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Smith v. Haynes & Haynes P.C.

United States Court of Appeals, Eleventh Circuit

October 15, 2019

JENNY CONNELL SMITH, Plaintiff - Appellant,

          Appeal from the United States District Court for the Northern District of Alabama D.C. Docket No. 2:14-cv-01334-RDP

          Before TJOFLAT and NEWSOM, Circuit Judges, and ANTOON, [*] District Judge.


         Plaintiff Jenny Smith, a legal assistant, brought this suit against the law firm of Haynes & Haynes P.C. and the firm's named partners, Alicia Haynes and Kenneth Haynes.[1] In her Amended Complaint, Smith asserted claims against Defendants for unpaid overtime and retaliation under the Fair Labor Standards Act of 1938 (FLSA), breach of contract, and slander. The district court granted two motions for summary judgment in favor of Defendants. In its first summary judgment ruling, the district court determined that the overtime, breach of contract, and slander claims were barred by the doctrine of judicial estoppel. In the second-addressing Smith's retaliation claim-the district court concluded that Defendants' alleged conduct did not constitute adverse action and was not attributable to Defendants.

         Smith now appeals. We affirm the grant of summary judgment on the retaliation claims, but we vacate the summary judgment on the judicial estoppel defense on the authority of Slater v. U.S. Steel Corp., 871 F.3d 1174 (11th Cir. 2017) (en banc) ("Slater II"), a case decided after the district court's judicial estoppel ruling.

         I. Factual and Procedural Background

         Smith worked for Defendants during two separate time periods. Her first term of employment was from December 2000 until April 2009. During that time, Smith was a regular, salaried employee. In July 2011, Smith began her second term of employment with Defendants. This time, she was hired as an hourly, "contract employee." Although Defendants designated her a contract employee, Smith worked eight hours a day, "Monday through Friday with an hour off for lunch" and "no benefits." Smith became dissatisfied. On several occasions, she asked Defendants to modify the terms of her employment to include payment for overtime. But Defendants did not change Smith's terms of employment, and in December 2012 Smith again left her job with Defendants.

         In April 2011-three months before Smith began her second stint with Defendants-an attorney filed a voluntary Chapter 13 bankruptcy petition on Smith's behalf. "Chapter 13 allows a portion of a debtor's future earnings to be collected by a trustee and paid to creditors. A Chapter 13 debtor does not receive a discharge of his debts; rather, the debtor is allowed to extend or reduce the balance of his debts through a plan of rehabilitation." Burnes v. Pemco Aeroplex, Inc., 291 F.3d 1282, 1284 n.1 (11th Cir. 2002), overruled on other grounds by Slater II.

         In her initial bankruptcy schedules, Smith was asked to list "[o]ther contingent and unliquidated claims of every nature." To that prompt, Smith responded, "none." Nothing in the record suggests that this answer was untrue. In August 2011, approximately one month after Smith resumed working for Defendants, the bankruptcy court confirmed Smith's Chapter 13 Plan, which provided for 100% payment to her unsecured creditors. And in January 2013-one month after Smith's employment with Defendants ended-the bankruptcy court dismissed Smith's Chapter 13 case for failure to make the payments required under the Plan.

         In July 2014, attorney Russell Parker filed this lawsuit on Smith's behalf. The initial Complaint-signed only by Parker-contained a single claim for unpaid overtime under the FLSA. The Complaint asserted that Smith was misclassified as a "contract employee" and was not paid overtime at the time-and-a-half rate required by the FLSA. In support of that contention, the Complaint specifically alleged that "[d]uring and after her employment, [Smith] spoke with her employers on multiple occasions about being misclassified and not being paid the overtime pay she was entitled to" and that "[d]espite [Smith's] complaints, Defendants did not correct [Smith's] misclassification or award her the overtime [pay] she was owed."

         Defendants knew that Smith had filed a Chapter 13 bankruptcy petition. And after Smith filed this action, Defendants checked the bankruptcy court filings. Those records revealed that Smith never amended her bankruptcy schedules to include her request for overtime as a contingent or unliquidated claim. Armed with that information, Defendants consulted attorney John Saxon, another employment lawyer, on how to best use it against Smith. Saxon recognized that Smith's failure to include her FLSA overtime claim on the bankruptcy schedule might give rise to a judicial estoppel defense. Saxon, who had over forty years of legal experience, suggested that he meet with Parker, whom he had formerly mentored. Defendants agreed.

         Parker accepted Saxon's invitation, and the two lawyers met at Saxon's office on August 4, 2014. Unbeknownst to Saxon, Parker electronically recorded the conversation. The meeting began with Saxon advising Parker that in the future, before filing cases against other lawyers, Parker should attempt to settle, "because it's embarrassing" for a law firm to get sued. Saxon then told Parker that Parker had "a serious and fatal judicial estoppel problem" with the case because of Smith's failure to disclose her overtime claim to the bankruptcy court.

         Saxon further informed Parker that Smith had a potentially embarrassing medical condition and that she had borrowed money from Defendants and not repaid the loans. He also mentioned that Smith had done work for other lawyers while being paid by Defendants. Ultimately, Saxon told Parker that if Smith insisted on pursuing the case in the face of her "judicial estoppel problem," the issue would be brought to the court's attention and "there [would] be counterclaims for three different matters"-"stealing time," tortious interference, and the unpaid loans. The gist of Saxon's message was that Parker should persuade Smith to voluntarily dismiss the lawsuit and that if she did not do so, Defendants would file defenses and counterclaims against her. As the meeting ended, Parker told Saxon that he would get back to him within 48 hours.

         The individual Defendants, their lawyers, and the principal witnesses in this case were all legal professionals engaged in assisting employees with grievances against their employers. And they were all members of NELA-AL, the Alabama affiliate of the National Employment Lawyers Association. NELA-AL is an organization of Alabama employment lawyers who primarily represent plaintiff-employees in litigation against their employers. With NELA-AL membership come the benefits of continuing education programs, opportunities to discuss litigation strategy, and social events.

         Saxon's conversation with Parker spawned a spate of filings. Just two days after that conversation, Barry Frederick and Brandi Frederick (the Frederick firm) filed a Notice of Appearance for Smith. The notice explained that the Frederick firm was representing Smith because of the "retaliatory personal attacks" the Defendants had "initiated and orchestrated." Attached to the notice was a letter from NELA-AL's president, attorney Henry F. Sherrod III. In that letter, Sherrod informed Parker: "Because you are in litigation with two of our members and their firm, the board [of NELA-AL] has decided to suspend your membership until the completion of the lawsuit. I am sure you understand the decision." Parker then filed a motion to withdraw his representation of Smith.

         The Frederick firm also filed a motion for an expedited scheduling conference. The stated purpose of that request was to seek court intervention to stem Defendants' attacks on Smith and Parker. In support of the relief sought, the motion claimed that the retaliatory conduct of Saxon and Sherrod rendered them additional potential defendants.

         The same day, Saxon filed an answer and affirmative defenses on behalf of Defendants. In the Answer, Defendants denied Smith's assertion that she had spoken to them during her employment about her classification and her request for overtime pay. And two of the affirmative defenses vaguely referred to judicial estoppel. The Second Defense stated, "To the extent the defenses of res judicata, judicial estoppel and collateral estoppel become applicable in this matter[], Defendants assert them in this case." And the Eighth Defense stated that "[Smith's] claims are barred by the doctrine of accord and satisfaction, full payment, estoppel, judicial estoppel, and waiver." The district court entered an order granting Parker's Motion to Withdraw and denying Smith's Motion for Expedited Scheduling Conference.

         As promised, Saxon filed a "Motion for Judgment on the Pleadings or for Summary Judgment" seeking a judgment based on the judicial estoppel defense. And within hours, the Frederick firm filed an Amended Complaint on Smith's behalf. The Amended Complaint reasserted the FLSA overtime pay claim and added claims for FLSA retaliation, breach of contract, and slander. The retaliation claims were based on Saxon's threats to file counterclaims and NELA-AL's suspension of Parker. Notably absent from the Amended Complaint was the allegation that Smith, while working for Defendants, had complained about being misclassified and not receiving overtime pay. Instead, the Amended Complaint stated that Smith did not know that she was misclassified and entitled to overtime until after she left employment with Defendants. Before the district court ruled on the Motion for Judgment on the Pleadings or for Summary Judgment, Saxon filed a "Motion to Dismiss, Motion for Judgment on the Pleadings, and Renewed Motion for Summary Judgment" and supporting memorandum of law, again asserting judicial estoppel. This motion superseded the first motion.

         In response to that motion, Smith filed a declaration-sworn under penalty of perjury-in which she attested, "During the entire time I worked for [Defendants], I was not aware I was entitled to overtime pay for hours worked over 40 per week." The Declaration also stated that Smith first learned she had a claim for misclassification and overtime pay in March 2014 when communicating with the IRS; that she "did not intend to mislead the court or [her] creditors in [her] Chapter 13 Bankruptcy"; and that she "did not intentionally omit the information about this potential claim against Defendants from [her] bankruptcy forms, because [she] did not know about it before [her] bankruptcy case ended."

         Treating Defendants' motion as one for summary judgment, the district court issued a Memorandum Opinion and Order denying the motion as to Smith's retaliation claim but granting it as to her other three claims against Defendants. The district court concluded that Smith's overtime, breach-of-contract, and slander claims were barred by judicial estoppel because Smith failed to inform the bankruptcy court of her claims against Defendants.[2] The district court additionally found that the inconsistencies between Smith's unsigned Complaint and her unsigned Amended Complaint constituted another basis warranting application of judicial estoppel. Thus, the district court dismissed all claims except the FLSA retaliation claim.

         Following a period of discovery, Defendants filed a motion for summary judgment on the remaining claim for retaliation. Following a hearing on that motion, the district court issued another Memorandum Opinion and Order granting summary judgment in favor of Defendants. In doing so, the district court concluded that neither Saxon's oral threats to Parker regarding filing counterclaims nor NELA-AL's suspension of Parker constituted adverse action because the acts would not "have 'dissuaded a reasonable worker from making or supporting a charge' against the employer." Moreover, the district court determined that the suspension from NELA-AL was not attributable to Defendants.

         On appeal, Smith does not challenge the district court's dismissal of her slander claim. She does, however, appeal the ruling on her overtime and breach of contract claims, arguing that the district court erroneously applied the doctrine of judicial estoppel. She also appeals the district court's summary judgment in favor of Defendants on her FLSA retaliation claim.

         II. Standard of Review

         "Generally, we review the granting of summary judgment de novo, and the district court's findings of fact for clear error." Robinson v. Tyson Foods, Inc., 595 F.3d 1269, 1273 (11th Cir. 2010). "Summary judgment is appropriate if the record shows no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law." Talavera v. Sch. Bd. of Palm Beach Cty., 129 F.3d 1214, 1216 ...

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