Anderson et al v. Entergy Mississippi, Inc. et al
Filing
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ORDER granting 27 Motion for Summary Judgment for the reasons set out in the order. Signed by District Judge Daniel P. Jordan III on November 5, 2012.(SP)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF MISSISSIPPI
WESTERN DIVISION
WANDA ANDERSON, et al.
PLAINTIFFS
VS.
CIVIL ACTION NO. 5:11cv103-DPJ-FKB
ENTERGY OPERATIONS, INC.
DEFENDANT
ORDER
This wage-and-hour dispute is before the Court on Defendant’s Motion for Summary
Judgment as to Plaintiff Larry D. Ward [27]. The Court, having considered the parties’
submissions, finds that Ward should be judicially estopped from pursuing this claim.
Defendant’s motion is therefore granted.
I.
Facts and Procedural History
Defendant Entergy Operations, Inc., hired Plaintiff Larry D. Ward in July 2009.
Defendant has allegedly treated Ward as an exempt employee—making him ineligible for
overtime wages—since he was hired. While working for Defendant and not receiving overtime
pay, Ward filed a Chapter 13 Bankruptcy Petition on December 12, 2010. Accompanying the
petition, Ward also filed the necessary asset and liability schedules. On the schedule listing his
personal property, Ward indicated he had no “contingent or unliquidated claims” of any nature.
Def.’s Mot. [27] Ex. B, Schedules of Assets & Liabilities, at 4. Likewise, Ward’s amended
Schedule B, filed on January 7, 2011, also asserted that Ward’s assets did not include a
contingent or unliquidated claim. Id., Ex. C, Amended Schedule, at 3.
Thereafter, the bankruptcy court entered an order on June 7, 2011, confirming Ward’s
Chapter 13 plan. And a little over a month later, Ward, along with several co-workers, filed this
suit under the Fair Labor and Standards Act alleging Defendant violated the FLSA by incorrectly
classifying Ward and other employees as exempt from overtime pay. Nearly one year after
commencement of the FLSA case, Entergy moved for summary judgment against Ward. Entergy
argues that Ward is judicially estopped from pursuing this FLSA claim because he represented to
the bankruptcy court that his assets did not include any contingent or unliquidated claims. On
June 26, 2012, after responding to Defendant’s motion, Ward filed an amended Schedule B in his
on-going bankruptcy case clarifying that his assets include an “overtime compensation claim
against Entergy.” Pl.’s Supp. Mem. [37] Ex. A, Amended Schedule B, at 3.
II.
Standard
Summary judgment is warranted under Rule 56(a) of the Federal Rules of Civil
Procedure when evidence reveals no genuine dispute regarding any material fact and that the
moving party is entitled to judgment as a matter of law. The rule “mandates the entry of
summary judgment, after adequate time for discovery and upon motion, against a party who fails
to make a showing sufficient to establish the existence of an element essential to that party’s
case, and on which that party will bear the burden of proof at trial.” Celotex Corp. v. Catrett,
477 U.S. 317, 322 (1986).
The party moving for summary judgment “bears the initial responsibility of informing the
district court of the basis for its motion, and identifying those portions of [the record] which it
believes demonstrate the absence of a genuine issue of material fact.” Id. at 323. The
nonmoving party must then “go beyond the pleadings” and “designate ‘specific facts showing
that there is a genuine issue for trial.’” Id. at 324 (citation omitted). In reviewing the evidence,
factual controversies are to be resolved in favor of the nonmovant, “but only when . . . both
parties have submitted evidence of contradictory facts.” Little v. Liquid Air Corp., 37 F.3d 1069,
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1075 (5th Cir. 1994) (en banc). When such contradictory facts exist, the court may “not make
credibility determinations or weigh the evidence.” Reeves v. Sanderson Plumbing Prods., Inc.,
530 U.S. 133, 150 (2000). Conclusory allegations, speculation, unsubstantiated assertions, and
legalistic arguments have never constituted an adequate substitute for specific facts showing a
genuine issue for trial. TIG Ins. Co. v. Sedgwick James of Wash., 276 F.3d 754, 759 (5th Cir.
2002); Little, 37 F.3d at 1075; SEC v. Recile, 10 F.3d 1093, 1097 (5th Cir. 1993).
III.
Analysis
“The doctrine of judicial estoppel is ‘a common law doctrine by which a party who has
assumed one position in his pleadings may be estopped from assuming an inconsistent position,’
particularly in situations where ‘intentional self-contradiction is being used as a means of
obtaining unfair advantage in a forum provided for suitors seeking justice.’” Wells Fargo Bank,
N.A., v. Oparaji (In re Oparaji), No. 11-20871, 2012 WL 4748957, at *3 (5th Cir. Oct. 5, 2012)
(quoting Kane v. Nat’l Union Fire Ins. Co., 535 F.3d 380, 385 (5th Cir. 2008); Brandon v.
Interfirst Corp., 858 F.2d 266, 268 (5th Cir. 1988)). This doctrine is an equitable one, “‘invoked
by a court at its discretion’ to ‘protect the integrity of the judicial process.’” Reed v. City of
Arlington, 650 F.3d 571, 574 (5th Cir. 2011) (en banc) (quoting New Hampshire v. Maine, 532
U.S. 742, 749–50 (2001)). And “[b]ecause the doctrine is intended to protect the judicial system,
rather than the litigants, detrimental reliance by the opponent of the party against whom the
doctrine is applied is not necessary.” Browning Mfg. v. Mims (In re Coastal Plains, Inc.), 179
F.3d 197, 205 (5th Cir. 1999) (emphasis in original) (citations omitted).
To determine whether to apply judicial estoppel, the Fifth Circuit has instructed courts to
look for the following elements: “‘(1) the party against whom judicial estoppel is sought has
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asserted a legal position which is plainly inconsistent with a prior position; (2) a court accepted
the prior position; and (3) the party did not act inadvertently.’” Love v. Tyson Foods, Inc., 677
F.3d 258, 261 (5th Cir. 2012) (quoting Reed, 650 F.3d at 574). But these factors do not represent
“inflexible prerequisites or an exhaustive formula,” because “different considerations ‘may
inform the doctrine’s application in specific factual contexts.’” Reed, 650 F.3d at 574 (quoting
New Hampshire, 532 U.S. at 751) (one citation omitted).
Application of judicial estoppel in the bankruptcy context necessitates a sensitivity to the
duties and goals of the overarching bankruptcy system. See Reed, 650 F.3d at 574 (“[J]udicial
estoppel must be applied in such a way as to deter dishonest debtors, whose failure to fully and
honestly disclose all their assets undermines the integrity of the bankruptcy system, while
protecting the rights of creditors to an equitable distribution of the assets of the debtor’s estate.”).
And “[i]t goes without saying that the Bankruptcy Code and Rules impose upon bankruptcy
debtors an express, affirmative duty to disclose all assets, including contingent and unliquidated
claims.” Superior Crewboats, Inc. v. Primary P & I Underwriters (In re Superior Crewboats),
374 F.3d 330, 335 (5th Cir. 2004) (quoting Coastal Plains, 179 F.3d at 207–08) (emphasis in
original); see also 11 U.S.C. § 521(a)(1).
This duty to disclose is on-going throughout the duration of the bankruptcy. Superior
Crewboats, 374 F.3d at 335 (citing Coastal Plains, 179 F.3d at 207–08); see also Jethroe v.
Omnova Solutions, Inc., 412 F.3d 598, 600 (5th Cir. 2005) (noting an on-going duty to disclose
in Chapter 13 cases). Given this duty, the Fifth Circuit has repeatedly stated that “‘[j]udicial
estoppel is particularly appropriate where . . . a party fails to disclose an asset to a bankruptcy
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court, but then pursues a claim in a separate tribunal based on that undisclosed asset.’” Love, 677
F.3d at 261–62 (quoting Jethroe, 412 F.3d at 600).
Ward does not challenge Defendant’s assertion that the first and second judicial-estoppel
elements are satisfied. Indeed, in many respects the circumstances in this case are
indistinguishable from published Fifth Circuit cases. See Love, 677 F.3d at 260–61, 263 (debtor
with pending Chapter 13 bankruptcy at the time of filing race-discrimination and retaliatory
discharge suit judicially estopped for failure to disclose claims); Jethroe, 412 F.3d at 599 (debtor
did not disclose Title VII claim in Chapter 13 bankruptcy that was pending when debtor filed
suit); see also Kamont v. West, 83 F. App’x 1, 2–3 (5th Cir. 2003) (unpublished) (Chapter 7
debtor discharged 11 days before filing suit judicially estopped for failure to disclose potential
claim or multiple EEOC filings).
First, it was plainly inconsistent for Ward to represent to the bankruptcy court that he
owned no contingent or unliquidated claims but then later pursue such a claim in a different
court. Jethroe, 412 F.3d at 600 (finding debtor who made several appearances before bankruptcy
court in on-going Chapter 13 case concealed her claim). And because of the ongoing duty to
report, Ward asserted a plainly inconsistent legal position not only when he initially failed to
disclose, but also when he failed to supplement his bankruptcy schedules after filing this FLSA
case. See Kamont, 83 F. App’x at 3 (“Kamont filed her fourth claim while the bankruptcy was
pending, triggering a duty to amend her [Chapter 7] bankruptcy petition.” (citation omitted)).
Second, the bankruptcy court accepted Ward’s position when it confirmed his Chapter 13
plan on June 7, 2011. Def.’s Mot. [27] Ex. D, Order Confirming Plan. The adoption element of
judicial estoppel “does not require a formal judgment; rather, it only requires ‘that the first court
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has adopted the position urged by the party, either as a preliminary matter or as part of a final
disposition.’” Superior Crewboats, 374 F.3d at 335 (quoting Coastal Plains, 179 F.3d at 206).
“This requirement is satisfied where a bankruptcy court has confirmed a debtor’s bankruptcy plan
in reliance on the veracity of his asset schedules.” Lejeune v. Turner Indus. Group, LLC, No.
11-1238, 2012 WL 1118631 (E.D. La. Apr. 3, 2012) (citing Jethroe, 412 F.3d at 600); see
Jethroe, 412 F.3d at 600 (“[The bankruptcy] court certainly confirmed Jethroe’s plan at least in
part based on its assessment of her assets and liabilities.” (citing Coastal Plains, 179 F.3d at
210)). At the time the bankruptcy court confirmed Ward’s plan, it undoubtedly did so with some
reliance on Ward’s scheduled assets and debts, which up until June 26, 2012, did not disclose the
FLSA claim. A court therefore accepted Ward’s prior position that he had no contingent or
unliquidated claims.
Finally, Ward’s inconsistent position was not inadvertent. In the bankruptcy context, “the
debtor’s failure to satisfy its statutory disclosure duty is ‘inadvertent’ only when, in general, the
debtor either lacks knowledge of the undisclosed claims or has no motive for their concealment.”
Love, 677 F.3d at 262 (quoting Coastal Plains, 179 F.3d at 210) (some internal quotations
omitted). The lack of knowledge that is relevant for this inquiry is not the debtor’s awareness of
a duty to report the claim, but whether the debtor lacked knowledge of the facts giving rise to the
contingent or unliquidated claim. Jethroe, 412 F.3d at 601 (“Jethroe must show not that she was
unaware that she had a duty to disclose her claims but that, at the time she filed her bankruptcy
petition, she was unaware of the facts giving rise to them.” (citing Coastal Plains, 179 F.3d
211–12)).
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Starting with Ward’s knowledge, Entergy points out that Ward surely knew he never
received overtime pay. Def.’s Mem [28] at 7. And as to the frequency of Ward’s overtime
hours, the complaint states the plaintiffs, including Ward, “routinely work[ed] and [were]
scheduled to work hours in excess of 40 hours per week.” Second Am. Compl. [17] ¶ 12. Ward
nonetheless asserts that his non-disclosure was inadvertent because his claim “is not a clear-cut
cause of action, and instead, is the type of action that requires detailed legal advice and analysis.”
Pl.’s Resp. [30] at 3. Ward has provided the court with nothing more than argument of counsel,
which is insufficient to create a question of fact as to Ward’s inadvertence.1 Love, 677 F.3d at
262 (holding that burden shifted to plaintiff after motive was established and noting that
“[w]hether a debtor’s failure to disclose claims was inadvertent presents a question of fact”
(citing Robinson v. Tyson Foods, Inc., 595 F.3d 1269, 1275 (11th Cir. 2010)). Despite questions
about Ward’s knowledge when he filed his bankruptcy petition, an inference can be drawn that at
the time the plan was confirmed, Ward had knowledge of the FLSA claim that would be filed
less than five weeks later.
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Ward also has not provided the Court with any authority supporting his argument that the
complexity of FLSA claims has a bearing on the application of judicial estoppel. While it may
be true that FLSA claims are not as straight-forward as other claims, such as for sexual
harassment, courts outside of the Fifth Circuit have reached different conclusions when facing
similar arguments. Compare In re Family Dollar FLSA Litig., No. 3:08 MD 1932, 2011 WL
4899972, at *3 (W.D.N.C. Oct. 14, 2011) (“[N]otwithstanding Slater’s declaration, her
Complaint establishes that she had the requisite knowledge of her [FLSA] claims . . . .”), and
Gaskins v. Thousand Trails, 521 F. Supp. 2d 693, 697 (S.D. Ohio 2007) (finding sufficient basis
to disclose in pre-lawsuit bankruptcy petition where complaint alleged “Plaintiff ‘regularly’
worked more than 40 hours per week”), with Sovik v. Ducks Unlimited, Inc., No. 3:11-CV-0018,
2011 WL 1397970, at *3–4 (M.D. Tenn. Apr. 13, 2011) (noting that although plaintiff obviously
“knew the relevant facts regarding his hours and duties,” it “does not necessarily follow that he
knew that [his employer] owed him overtime compensation” under the FLSA).
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Regardless of his knowledge prior to filing this FLSA lawsuit, Ward at least had notice of
his claim when the lawsuit was filed on July 11, 2011. Although Ward’s bankruptcy case was
still pending at that time, Ward did not amend his Schedule B form listing his personal property
until prompted by Defendant’s motion in this case, some 11 months after confirmation of Ward’s
plan. The concurrence of Ward’s bankruptcy with the filing of this FLSA case and the nearly
one-year lapse prior to disclosure both undercut Ward’s inadvertence argument. See Jethroe, 412
F.3d at 600 (“A plaintiff is judicially estopped from pursuing an EEOC charge filed while his
bankruptcy petition was pending and where he did not fulfill his duty to amend the petition to
include that claim.” (citing Kamont, 83 F. App’x at 3)). “The obligation to disclose pending and
unliquidated claims in bankruptcy proceedings is an ongoing one,” and by failing to do so Ward
continued to represent to the bankruptcy court that he had no contingent or unliquidated claims.2
Id. (citing Coastal Plains, 179 F.3d at 207–08).
Turning then to motive, Ward also fails to rebut Defendant’s inference that “the potential
for civil damages he can keep for himself rather than use to pay creditors” created a motive for
Ward to conceal his FLSA claim. Def.’s Mem. [28] at 7. The Fifth Circuit has recognized that
“‘the motivation sub-element is almost always met if a debtor fails to disclose a claim or possible
claim to the bankruptcy court. Motivation in this context is self-evident because of potential
financial benefit resulting from the nondisclosure.’” Love, 677 F.3d at 262 (quoting Thompson v.
Sanderson Farms, Inc., No. 3:04CV837-WHB-JCS, 2006 U.S. Dist. LEXIS 48409, at *12–13
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This conclusion is unchanged by Ward’s assertion that he was unaware of his duty to
report, which is irrelevant to the inadvertence analysis. Kamont, 83 F. App’x at 3 (“A lack of
awareness of the statutory disclosure duty is simply not relevant to the question of judicial
estoppel.” (citing Coastal Plains, 179 F.3d at 212)).
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(S.D. Miss. May 31, 2006)). Under his June 26, 2011 plan, Ward is only required to repay a
minimum of 25% of his unsecured debt. Def.’s Mot. [27] Ex. D, Order Confirming Plan, at 5.
Had Ward disclosed this claim as part of his assets, he might have had to repay a greater
percentage of the unsecured debt. See Jethroe, 412 F.3d at 601 (noting debtor had an incentive to
conceal the claim so as to minimize repayment of unsecured debt). Thus, the inference of a
motive to conceal is fitting in this case.
Finally, Ward’s argument that he had no motive to conceal because of a newfound desire
to disclose the claim by amending his asset schedule has recently been rejected by the Fifth
Circuit. As the court in Love made clear, “‘[w]hen reviewing potential motive, the relevant
inquiry is intent as the time of non-disclosure,’” not at the later time when a party raising judicial
estoppel has essentially forced the disclosure. Love, 677 F.3d at 263 (quoting Robinson v. Tyson
Foods, Inc., 595 F.3d 1269, 1275 (11th Cir. 2010)). “Allowing [the 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 personal assets only
if he is caught concealing them.” Superior Crewboats, 374 F.3d at 336 (brackets in original)
(quoting Burnes v. Pemco Aeroplex, Inc., 291 F.3d 1282, 1288 (11th Cir. 2002). Although Ward
has provided the Court with a basis to assess his motive to conceal now, this “post-disclosure
conduct again fails to speak to his motivations while he was obligated to disclose his claims but
had not yet done so.” Love, 677 F.3d at 263. Ward has therefore provided the Court with no
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basis to conclude that he lacked a motive to conceal, and accordingly Ward’s non-disclosure of
this FLSA claim was not inadvertent.3
IV.
Conclusion
The Court has considered all of the arguments presented in the parties’ briefs. Those
arguments not addressed were either unsupported in law or fact or would not change the result of
this Order. Based on the foregoing, the Court finds that Ward should be judicially estopped from
pursuing his FLSA claim and that Defendant’s motion [27] is therefore granted.
SO ORDERED AND ADJUDGED this the 5th day of November, 2012.
s/ Daniel P. Jordan III
UNITED STATES DISTRICT JUDGE
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Ward also requests the Court to exercise discretion and decline to apply judicial estoppel
based on a cautionary statement in the Love opinion: “We do not mean to diminish the weight
that courts should give to creditors’ interests when determining whether judicial estoppel should
apply.” 677 F.3d at 266. But this caveat appears to be principally directed at the Reed and Kane
line of cases, in which the Fifth Circuit held that judicial estoppel would not apply to an innocent
trustee pursuing a cause of action that was the property of a Chapter 7 estate. See Love, 677 F.3d
at 266 (citing Reed, 650 F.3d at 574–75; Kane, 535 F.3d at 383–84). Ward, unlike the debtors in
those cases, is pursuing his FLSA claim independent of any trustee or creditor oversight, and
nothing in the parties memoranda suggests anything will prevent Ward “from realizing any
gains at all on claims he had not timely disclosed to his creditors.” Id. (citing Reed, 650 F.3d at
573). Thus, the Court sees no reason here to exercise discretion.
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