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Posts Tagged ‘Eleventh Circuit’

En Banc Eleventh Circuit Decision May Substantially Undermine Judicial Estoppel Defense

Posted on: November 17th, 2017

By: William H. Buechner, Jr.

A  decision recently issued by the Eleventh Circuit sitting en banc may substantially undermine the judicial estoppel defense in employment cases.

A judicial estoppel defense may arise in many contexts, but the most common scenario is when the plaintiff files for bankruptcy, denies under oath the existence of any actual or potential claims on the bankruptcy schedules, obtains relief (either a complete discharge or confirmation of a reorganization plan) and then pursues (or continues to pursue) the claims that the plaintiff failed to disclose.  Under circumstances such as these, courts may bar a plaintiff from pursuing these claims, on the ground that such conduct makes a mockery of the judicial system by denying the existence of claims in one judicial forum and then pursuing those claims in another forum.  Courts also recognize that such conduct would permit the plaintiff to enrich himself to the detriment of the plaintiff’s creditors.  We have asserted the judicial estoppel defense successfully to defeat a number of employment claims.

In order to apply judicial estoppel, the defendant must establish that the plaintiff intended to make a mockery of the judicial system.  The Eleventh Circuit previously had held that a district court may infer this intent if the plaintiff knew about the omitted claim and had a motive to conceal it (which the plaintiff almost always does).  In Slater v. United States Steel Corp., 871 f.3D 1174 (11th Cir. 2017) (en banc), the Eleventh Circuit reversed the dismissal of the plaintiff’s race and sex discrimination claims on the ground of judicial estoppel.  In doing so, the Eleventh Circuit overruled the precedent summarized above and held that the court should consider all the facts and circumstances of the case in deciding whether the plaintiff intended to make a mockery of the judicial system. Id. at 1185.  The Eleventh Circuit explained that the district court may consider factors such as (1) the plaintiff’s level of sophistication; (2) whether the plaintiff has corrected the non-disclosures and if, so, under what circumstances; (3) whether the plaintiff informed his bankruptcy attorney of the claim before filing the bankruptcy disclosures; and (4) whether the trustee or the creditors were aware of the claim before the plaintiff amended the disclosures. Id.

In announcing this totality of circumstances approach, the Eleventh Circuit suggested that, if the bankruptcy court allows the plaintiff to re-open the bankruptcy case to disclose the previously omitted claim, this factor may weigh against the application of judicial estoppel. Id. at 1186-1187.  In addition, the Eleventh Circuit resolved an intra-circuit conflict and held that judicial estoppel should not be applied in Chapter 7 cases where the claim belongs to the trustee, unless the trustee (rather than the plaintiff) fails to disclose the claim with the intent to make a mockery of the judicial system. Id. at 1184-1185, 1188 n.16.  Of course, a bankruptcy trustee seldom, if ever, engages in such conduct.

The Eleventh Circuit’s decision follows similar decisions in the Sixth, Seventh and Ninth Circuits, whereas the Fifth and Tenth Circuits continue to hold that the plaintiff’s intent may be inferred if the plaintiff knew about the omitted claim and had a motive to conceal it.  Given this circuit split, it is possible that the Supreme Court may address this issue at some point in the future.

Absent intervention by the Supreme Court, it may be much more difficult for employers in the Eleventh Circuit to prevail on a judicial estoppel defense as a result of the Slater decision.

If you have any questions or would like more information, please contact Bill Buechner at [email protected].

Federal Circuit Scorecard – Title VII & Sexual Orientation Discrimination

Posted on: October 13th, 2017

By: Michael M. Hill

A Georgia case is in the running to be the one the Supreme Court uses to resolve the question of whether Title VII of the Civil Rights Act of 1964 (which prohibits employment discrimination on the basis of sex and certain other characteristics) also includes discrimination on the basis of sexual orientation. The Supreme Court is widely expected to take on this issue at some point, but no one knows exactly when or which case it will be.

In Evans v. Georgia Regional Hospital, 850 F.3d 1248 (11th Cir. 2017), a former hospital security guard alleged she was harassed and otherwise discriminated against at work because of her homosexual orientation and gender non-conformity.  While the trial court dismissed her case, the Eleventh Circuit Court of Appeals partially reversed.  The Eleventh Circuit held that Evans should be given a chance to amend her gender non-conformity claim, but it affirmed dismissal of her sexual orientation claim.

The issue, in most federal circuits, is a distinction between (1) claims of discrimination on the basis of gender stereotypes (e.g., for a woman being insufficiently feminine), which the Supreme Court has held is discrimination based on sex, and (2) claims of discrimination based on sexual orientation, which all but one federal circuit has held is not discrimination based on sex.

At present, this is how things stand now:

  • In the Seventh Circuit (which covers Illinois, Indiana, and Wisconsin), sexual orientation discrimination does violate Title VII.
  • In every other federal circuit, sexual orientation discrimination does not violate Title VII.
  • But no matter where you are, the U.S. Equal Employment Opportunity Commission (EEOC) takes the position that sexual orientation discrimination does violate Title VII.

To make matters more confusing, the full court of the Second Circuit (which covers New York, Connecticut, and Vermont) is considering whether to affirm its past position that sexual orientation is not protected by Title VII or to join the Seventh Circuit. In that case, the EEOC of course is arguing that sexual orientation is a protected category, but the U.S. Department of Justice has filed an amicus brief to argue that sexual orientation is not protected.  In the words of the Department of Justice, “the EEOC is not speaking for the United States.”

The long and short of it is that, until the Supreme Court weighs in, employers need to be mindful of the federal law as interpreted in their circuit, while also understanding that the EEOC enforces its position nationwide whether or not the local federal circuit agrees with it.

If you have any questions or would like more information, please contact Michael M. Hill at [email protected].

Court Holds that Eleven Claims are Subject to Single Limit

Posted on: October 13th, 2017

By: Joyce M. Mocek

Recently, the Eleventh Circuit, applying Florida law, held that eleven claims of bodily injury by separate patients all against a pharmacy and pharmacist for negligence in repackaging a drug for injections constituted “related claims” under the insurance policy(ies) at issue.  Amer. Cas. Co. of Reading, Pa. v. Belcher, No. 17-10848, 2017 WL 4276057 (11th Cir. Sept. 27, 2017)

In this case, a pharmacy and pharmacist allegedly repackaged drugs from larger vials into single dose syringes for injections into eyes of patients, but did not take the necessary steps to prevent contamination.  The syringes allegedly became contaminated, and eleven patients that were injected with the drugs suffered severe vision loss and/or blindness.   Both the pharmacist and pharmacy tendered the eleven claims to their professional liability carrier- which were separate errors and omissions policies issued by the same insurer, each policy with a $1 million per claim and $3 million aggregate limit of liability.

The insurers defended the claims presented against the pharmacy and pharmacist subject to a reservation of rights and asserted that the claims were “related claims,” subject to the $1 million per claim limit.  The trial court held that the claims were logically connected and thus “related claims.”   

The Eleventh Circuit affirmed the trial court, holding that the test to determine whether the claims were related was whether they were logically or causally connected by any common fact or circumstance.   In this case, the Court found that the claims were logically connected because a single technician supervised by the same pharmacist prepared each syringe using the same process at the same location, violating the same health and safety regulations.

If you would like to know more about this decision or other insurance coverage matters, please contact Joyce Mocek at [email protected]

 

Repaying Old Debts – The Supreme Court Limits FDCPA Liability for Scheduling Time-Barred Claims in Bankruptcy

Posted on: October 9th, 2017

By: Matthew M. Weiss

Earlier this year, the Supreme Court handed a victory to debt collectors when it held that the scheduling of a time-barred claim in bankruptcy was not a violation of the Fair Debt Collection Practices Act (FDCPA).

In Midland Funding, LLC v. Johnson, Aleida Johnson filed for personal bankruptcy under Chapter 13 of the Bankruptcy Code in the Southern District of Alabama. Midland Funding, LLC (Midland) filed a proof of claim asserting a credit card debt of $1,879.71. Johnson’s last charge on the account was in 2003, more than 10 years before Johnson’s bankruptcy filing, even though Alabama’s statute of limitations on the collection of debts was six years. Johnson objected to the claim and it was disallowed. Johnson then brought suit against Midland seeking actual damages, statutory damages, attorneys’ fees, and costs for a violation of the FDCPA, 15 U.S.C. § 1692k. After the district court determined that the FDCPA was inapplicable and dismissed the lawsuit, the Eleventh Circuit Court of Appeals reversed the decision, and Midland appealed to the Supreme Court.

In a 5-3 decision (with Justice Gorsuch abstaining), Justice Breyer, writing for the majority, first determined that a claim under the Bankruptcy Code was a “right of payment”, and that a creditor has the right to payment of a debt even after the limitations period expires. The Court also noted that a claim does not automatically have to be enforceable. Further, the definition of claim under the Bankruptcy Code provided that the claim could be “contingent” or “disputed”. Additionally, the Court found that the running of the statute of limitations was meant to be asserted as an affirmative defense by the debtor after the creditor asserted a claim.

Turning to whether the filing of a time-barred claim was “unfair” or “unconscionable” under the FDCPA, the court distinguished bankruptcy from civil cases in which creditors were subject to FDCPA liability for bringing suit on time-barred claims because “a consumer might unwittingly repay a time-barred debt” in a civil case. The Court reasoned that unlike civil cases, the consumer initiates bankruptcy proceedings, and are unlikely to pay a stale claim just to avoid going to court. Additionally, the Court said that the presence of knowledgeable trustees and procedural rules provided additional protection to debtors. The Court also noted that by filing a stale claim that was subsequently disallowed, that claim would be forever discharged, removing the debt from the debtor’s credit report and “potentially affecting an individual’s ability to borrow money, buy a home, and perhaps secure employment.” For all of these reasons, the Court concluded that the filing of a stale claim in bankruptcy was not “unfair” or “unconscionable” under the FDCPA.

The Supreme Court’s decision in Midland Funding legitimizes a major tool of debt collectors, who now can freely assert time-barred claims in bankruptcy proceedings with the hope that both the debtor and the bankruptcy trustee fail to assert a statute of limitations defense. As Justice Sotomayor wrote in her dissent, because debt buyers assume that a certain percentage of old debt will be written off as uncollectible, the Supreme Court’s decision will likely make consumer debt a more valuable commodity based on the assumption that a greater percentage of that debt will be collected in bankruptcy proceedings. Sotomayor had specifically predicted that “debtor collectors may file claims in bankruptcy proceedings for stale debts and hope that no one notices that they are too old to be enforced.”

In light of the Supreme Court’s decision, bankruptcy debtors should be extra vigilant about reviewing claims filed in their bankruptcy cases to determine whether a statute of limitations affirmative defense can be asserted. Conversely, creditors should not become too comfortable because, even though the Supreme Court’s decision precludes FDCPA liability for filing time-barred bankruptcy claims, the Supreme Court expressly declined to extend its holding to creditors who assert time-barred claims outside of bankruptcy.

If you have any questions or would like more information, please contact Matthew Weiss at [email protected].

 

Qualified Immunity and The First Amendment – Why Plaintiffs Continue To Struggle Proving “Clearly Established Case Law”

Posted on: October 3rd, 2017

By: Bradley T. Adler and Will Collins

The recent Eleventh Circuit decision Gaines v. Wardynski, 2017 U.S. App. LEXIS 18276, No. 16-15583 (11th Cir. Sept. 21, 2017), is a good reminder of the importance and value of qualified immunity as a defense to litigation in the Eleventh Circuit Court of Appeals (federal appeals court covering Georgia, Florida and Alabama).  In Gaines, a school teacher, Lynda Gaines, filed a Section 1983 claim against the school superintendent, Dr. Casey Wardynski, alleging violations of her First Amendment right of freedom of speech and freedom of association.  After Gaines filed suit and before discovery commenced, Dr. Wardysnki filed a motion to dismiss based on qualified immunity.  The district court denied the motion and Dr. Wardysnki appealed.

In short, Gaines’ claim arose out of a dispute in May of 2013 when Gaines’ father, a county commissioner, “blasted” the Hunstville City Board of Education and Dr. Wardynski for recent actions they were taking.  Gaines, who was a teacher in the Huntsville school system at the time, alleged that, after the article was published, she was denied a promotion to one of three open teaching positions in retaliation for her father’s comments. While the district court denied Dr. Wardynski’s motion for summary judgment based on qualified immunity, the Eleventh Circuit reversed.  Through its decision, the Eleventh Circuit reminded practitioners that, in order for a constitutional right to be clearly established by law under the doctrine of qualified immunity, the clearly established law must be specifically particularized to the facts of the case. The Eleventh Circuit concluded in Gaines that the case law that the district court and Gaines cited “was not particularized to the facts of the case, but rather merely set out First Amendment principals at a high level of generality.”  As a result, the Eleventh Circuit concluded that the defendants had not violated a clearly established constitutional right.

As a part of its decision, the court emphasized that whether a right is clearly established turns on whether the governmental official had fair warning.  According to the court, there are three methods for a plaintiff to show fair warning: (1) citing a materially similar case already decided; (2) pointing to a broader clearly established principle that should control the novel facts of the situation; and (3) where the conduct of a situation so obviously violates the constitution, prior case law is unnecessary.

Here, the court quickly moved past the second and third methods, which are rare and generally involve cases of egregious conduct. Instead, this decision turned on whether there was a materially similar case already decided. The Eleventh Circuit stressed that the “materially similar case” analysis is not a general inquiry, but rather must (1) be particularized to the facts; (2) be particularized to the context; and (3) give notice to the governmental official.  As a part of its analysis, the Eleventh Circuit stopped short of saying that the facts must be directly on point, but emphasized the facts must be close enough to put the “question beyond debate” and must come from a previously-issued decision of the United States Supreme Court, the governing federal court of appeals, or the applicable state supreme court.

In the end, the Gaines decision emphasized just how difficult it is for a plaintiff to overcome qualified immunity because of the level of particularity required for a case to be materially similar in facts and context.  As a result, when government officials are facing suits for constitutional violations, it is critical for them to remember to assess the potential use of a qualified immunity defense at the outset of the case.

If you have any questions or would like more information, please contact Bradley Adler at [email protected] or Will Collins at [email protected].