Browne v. PAM Transport Inc

IN THE UNITED STATES DISTRICT COURT

FOR THE WESTERN DISTRICT OF ARKANSAS

FAYETTEVILLE DIVISION

DAVID BROWNE, ANTONIO

CALDWELL, and LUCRETIA HALL, .

on behalf of themselves and others

similarly situated PLAINTIFFS

V. CASE NO. 16-CV-5366

P.A.M. TRANSPORT, INC., et al. DEFENDANTS

MEMORANDUM OPINION AND ORDER

Before the Court is a Motion for Summary Judgment on the Claims of Named

Plaintiff Antonio Caldwell and Opt-In Plaintiffs Based on Estoppel (Doc. 151) and a

Memorandum Brief (Doc. 152) and Statement of Facts in Support (Doc. 153) by P.A.M.

Transport (“PAM”) and John Doe Defendants (collectively, “Defendants”). Plaintiffs filed

a Response (Doc. 169), and Defendants filed a Reply (Doc. 179). The matter is now ripe

for decision. For the following reasons, the Court GRANTS IN PART AND DENIES IN

PART Defendants’ Motion for Summary Judgment (Doc. 151).

|. BACKGROUND

Defendants seek summary judgment against Named Plaintiff Antonio Caldwell and

forty-eight Opt-In Plaintiffs on the basis of judicial estoppel. PAM previously raised this

argument in its Motion for Judgment on the Pleadings. (Doc. 56). In its ruling, the Court

denied the motion without prejudice, holding that the question was fact-intensive and not

appropriate for a Rule 12(c) motion. (Doc. 82, p. 13).

Mr. Caldwell and his wife filed a Chapter 13 bankruptcy petition and proposed plan

in the Eastern District of Arkansas on June 20, 2014. He then made at least four

amendments to this proposed plan before the plan was confirmed by the bankruptcy court

in April 2015. Mr. Caldwell submitted two more amendments to the bankruptcy plan in

May 2015, and the bankruptcy court confirmed an amended plan on June 3, 2015. In

August of that year, Mr. Caldwell began working for PAM. He was employed by PAM for

a little more than five months, ending his employment in late January 2016. On December

9, 2016, Mr. Caldwell and fellow Named Plaintiffs David Browne and Lucretia Hall initiated

this action. Mr. Caldwell submitted another modified plan in his bankruptcy proceeding in

August 2017, adding a new creditor, but did not inform the bankruptcy court that this case

had been filed. In November of that year, Mr. Caldwell disclosed his bankruptcy

proceeding in response to Defendants’ interrogatories. His modified bankruptcy plan was

confirmed by the bankruptcy court on January 31, 2018. Throughout this period, Mr.

Caldwell also submitted amended schedules to the bankruptcy court but did not indicate

that he had initiated this litigation. In May 2018, PAM filed its Motion for Judgment on the

Pleadings in which it first raised the issue of judicial estoppel. On June 26, 2018, Mr.

Caldwell filed an amended Schedule A/B in his bankruptcy case, listing for the first time

the instant “lawsuit for unpaid wages and liquidated damages” under category 21 of

personal property, “other contingent and unliquidated claims of every nature.” (Doc. 169-

6). He indicated that the current value of his interest is “unknown.” /d. As of the writing of

this opinion, Mr. Caldwell’s bankruptcy proceeding remains active.

ll. LEGAL STANDARD

“Judicial estoppel is an equitable doctrine invoked by a court at its discretion” in

order to “prevent improper use of judicial machinery.” New Hampshire v. Maine, 532 U.S.

742, 750 (2001). Courts invoke judicial estoppel “to protect the integrity of the judicial

process by prohibiting parties from deliberately changing positions according to the

exigencies of the moment.” /d. at 749-50 (internal quotation marks and citations omitted).

“The circumstances under which judicial estoppel may appropriately be invoked are

probably not reducible to any general formulation of principle.” /d. However, the Supreme

Court offers three factors to consider in determining whether to apply the doctrine:

First, a party’s later position must be clearly inconsistent with its earlier

position. Second, courts regularly inquire whether the party has succeeded

in persuading a court to accept that party’s earlier position, so that judicial

acceptance of an inconsistent position in a later proceeding would create

the perception that either the first or the second court was misled. Absent

success in a prior proceeding, a party’s later inconsistent position

introduces no risk of inconsistent court determinations, and thus poses little

threat to judicial integrity. A third consideration is whether the party seeking

to assert an inconsistent position would derive an unfair advantage or

impose an unfair detriment on the opposing party if not estopped.

Id. at 750-51 (internal quotation marks and citations omitted). The Eighth Circuit has

cautioned that “[c]ourts should only apply the doctrine as an extraordinary remedy when

a party’s inconsistent behavior will result in a miscarriage of justice.” Stallings v.

Hussmann Corp., 447 F.3d 1041, 1049 (8th Cir. 2006).

Ill. DISCUSSION

A. Named Plaintiff Caldwell

The Court first turns to the matter of judicial estoppel as to Named Plaintiff Antonio

Caldwell. Both parties have provided the Court with copies of documents from Mr.

Caldwell’s bankruptcy proceedings, and the Court finds it appropriate to take judicial

notice of these filings as public records. See Bazzelle v. Compasspointe Healthcare

System, 2016 WL 6832643, at *2 (W.D. Ark. Nov. 18, 2016) (so holding in the context of

a Rule 12(c) motion for judgment on the pleadings).

1. Inconsistent Positions

The Court first considers whether Mr. Caldwell has taken inconsistent positions in

his bankruptcy proceeding and before this Court. Defendants assert that because Mr.

Caldwell failed to disclose this action on the modified plan confirmed by the bankruptcy

court after this litigation began and did not update his Schedule A/B until after Defendants

brought the matter to his attention, he has taken the position before the bankruptcy court

that this action does not exist while he attempts to litigate it here, a clearly inconsistent

position. In support, Defendants direct the Court to multiple cases in which the Eighth

Circuit has agreed with a lower court that a plaintiff took inconsistent positions in his or .

her bankruptcy proceeding and before the district court. See Stallings, 447 F.3d at 1049

(bankruptcy petitioner’s “failure to amend his bankruptcy schedules to include his [post-

petition] claim against [his employer] represented to the bankruptcy court that no such

claims existed,” and his position was inconsistent with his subsequent filing of those

claims in federal district court); see also Van Horn v. Martin, 812 F.3d 1180, 1183 (8th

Cir. 2016) (same); Jones v. Bob Evans Farms, Inc., 811 F.3d 1030, 1033 (8th Cir. 2016)

(same); E.E.0.C. v. CRST Van Expedited Inc., 679 F.3d 657, 679 (8th Cir. 2012) (same),

In each of these cases, however, the plaintiff ultimately had his or her bankruptcy

discharged or dismissed without having ever amended the relevant schedules. See

Stallings, 447 F.3d at 1045; Van Horn, 812 F.3d at 1182; Bob Evans, 811 F.3d at 1032:

CRST, 679 F.3d at 678. Here, in contrast, Mr. Caldwell’s opportunity to amend his

bankruptcy filings has not passed—his bankruptcy proceedings are ongoing. In fact, in

June 2018, Mr. Caldwell filed an updated Schedule A/B reflecting his participation in this

litigation, so his position before the bankruptcy court is not inconsistent with his position

in this case.

Defendants argue that since Mr. Caldwell did not update his Schedule A/B until

Defendants filed their first motion seeking judicial estoppel, he cannot be deemed to have

“cured” his earlier omission. This, Defendants argue, would reward Mr. Caldwell’s

gamesmanship in waiting until he was “caught” by Defendants to update his bankruptcy

filings. The Eighth Circuit has observed that “determining whether a litigant is playing fast

and loose with the courts has a subjective element and its resolution draws on the trier’s

intimate knowledge of the case at bar.” Stallings, 447 F.3d at 1046 (modifications

adopted). The Court is confident that neither Mr. Caldwell nor his attorneys are engaged

in such impermissible conduct. For example, Mr. Caldwell disclosed his pending

bankruptcy proceedings in response to Defendants’ interrogatories back in November

2017. If Mr. Caldwell were attempting to hide his ongoing wage-and-hour claim from the

bankruptcy court, it would also make sense to conceal his bankruptcy proceeding from

Defendants to avoid exactly the situation that has arisen here.

The Bankruptcy Code does not set deadlines for a petitioner to amend her filings

with a post-petition legal claim. Nor was Mr. Caldwell subject to an explicit instruction from

the trustee to report “lawsuits that were ‘received or receivable’ during the term of [the]

plan,” as the petitioners were in Bob Evans. 811 F.3d at 1032. Defendants do not offer

any Eighth Circuit case holding that a plaintiff cannot cure the omission of a post-petition

cause of action by amending her bankruptcy filings before discharge, and this Court

declines to exercise its discretion to reach such a holding. Since Mr. Caldwell’s

bankruptcy has not yet been dismissed or discharged, he was permitted to amend his

filings, and he has done so. Therefore, the Court does not find that he has taken

inconsistent positions.

2. Judicial Acceptance

Even if the Court were to find that Mr. Caldwell’s failure to earlier amend his filings

constituted a position inconsistent with this litigation, the Court does not find that the

bankruptcy court “accepted” Mr. Caldwell’s earlier position. Defendants cite to two cases

from the Eastern District of Arkansas for the proposition that a court confirming a

petitioner's Chapter 13 Plan constitutes acceptance for the purposes of judicial estoppel.

Funk v. Labor Ready, Inc., 2008 WL 4368946 (E.D. Ark. Sept. 24, 2008); Small v. Ark.

Fair Housing Comm'n, 2007 WL 433565 (E.D. Ark. Feb. 6, 2007). In both of these cases,

however, the plaintiffs cause of action accrued before he or she filed a bankruptcy

petition, and the standard forms required the petitioner to disclose it at the time of filing.

When the cause of action accrues after the bankruptcy petition is filed, in contrast, there

is no specific timeline on which the schedules or the plan must be amended, and the

petitioner can continue to update the schedules and plan throughout the multi-year

bankruptcy process. In Mr. Caldwell’s case, for example, it appears that he has amended

his sian at least seven times since filing for bankruptcy and submitted amended

schedules more than a dozen times. See Doc. 169-5.

Given the ease and frequency with which a petitioner can modify her bankruptcy

filings, it makes sense that when the cause of action arises after the bankruptcy petition,

the Eighth Circuit has only found judicial acceptance of an inconsistent position when the

bankruptcy is discharged without the cause of action having been disclosed. See Van

Horn, 812 F.3d at 1183; Bob Evans, 811 F.3d at 1033. In fact, the Eighth Circuit

specifically found “no judicial acceptance of [plaintiffs] inconsistent position [where] the

bankruptcy court never discharged [his] debts based on the information that [he] provided

in his schedules.” Stallings, 447 F.3d at 1049. See also CRST, 679 F.3d at 679-80

(contrasting the plaintiffs’ receipt of a full discharge with the facts in Stallings). Similarly

here, the Court believes that even if Mr. Caldwell had taken an inconsistent position, there

has not been judicial acceptance of that position simply because the bankruptcy court

confirmed a modified plan that did not list this lawsuit. There was no specific deadline by

which Mr. Caldwell was required to update his bankruptcy filings. He was permitted to file

multiple amendments to both the plan and the schedules over the course of the

bankruptcy, and indeed has done so, including an amended Schedule A/B to reflect this

lawsuit, and his bankruptcy has not yet been discharged. Mr. Caldwell cannot be said to

have had a “success” in his bankruptcy proceedings that creates a “risk of inconsistent

court determinations’ or “the perception that either . .. court was misled.” New Hampshire,

532 U.S. at 750-51. Therefore, the Court finds that there was no judicial acceptance,

even if Mr. Caldwell had taken inconsistent positions before this Court and the bankruptcy

court.

3. Unfair Advantage

Finally, the Court cannot conclude that Mr. Caldwell has received any unfair

advantage from waiting approximately eighteen months before disclosing post-petition

litigation in his bankruptcy proceedings. The Eighth Circuit admonishes that

judicial estoppel does not apply when a debtor’s prior position was taken

because of a good-faith mistake rather than as part of a scheme to mislead

the court. Although it may generally be reasonable to assume that a debtor

who fails to disclose a substantial asset in bankruptcy proceedings gains an

advantage, the specific facts of a case may weigh against such an

inference. A rule that the requisite intent for judicial estoppel can be inferred

from the mere fact of nondisclosure in a bankruptcy proceeding would

unduly expand the reach of judicial estoppel in post-bankruptcy

proceedings and would inevitably result in the preclusion of viable claims

on the basis of inadvertent or good-faith inconsistencies.

Stallings, 447 F.3d at 1049 (internal quotation marks and citations omitted and

modifications adopted). The Stallings court offers the example of someone who receives

a right-to-sue letter from the Equal Employment Opportunity Commission (“EEOC”) after

filing for bankruptcy and does not amend the bankruptcy petition accordingly as someone

with a “motive to conceal’ those claims. /d. at 1048. Importantly, however, the Stallings

court did not extend that reasoning to the situation before it, in which the plaintiffs FMLA

claim accrued after he filed for bankruptcy, because he had not received an indication

that he had “a viable claim” against his employer. /d. at 1049. In Bob Evans and Van

Horn, the plaintiffs had received right-to-sue letters from the EEOC and the courts were

applying this language from Stallings. See 811 F.3d at 1034; 812 F.3d at 1183. See also

Bazzelle, 2016 WL 6832642, at *4.

Additionally, in Bob Evans, Van Horn, and Bazzelle, in contrast with Stallings, the

petitioner received a discharge of debt without having disclosed the civil claim, thereby

denying creditors access to the proceeds of any potential settlement. See 811 F.3d at

1032; 812 F.3d at 1182; 2016 WL 6832642, at “1. Here, in contrast, Mr. Caldwell has not

received any discharge. He continues to make monthly payments pursuant to his

bankruptcy plan. He continues to be subject to monitoring by the bankruptcy trustee, who

could direct Mr. Caldwell to modify his plan based on developments in this case if

appropriate. See Francis v. Ark. Blue Cross & Blue Shield, 2007 WL 1965393, at *3 (E.D.

Ark. July 2, 2007) (“The bankruptcy court has now been advised of this lawsuit, albeit

after the fact. Further, in the event of a recovery, the bankruptcy trustee will have the

option to distribute any recovery in excess of the statutory exemption to Plaintiff's creditors

(assuming they file a claim).”); Ginardi v. Frontier Gas Servs., LLC, 2012 WL 136269, at

*3 (E.D. Ark. Jan. 18, 2012) (“[Plaintiffs’] delay in disclosing does not put Defendant at an

unfair advantage. Furthermore, the bankruptcy court is now advised of this case and can

modify the Chapter 13 plan as it sees fit. Therefore, . . . the doctrine of judicial estoppel

is not appropriate in this case.”). The trustee did not require Mr. Caldwell to modify his

bankruptcy plan after he disclosed this litigation in his amended Schedule A/B in June

2018, indicating that Mr. Caldwell’s monthly payments would not have been affected by

earlier disclosure of this suit. In fact even Defendants acknowledge that “if the debtor

discloses the claim during the bankruptcy, the trustee will acquire the power and right to

determine, in the first instance, how to attempt to turn the claim into cash that can then

be used to pay creditors.” (Doc. 152, p. 16). That is exactly what has happened here, and

the Court cannot find any evidence that Mr. Caldwell received an unfair advantage from

the delay in amending his Schedule A/B such that justice requires he be estopped from

pursuing this claim. It has been disclosed during the pendency of the bankruptcy, and the

trustee may now take any measures he believes are necessary to provide compensation

to Mr. Caldwell’s creditors.

B. Opt-In Plaintiffs

1. Waiver

Defendants identify forty-eight Opt-In Plaintiffs whose bankruptcy proceedings

overlapped with their involvement in this litigation and against whom Defendants assert

that judicial estoppel is also appropriate. Plaintiffs respond that while Dstenaente raised

estoppel as an affirmative defense against Named Plaintiffs’ claims, they did not raise it

in reference to Opt-in Plaintiffs and have therefore waived judicial estoppel as an

affirmative defense."

Failure to plead an affirmative defense generally means that a defendant has

waived that defense. However, the Eighth Circuit has held that this is not a hard and fast

rule and that the “Rule 8(c) pleading requirement is intended to give the opposing party

both notice of the affirmative defense and the opportunity to rebut it.” First Union Nat’!

Bank v. Pictet Overseas Trust Corp., 477 F.3d 616, 622 (8th Cir. 2007). Here, though

Defendants did not explicitly raise the affirmative defense of estoppel with regard to the

claims of Opt-In Plaintiffs in the Amended Answer, they did raise this defense in the

Motion for Judgment on the Pleadings filed in May 2018. (Doc. 57). Plaintiffs did not raise

the issue of waiver at that time but responded on the merits of the motion and requested

time to respond more substantively. (Doc. 68, pp.16—-19). In its ruling, the Court dismissed

Defendants’ motion without prejudice, allowing them to raise the argument again later.

Plaintiffs therefore do not face unfair surprise, inadequate notice, or prejudice now that

Defendants raise the same argument at the summary judgment phase. Defendants’

failure to explicitly plead the affirmative defense of estoppel against the Opt-In Plaintiffs

is not fatal.

2. Judicial Estoppel

The bankruptcy proceedings of the Plaintiffs identified in Defendants’ motion

appear to be in various postures: some are active, some have been dismissed, and some

1 The relevant paragraph of the Amended Answer reads, “Named Plaintiffs’ claims are

barred in whole or in part by the doctrines of release, waiver, deduction, setoff, and

estoppel.” (Doc. 141, p. 25). Other affirmative defenses are raised as to “Plaintiffs’ claims”

or “putative Plaintiffs.” See, e.g., id. at p. 23.

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discharged; additionally, some Plaintiffs filed for bankruptcy before opting in to this

lawsuit, and some filed after.* Judicial estoppel is appropriately applied to Plaintiffs who

had debt discharged by the bankruptcy court without having disclosed their participation

in this litigation. The Eighth Circuit’s holdings in Bob Evans and Van Horn make clear that

having debt discharged by the bankruptcy court without disclosing a cause of action, even

if the cause of action accrued after the bankruptcy petition was filed, is the acceptance of

an inconsistent position and an unfair advantage to the plaintiff. See 811 F.3d at 1033—

34; 812 F.3d at 1183. If the claim had been disclosed, “the bankruptcy trustee could have

moved the bankruptcy court to order [the plaintiff] to make the proceeds from any potential

settlement available to his unsecured creditors” to whom the plaintiffs liability was

ultimately discharged. 812 F.3d at 1183 (internal quotation marks omitted).

Opt-In Plaintiffs who filed for bankruptcy before opting into this lawsuit and have

active cases are still able to amend their bankruptcy filings to disclose their participation

in this litigation. Unless and until their cases are discharged, they have not yet had an

inconsistent position accepted by a court and received an unfair advantage from their

failure to disclose. Therefore, the doctrine of judicial estoppel is not appropriately applied

to any Opt-In Plaintiff who filed bankruptcy before joining this suit and whose proceeding

remains open to submit an amended Schedule A/B or Schedule B, unless there is other

- evidence of unfair advantage to the Plaintiff or intent to mislead the bankruptcy court.

Where a Plaintiff filed for bankruptcy after opting into the litigation, she was

required to disclose her participation at the time she filed for bankruptcy. If she failed to

2 Since, as discussed above, the Court will take judicial notice of public records, including

bankruptcy filings, Plaintiffs’ objection to the material Defendants offer in support of their

Motion is moot.

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comply with this requirement, she took an inconsistent position. Again, however, this

Court declines to exercise its discretion to hold that, given a bankruptcy petitioner's ability

to amend her filings, something short of a discharge constitutes “acceptance” of her

position by the bankruptcy court for the purposes of estoppel. Without evidence of intent

to mislead the bankruptcy court or unfair advantage, the Court will not find a Plaintiff

estopped who has not had her bankruptcy discharged, even if her bankruptcy was filed

after she opted into this litigation.

Finally, Plaintiffs who have had their bankruptcies dismissed without a discharge

of debt also are not subject to judicial estoppel. Even if a Plaintiff never disclosed her

participation in this suit, if her bankruptcy was dismissed, the court never adopted any

position taken by the Plaintiff and she never received any benefit from the bankruptcy

proceeding that would constitute an unfair advantage. See Stallings, 447 F.3d at 1049.

Based on this discussion of when judicial estoppel is and is not appropriate, the

parties are directed to examine the relevant bankruptcy filings and determine the Plaintiffs

to whom the doctrine of judicial estoppel is applicable. The parties should then file joint

supplemental briefing indicating which Opt-In Plaintiffs they agree should be estopped.

To the extent that the parties cannot discern or agree whether judicial estoppel is

applicable to a particular Opt-In Plaintiff based on the Court’s discussion above, the

parties are directed to separately brief the issues and file the applicable records so that

the Court may rule. Any briefing the parties wish to file on this matter is due no later than

January 10, 2020.

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IV. CONCLUSION

Therefore, Defendants’ Motion for Summary Judgment (Doc. 151) is GRANTED

IN PART AND DENIED IN PART. i.

[=

IT IS SO ORDERED on this 3 day of December /20/19.

CaN.

MOFAY/L. BROOKS

~ UNITED/STATES-BISTRICT JUDGE

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