Summary of a Recent
Judicial Development in
Bankruptcy

Failure to List FLSA Claims as Assets on Bankruptcy Petition
Results in Judicial Estoppel

Walt McCarter
National AgLaw Center Research Associate

Summary of Decision

In Tate v. Wayne Farms LLC, No. 2:07cv1009-KS-MTP, 2008 WL 5272091 (S.D. Miss. Dec. 16, 2008), the United States District Court for the Southern District of Mississippi held that a plaintiff was judicially estopped from bringing Fair Labor Standards Act (FLSA) claims against her former employer because she had failed to list the claims as assets in her bankruptcy petition.

Background

The plaintiff, a bankruptcy debtor, had brought claims against her former employer Wayne Farms for violations of the FLSA. Id. at *1. Wayne Farms moved to dismiss because the plaintiff had failed to list the claims as assets in her bankruptcy petition, and the plaintiff did not oppose the motion. Id.

Analysis and Holdings

The court explained that the Bankruptcy Code imposes upon bankruptcy debtors an express, affirmative duty to disclose all assets, including contingent and unliquidated claims. Id. When a debtor fails to disclose a pending or potential claim in her bankruptcy petition, she is judicially estopped from bringing that claim later. Id. at *2. The court stated that judicial estoppel was particularly appropriate when, as in this case, a party failed to disclose an asset to a bankruptcy court but then pursued a claim in a separate tribunal based on that undisclosed asset, and therefore the court granted Wayne Farms' motion for summary judgment, dismissing the plaintiff's claims with prejudice. Id.

The case was decided on December 16, 2008.