Donnelly et al v. Academic Partnerships LLC
Filing
59
Memorandum Opinion and Order granting 23 Motion for Judgment on the Pleadings on Plaintiff Dante Williams' Claims and Brief in Support and DISMISSES WITH PREJUDICE Williams's claims. By separate order, the Court will issue a final judgment as to Williams. (Ordered by Judge Brantley Starr on 3/8/2022) (ykp)
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UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF TEXAS
DALLAS DIVISION
RAYMOND DONNELLY, O’TARA
JOHNSON, AND DANTE
WILLIAMS,
Plaintiffs,
v.
ACADEMIC PARTNERSHIPS,
LLC,
Defendant.
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Civil Action No. 3:20-CV-01106-X
MEMORANDUM OPINION AND ORDER
Before the Court is Defendant Academic Partnership, LLC’s (Academic)
motion for summary judgment on Plaintiff Dante Williams’s claims. [Doc. No. 23].
Though originally filed as a motion for judgment on the pleadings, the Court notified
the parties of its intention to convert the motion to one for summary judgment under
Federal Rule of Civil Procedure 12(d). [Doc. No. 57]. After careful consideration, and
for the reasons explained below, the Court GRANTS Academic’s motion and
DISMISSES WITH PREJUDICE Williams’s claims.
A final judgment as to
Williams will follow shortly.
I.
Factual Background
Academic is a higher education company that partners with colleges and
universities in establishing and maintaining online course curricula. Dante Williams
is one of several plaintiffs who has brought this action against Academic, alleging
1
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that Academic engaged in impermissible racial discrimination against Black
employees such as Williams. Williams was employed by Academic from March 2013
until July 2018 and served as a team lead in the workforce management department.
Williams claims that, beginning in August 2017, he was repeatedly discriminated
against and denied promotions for which he applied in favor of White candidates. In
April 2018, Williams met with Academic’s executive vice president and complained
to her about the racial disparity within Academic, the disparate treatment of Black
employees, and systemic discrimination within Academic’s hiring and promotions
practices. Williams alleges that, after he voiced these concerns, he was subjected to
retaliatory treatment, and continued to be treated poorly compared to White
employees. Williams brought these issues to the attention of his direct supervisor on
a nearly weekly basis and continued to frequently complain of this discriminatory
treatment after his direct supervisor left Academic.
Academic constructively
discharged Williams in July 2018. Williams timely filed complaints of discrimination
with the Equal Employment Opportunity Commission and sued Academic in May
2020, under various provisions of Title VII, Section 1981 of the Civil Rights Act of
1866, and the Texas Labor Code.
Academic filed a motion for judgment on the pleadings against Williams alone,
which, as explained above, the Court has converted to a motion for summary
judgment. 1 Academic’s argument does not relate to the merit of Williams’s claims.
Rather, Academic argues that Williams is judicially estopped from pursuing his
1
Doc. No. 57.
2
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claims because he failed to disclose them as required in his bankruptcy proceeding.
Williams filed for Chapter 13 bankruptcy in June 2017, and the bankruptcy court
confirmed his plan in November 2017. Williams never amended his petition to
disclose his claims against Academic, either before or after the bankruptcy court
confirmed his plan.
In December 2018, more than five months after Academic
discharged Williams, the bankruptcy court dismissed Williams’s case for his failure
to make the required payments under his plan.
II.
Legal Standards
“Summary judgment is appropriate if, viewing the evidence in the light most
favorable to the non-moving party, 2 “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.” 3 “A fact is material if it ‘might affect the outcome of the suit’” and “[a] factual
dispute is genuine ‘if the evidence is such that a reasonable jury could return a verdict
for the nonmoving party.’” 4
“Judicial estoppel is a common law doctrine that prevents a party from
assuming inconsistent positions in litigation.” 5 “The purpose of the doctrine is to
protect the integrity of the judicial process, by prevent[ing] parties from playing fast
and loose with the courts to suit the exigencies of self interest.” 6 “Judicial estoppel
2
Howell v. Town of Ball, 827 F.3d 515, 522 (5th Cir. 2016).
3
FED. R. CIV. P. 56(a).
4 Thomas v. Tregre, 913 F.3d 458, 462 (5th Cir. 2019) (quoting Anderson v. Liberty Lobby, Inc.,
477 U.S. 242, 248 (1986)).
5
Allen v. C & H Distribs., L.L.C., 813 F.3d 566, 572 (5th Cir. 2015) (cleaned up).
6
In re Coastal Plains, Inc., 179 F.3d 197, 205 (5th Cir. 1999) (cleaned up).
3
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has three elements: (1) The party against whom it is sought has asserted a legal
position that is plainly inconsistent with a prior position; (2) a court accepted the
prior position; and (3) the party did not act inadvertently.” 7
“Because full disclosure by debtors is essential to the proper functioning of the
bankruptcy system, the Bankruptcy Code severely penalizes debtors who fail to
disclose
assets . . . .” 8
Correspondingly,
“[j]udicial
estoppel
is
particularly
appropriate where . . . a party fails to disclose an asset to a bankruptcy court, but
then pursues a claim in a separate tribunal based on that undisclosed asset.” 9 “When
a debtor fails to disclose a pending or potential claim in her bankruptcy petition, she
is judicially estopped from bringing that claim later.” 10
The debtor is not relieved of this duty to disclose pending or potential claims
after filing his initial petition or after the bankruptcy confirms his plan. Rather,
“Chapter 13 debtors have a continuing obligation to disclose post-petition causes of
action.” 11
Likewise, “debtors must disclose post-confirmation assets to the
bankruptcy court.” 12 Even where it is not clear that creditors will be entitled to
recover a post-confirmation asset, “debtors have a duty to disclose to the bankruptcy
court notwithstanding uncertainty.” 13 The Fifth Circuit has explained the “obvious”
7
In re Flugence, 738 F.3d 126, 129 (5th Cir. 2013).
8
Chartschlaa v. Nationwide Mut. Ins. Co., 538 F.3d 116, 122 (2d Cir. 2008).
9
Jethroe v. Omnova Sols., Inc., 412 F.3d 598, 600 (5th Cir. 2005).
10
11
Kamont v. West, 83 F. App’x 1, 3 (5th Cir. 2003).
Allen, 813 F.3d at 572 (cleaned up).
United States ex rel. Bias v. Tangipahoa Par. Sch. Bd., 766 F. App’x 38, 42 (5th Cir. 2019)
(cleaned up).
12
13
Flugence, 738 F.3d at 130.
4
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reason for this rule:
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Whether a particular asset should be available to satisfy
creditors is often a contested issue, and the debtor’s duty to disclose assets—even
where he has a colorable theory for why those assets should be shielded from
creditors—allows that issue to be decided as part of the orderly bankruptcy process. 14
III.
Analysis
Here, Williams does not dispute that he failed to disclose his claims to the
bankruptcy court prior to its dismissal of his case for failure to make payments in
December of 2018. Rather, Williams claims that in his bankruptcy proceeding he was
only asked whether he had actually filed a lawsuit or made a demand for payment,
not whether he had any potential claims. 15 But the bankruptcy petition Williams
filled out required disclosure of “claims against third parties, whether or not you have
filed a lawsuit or made a demand for payment.” 16 Williams indicated that he had no
such claims. Although he had a continuing obligation to disclose post-confirmation
assets to the bankruptcy court, he never notified the court of his claims against
Academic. Because Williams had an “affirmative duty” to disclose his claims against
Academic to the bankruptcy court, his failure to do so constituted an implicit
representation that he had none. 17 By filing this lawsuit—which is predicated on
events that allegedly occurred prior to the bankruptcy court’s dismissal of Williams’s
14
Id.; see also Allen, 813 F.3d at 572; Bias, 766 F. App’x at 42.
15
Doc. No. 25 at 6; Doc. No. 25-1 at 2.
Doc. No. 24-1 at 13. Williams does not contest the authenticity of this document or offer any
explanation whatsoever as to the discrepancy between it and his representation to this Court
regarding its contents. So, there is no genuine issue as to whether Williams was asked to disclose
potential claims.
16
17
Flugence, 738 F.3d at 130.
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case—Williams “has asserted a legal position that is plainly inconsistent with a prior
position.” 18 So, the first element of judicial estoppel is satisfied.
Next, the Court must consider whether “a court accepted [Williams’s] prior
position.” 19 Here, based on Williams’s representations in his petition—including his
indication that he did not have any claims against third parties—the bankruptcy
court confirmed Williams’s plan. Had Williams disclosed his post-petition causes of
action against Academic as required, the bankruptcy court “may well have altered
[his] plan.” 20 Accordingly, the second element of judicial estoppel is also satisfied.
Finally, the Court considers whether Williams acted inadvertently in failing to
disclose his claims to the bankruptcy court. 21
“To establish inadvertence . . .
[Williams] may prove either that [he] did not know of the inconsistent position or that
[he] had no motive to conceal it from the court.” 22
To demonstrate a lack of
knowledge, Williams may not simply show he was unaware that he was obligated to
disclose his claims. In fact, whether Williams knew he had a duty to disclose his
claims is “irrelevant.” 23 Rather, he must demonstrate that he was “unaware of the
facts giving rise to [his claims].” 24 And by his own allegation, Williams continually
18
Id. at 129.
19
Id.
20
Id. at 130.
21
Id. at 129.
22
Id. at 130 (cleaned up).
23
Allen, 813 F.3d at 573.
24 Id.; see also, e.g., Bryant v. Miss. Div. of Medicaid, 4:13-CV-123-DMB-RP, 2017 WL 706316
at *2 (N.D. Miss. Feb. 22, 2017); Pete v. Capital One, N.A., 4:17-CV-594-A, 2018 WL 3150424, at *4
(N.D. Tex. June 26, 2018) (McBryde, J.).
6
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voiced his complaints of discrimination that are basis of this suit to his supervisors
at Academic prior to his discharge in July 2018. So, he was aware of the facts
underlying his claims.
Accordingly, the third element of judicial estoppel is
satisfied. 25
After confirming that Williams knew of his inconsistent position, the Court
next must consider whether Williams had a motive to conceal it. “[T]he 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.” 26 Had Williams disclosed his
claims, “his creditors may have sought modification and the bankruptcy court might
have modified his plan to require paying some of the interest, paying over a shorter
period, or paying some of the discharged debts.” 27 Williams could “reap a windfall
had [he] been able to recover on the undisclosed claim[s] without having disclosed it
to the creditors,” 28 so he had a motive to conceal them. Because Williams both knew
Williams argues that his actions were inadvertent because he was not aware that he had
potential legal claims against Academic until he contacted and met with his lawyers in March 2020.
As explained above, the relevant question is not whether Williams knew that he had legal claims, but
whether Williams knew the facts giving rise to the claims. Allen, 813 F.3d at 573. But even if more
detailed legal knowledge were necessary, the Court would still conclude that Williams did not act
inadvertently. While he contends that he became aware that he had legal claims in March 2020,
Williams filed his Equal Employment Opportunity Commission charge—a condition precedent to filing
such an employment discrimination lawsuit—in April 2019. Despite Academic pointing out this
discrepancy, Williams again offers no explanation and does not point to any event between the
bankruptcy dismissal in December 2018 and his charge filing in April 2019 by which he became aware
that he had legal claims.
25
26
Love v. Tyson Foods, Inc., 677 F.3d 258, 262 (5th Cir. 2012) (cleaned up).
27
GSDMIdea, 798 F.3d at 273.
28
Love, 677 F.3d at 262 (cleaned up).
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of his inconsistent position and had a motive to conceal it, the third and final element
of judicial estoppel is satisfied.
Notwithstanding the satisfaction of each element of judicial estoppel, Williams
argues that the Court should nonetheless deny Academic’s motion. After all, “judicial
estoppel is an equitable doctrine and the decision whether to invoke it [is] within the
court’s discretion.” 29 Doubling down on his contention that he was not even aware he
had claims against Academic until he met with lawyers, Williams insists it was not
his intent to play “fast and loose” with the courts, 30 so the Court should not dismiss
his claims.
In advancing this argument, Williams relies heavily on Kane v. National Union
Fire Insurance Co., where the Fifth Circuit reversed the district court’s conclusion
that judicial estoppel required dismissal of the plaintiffs’ claims because they had not
disclosed the claims in their Chapter 7 bankruptcy proceeding. 31 But Kane hinged
on the role of the bankruptcy trustee. Unlike here, after the Kanes filed their lawsuit,
the bankruptcy court reopened their case post-discharge so that the trustee could
administer these previously undisclosed claims for the benefit of the estate and the
creditors. 32 The trustee’s role in pursuing the claim meant that equitable estoppel
would only serve to stop the trustee and creditors from fulfilling their rightful roles. 33
29
Kane v. Nat’l Union Fire Ins. Co., 535 F.3d 380, 384 (5th Cir. 2008) (alteration in original).
30
Coastal Plains, 179 F.3d at 205.
31
Kane, 535 F.3d 380 at 384.
32
Id. at 383.
33 Id. (“[T]he only way the Kanes’ creditors would [have been] harmed [was] if judicial estoppel
[was] applied to bar the Trustee from pursuing the claim against Defendants on behalf of the estate.”).
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And any benefit to the Kanes (from not judicially estopping the trustee from pursuing
the claim) was minimal. The Kanes “[stood] to benefit [from the lawsuit] only in the
event that there [was] a surplus after all debts and fees ha[d] been paid.” 34 To further
explain its reasoning, the Fifth Circuit then quoted Judge Easterbrook with approval:
The [debtor’s] nondisclosure in bankruptcy harmed his creditors by
hiding assets from them. Using this same nondisclosure to wipe out [the
debtor’s claim against the defendant] would complete the job by denying
creditors even the right to seek some share of the recovery. Yet the
creditors have not contradicted themselves in court. They were not
aware of what [the debtor] has been doing behind their backs. Creditors
gypped by [the debtor’s] maneuver are hurt a second time by the district
judge’s decision. Judicial estoppel is an equitable doctrine, and using it
to land another blow on the victims of bankruptcy fraud is not an
equitable application. 35
Here, the bankruptcy court dismissed Williams’s plan for his failure to make
the required payments prior to the commencement of this lawsuit, so Williams has
no live bankruptcy plan in place and there is no trustee. Neither party has advised
the Court as to whether Williams still has creditors, nor has Williams argued that
the Court should decline to estop his claims based on concerns for his creditors’
interests. 36
Williams also relies on Gilbreath v. Averitt Express, Inc., where the district
court determined that all the elements of judicial estoppel were satisfied but
34
35
2006).
Id at 387.
Id. (alternation in original) (quoting Biesek v. Soo Line R.R. Co., 440 F.3d 410, 413 (7th Cir.
36 And while Williams’s recovery on his claims against Academic might make him more likely
to eventually pay back his creditors—again, if he still has any—that is a much more remote
consideration than in Kane, where a live bankruptcy proceeding existed which entitled the Kanes’
creditors to directly acquire the Kanes’ assets, including any damages from the lawsuit.
9
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nevertheless declined to estop the plaintiff’s claim. 37 Central to the Gilbreath court’s
conclusion, though, was the fact that there was then “considerable debate over
whether Chapter 13 debtors must disclose assets acquired post-confirmation.” 38
Since Gilbreath was decided, the Fifth Circuit has ended that debate: “[Chapter 13]
[d]ebtors must disclose post-confirmation assets to the bankruptcy court.” 39
So,
neither Kane nor Gilbreath supports Williams’s argument. Accordingly, the Court
GRANTS Academic’s motion for summary judgment and DISMISSES WITH
PREJUDICE Williams’s claims. 40
Academic also requests that the Court award them reasonable fees and costs.
Williams does not mention Academic’s request in his responsive briefing. Should
Academic still wish to recover these reasonable fees and costs, it may file a motion
for fees and costs that sets out the legal basis for doing so, accompanied by an exhibit
describing the various items—including the work done, the time expended, and the
37
Gilbreath v. Averitt Exp., Inc., No. 09–1922, 2010 WL 4554090 (W.D. La. Nov. 3, 2010).
38
Id. at *9.
39
Bias, 766 F. App’x. at 42 (cleaned up); see also GSD&M Idea, 2014 WL 11320447 at *6.
40 While neither party points to it, the Court notes that Circuits others than the Fifth have
adopted more expansive judicial estoppel inquiries. For example, recently the en banc Eleventh
Circuit—expanding the judicial estoppel inquiry beyond that of the Fifth Circuit and its own
precedents—considered 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.” Slater v. U.S. Steel Corp., 871 F.3d 1174 (11th Cir. 2017). In
significant part because the plaintiff in Slater had immediately admitted and corrected her
nondisclosure of claims to the Chapter 7 trustee and the bankruptcy court upon learning of it, the
Eleventh Circuit deemed judicial estoppel inappropriate. Id. at 1178. Williams’s response, on the
other hand, has been to make further misrepresentations to the Court in an attempt to explain away
his nondisclosure. Furthermore, the Eleventh Circuit noted that, as Judge Easterbrook explained in
Biesek, 440 F.3d at 413, estoppel of the plaintiff’s claims would injure her creditors because she had a
live bankruptcy plan in place. Slater, 871 F.3d at 118. So, even under a more expansive judicial
estoppel inquiry, Williams’s claims would likely still be judicially estopped.
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associated hourly billing rates—for which recovery is sought within 14 days of the
final judgment.
IV.
Conclusion
For the foregoing reasons, the Court GRANTS Academic’s motion for
summary judgment and DISMISSES WITH PREJUDICE Williams’s claims. By
separate order, the Court will issue a final judgment as to Williams.
IT IS SO ORDERED this 7th day of March, 2022.
BRANTLEY STARR
UNITED STATES DISTRICT JUDGE
11
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