from the United States District Court for the Northern
District of Alabama D.C. Docket No. 2:09-cv-01732-KOB
ED CARNES, Chief Judge, TJOFLAT, MARCUS, WILSON, WILLIAM
PRYOR, MARTIN, JORDAN, ROSENBAUM, JULIE CARNES, and JILL
PRYOR, Circuit Judges. [*]
PETITION FOR REHEARING
PRYOR, CIRCUIT JUDGE.
individual files for bankruptcy, he must file sworn
disclosures listing his debts and his assets, including any
pending civil claims, and identifying any lawsuits he has
filed against others. Occasionally, a plaintiff who has a
pending civil lawsuit fails to list the claims or lawsuit in
these disclosures. In omitting this information, the
plaintiff effectively takes inconsistent positions in the two
judicial proceedings by asserting in the civil lawsuit that
he has a claim against the defendant while denying under oath
in the bankruptcy proceeding that the claim exists.
equitable doctrine of judicial estoppel is intended to
protect courts against parties who seek to manipulate the
judicial process by changing their legal positions to suit
the exigencies of the moment. Today, we address how this
doctrine should be applied when a plaintiff takes
inconsistent positions by pursuing in district court a civil
claim that he failed to disclose as an asset in his
bankruptcy proceedings. We reaffirm our precedent that when
presented with this scenario, a district court may apply
judicial estoppel to bar the plaintiff's civil claim if
it finds that the plaintiff intended to make a mockery of the
what suffices for a district court to find that a plaintiff
who did not disclose a civil lawsuit in bankruptcy filings
intended to make a mockery of the judicial system? Our Court
has endorsed a rule that the mere fact of the plaintiff's
nondisclosure is sufficient, even if the plaintiff corrected
his bankruptcy disclosures after the omission was called to
his attention and the bankruptcy court allowed the correction
without penalty. See Barger v. City of Cartersville,
348 F.3d 1289 (11th Cir. 2003); Burnes v. Pemco Aeroplex,
Inc., 291 F.3d 1282 (11th Cir. 2002). We granted en banc
review to reconsider this precedent.
today that when determining whether a plaintiff who failed to
disclose a civil lawsuit in bankruptcy filings intended to
make a mockery of the judicial system, a district court
should consider all the facts and circumstances of the case.
The court should look to factors such as the plaintiff's
level of sophistication, his explanation for the omission,
whether he subsequently corrected the disclosures, and any
action taken by the bankruptcy court concerning the
nondisclosure. We acknowledge that in this scenario the
plaintiff acted voluntarily, in the sense that he knew of his
civil claim when completing the disclosure forms. But
voluntariness alone does not necessarily establish a
calculated attempt to undermine the judicial process. We
therefore overrule the portions of Burnes and
Barger that permit a district court to infer intent
to misuse the courts without considering the individual
plaintiff and the circumstances surrounding the
the district court applied judicial estoppel to bar plaintiff
Sandra Slater's discrimination and retaliation claims in
a lawsuit against her employer, U.S. Steel Corporation,
because Slater failed to disclose these civil claims as
assets in her bankruptcy. Relying on our precedent in
Burnes and Barger, the district court
inferred from Slater's nondisclosure alone that she
intended to manipulate the judicial process. A panel of our
Court affirmed, concluding that the district court did not
abuse its discretion in applying judicial estoppel. Because
we announce a new inquiry for evaluating intent to make a
mockery of the judicial system, we remand to the panel so
that it may decide whether the district court abused its
discretion in light of this new standard.
Factual Background and Proceedings Below
a high school graduate, worked for U.S. Steel for more than
10 years performing general manual labor. Slater sued U.S.
Steel for discrimination based on race and sex in violation
of Title VII, 42 U.S.C. § 2000e et seq, and 42
U.S.C. § 1981, and for retaliating against her after she
complained of race and sex discrimination, in violation of
Title VII and § 1981. U.S. Steel moved for summary
judgment on all of Slater's claims. The district court
granted the motion in part and denied it in part. The court
denied summary judgment on Slater's claims that she
suffered discrimination in job assignments based on her sex
and was fired in retaliation for complaining about racial
discrimination. Despite withstanding summary judgment, Slater
never had an opportunity to present these claims to a jury.
month after the district court's summary judgment ruling,
Slater- represented by different counsel than in her
discrimination case-filed a petition for Chapter 7
bankruptcy. She did not disclose her lawsuit against U.S.
Steel in her bankruptcy petition or the schedules filed with
her petition. When asked under penalty of perjury in Schedule
B-Personal Property to identify any "contingent and
unliquidated claims, " she answered "none."
Voluntary Pet. at 10, In re Slater, No. 11-02865
(Bankr. N.D. Ala. June 2, 2011), ECF No. 1. And when asked
under penalty of perjury in her Statement of Financial
Affairs to identify any "suits and administrative
proceedings to which the debtor is or was a party within one
year immediately preceding the filing of this bankruptcy
case, " she again answered "none."
Id. at 29 (emphasis omitted).
Slater filed her disclosures, the bankruptcy trustee issued a
Report of No Distribution, finding there was no property
available for distribution from the estate over and above
that exempted by law. In the absence of any objections to the
report, 30 days later the estate became presumptively fully
administered. See Fed. R. Bankr. P. 5009(a).
next day, U.S. Steel again moved for summary judgment in the
employment discrimination case, this time on the ground that
because Slater failed to disclose her civil claims in the
bankruptcy proceeding, the doctrine of judicial estoppel
should bar her from pursuing those claims. In response,
Slater testified by declaration that she did not
intentionally misrepresent facts to the bankruptcy court. She
further explained that she misunderstood the question in the
Statement of Financial Affairs regarding "suits and
administrative proceedings to which the debtor is or was a
party" as asking only about suits filed against her.
next business day after U.S. Steel filed the motion, Slater
amended her Statement of Financial Affairs and Schedule B to
her bankruptcy petition to disclose her claims against U.S.
Steel. The bankruptcy trustee then filed with the bankruptcy
court a request to employ the lawyers who were representing
Slater in her employment action to continue to pursue the
claims against U.S. Steel on behalf of the estate. The
bankruptcy court granted the motion.
bankruptcy case proceeded: upon Slater's petition, the
court converted the case from a Chapter 7 to a Chapter 13
proceeding, and Slater filed a proposed Chapter 13 plan,
which the bankruptcy court confirmed. Later, though, when
Slater failed to pay the trustee under the terms of the
confirmed plan, the bankruptcy court dismissed her case,
meaning her debts never were discharged in bankruptcy.
civil action fared no better. The district court granted U.S.
Steel's motion for summary judgment, applying the
doctrine of judicial estoppel to bar her claims. The court
rejected Slater's arguments that her omission of the
civil claims in the bankruptcy proceeding was inadvertent and
that she never intended to thwart the judicial process. The
court explained that under our circuit precedent, a failure
to disclose is "'inadvertent' only when
. . . the debtor either lacks knowledge of the undisclosed
claims or has no motive for their concealment." Order at
11 (emphasis added) (Doc. 89) (quoting Barger, 348
F.3d at 1295-96).
district court found that Slater knew about her civil claims,
filed in 2009, when she completed the bankruptcy disclosures
in 2011 and that she had a motive to conceal the claims
"to defraud creditors into accepting her [bankruptcy]
case as one involving no assets for distribution despite the
real possibility with the impending trial of the
discrimination case that she could soon be receiving a money
settlement or a money judgment in her favor."
Id. at 12. Although Slater corrected her disclosures
immediately after U.S. Steel brought the omissions to light,
the district court found this fact irrelevant because
"waiting until after being caught to rectify the
omission is too little, too late." Id.
Following Burnes, Barger, and their
progeny, the court drew an inference that Slater intended to
make a mockery of the judicial system based on its finding
that she had knowledge of the undisclosed claims and a motive
to conceal them.
appealed. After oral argument, a panel of this Court affirmed
the district court's grant of summary judgment to U.S.
Steel. In a concurring opinion, Judge Tjoflat urged the Court
to review en banc our precedent permitting the inference on
which the district court relied, that a plaintiff who omitted
a civil claim as an asset in bankruptcy filings necessarily
intended to make a mockery of the judicial system. See
Slater v. U.S. Steel Corp., 820 F.3d 1193, 1235 (11th
Cir.) (Tjoflat, J., concurring) (explaining that our
precedent validating such an inference "guarantees the
very mockery of justice the doctrine of judicial estoppel was
designed to avoid"), reh'g en banc granted, op.
vacated, No. 12-15548 (11th Cir. Aug. 30, 2016). We
agreed to rehear the case en banc and vacated the panel
Overview of Bankruptcy Principles
turning to judicial estoppel, we pause for an overview of the
Chapter 7 and Chapter 13 bankruptcy procedures that allow
debtors to discharge their financial obligations and receive
a fresh start to explain how a debtor's pending civil
claim is treated in bankruptcy. See Grogan v.
Garner, 498 U.S. 279, 286-87 (1991) (explaining that
bankruptcy is designed to give "honest but unfortunate
debtor[s]" the opportunity to "reorder their
affairs, make peace with their creditors, and enjoy a new
opportunity in life with a clear field for future effort,
unhampered by the pressure and discouragement of preexisting
debt" (internal quotation marks omitted)). For our
purposes here, the main difference between a Chapter 7 and a
Chapter 13 proceeding is that creditors are paid primarily
with the debtor's prepetition assets in Chapter 7 and
with his postpetition earnings in Chapter 13.
7 allows a debtor to make a clean break from his financial
past, but at a steep price: prompt liquidation of the
debtor's assets." Harris v. Viegelahn, 135
S.Ct. 1829, 1835 (2015). When a debtor files a Chapter 7
petition, his assets, subject to certain exemptions, are
immediately transferred to a bankruptcy estate. 11 U.S.C.
§ 541(a)(1). The Chapter 7 trustee is responsible for
selling the property in the estate and distributing the
proceeds to creditors. Id. §§ 704(a)(1), 726.
Although a Chapter 7 debtor "must forfeit virtually all
his prepetition property, " the bankruptcy laws give the
debtor an immediate fresh start and a break from the
financial past "by shielding from creditors his
postpetition earnings and acquisitions."
Harris, 135 S.Ct. at 1835. The debtor may keep any
wages earned or assets acquired after the bankruptcy filing.
Id. (citing 11 U.S.C. § 541(a)(1)).
contrast, a debtor who proceeds under Chapter 13 may keep his
prepetition property but must repay his creditors over time,
generally from what he earns after filing bankruptcy. The
Chapter 13 debtor proposes a plan to repay his debts over a
three- or five-year period; the plan must be confirmed by the
bankruptcy court. Payments under the plan "are usually
made from a debtor's 'future earnings or other future
income.'" Id. (quoting 11 U.S.C.
1322(a)(1)). In determining the sufficiency of the proposed
plan payments, the bankruptcy court must consider the value
of the debtor's assets because the court may confirm the
plan only if the present value of the proposed repayments is
"not less than the amount that would be paid" to
creditors if the debtor's assets were liquidated under
Chapter 7. See 11 U.S.C. § 1325(a)(4). If the
bankruptcy court confirms the plan, the trustee generally
collects a portion of the debtor's wages through payroll
deduction and then distributes the withheld wages to the
creditors at the plan's conclusion. See Harris,
135 S.Ct. at 1835. If the debtor completes his payments under
the plan, his debts are discharged. See id.
debtor files for bankruptcy under Chapter 13, his assets are
transferred to the bankruptcy estate. See 11 U.S.C.
§ 1306(a). But after the bankruptcy plan is confirmed,
the property of the estate returns to the debtor except as
provided in the plan or order confirming the plan. See
id. § 1327(b). A Chapter 13 debtor generally is
permitted to retain his assets, such as his home or car.
See Harris, 135 S.Ct. at 1835.
these differences, when a debtor's assets include a civil
claim, the claim will be treated differently depending upon
whether the bankruptcy is a Chapter 7 or a Chapter 13
proceeding. Because a Chapter 7 debtor forfeits his
prepetition assets to the estate, only the Chapter 7 trustee,
not the debtor, has standing to pursue a civil legal claim
unless the trustee abandons the asset, which then returns the
claim to the possession and control of the debtor. See
Parker v. Wendy's Int'l, Inc., 365 F.3d 1268,
1272 (11th Cir. 2004). But a Chapter 13 debtor retains
standing to continue to pursue the civil claim. See
11 U.S.C. § 1303; Fed.R.Bankr.P. 6009 ("With or
without court approval, the . . . debtor in possession may
prosecute . . . any pending action or proceeding by . . . the
debtor, or commence and prosecute any action or proceeding in
behalf of the estate before any tribunal."). Thus, a
Chapter 13 debtor may continue to control the lawsuit and the
terms of any settlement. See Crosby v. Monroe Cty.,
394 F.3d 1328, 1331 n.2 (11th Cir. 2004). With these
bankruptcy principles and distinctions in mind, we now turn
to the doctrine of judicial estoppel.
Judicial Estoppel Analysis
precise issue before us is how the doctrine of judicial
estoppel should be applied when a plaintiff fails to identify
a pending civil claim as an asset in a bankruptcy proceeding.
To address this issue, we begin by reaffirming that a
district court may apply judicial estoppel when a two-part
test is satisfied: the plaintiff (1) took a position under
oath in the bankruptcy proceeding that was inconsistent with
the plaintiff's pursuit of the civil lawsuit and (2)
intended to make a mockery of the judicial
discuss how a district court should apply the second prong.
Our precedent has, in effect, treated the fact of the
plaintiff's omission as establishing the requisite
intent. Today we clarify that the district court must
consider all the facts and circumstances in determining
whether the plaintiff acted with the intent to make a mockery
of the judicial system.
To Invoke Judicial Estoppel in the Bankruptcy Scenario,
District Courts Should ...