Helton et al v. Token Inc

Filing 55

MEMORANDUM OPINION. Signed by Judge L Scott Coogler on 4/23/13. (KGE, )

FILED
2013 Apr-23 PM 12:25
U.S. DISTRICT COURT
N.D. OF ALABAMA

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ALABAMA
JASPER DIVISION
WILLIAM EUGENE HELTON,
FRANCES MARIE ROBBINS,
TERRI ANN PATE, WANDA
GAIL RUSHING, and PAMELA
KAY THOMPSON,
Plaintiffs;
vs.
TOKEN, INC.,
Defendant.

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6:11-cv-02846-LSC

MEMORANDUM OPINION
I.

Introduction
Before the Court is a Motion for Partial Summary Judgement, filed on October

25, 2012, by the defendant, Token, Inc. (“Token”). (Doc. 28.) Token seeks summary
judgment in its favor as to the claims asserted by Frances Marie Robbins (“Robbins”),
the only plaintiff remaining in this action. Specifically, Token seeks to dismiss
Robbins’s claim for unpaid overtime wages in violation the Fair Labor Standards Act
(“FLSA”), 29 U.S.C. § 201, et seq., as well as her state law claims for fraud and breach
of contract. Token asserts various arguments in support of its motion, including that
Robbins is judicially estopped from litigating her claims because she failed to disclose
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them in her Chapter 7 bankruptcy proceeding, which was filed on November 29, 2010.
The issues raised in Token’s motion for summary judgment have been fully briefed
by both parties and are ripe for decision. For the reasons described below, Token’s
Motion for Partial Summary Judgment (Doc. 28) is due to be GRANTED.
II.

Facts
Robbins began working at a Token convenience store sometime in January

2003. Her employment with Token effectively ended on December 27, 2010, when
Token sold Robbins’s store to a new owner. Robbins was initially hired as a part-time
employee and was paid by the hour. Not long after she was hired by Token, Robbins’s
hours increased to full time and she received the job title of “store manager.” As a
store manager, Robbins was paid a weekly salary which started at $450.00 per week.
Robbins’s salary increased over the years to $500.00 per week from August 2008
through the end of her employment. Robbins did not receive any overtime pay for the
period of time she was classified as a store manager. Robbins testified that she believed
she was entitled to overtime pay “all the time” she worked for Token, and she further
agreed that she understood that she was entitled to overtime pay from “the moment
she started being paid by salary.” (Doc. 30-6, Robbins’s Dep. 49:22–50:15.) Robbins
also testified that she complained to her supervisor about not receiving overtime

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sometime in 2006 or 2007. (Id. at 50:16–53:6.) In this lawsuit, Robbins’ asserts that
Token’s failure to pay overtime was a violation of the FLSA and she seeks payment
for the unpaid wages. (Doc. 1 ¶ 13–17.)
For all times relevant to this dispute, Token had in place a Manager’s Bonus
Program (“Bonus Program”). Pursuant to the Bonus Program, store managers were
eligible to receive a monthly bonus based on their individual store’s performance.
Additionally, the Bonus Program provided that managers would receive an annual
bonus equal to the sum of their monthly bonuses for the year. On November 3, 2010,
Robbins and other Token store managers were notified that Token was terminating
the annual matching portion of the Bonus Program. (Doc. 39-3.) In this lawsuit,
Robbins asserts that Token’s elimination of the annual matching component of the
Bonus Program amounted to fraud and breach of contract. (Doc. 1 ¶ 23–28.)
Robbins filed a voluntary petition for Chapter 7 bankruptcy on November 29,
2010, approximately one month before her employment with Token ended. (Doc. 301.) The schedule of assets (Schedule B) and Statement of Financial Affairs filed with
Robbins’s voluntary petition did not list her potential legal claims against Token. (Id.)
On February 14, 2011, the bankruptcy trustee held a Section 341 Meeting of Creditors.
At the creditors’ meeting, Robbins’s attorney orally informed the trustee that she

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possessed an unpaid overtime claim, stating “we’re gonna have to amend the
schedules she’s got a wage and hour case that we’re gonna be filing and we’re gonna
have to amend it for that.” (Doc. 38-2 at 2.)It does not appear the breach of contract
and fraud claims were ever discussed, nor is there any evidence that either Robbins or
her attorney provided the trustee with a potential value for the FLSA claim. Beyond
the initial acknowledgment by Robbins’s counsel, the potential FLSA claim was only
briefly addressed. In response to the trustee’s questions, Robbins’s counsel stated that
the FLSA claim would turn on the application of a managerial exemption, and he
estimated that Robbins would be able to claim a $5,000 personal exemption on any
recovery obtained. (Id. at 3.) The trustee concluded the discussion by stating “Ok
we’ll look at that because I may have to hire you to basically represent the estate in
that. Just need to let Ms. Robbins understand how that works.” (Id. at 4.)
The day after the Section 341 meeting, the trustee issued a no-asset
determination, providing that “there is no property available for distribution from
[Robbins’s] estate over and above that exempted by law.” (Doc. 30-3 at 3.) Then, on
March 24, 2011, Robbins received a complete discharge from the Bankruptcy Court.
Robbins did not amend her Schedule B or Statement of Financial Affairs to include
her alleged claims against Token at anytime prior to the trustee’s no-asset

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determination or the bankruptcy court’s discharge.
On August 15, 2011, Robbins, along with four other plaintiffs, filed the
complaint in this action. As of that date, Robbins had still not made any attempt to
amend her bankruptcy petition and schedules to include her alleged claims against
Token. Token filed an answer to the complaint on December 28, 2011, asserting
several affirmative defenses, including judicial estoppel. (Doc. 4 at 6, ¶ 5.) During a
telephone call on September 14, 2012, counsel for Token informed Robbins’s attorney
that its judicial estoppel defense was based on the fact that Robbins had failed to
disclose her legal claims against Token in her bankruptcy petition and schedules.
Subsequently, on October 3, 2012, Robbins moved the bankruptcy court to re-open
her bankruptcy case to allow her to amend her petition and schedules to include the
claims against Token.1 (Doc. 30-4 at 1.)Following a hearing on October 30, 2012, the
bankruptcy court granted Robbins’s motion to reopen her Chapter 7 case. (Doc. 30-5.)
Robbins then filed an amended Schedule B and an amended Statement of Financial
Affairs, setting out her claims against Token and valuing those claims at $50,000.00.
1

Token described the telephone call and the subsequent amendment of Robbins’s
bankruptcy petition in its narrative statement of undisputed facts included in its brief in support
of its motion for partial summary judgment. (Doc. 29 at 6.) Insofar as Robbins disputes this
statement of fact, she does not dispute the conversation took place or its content, nor does she
dispute that the bankruptcy petition was amended after the call. Rather, Robbins’ merely offers
that Token’s judicial estoppel defense is unfounded because she disclosed her claim at the
Section 341 meeting. (Doc. 38 at 3.)
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(Docs. 38-4 & 38-5.)
III.

Standard
Summary judgment is proper “if the movant shows that there is no genuine

dispute as to any material fact and the movant is entitled to judgment as a matter of
law.” Fed. R. Civ. P. 56(a). The party moving for summary judgment “always bears
the initial responsibility of informing the district court of the basis for its motion, and
identifying those portions of [the evidence] which it believes demonstrate the absence
of a genuine issue of material fact.” Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986).
The movant can meet this burden by presenting evidence showing that there is no
genuine dispute of material fact, or by showing that the nonmoving party has failed to
present evidence in support of some element of its case on which it bears the ultimate
burden of proof. Id. at 322-23. In evaluating the arguments of the movant, the court
must view the evidence in the light most favorable to the nonmoving party. Mize v.
Jefferson City Bd. of Educ., 93 F.3d 739, 742 (11th Cir. 1996).
Once the moving party has met his burden, Rule 56 “requires the nonmoving
party to go beyond the pleadings and by [his] own affidavits, or by the depositions,
answers to interrogatories, and admissions on file, designate specific facts showing
that there is a genuine issue for trial.” Celotex, 477 U.S. at 324 (internal quotations

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omitted); see also Fed. R. Civ. P. 56(c). “A factual dispute is genuine only if a
‘reasonable jury could return a verdict for the nonmoving party.’” Info. Sys. &
Networks Corp., 281 F.3d at 1224 (quoting United States v. Four Parcels of Real Property,
941 F.2d 1428, 1437 (11th Cir. 1991)).
IV.

Analysis
Token asserts several grounds for which this Court should grant summary

judgment in its favor. Because the Court finds Token’s judicial estoppel argument is
sufficient to dispose of Robbins’s claims, the Court’s analysis will not go beyond this
defense.
“Judicial estoppel is an equitable doctrine invoked at a court’s discretion.”
Burnes v. Pemco Aeroplex, Inc., 291 F.3d 1282, 1285 (11th Cir. 2002) (citing New
Hampshire v. Maine, 532 U.S. 742, 750 (2001)). Application of the judicial estoppel
doctrine prevents a party from “asserting a claim in a legal proceeding that is
inconsistent with a claim taken by that party in a previous proceeding.” Burnes, 291
F.3d at 1285 (quoting 18 James Wm. Moore et al., Moore’s Federal Practice § 134.30,
p. 134–62 (3d ed. 2000)). The purpose of the doctrine is “to protect the integrity of
the judicial process by prohibiting parties from deliberately changing positions
according to the exigencies of the moment.” New Hampshire, 532 U.S. at 749–50.

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Because judicial estoppel protects the process, not a specific party, the one asserting
the doctrine need not show that it detrimentally relied on the other party’s previous
assertions or even that it was involved in the previous proceeding. Burnes, 291 F.3d
at 1286.
The Eleventh Circuit has established two factors which predominate in
applying judicial estoppel to a particular case. Burnes, 291 F.3d at 1285 (noting that the
“two factors applied in the Eleventh Circuit are consistent with the Supreme Court’s
instructions” in New Hampshire); Barger v. City of Cartersville, 348 F.3d 1289, 1293
(11th Cir. 2003). First, a party’s allegedly inconsistent position must have been “made
under oath in a prior proceeding.” Burnes, 291 F. 3d at 1285 (quoting Salomon Smith
Barney, Inc. v. Harvey, 260 F.3d 1302, 1308 (11th Cir. 2001)). Second, the
“inconsistencies must be shown to have been calculated to make a mockery of the
judicial system.” Id. “[T]hese two enumerated factors are not inflexible or exhaustive;
rather, courts must always give due consideration to all of the circumstances of a
particular case when considering the applicability of this doctrine.” Id. at 1286.
Before applying the two-prong test, it is helpful to lay some groundwork
regarding a debtor’s duty to disclose in a bankruptcy proceeding. A debtor seeking
protection under the bankruptcy laws is required to disclose all assets, or potential

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assets, to the bankruptcy court by filing a schedule of assets and a statement of the
debtor’s financial affairs. 28 U.S.C. § 521(1). “[T]he importance of full and honest
disclosure cannot be overstated.” Burnes, 291 F.3d at 1286 (quoting Ryan Operations
G.P. v. Santiam-Midwest Lumber Co., 81 F.3d 355, 362 (3d. Cir. 1996)). The Eleventh
Circuit “has emphasized the importance of full and honest disclosure in bankruptcy
proceedings, stating that it is ‘crucial’ to the system’s ‘effective functioning.’”
Robinson v. Tyson Foods, Inc., 595 F.3d 1269, 1274 (11th Cir. 2010) (quoting Burnes, 291
F.3d at 1286). This duty to disclose “applies to proceedings under Chapter 13 and
Chapter 7 alike” and “is a continuing one that does not end once the forms are
submitted to the bankruptcy court; rather, a debtor must amend her financial
statements if circumstances change.” Id. Full disclosure is particularly important
because “creditors rely on a debtor’s disclosure statements in determining whether
to contest or consent to a no asset discharge. Bankruptcy courts also rely on the
accuracy of the disclosure statements when considering whether to approve a no asset
discharge.” Burnes, 291 F.3d at 1286.
With these principles in mind, the Court turns to the Eleventh Circuit’s test for
judicial estoppel. There can be no debate that Robbins has taken inconsistent positions
under oath. Robbins’s voluntary bankruptcy petition, submitted under oath to the

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bankruptcy court, failed to mention her legal claims against Token. The effect of this
filing was that Robbins represented to the bankruptcy court that no such claims
existed. Of course, she now asserts those omitted claims in the action pending before
this Court.
Having established that Robbins has adopted inconsistent positions, the Court
must evaluate whether these inconsistences were “ calculated to make a mockery of
the judicial system.” Burnes, 291 F. 3d at 1285. This is a question of intent. The
Eleventh Circuit has stated that judicial estoppel may only apply in situations
involving intentional contradictions, “not simple error or inadvertence.” Id. at 1286.
However, direct evidence that a party acted with an intent to deceive the court is not
required. Rather, “deliberate or intentional manipulation can be inferred from the
record” where the debtor has (1) knowledge of the undisclosed claims and (2) a
motive for concealment. Barger, 348 F.3d at 1294 (quoting Burnes, 291 F.3d at 1287).
It is undisputed that Robbins had knowledge of her legal claims against Token
at the time she filed her Chapter 7 bankruptcy petition on November 29, 2010.
Robbins’s FLSA claim is based on unpaid overtime wages for time worked between
2003 and 2010. Robbins had knowledge of the facts giving rise to this claim as early
as 2003, as evidenced by her testimony that she felt she was entitled to overtime pay

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from the moment she became a salaried employee. Additionally, she complained to
her supervisor about not getting overtime pay in 2006 or 2007, well before the
bankruptcy suit was filed. Robbins also had knowledge of her breach of contract and
fraud claims when she filed for bankruptcy because those claims arose from Token’s
discontinuation of its year-end Bonus Program on November 3, 2010, less than a
month before Robbins filed for bankruptcy.
As to motive, the Eleventh Circuit has held that a debtor in bankruptcy has a
motive to conceal claims from creditors. See DeLeon v. Comcar Indus., Inc., 321 F.3d
1289, 1291 (11th Cir. 2003) (“[A] financial motive to secret assets exists under
Chapter 13 as well as Chapter 7 because the hiding of assets affects the amount to be
discounted and repaid.”). Robbins, however, contends that there is no evidence of
motive in this case because any recovery she obtained from these suits would have
been exempt from inclusion in the bankruptcy estate pursuant to Ala. Code § 6-10-6
or 15 U.S.C. § 1673, or simply would have been de minimis. There are several flaws
with this argument. First, Robbins did not possess the legal authority to unilaterally
determine that her claims were of such little value so as to not warrant disclosure.
Rather, Robbins had a duty under bankruptcy law to make a full and honest disclosure
of all assets, regardless of their value, so that her creditors could make an informed

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decision about whether to contest the bankruptcy court’s no-asset discharge. Second,
it is unlikely the statutes cited would have exempted monetary damages recovered
from in this lawsuit. The first statute, Ala. Code § 6-10-6, expressly states that
“wages, salaries or other compensation” are not exempted; yet here, Robbins seeks
back wages in the form of unpaid overtime pay. The second statute cited, 15 U.S.C.
§ 1673, relates to restrictions on garnishments, which is inapposite here because even
if Robbins’s is successful on her monetary claim her recovery would not be subject to
garnishment.
Because Robbins had knowledge of her claims and a motive to conceal those
claims at the time she filed her petition for bankruptcy, the Court finds it appropriate
to infer “deliberate or intentional manipulation” of the judicial process. Burnes, 291
F.3d at 1287. Nevertheless, Robbins argues that several facts militate against a finding
that she engaged in intentional manipulation. Specifically, Robbins contends that her
oral acknowledgment of her claims before the trustee at the creditors’ meeting, as well
as the fact that she was recently permitted to reopen her bankruptcy proceeding to
amend her petition and schedules, both show that she did possess the required intent
to support application of judicial estoppel. The Court disagrees.
The fact that Robbins orally informed the trustee that a potential wage an hour

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claim existed does not change this Court’s analysis. As an initial matter, the Court has
not been provided any authority that this type of disclosure is sufficient to satisfy the
debtor’s obligation to make a “full and honest” disclosure of all assets. Indeed, the
Court is skeptical that this type of disclosure would ever be sufficient since an oral
statement at a creditors’ meeting does not create an official, documented record
describing the potential claims, and hardly gives creditors the type of information
needed evaluate and potentially challenge a no-asset determination.
However, even assuming an oral disclosure at a creditors’ meeting is
appropriate in some cases, it was nonetheless insufficient here. First, Robbins did not
provide any disclosure whatsoever about her claims for breach of contract and fraud.
And with respect to the FLSA claim, the only information provided to the trustee was
that Robbins had a wage and hour case that would soon be filed, and that the schedules
would need to be amended accordingly. Robbins, however, never provided the trustee
with any information about the value of her FLSA claim, a fact that would have been
particularly relevant when determining whether a no-asset finding was appropriate.
In the absence of a full disclosure about the value of Robbins’s claims, the trustee
lacked sufficient information to make a no-asset determination, and conversely, the
creditors lacked the information necessary to make an informed decision about

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whether to object to the trustee’s finding. Furthermore, Robbins cannot contend that
the value of her claim was unknown at the time of the creditors’ meeting. While there
is always some uncertainty about how much will be recovered in a suit for unliquidated
damages, Robbins had all the facts and information necessary to assess the value of her
claim because she could calculate the amount of unpaid overtime by adding up the
hours she worked each week, exceeding forty hours, for which she received no pay.
The Court has only found one other case where the Eleventh Circuit has
addressed the adequacy of an oral disclosure at a creditors’ meeting. In Barger v. City
of Cartersville, 348 F.3d 1289 (2003), the plaintiff-debtor told the trustee during the
creditors’ meeting about a pending employment discrimination claim that she had
failed to list on her schedule of assets. When the court inquired about the claim, the
plaintiff stated that she was seeking injunctive relief, but failed to state that she was
also seeking monetary damages. Based on these representations, the trustee issued a
no-asset determination and the bankruptcy court ultimately issued a no-asset
discharge. Subsequently, the district court presiding over the plaintiff’s discrimination
claim entered summary judgment against the plaintiff, holding that she was collaterally
estopped from asserting her claim because she failed to adequately disclose her claim
in bankruptcy. The Eleventh Circuit affirmed, stating: “The foremost responsibility

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in this matter was for [the plaintiff] to fully disclose her assets. She did not satisfy her
duty. Instead, she dissembled to the trustee and indicated that her discrimination
claim had no value.” Barger, 348 F.3d at 1296.
Although Robbins’s oral disclosure at the creditors’ meeting was arguably more
revealing and less deceptive than the statement made in Barger, it nonetheless failed
to constitute the type of “full and honest” disclosure required in bankruptcy
proceeding. Burnes, 291 F.3d at 1286. As in Barger, the trustee in this case was not
provided the type of information, such as the value of the potential claims, which
would have been necessary to reach an informed decision about whether a no-asset
determination was appropriate. Moreover, the creditors were denied access to the full
information necessary to assess whether they should have contested the bankruptcy
court’s no-asset discharge. Thus, even if oral disclosure to the trustee is sufficient in
some cases, it was not sufficient here.
Finally, Robbins’s last contention that her recent attempt to reopen her
bankruptcy case to include her claims against Token in her schedule of assets is
equally unavailing. Robbins only made this effort after the Token’s counsel informed
her attorneys that it intended to raise judicial estoppel in its defense. The Eleventh
Circuit rejected such efforts under virtually identical circumstances in Barger, stating:

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Allowing [a debtor] to back-up, re-open the bankruptcy case, and amend
his bankruptcy filings, only after his omission has been challenged by an
adversary, suggests that a debtor should consider disclosing potential
assets only if he is caught concealing them. This so-called remedy would
only diminish the necessary incentive to provide the bankruptcy court
with a truthful disclosure of the debtor’s assets.
348 F.3d at 1297 (quoting Burnes, 291 F.3d at 1288). Pursuant to holding in Barger,
Robbins’s attempt to retroactively alter her bankruptcy filings after being notified
about Token’s judicial estoppel defense cannot save her claims.
V.

Conclusion
For the forgoing reasons, Token’s Motion for Partial Summary Judgment (Doc.

29), is due to be GRANTED. A separate order will be entered consistent with this
Opinion.
Done this 23rd day of April 2013.

L. Scott Coogler
United States District Judge
[170956]

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