Julio Antonio Silva v. Pro Transport, Inc.
898 F.3d 1335
| 11th Cir. | 2018Background
- Silva worked for Pro Transport and sued for unpaid overtime under the FLSA after being paid for only 40 of 70 weekly hours.
- While represented by a different attorney, Silva filed Chapter 13 bankruptcy and did not disclose the FLSA claim as a contingent/unliquidated asset; the plan was confirmed.
- Silva later retained new counsel (Zidell) and filed the FLSA action without updating bankruptcy disclosures; the omission was later corrected by amending the bankruptcy schedules.
- Defendants moved for summary judgment arguing judicial estoppel barred the FLSA claim because Silva failed to disclose the claim in bankruptcy and intended to conceal it; the district court granted summary judgment and later imposed sanctions on Silva and his attorneys for bad faith litigation.
- While Silva’s sanctions appeal was pending, the Eleventh Circuit issued Slater (en banc), clarifying that courts must evaluate all facts and circumstances (e.g., plaintiff sophistication, correction of disclosures) before inferring intent to “make a mockery of the judicial system.”
- Applying Slater, the panel concluded the district court abused its discretion in awarding sanctions because Silva and counsel had a reasonable, non-frivolous basis to argue judicial estoppel did not apply.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether sanctions were proper for pursuing the FLSA claim | Silva argued failure to disclose was a mistake; he corrected the schedules and lacked sophistication, so pursuing the claim was reasonable | Defendants said nondisclosure created an inevitable judicial estoppel bar and pursuing the claim was frivolous and in bad faith | Reversed: sanctions improper because, per Slater, facts supported reasonable argument against estoppel |
| Whether judicial estoppel applied to bar the FLSA claim | Silva contended judicial estoppel should not apply given his circumstances and corrected disclosure | Defendants contended prior Eleventh Circuit precedent mandated estoppel when a claim is undisclosed | Not decided on merits in this appeal; court used Slater to assess reasonableness of arguments for purposes of sanctions |
| Whether attorneys multiplied proceedings unreasonably under § 1927 / Rule 11 | Silva’s counsel argued they had a nonfrivolous basis and relied on facts (client sophistication, amendment) | Defendants argued counsel failed adequate investigation and should have known estoppel would bar the suit | Court held counsel acted with a reasonable basis; sanctions under inherent power, § 1927, and Rule 11 were an abuse of discretion |
| Whether debtor lacked standing to pursue FLSA claim in Chapter 13 | Silva argued debtors retain standing in Chapter 13 and the bankruptcy rules permitted amendment | Defendants argued only trustee has standing (citing bankruptcy standing rules) | Court held district court’s alternative bad-faith finding re: standing was clearly erroneous; Chapter 13 debtors retain standing |
Key Cases Cited
- Slater v. U.S. Steel Corp., 871 F.3d 1174 (11th Cir. en banc 2017) (requires courts to consider all facts and circumstances before inferring intent for judicial estoppel in bankruptcy nondisclosure cases)
- Nicholson v. Shafe, 558 F.3d 1266 (11th Cir. 2009) (standard of review for sanctions: abuse of discretion)
- Barnes v. Dalton, 158 F.3d 1212 (11th Cir. 1998) (inherent authority to sanction for bad faith litigation)
- Schwartz v. Millon Air, Inc., 341 F.3d 1220 (11th Cir. 2003) (§ 1927 sanctions require willful abuse of judicial process or bad faith)
- Baker v. Alderman, 158 F.3d 516 (11th Cir. 1998) (Rule 11 sanctions standards: frivolous filings, improper purpose)