flexible circumstances, are rendered useless. Moreover, expansion of the Burnes/ Barger doctrine in Robinson v. Tyson Foods, Inc., 595 F.3d 1269, 1274 (11th Cir. 2010), has made judicial estoppel even more burdensome to chapter 13 debtors by requiring them to amend their schedules to reflect postpetition le v62GvF7FFpvFW"#`FBVFW"FR6FR"&'WF7'VW26R7V6&WV&VVBF0VF6ǒ֖6VB&ƖvFV6W0FRVv'"6VBFV'F"@7&VFW2vFf'GVGf"6ggFVfVFG2fǒFR'&VbW2FR66RF@FR'W&W2&&vW"F7G&R2WffV@vg&G27FV6&RW'6R`&WfVFr667FVBVv6F2B27FVBW6VBFV6g&V@v66VB&R&&FVǒ&PFVBvF'FW"&f62FP&'WF76FRB'VW2&WGFW &6F66W27V626FW"FP'&Vb6FVG2vVB&R6VvPFFRFV'F.( 27FFr6FW"rVW72FR76WB2&FVBFPG'W7FVRvVB&RFR'GvF7FFpFW'7VR&RWFFVv6@6FW"2FRFV'F.( 27FFrFW'7VRFR6vVB6FVRvF&V6fW'&VVfGFrFRW7FFRखFRWfVBb7GVg&VBFP'BbFR&'WF7FV'F"FW&P&Rv2FFG&W72FB6GV7@vFWB&W6'BF&&FRVF6W7FV7V6&VVFW26VFPFVbF66&vRB"67F0vFFR&'WF7&6VVFr WfV7&֖6&vW2'F7V&ǐVw&VvW266W2FR'&Vb&6W2FBbVF6W7FV6FVW2FǒFW6R66W2FR6W'B6V@FVW"G2Ɩ6FFVƖ֖FPWFF2fW&V6W2vF&W7V7BF667FV6W2BƖ6W2FVBB֖VVF6W7FV6V@B&WfVB6FW"rG'W7FVRg&ЧW'7VrFRFV'F.( 2Vv7F6'BF67&WF2FFRƖ6F`VF6W7FV6VB&R&W7F&VBFFR&'WF76W'B4$2w&FVgVFW&VFf WF&rFR'&VbࠤF766Fb67VW"&'WF7GF&W0