Slater v. U.S. Steel Corp.

Summarized by David Bury , Stone & Baxter, LLP
10 years 6 days ago

Citation:

Slater v. U.S. Steel Corp., No. 12-15548 (11th Cir. Feb. 24, 2016)

Tag(s):

Ruling:

The ruling consists of 2 important parts: (i) a 32 page per curiam decision affirming the District Court and (ii) a 78 page concurrence by Judge Tjoflat encouraging the 11th Circuit to revisit certain of its prior judicial estoppel rulings. [Note: the District Court had found the standing argument to be moot because Slater, as the debtor-in-possession in her Ch. 13, had standing to pursue the claims for the estate.] In the per curiam decision, the main issue is the potential tension between two judicial estoppel precedents: (i) the U.S. Supreme Court's New Hampshire v. Maine (532 U.S. 742) decision and (ii) the 11th Circuit's Burnes v. Pemco (291 F.3d 1282) decision. Each decision sets out the purpose of judicial estoppel: protecting the integrity of the judicial process by preventing parties from deliberately changing their positions "according to the exigencies of the moment." However, they differ in their recitation of the required elements. Whereas New Hampshire suggests that a required element is that the party who has changed its position must have persuaded a court to accept its prior position, Burnes only requires that the inconsistent positions were advanced to "make a mockery of the judicial system." Concluding that New Hampshire recognizes that the elements of judicial estoppel are not inflexible, the panel concludes that the Burnes factors are consistent with the New Hampshire factors in spirit. Therefore, in the Ch. 7 context, Burnes' focus on (i) inconsistent statements under oath and (ii) advancing those inconsistent statements to make a mockery of justice satisfies New Hampshire. The panel concludes that extending the explicit elements of New Hampshire to the typical judicial estoppel situation presented in bankruptcy cases would unnecessarily condition the applicability of judicial estoppel in bankruptcy on the bankruptcy case having been concluded. The panel reasons that, with or without that element, the debtor's intentional concealment, alone, undermines the judicial process and, thus, justifies the application of judicial estoppel. With that, the panel upholds the District Court's analysis of those 2 elements in the Slater case. In his special concurrence, which is the most remarkable part of the decision, Judge Tjoflat acknowledges that 11th Circuit precedent dictated the panel's decision. However, he urges the 11th Circuit to rehear the matter, en banc, to reconsider 2 of the 11th Circuit's prior decisions: (i) the Barnes decision and (ii) the Barger v. City of Cartersville (348 F.3d 1289) decision. Specifically, Judge Tjoflat submits that those decisions, by requiring the application of judicial estoppel in cases like the Slater case, (i) result in a windfall for defendants like U.S. Steel; (ii) deprive creditors, like Slater's creditors, of potential recoveries; and (iii) strip the bankruptcy courts of their discretion. At bottom, he submits that the 11th Circuit's application of judicial estoppel in bankruptcy cases should be reconsidered because, rather than penalizing debtors and providing them an incentive to disclose fully, it merely penalizes bankruptcy estates and participating creditors, while arguably motivating incomplete disclosure by debtors. Although his 78 page treatise on judicial estoppel is far too extensive to summarize here, an outline of its 3 sections might be useful: (i) an overview of how bankruptcy is supposed to work, generally; (ii) a history of judicial estoppel in the 11th Circuit; and (iii) the bad consequences (listed above) of continuing to apply Burnes and Burger. Judge Tjoflat concludes his opinion by calling for "en banc review to set straight the doctrine of judicial estoppel." Bonus: He also provides a 7 page appendix that includes charts, timelines, and an index of cases. For additional coverage of this opinion, see Bill Rochelle’s “Daily Wire” summary here: http://www.abi.org/newsroom/daily-wire/11th-circuit-may-follow-5th-circuit-by-limiting-judicial-estoppel-in-bankruptcy.

Procedural context:

Slater sued U.S. Steel for employment discrimination in the Northern District of Alabama. The District Court (i) granted summary judgment on her racial discrimination claim and (ii) dismissed her other discrimination claims on judicial estoppel grounds. Slater appealed. The 11th Circuit affirmed in a 32 page per curiam opinion. However, Judge Tjoflat, via his 78 page concurrence, urged the 11th Circuit to rehear the matter, en banc, to reconsider certain of the 11th Circuit's prior rulings on judicial estoppel.

Facts:

Sandra Slater sued her employer, U.S. Steel, for discrimination, including racial discrimination and employment discrimination. Almost 2 years later, she filed a Ch. 7 bankruptcy. She failed to disclose the suit in her Schedules or Statement of Financial Affairs. After learning about the bankruptcy, U.S. Steel raised judicial estoppel as a basis for summary judgment and lack of standing, due to the Ch. 7, as basis for dismissal. In response, Slater amended her schedules to disclose the suit and argued that her failure to disclose was not intentional. While the motions were pending, the Bankruptcy Court approved the Ch. 7 trustee's application to employ Slater's employment suit lawyers as special counsel for the bankruptcy estate to pursue the claims for the estate. And then Slater moved to convert her case from a Ch. 7 to a Ch. 13. The Bankruptcy Court approved the motion and, ultimately, confirmed her 42 month bankruptcy plan.

Judge(s):

Tjoflat; Pryor; Scola (District Judge sitting by designation from the S.D. Fla.)

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