If this doesn’t sound very much like law, and you’re wondering where exactly the Court is getting this stuff, Justice Clarence Thomas is your man.
Nobody would confuse this morning’s Supreme Court decision in Keathley v. Buddy Ayers Construction with a big case. In yesterday’s roundup of the 22 cases left on the docket, I ranked it dead last in importance. The opinion was unanimous, and given to the junior justice, Justice Ketanji Brown Jackson, to write. The Court was asked to decide “whether the doctrine of judicial estoppel can be invoked to bar a plaintiff who fails to disclose a civil claim in bankruptcy filings from pursuing that claim simply because there is a potential motive for nondisclosure, regardless of whether there is evidence that the plaintiff in fact acted in bad faith.” It was the first time the Court decided when and how judicial estoppel applies in bankruptcy cases. As I explained:
Judicial estoppel is the doctrine that if you take a position in litigation and win the argument, you can’t go back and change your tune on that point later on when it no longer benefits you…This particular case is mostly about whether that applies regardless of intent, given that bankruptcy cases are supposed to clear the decks in deciding how to divvy up the assets and liabilities of the debtor, whether those are the debtor’s own claims (as in this one) or those against the debtor. . . . Convincing the Court to require a showing of bad faith before applying that rule might seem like an uphill climb, but it’s an equitable doctrine, and the justices seemed skeptical at the argument of applying an absolute rule where there is no misconduct.
Jackson’s opinion for the Court ended up eschewing any sort of bright-line legal rule in favor of a “holistic” standard for looking at “the totality of the circumstances” (translation: lots of billable hours for lawyers, few standards for appellate courts to review decisions) in order to determine whether it was inadvertent or mistaken for a debtor to not mention that he had a claim for a lawsuit against somebody else that he didn’t list when filing for bankruptcy. So, an equitable standard will be used to police debtors who may seem to be playing fast and loose. (Justice Sonia Sotomayor wrote separately to argue that this standard should rarely if ever apply because these disputes usually arise while the bankruptcy case is still ongoing, so the debtor’s case can be adjusted accordingly.)
If this doesn’t sound very much like law, and you’re wondering where exactly the Court is getting this stuff, Justice Clarence Thomas is your man. Courts commonly apply both rules that allow for clear bright-line distinctions even when they may seem harsh in particular cases, and standards that take a broader approach that tries harder to be fair but at the cost of more expense and less clarity. Sometimes, a standard applies because that’s what Congress or the Constitution requires.
But where do we get judicial estoppel from? Not written law. It’s one of those things courts have developed from their inherent powers to police the abuse of the judicial process itself. Thomas, in a concurring opinion joined by Justice Neil Gorsuch, wrote “to express doubt about the foundation of the doctrine of judicial estoppel.” As Thomas noted, the doctrine “entered the mainstream in the federal courts only in the past few decades,” having before that been a minority rule mainly applied in Tennessee law. Because the doctrine bars any inconsistent positions, “judicial estoppel reaches much further than the older doctrine of ‘equitable estoppel,’ which requires the party invoking the doctrine to prove that it was itself the object of a previous representation, that it relied on the previous representation, and that it was prejudiced by the change in positions.” And only one case has actually applied it at the Supreme Court, in an original jurisdiction suit between two states that he felt was not an adequate basis for lower courts to treat it as established by precedent.
As a result, “it is unclear what gives federal courts the authority to bar suits based on judicial estoppel. . . . Judicial estoppel has secured widespread acceptance in the Courts of Appeals without any clear authority in statutes, rules of procedure, or this Court’s precedents. In a future case, this doctrine merits a closer look.” That’s a warning as well as an invitation. While both Sotomayor and the majority opinion expressed some hostility to the doctrine, time will tell if there are more than two votes willing to accept it.