Snyder v. Polymer Machinery Company, Inc.

PEARSON, J.

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF OHIO

EASTERN DIVISION

GREGORY C. SNYDER JR, )

) CASE NO. 5:22CV1496

Plaintiff, )

)

v. ) JUDGE BENITA Y. PEARSON

)

POLYMER MACHINERY )

COMPANY INC., et al., ) MEMORANDUM OF OPINION

) AND ORDER

Defendants. ) [Resolving ECF No. 14]

Pending is Defendants Polymer Machinery Company, Inc. (“Polymer Machinery’) and

Kendall Ashby’s Motion to Dismiss (ECF No. 14). The Court has been advised, having

reviewed the record, the parties’ briefs,’ and the applicable law. For the reasons that follow, the

Court grants summary judgment to Defendants.

' Plaintiff supports his response to the motion with a Declaration (ECF No. 24-1).

As the party who chose to present matters outside the pleadings in his response, Plaintiff

had a reasonable opportunity to present all pertinent material in his declaration and took

advantage of that right. Considering the declaration, the Court converts the within

motion into one for summary judgment. See, e.g., Schultz v. Hydro-Gear Ltd.

Partnership, No. 5:12-CV-10, 2012 WL 3527068, at *3 (W.D. Ky. Aug. 15, 2012) (“A

party cannot claim to have been ‘surprised by the conversion of the motion to dismiss into

a motion for summary judgment when the party was aware that materials outside the

pleading had been submitted to the court before the court granted the motion.’ ”) (quoting

Song v. City of Elyria, 985 F.2d 840, 842 (6th Cir. 1993)).

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1.

A.

Plaintiff Gregory C. Snyder Jr. filed a Chapter 13 bankruptcy in the U.S. Bankruptcy

Court for the Northern District of Ohio. See Jn re Gregory C. Snyder, Jr. (Bankr. N.D. Ohio

filed Nov. 20, 2020). From February 2015 to June 2022, Plaintiff was employed as a service

technician at Polymer Machinery. Thereafter, the above-entitled action asserting violations of

the Fair Labor Standards Act (“FLSA”), Ohio Rev. Code § 4111.03 and regulations thereunder

was filed in this Court on August 22, 2022. It is well-settled that a cause of action is an asset that

must be disclosed in the debtor’s schedule of personal property pursuant to 11 U.S.C. § 521.

Eubanks v. CBSK Fin. Grp., Inc., 385 F.3d 894, 897 (6th Cir. 2004). The duty of disclosure in

bankruptcy “is a continuing one, and a debtor is required to disclose all potential causes of

action.” Schultz, 2012 WL 3527068, at *4 (quoting Jn re Coastal Plains, Inc., 179 F.3d 197, 208

(Sth Cir. 1999)).

Defendants argue judicial estoppel bars Plaintiff's overtime compensation claims because

they were not disclosed in the previously filed Chapter 13 bankruptcy prior to the filing of

Defendants’ initial Motion to Dismiss (ECF No. 8) in the case at bar on October 20, 2022.

Generally, the doctrine of judicial estoppel “prevents a party from prevailing in one phase of a

case on an argument and then relying on a contradictory argument to prevail in another phase.”

New Hampshire v. Maine, 532 U.S. 742, 749 (2001) (quoting Pegram v. Herdrich, 530 U.S. 211,

227 n. 8 (2000)). The Sixth Circuit has stressed that the doctrine of judicial estoppel preserves

‘the integrity of the courts by preventing a party from abusing the judicial process through

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cynical gamesmanship.’ ” Schultz, 2012 WL 3527068, at *4 (quoting Browning v. Levy, 283

F.3d 761, 776 (6th Cir. 2002) (Chapter 11 case) (quoting Teledyne Indus., Inc. v. NERB, 911 F.2d

1214, 1218 (6th Cir. 1990))). In Stanley v. FCA US, LLC, 51 F.4th 215 (6th Cir. 2022) (Chapter

13 case), the Court of Appeals affirmed the district court’s application of judicial estoppel to bar

the plaintiff's Family and Medical Leave Act (“FMLA”) interference claim. /d. at 221. The

Sixth Circuit stated: “[w]hen a separate bankruptcy proceeding is involved, judicial estoppel

bars an undisclosed suit when: ‘(1) the debtor assumed a position contrary to one she asserted

under oath while in bankruptcy; (2) the bankruptcy court adopted the contrary position either as a

preliminary matter or as part of a final disposition; and (3) the debtor’s omission did not result

from mistake or inadvertence.’ Kimberlin y. Dollar Gen. Corp., 520 F. App’x 312, 314 (6th Cir.

2013) (citing [White v. Wyndham Vacation Ownership, Inc., 617 F.3d 472, 478 (6th Cir.

2010)]).” Jd. at 219, All three prongs of the White test are met in the present case.

Plaintiff filed the present case without alerting either this Court to his bankruptcy

proceeding or the bankruptcy court to the existence of these claims. Plaintiff only made attempts

to alert the Chapter 13 Trustee and assert claims on behalf of his bankruptcy estate after ECF No.

8 was filed.” A Joint Motion and Application to appoint Ryan A. Winters, Plaintiffs Counsel in

the case at bar, as special counsel was filed by the Chapter 13 Trustee and the Debtor in the

bankruptcy court on November 16, 2022 — nearly three months after Plaintiff filed the present

> The First Amended Complaint (ECF No. 11), filed on November 10, 2022,

includes claims in Plaintiff's own name for his benefit and for the benefit of his

bankruptcy estate.

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case and nearly a month after Defendants’ Motion to Dismiss (ECF No. 8) was filed. See ECF

No. 24 in Case No. 20-52096-amk.’ Plaintiff argues that the actions he has taken since the filing

of Defendants’ Motion to Dismiss demonstrate a lack of bad faith and remedy his prior

concealment as a Chapter 13 debtor. See Opposition to Motion (ECF No. 24) at PageID #: 197,

205. In support, Plaintiff points to his own declaration, but does not state when he “took action

to notify [his] bankruptcy attorney” or that he made any disclosure to the Chapter 13 Trustee

prior to the filing of ECF No. 8:

4. Prior to the filing of my Chapter 13 bankruptcy petition, I was not

aware of the existence of possible violations of federal and Ohio wage law from

my time working for Defendants.

5. Once I learned that I may be owed unpaid overtime wages by

Defendants, I took action to notify my bankruptcy attorney of the existence of

these federal and related Ohio wage law claims.

ECF No. 24-1 at PageID #: 212. But merely allowing a bankruptcy petitioner to avoid judicial

estoppel by correcting omissions after an opposing party notifies them of the same “ ‘would

encourage gamesmanship’ and defeat the purpose of the doctrine.” Newman v. Univ. of Dayton,

751 Fed. Appx. 809, 815 (6th Cir. 2018) (quoting White, 617 F.3d 481). Moreover, Plaintiff

became aware that he possessed these overtime compensation claims prior to the filing of this

action and prior to the filing of Defendant’s Motion to Dismiss (ECF No. 8). And yet, as is

evident from the bankruptcy court’s docket, Plaintiff made no attempt to amend his schedules or

> On January 23, 2023, the Joint Motion and Application was granted. See ECF

No. 29 in Case No. 20-52096-amk. On January 20, 2023, the Chapter 13 Trustee filed an

Amended Motion to Dismiss Due to Failure of Debtor to Make Plan Payments (ECF No.

28 in Case No. 20-52096-amk). The Amended Motion to Dismiss was granted at a

hearing held on February 16, 2023.

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plan or alert the bankruptcy court to the existence of these claims prior to November 16, 2022.

The Sixth Circuit reaffirmed in Stan/ey that a Chapter 13 debtor’s motive to conceal claims is

presumed. 51 F.4th at 219; see also White, 617 F.3d at 479; Lewis v. Weyerhaeuser Co., 141

Fed.Appx. 420, 426 (6th Cir. 2005) (“It is always in a Chapter 13 petitioner’s interest to

minimize income and assets”).

Plaintiff's post hoc actions do not indicate good faith and are not enough to save this

matter from dismissal under applicable Sixth Circuit precedent. It is not just the efforts that a

debtor takes to correct an omission but the “timing” of those efforts that is important. Stanley, 51

F.4th at 221 (citing White, 617 F.3d at 480). “Consequently, efforts to correct an omission that

came before the Defendants filed their motion to dismiss are more important than efforts that

came after the Defendants filed their motion to dismiss.” White, 617 F.3d at 480. Like the

efforts taken by the plaintiffs in Stanley and White, Plaintiff's “late, perfunctory disclosure does

not demonstrate an absence of bad faith.” Stanley, 51 F.4th at 221.

B.

Plaintiff's repleading of his overtime compensation claims in the First Amended

Complaint (ECF No. 11) as also being for the benefit of his bankruptcy estate does not shield the

claims from the application of judicial estoppel. See White, 617 F.3d 481 n. 10 (rejecting

dissent’s argument that the concealed claims should be preserved for the Chapter 13 estate).

Plaintiff cites Stephenson v. Malloy, 700 F.3d 265 (6th Cir. 2012), and Stevenson v. Haddad,

529 Fed.Appx. 522 (6th Cir. 2013), in support of his argument that judicial estoppel cannot be

maintained against a bankruptcy Trustee. See ECF No. 24 at PageID #: 206-208. Stephenson

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and Stevenson, however, are distinguishable from the case at bar. First, both cases concern

Chapter 7 Trustees who were actually a plaintiff in the action. Whereas, the claims in ECF No.

11 are in a Chapter 13 debtor’s own name for his benefit and for the benefit of his bankruptcy

estate. Second, in Stephenson, the Sixth Circuit relied heavily on the substantial evidence

demonstrating a lack of bad faith. 700 F.3d at 269, 275. Plaintiff, however, has not alleged in

ECF No. 11 or his Declaration (ECF No. 24-1) that he made any disclosure of his overtime

compensation claims to the Chapter 13 Trustee prior to the filing of Defendant’s Motion to

Dismiss (ECF No. 8).

Other courts have distinguished Stephenson and imposed judicial estoppel on similar

facts to those in the present case. In Thompson v. Bruister and Assoc., Inc., No. 3:07-00412,

2013 WL 4507734, at *3 (M.D. Tenn. Aug. 23, 2013), the district court entered summary

judgment against plaintiff based on judicial estoppel even over the plaintiff's request that the

court wait to interpose the Chapter 13 Trustee as plaintiff. In Amato v. Maggiano’s Holding

Corp., No. 20-cv-12007, 2022 WL 406314, *4-5 (E.D. Mich. Feb. 4, 2022), the district court

distinguished Stephenson, cited Thompson, and applied judicial estoppel against a Chapter 13

debtor.

II.

Viewing Plaintiff's probative evidence and all reasonable inferences drawn therefrom in

the light most favorable to Plaintiff, the Court concludes that there is no genuine issue of material

fact and the movant is entitled to a judgment on the basis of judicial estoppel as a matter of law.

For the foregoing reasons, Defendants’ Motion to Dismiss (ECF No. 14), converted to a motion

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for summary judgment, is granted. Final judgment will be entered in favor of Defendants and

against Plaintiff on the First Amended Complaint (ECF No. 11).

IT IS SO ORDERED.

March 31, 2023 /s/ Benita Y. Pearson

Date Benita Y. Pearson

United States District Judge

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