Eleventh Circuit Reverses Sanctions Award Against FLSA Plaintiff

In Silva v. Pro Transp., Inc., __ F.3d __, 2018 WL 3801663 (11th Cir. Aug. 10, 2018) (per curiam), the Eleventh Circuit applied its prior decision in Slater v. U.S. Steel Corp., 871 F.3d 1174 (11th Cir. 2017 ) (en banc) (see our blog post here) to reverse a sanctions award against a FLSA plaintiff and his attorneys.  The plaintiff, Juan Antonio Silva, first consulted a lawyer about his FLSA claim in 2014, but that lawyer ended the representation after the case failed to settle.  Later, Silva filed for bankruptcy, using a different attorney.  He failed to list is FLSA claim as an asset in the bankruptcy case.

Months later, at his mother’s suggestion, Silva consulted another lawyer about his FLSA claim.  That lawyer’s “intake form” asked about any pending legal matters, but Silva, not realizing the potential significance of his bankruptcy case, failed to list it.  That lawyer ultimately filed the FLSA claim on Silva’s behalf, and the defendants moved for summary judgment on the ground that Silva was judicially estopped from asserting the claim because he had failed to disclose it in his bankruptcy.  The district court granted the motion and later granted the defendants’ request for sanctions, based on then-current case law to the effect that a debtor’s failure to list a claim in bankruptcy authorized an inference that the failure to disclose constituted a “mockery of the judicial system” sufficient to apply judicial estoppel.  Silva appealed the sanctions order.

And then the Eleventh Circuit decided Slater, which overruled prior precedent that “permit[ted] a district court to infer intent to misuse the courts without considering the individual plaintiff and the circumstances surrounding the nondisclosure” and held that in assessing whether a plaintiff intended to make a mockery of the judicial system, a district court must consider “all the facts and circumstances of the particular case.”  In Silva’s own case the court was “left with a definite and firm conviction that the district court made a mistake in determining that Silva and his attorneys took a frivolous position and had no reasonable chance of success in arguing that judicial estoppel did not apply” — as evidenced by the Slater decision itself.  “Because the facts do not support that Silva and his attorneys acted in bad faith or took legal action that had no reasonable chance of success, we conclude that the district court abused its discretion in imposing sanctions.”

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