Stephen Stanley v. FCA US, LLC, 51 F.4th 215

Stephen Stanley filed Chapter 13 bankruptcy on May 24, 2018 and answered that he had no claims against third parties to disclose.
On December 11, 2018 his Chapter 13 plan was modified and confirmed to provide that unsecured creditors would receive 100% repayment.
Stanley alleges FCA US violated the FMLA and that he was terminated May 31, 2018; the Union filed and later withdrew grievances, and Stanley sued for FMLA interference on March 22, 2019.
Stanley did not list the FMLA suit in his bankruptcy petition; he was questioned about the omission during a January 27, 2021 deposition and received a February 25, 2021 settlement/demand letter raising the omission.
On April 27, 2021 Stanley amended his bankruptcy disclosures to list the FMLA claim with an "unknown" value; the district court found the late disclosure insufficient and granted summary judgment for FCA US on judicial estoppel grounds.
The Sixth Circuit affirmed, focusing on the three-part judicial-estoppel inquiry (knowledge, motive, bad faith) and concluding motive and bad faith were present.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Knowledge of claim facts	Not disputed / Stanley concedes knowledge	Stanley knew facts (union grievances pre/post-petition)	Stanley had knowledge of the claim
Motive to conceal the claim	No motive because plan required 100% repayment (no windfall)	Even with 100% plan, nondisclosure could advantage debtor by affecting creditors' and court's evaluation of the plan	Motive existed — omission could benefit Stanley and affect plan confirmation
Bad faith / inadvertence of omission	Omission was mistaken; correction shows lack of bad faith	Disclosure was made only after opposing counsel raised the issue; amendment was perfunctory and listed value as "unknown" despite prior demand for a specific amount	Omission was not inadvertent; corrective disclosure insufficient to negate bad faith
Appropriateness of judicial estoppel / summary judgment	Judicial estoppel improper; merits should be reached	Judicial estoppel necessary to preserve bankruptcy process integrity and bar undisclosed claims	Affirmed: judicial estoppel bars the FMLA claim and summary judgment for FCA US was proper

New Hampshire v. Maine, 532 U.S. 742 (2001) (defines judicial estoppel and its purpose)
White v. Wyndham Vacation Ownership, Inc., 617 F.3d 472 (6th Cir. 2010) (applies three-part test for bankruptcy-related judicial estoppel)
Browning v. Levy, 283 F.3d 761 (6th Cir. 2002) (Chapter 11 decision discussing when nondisclosure yields no windfall)
Lewis v. Weyerhaeuser Co., [citation="141 F. App'x 420"] (6th Cir. 2005) (noting debtors generally have incentive to minimize disclosed assets)
Eubanks v. CBSK Fin. Grp., Inc., 385 F.3d 894 (6th Cir. 2004) (corrective disclosures can negate bad faith in some circumstances)
Javery v. Lucent Techs., Inc., 741 F.3d 686 (6th Cir. 2014) (example of no motive where statutory exemption prevented creditors from reaching recovery)