Loyola of Los Angeles Law Review

January, 1999

 

Article

 

*461 CAUTION! ESTOPPEL AHEAD: CLEVELAND V. POLICY MANAGEMENT SYSTEMS

CORPORATION

 

Lawrence B. Solum [FNa1]

 

 

 

 

Copyright ©  1999 Loyola Law School of Loyola Marymount University; Lawrence

 

 

B. Solum

 

 

 

 

I. Introduction

 

  Cleveland v. Policy Management Systems Corporation [FN1] will present the United States Supreme Court with the opportunity to make its first modern  [FN2] pronouncement on the doctrine of judicial estoppel, [FN3] also known as preclusion against the assertion of inconsistent positions. [FN4] The Supreme Court will address judicial estoppel in a particularly sensitive and controversial context.  The courts below, the Northern District of Texas and the Fifth Circuit, invoked the doctrine of judicial estoppel as the basis for a grant of summary judgment against Carolyn Cleveland. [FN5]  Ms. Cleveland claimed that Policy Management Systems Corporation terminated her after it refused to grant requested accommodations as required by the Americans with Disabilities Act (ADA). [FN6]  Ms. Cleveland's claim was judicially estopped based on her prior application for social security disability benefits, in which she had stated that she was unable to work. [FN7]

 

  The aim of this Commentary is not to argue for a particular resolution of the dispute between Ms. Cleveland and her former employer.  Rather, the goal is to address a more general question: Is the Cleveland case an appropriate vehicle for the Supreme Court to *463 endorse the seldom invoked and controversial  [FN8] doctrine of judicial estoppel?  That doctrine originated in the needs of a procedural system that was substantially different from the contemporary system, which is shaped by the Federal Rules of Civil Procedure and the Federal Rules of Evidence.  Contemporary understandings of the respective role of judge and jury and the rules of evidence suggest that a punitive doctrine of judicial estoppel is inconsistent with the search for truth--the hallmark of American civil procedure.  Moreover, contemporary understandings of the doctrines of claim and issue preclusion eliminate much of the need for a distinct doctrine of judicial estoppel.

 

  This Commentary will proceed as follows.  Part II, "The Context of Cleveland," lays out the facts and procedural history of the Fifth Circuit's decision and examines the law of judicial estoppel in general and the preclusion of ADA claims in particular. [FN9]  Part III, "Understanding Judicial Estoppel: History and Function," takes a larger view of the judicial estoppel doctrine and discusses its history and function. [FN10]  Part IV, "The Case against Supreme Court Endorsement of Judicial Estoppel," advances the central thesis of this Commentary: Cleveland is an inappropriate vehicle for the Supreme Court to endorse the controversial doctrine of judicial estoppel.  [FN11] The conclusion of this Commentary is that the Supreme Court should resolve Cleveland on grounds other than an application of the doctrine of judicial estoppel, either rejecting the doctrine of judicial estoppel outright or reserving the question of its contemporary viability for another day.  [FN12]

 

 

II. The Context of Cleveland

 

A. The Facts and Procedural History

 

  In August 1993, Carolyn Cleveland took a job with Policy Management Systems Corporation (PMSC).  In January 1994, she had a *464 stroke resulting in the condition of aphasia, affecting her concentration, memory, and ability to speak, read, and spell.  Ms. Cleveland's daughter helped her file an application for social security.  That application included the statement that she was and continued to be "unable to work because of [her] disabling condition on January 7, 1994." [FN13]  In April 1994, Ms. Cleveland went back to work with her doctor's approval and so informed the Social Security Administration. [FN14]  Back at work, Ms. Cleveland asked her employer to accommodate her aphasia disability by giving her computer training, permitting her to take work home in the evening, and transferring her to another position.  She also asked her employer to permit a Texas Rehabilitation Commission counselor to assist her.  PMSC denied all of these requests and terminated Cleveland in July 1994. [FN15]

 

  Ms. Cleveland renewed her disability benefits application in September 1994, and in May 1995, she asked for a hearing before an Administrative Law Judge (ALJ).  The ALJ found that Ms. Cleveland had become disabled on January 7, 1994, and granted her request for disability benefits. [FN16]  Before the ALJ decided her claim, however, Ms. Cleveland filed a civil action in the United States District Court for the Northern District of Texas.  Her complaint alleged that PMSC's termination of her violated the ADA and the Texas Labor Code. [FN17]  PMSC moved for partial summary judgment on the ground that Ms. Cleveland's representations in her disability benefits application precluded her from claiming that she is a "qualified individual with a disability" under the ADA. [FN18]  The district court granted this motion and thus entered a final judgment against her on her federal claim and dismissed her state law claim without prejudice. [FN19]

 

  Ms. Cleveland appealed to the United States Court of Appeal for the Fifth Circuit.  She argued the District Court erred by granting summary judgment against her.  As stated by Judge Wiener in his *465 opinion for the court, Ms. Cleveland advanced four arguments on appeal:

    [H]er position in pursuit of social security disability benefits and her instant position under the ADA are not inconsistent, as (1) she was disabled for purposes of social security disability benefits when she filed the initial application; (2) when she returned to work, she notified the SSA and withdrew her claim for benefits; and (3) she became disabled again for purposes of social security disability benefits only after and as a result of her termination. . . . [And (4)] from the time she returned to work until she was terminated, she could have performed the essential functions of her job with a reasonable accommodation, i.e., during that period she was a "qualified individual with a disability." [FN20] The Court of Appeals rejected Ms. Cleveland's arguments and affirmed the district court's grant of summary judgment. [FN21]

 

  Judge Wiener noted that the standard of review for a grant of summary judgment is de novo; [FN22] he then observed the surface inconsistency between Ms. Cleveland's assertion that she was able to work with reasonable accommodations for the purpose of her ADA claim and her assertion that she was unable "'to engage in any substantial gainful activity by reason of any medically determinable physical or mental impairment"' [FN23] for the purposes of her disability benefits claim. Judge Weiner then gave a brief statement of the doctrine of judicial estoppel, or preclusion against inconsistent positions: "Judicial estoppel prevents a party from asserting a position in a legal proceeding that is contrary to a position previously taken in the same or some earlier proceeding.  The doctrine serves a clear purpose: to protect the integrity of the judicial process." [FN24]  This statement of the doctrine of judicial estoppel is abstract and incomplete.  Judge Weiner's formulation does not provide a rule of law that could be applied to the facts of a particular case.

 

  *466 The next step in the opinion was to consider the application of the judicial estoppel doctrine to the facts and procedural history of Cleveland. Speaking for the Fifth Circuit, Judge Weiner stated: "We decline, however, to adopt a per se rule that automatically estops an applicant for or recipient of social security disability benefits from asserting a claim of discrimination under the ADA." [FN25]  The opinion reasoned that a per se rule of judicial estoppel was inappropriate because "under some limited and highly unusual set of circumstances the two claims would not necessarily be mutually exclusive."  [FN26] The Fifth Circuit advanced three supporting reasons for this conclusion.  First, the legal standards for establishing disability under the ADA and the Social Security Act (SSA) differ with respect to the kind of evidence that is required.  The ADA requires individualized fact-finding whereas the SSA allows for generalized presumptions. [FN27]  Second, the SSA does not preclude a finding of disability where a claimant might work if given reasonable accommodations by an employer. [FN28]  Third, the substantive provisions of the SSA allow persons with disabilities to receive benefits and work under certain circumstances, including trial work periods and for pay that falls below a statutory level. [FN29]

 

  Judge Weiner's opinion then set forth a rule governing judicial estoppel in cases involving ADA claims and claims for disability benefits:

    We hold therefore that the application for or the receipt of social security disability benefits creates a rebuttable presumption that the claimant or recipient of such benefits is judicially estopped from asserting that he is a "qualified individual with a disability."  We thus leave open the possibility that there might be instances in which the nature and content of the disability statement submitted to the SSA, in the context of the particular facts of the case, would not absolutely bar a plaintiff from attempting to demonstrate that despite his total disability for Social Security purposes he is *467 a "qualified individual with a disability." Conceivably, such a plaintiff might be able to rebut this presumption if he were able to present credible, admissible evidence--such as his social security disability benefits application, other sworn documentation, and his allegations relevant to his ADA claim--sufficient to show that, even though he may be disabled for purposes of social security, he is otherwise qualified to perform the essential functions of his job with a reasonable accommodation and thus not estopped from asserting an ADA claim. [FN30] The court concluded that Ms. Cleveland had not presented evidence raising a genuine issue of material fact that would rebut the presumption that she was judicially estopped from asserting that she was a "qualified individual with a disability" for the purposes of the ADA but unable to work for the purposes of her social security disability claim. [FN31]  Hence, the Fifth Circuit affirmed the trial court's grant of summary judgment.

 

  On October 5, 1998, the United States Supreme Court granted Carolyn Cleveland's petition for a writ of certiorari.  The order granting the writ stated:

    Petition for writ of certiorari to the United States Court of Appeals for the Fifth Circuit granted limited to the following two questions: 1. Whether the application for, or receipt of, disability insurance benefits under the Social Security Act, 42 U.S.C. §  423, creates a rebuttable presumption that the applicant or recipient is judicially estopped from asserting that she is a "qualified individual with a disability" under the Americans with Disabilities Act of 1990, 42 U.S.C. §  12101 et seq.  2. If it does not create such a presumption, what weight, if any, should be given to the application for, or receipt of, disability insurance benefits when a person asserts she is a "qualified individual with a disability" under the ADA?  [FN32]

 

  *468 The Supreme Court will consider these issues in light of a variety of decisions by the lower federal courts that address the doctrine of judicial estoppel in general and the application of that doctrine to ADA claims similar to that advanced by Ms. Cleveland in particular.

 

 

B. The Current State of the Law

 

  Our investigation of the context in which the Supreme Court will hear Cleveland now turns to the law.  Initially, it is useful to look at the current status of the doctrine of judicial estoppel in the lower federal courts.  This Commentary will then consider the application of this doctrine to ADA claims.

 

 

1. The doctrine of judicial estoppel in the lower federal courts

 

  Invocation of the doctrine of judicial estoppel is actually quite rare,   [FN33] especially when the doctrine is compared to the more traditional forms of preclusion law, claim preclusion--also known as res judicata--and issue preclusion--also known as collateral estoppel.  Although the doctrine remains controversial [FN34] and the elements of judicial estoppel have never been clearly defined, [FN35] most of the *469 United States Courts of Appeal have endorsed the doctrine of judicial estoppel.  For example, recent decisions in the First, [FN36] Second, [FN37] Third, [FN38] Fourth,  [FN39] Fifth, [FN40] Sixth, [FN41] Seventh, [FN42] Eighth,  [FN43] Ninth, [FN44] Eleventh, [FN45] and Federal Circuits [FN46] have apparently endorsed the doctrine of judicial estoppel.

 

  Two circuits have indicated general disapproval of the doctrine.  The Tenth Circuit has recently reaffirmed its longstanding rejection of the doctrine.  [FN47] The D.C. Circuit has also declined to adopt the doctrine. [FN48]

 

  *471 There is abstract agreement in the cases on the proposition that judicial estoppel is a form of preclusion that prevents a party from asserting a claim in a legal proceeding that is inconsistent with a claim taken by that party in a previous proceeding. [FN49]  Beyond this general formulation, the elements of the doctrine of judicial estoppel are uncertain and a matter of dispute. [FN50]  Although the doctrine of judicial estoppel is sometimes limited to factual assertions, other courts have held that the doctrine applies to preclude inconsistent legal positions as well. [FN51]  Judicial estoppel is sometimes understood as an absolute bar to a litigant asserting inconsistent positions, but this extreme version of the rule seems not to have been widely adopted. [FN52]  Some courts hold that for judicial estoppel to preclude an inconsistent assertion in a second proceeding, the assertion must have been made under oath in the first proceeding, [FN53] but other decisions seem to assume that preclusion may be based on positions taken by counsel. [FN54] In diversity cases, there is even controversy over the question of whether federal or state law governs the doctrine of judicial estoppel in diversity cases. [FN55]

 

  *472 As with the related doctrine of issue preclusion, or collateral estoppel, some decisions do not require the party seeking to benefit from judicial estoppel to have been a party to the prior proceeding in order to invoke judicial estoppel. [FN56]  Other courts, however, have held that a party must have been a party to the prior proceeding to be able to invoke judicial estoppel against the opposing party in the second proceeding.  [FN57]  Judicial estoppel may resemble issue preclusion in another respect: many judicial estoppel opinions state that the assertion in the prior proceeding must have been successful, [FN58] which suggests *473 that it is the prior adjudication of the issue and not merely the party's assertion of a position that is being given preclusive effect.

 

 

2. Preclusion of inconsistent positions in disability cases

 

  The confusion and disagreement that characterize the law of judicial estoppel in general are evident in the particular context of claims arising under the ADA. [FN59]  The issue of judicial estoppel has arisen most frequently in recent years in the context of ADA cases. Defendant employers may invoke the doctrine against a plaintiff making an ADA claim who has previously applied for disability benefits, such as those provided by the SSA.  In an application for disability benefits, plaintiffs attest to their total disability, thereby creating a perceived factual inconsistency with their later claim that they are qualified to work under the ADA.

 

  The courts of appeal are divided on the proper application of the doctrine of judicial estoppel in the context of ADA claims.  Judicial estoppel against ADA claims that are inconsistent with the claimant's position in a prior disability benefits claim has been approved in the Second, [FN60] Third, [FN61] and Fifth [FN62] Circuits.  Theoretical approval of judicial estoppel of ADA claims on possible facts other than those before the court has been expressed in the First, [FN63] Fourth, [FN64] Ninth, [FN65] and Eleventh  [FN66] Circuits.  Application of the doctrine of judicial estoppel to ADA claims appears to have been rejected in the Sixth, [FN67] Seventh, [FN68] Tenth, [FN69] and the D.C. Circuits. [FN70]  The Federal Circuit, which has a specialized subject matter jurisdiction, [FN71] has not addressed the application of judicial estoppel to ADA claims.

 

 

III. Understanding Judicial Estoppel: History and Function

 

  Both the doctrine of judicial estoppel in general and its application to ADA claims in particular have generated considerable disagreement and confusion in the lower federal courts.  To clarify the development of this discord, this section examines some of the history and context of judicial estoppel.  [FN72]

 

 

*475 A. Some Notes on the History of Judicial Estoppel

 

  Some early references to "judicial estoppel" do not actually discuss a form of preclusion against inconsistent positions but instead refer to related doctrines such as issue preclusion, [FN73] claim *476 preclusion,  [FN74] both issue and claim preclusion, [FN75] an election of remedies doctrine, [FN76] or some other rule of law. [FN77]  The first clear reference by a federal court to preclusion against inconsistent positions under *477 the rubric of "judicial estoppel" appears to have been made by the Third Circuit in 1929. [FN78]  Aside from this single instance, the phrase "judicial estoppel" appears not to have been used again by the federal courts to refer to preclusion against inconsistent positions until the 1950s, when the Fifth Circuit mentioned the doctrine in passing. [FN79]  During the 1950s, however, the courts continued to use the phrase to refer to other doctrines.  [FN80]  With the exception of the Fifth Circuit's apparent endorsement of judicial estoppel in dicta, reaction *478 to the doctrine in the 1950s was generally unfavorable. [FN81]  Assertions of the doctrine drew the scorn of Judges Moore [FN82] and Learned Hand [FN83] of the Second Circuit and a strong rejection of the doctrine from the Tenth Circuit. [FN84]

 

  Judicial estoppel as preclusion against inconsistent positions appeared again in a 1964 diversity case, when the Middle District of Tennessee declined to extend Tennessee's version of judicial estoppel [FN85] to a prior statement made in a legislative hearing. [FN86]  In *479 subsequent cases during the 1960s, judicial estoppel was applied in diversity cases, [FN87] likely on the theory that the Erie doctrine required its application; [FN88] other cases mentioned the doctrine but declined to apply it on the facts before the court. [FN89] In the 1970s, the doctrine was invoked more frequently. Most cases invoking the doctrine rejected its application on the facts before the court, [FN90] but the doctrine was *481 actually applied as the basis for decision in a few cases. [FN91] Similarly, during the early 1980s, a large number of courts refused to apply the doctrine on the facts before them,  [FN92] although there are several cases in which the doctrine was applied.  [FN93]

 

  *482 A review of the cases suggests that the doctrine of judicial estoppel developed without substantial judicial attention to either the history or function of the doctrine.  Many of the federal judicial estoppel cases pay lip service to the doctrine but reject its application *483 on the ground that some requirement was not satisfied.  Many of the decisions were diversity cases in which the federal court assumed that it was bound by state law formulations of the judicial estoppel doctrine.  Most of the cases that did apply the doctrine rely on formulaic recitations, often citing a legal encyclopedia as authority.  Almost none of the reported decisions address a crucial question: What function does the doctrine of judicial estoppel serve in the context of a modern procedural system that has adopted the Federal Rules of Civil Procedure and the Federal Rules of Evidence and that has adopted the contemporary doctrines of issue and claim preclusion?  It is to that question that this Commentary now turns.

 

 

B. Judicial Estoppel in the Context of Modern Preclusion Law

 

  The doctrine that is now known as judicial estoppel has its roots in nineteenth century American law.  During this period, the modern doctrines of claim and issue preclusion had not clearly emerged.  The term "judicial estoppel" was frequently used as a synonym for res judicata or collateral estoppel.  Modern claim and issue preclusion law provides a powerful array of tools for preventing the relitigation of claims and issues that have been decided in a prior adjudication.  The modern doctrine of claim preclusion would preclude a party who prevails on a claim and then seeks additional relief based on an inconsistent position, so long as the claims are based on the same transaction or the same factual allegations. [FN94]  The modern doctrine of issue preclusion would preclude a party who prevails on an issue and then seeks to take an inconsistent position against the same opponent in a subsequent action, so long as the issues are identical and were actually litigated and necessarily decided in the prior action. [FN95]  Depending on the circumstances, issue preclusion may also be available to a stranger to the prior action under the rules governing "nonmutual collateral estoppel."  [FN96]

 

  These modern rules are quite different from the inconsistent patchwork of nineteenth century preclusion law.  This proposition is *484 illustrated by the traditional mutuality rule for issue preclusion.  In some cases, judicial estoppel in the form of preclusion against inconsistent positions may have been the only form of preclusion available to a party in a subsequent action who wished to bind an opponent to the determination of an issue in a prior litigation in which the party seeking the estoppel was not joined.

 

  Indeed, the influential Harvard Law Review Note, The Doctrine of Preclusion against Inconsistent Positions, [FN97] focused on exactly this role for the doctrine of judicial estoppel.  The following quotation illustrates how the availability of other preclusion doctrines shaped scholarly and judicial opinion about the doctrine of judicial estoppel:

    Text writers commonly say that a personal judgment or a position taken in a previous judicial proceeding has no effect in a suit between different parties unless there is a relationship of privity between each new party and one of the original parties.  Thus, a stranger to a judgment cannot take advantage of the prior proceeding.  There are, however, a series of cases in which the courts have precluded a person from framing his testimony or pleadings in a manner inconsistent with a position taken in a prior proceeding even though one or both parties were different and no relationship of privity existed.  These cases are based upon the principle that a litigant should not be permitted, either by passive consent or by affirmative action, to lead a court to find a fact one way and then contend in another judicial proceeding that the same fact should be found otherwise. [FN98] The student author of the Harvard Note concluded that:

    [t]he primary distinction in practice between the principle of preclusion  [ [ [against inconsistent positions] on the one hand and res judicata and collateral estoppel on the other is that, while the latter doctrines require identity of parties, the former may be invoked by a person not a party to the first *485 suit against one who was either a witness or a party in that suit. [FN99]

 

  Of course, if the primary difference between judicial estoppel and issue preclusion was the traditional mutuality rule, the relationship between the two doctrines needs to be reexamined in light of modern cases authorizing both defensive and offensive nonmutual collateral estoppel. [FN100]  Illustrative of the modern approach is the view of the Restatement (Second) of Judgments:

    A party precluded from relitigating an issue with an opposing party, in accordance with § §  27 and 28, is also precluded from doing so with another person unless the fact that he [or she] lacked full and fair opportunity to litigate the issue in the first action or other circumstances justify affording him [or her] an opportunity to relitigate the issue. The circumstances to which considerations should be given include those enumerated in §  28 and also whether:

 

  (1) Treating the issue as conclusively determined would be incompatible with an applicable scheme of administering the remedies in the actions involved;

 

  (2) The forum in the second action affords the party against whom preclusion is asserted procedural opportunities in the presentation and determination of the issue that were not available in the first action and could likely result in the issue being differently determined;

 

  (3) The person seeking to invoke favorable preclusion, or to avoid unfavorable preclusion, could have effected joinder in the first action between himself [or herself] and his [or her] present adversary;

 

  (4) The determination relied on as preclusive was itself inconsistent with another determination of the same issue;

 

  *486 (5) The prior determination may have been affected by relationships among the parties to the first action that are not present in the subsequent action, or apparently were based on a compromise verdict or finding;

 

  (6) Treating the issue as conclusively determined may complicate determination of issues in the subsequent action or prejudice the interests of another party thereto;

 

  (7) The issue is one of law and treating it as conclusively determined would inappropriately foreclose opportunity for obtaining reconsideration of the legal rule upon which it was based;

 

  (8) Other compelling circumstances make it appropriate that the party be permitted to relitigate the issue. [FN101]

 

  To the extent that the doctrine of judicial estoppel has been formulated to allow nonmutual collateral estoppel without reference to these factors, the question arises as to why this is so.  Although the assertion of an inconsistent position in a prior litigation might be a factor favoring the application of issue preclusion, it is not apparent why it should be a decisive factor that trumps all of the other considerations used in making the decision to grant nonmutual collateral estoppel.  Although the aim of this Commentary is not to resolve the Cleveland case on its facts, we should note that Cleveland is itself a case involving nonmutual application of the doctrine of judicial estoppel.  PMSC was not a party to Ms. Cleveland's application for disability benefits.

 

  It has been argued that judicial estoppel avoids other requirements of issue preclusion--in particular, the requirement that the issue with respect to which preclusion is sought have been actually litigated and necessarily decided in the prior action. [FN102]  According to this argument, courts can "impose judicial estoppel in situations where [they] would otherwise be forced to allow repetitious and illegitimate litigation to proceed." [FN103]  In other words, judicial estoppel "enables courts to provide relief in cases where collateral estoppel *487 cannot." [FN104]  But this argument proves too much.  If the doctrine of issue preclusion has been formulated too narrowly to serve the twin goals of achieving judicial economy while preserving accuracy, the proper response would be to craft a more liberal doctrine of issue preclusion.  Judicial estoppel provides only an ad hoc remedy that would address the problem only where there is the fortuity of a prior inconsistent position.

 

  The point of this discussion is to frame the following question: Should the Supreme Court recognize judicial estoppel as a distinct preclusion doctrine, governed by a unique set of rules that differ from those applicable to claim and issue preclusion?  Framing the question in this way juxtaposes judicial estoppel with the other preclusion doctrines in their modern form. Judicial estoppel does not stand in isolation from the general fabric of American law.  If the Supreme Court considers adopting the doctrine of judicial estoppel in the Cleveland case, it should pay close attention to the role that this doctrine will play in light of the principles and policies that animate the American system of procedure.

 

  In this regard, we should recall Judge Learned Hand's observation of the relationship between the doctrine of judicial estoppel and preclusion law in general.  Writing in dissent on another issue, Judge Hand was required to deal with a judicial estoppel claim avoided by the majority's disposition of the case.  He stated:

    It will be necessary as a preliminary [sic] to deal with the plaintiffs' agreement that, regardless of whether the defendant had in fact been "transacting business," its denials that it had been in at least ten actions brought against it in both state and federal courts constituted a "judicial estoppel" against its present contradictory position.  It is of course true that upon the trial in the actions at bar any statements made by the defendant in its pleadings and affidavits in other actions were competent evidence in favor of the plaintiffs; but I can find no warrant for the theory that they created a "judicial estoppel," except suggestions in one or two law reviews.  Moreover, since such a doctrine is plainly contrary to the underlying basis of the whole doctrine of *488 estoppel by judgment it is plainly without foundation.  Judgment by estoppel is not designed as a moral sanction against inconsistency: it does not visit penalties upon those who take one position today and deny it tomorrow; it is designed only to prevent a party who has, or has not, prevailed upon an issue in an earlier action to vex the same antagonist with the same dispute in a later one. [FN105] Since Judge Hand's day, our view of the role of issue preclusion, or collateral estoppel, has been enlarged, but his essential point remains relevant.  Preclusion law strikes a balance between the search for truth on the one hand and the conservation of judicial resources and fairness to opposing parties on the other.  "Playing fast and loose with the truth" is not admirable, but preclusion law is a tool ill suited to the task of punishing perjury or insuring truthful allegations in pleadings.

 

 

IV. The Case against Supreme Court Endorsement of Judicial Estoppel

 

  Although a number of arguments have been advanced in favor of the doctrine of judicial estoppel, a close examination reveals that there is no compelling justification for a separate doctrine of judicial estoppel.  A general rule of preclusion against inconsistent positions is incompatible with the search for truth and commitment of fact-finding to the jury.

 

 

A. The Purported Rationale for Judicial Estoppel

 

  What is the purpose of the doctrine of judicial estoppel?  The Third Circuit's opinion in Scarano v. Central Railroad Company [FN106] provided one of the clearest statements:

    Such use of inconsistent positions would most flagrantly exemplify that playing "fast and loose with the courts" which has been emphasized as an evil the courts should not tolerate. . . . And this is more than affront to judicial dignity. For intentional self-contradiction is being used as a *489 means of obtaining unfair advantage in a forum provided for suitors seeking justice. [FN107] Two functions are suggested here for the doctrine of judicial estoppel.  The first purpose of the doctrine is to guard against deception; or in other words, to protect the accuracy of judicial proceedings against litigants who might engage in deceptive behavior.  The second purpose is to prevent a litigant from taking unfair advantage of an opponent, presumably by prevailing in two different actions on the basis of inconsistent positions.  Both of these purposes require further analysis.

 

 

B. Judicial Estoppel Does Not Advance the Search for Truth

 

  Is the doctrine of judicial estoppel justified by its contribution to the accuracy of judicial proceedings?  Initially, it should be observed that the search for truth is surely one of the cardinal measures of procedural fairness. [FN108]  As one court has recognized, "the ultimate aim of the judicial system is to ascertain the real truth." [FN109]  But does judicial estoppel serve this end?  In an obvious sense, the answer is no.  Judicial estoppel operates to prevent the finder of fact or judge of law in a subsequent litigation from determining whether the position being asserted in that case is factually true or legally correct.  Consequently, the effect of the estoppel is to bind the judge or jury in the subsequent action to the position asserted in the prior action, even if that position was incorrect as a matter of law or fact.  As the Tenth Circuit put it, judicial estoppel "would discourage the determination of cases on the basis of the true facts that they might be established ultimately." [FN110]  This effect is a truism with respect to all of the prior *490 adjudication doctrines: as it is frequently put, they render "black white and crooked straight." [FN111]  The goal of accuracy would be better served by assessing the factual or legal contention in the subsequent action on its merits, and sustaining the position only if it is true or legally correct.  If the issue is a factual one, the prior inconsistent statement of a party is admissible as evidence, and it can and should be weighed against other evidence and any explanation for the inconsistency.  [FN112]

 

  *491 It might be argued that the doctrine of judicial estoppel deters the assertion of false positions by imposing a sanction.  If a party asserts a false or legally incorrect position in a prior action, the party will be deprived of any benefit it might receive from asserting the true facts or correct law in a subsequent action.  But it is far from obvious that the net effect of the judicial estoppel doctrine improves systemic accuracy by deterring misrepresentations.  Unlike the criminal law, which is codified and publicized, judicial estoppel is an obscure legal doctrine.  Moreover, far from being swift and certain, the imposition of judicial estoppel as a punishment for misrepresentation in a prior action will likely be delayed and haphazard. Finally, the question arises as to the proportionality of judicial estoppel as a punishment for misrepresentation.  Although the stakes in the prior and subsequent actions might, as a matter of coincidence, be roughly proportional, they might just as well be wildly disproportionate.  The effect of the sanction might be so small as to be wholly ineffective, or it might be so large as to be grossly unjust.

 

  One final point should be made about the effect of judicial estoppel on accuracy.  Many courts hold that a party cannot be judicially estopped if the party did not prevail in the prior action or if the court did not adopt the party's position. [FN113]  If an identical issue was actually litigated and necessarily decided in a prior litigation, then the doctrine of judicial estoppel is unnecessary since the case can be handled by the principles of issue preclusion.  If one of the requirements for issue preclusion is not met, if for example the issues are *492 not truly identical, then the concerns of policy and principle that argue against granting issue preclusive effect would also seem to argue against judicial estoppel.

 

  Some courts, however, have suggested that judicial estoppel differs from issue preclusion in that judicial estoppel allows preclusion on the basis of a prior inconsistent position that was not actually litigated and decided in the prior adjudication. [FN114]  If there has been no actual litigation and decision, then the policy of judicial efficiency and economy that supports the application of issue preclusion and overrides the concern for accuracy in the subsequent litigation is not present--resources have not been invested in the determination of the issue in the prior action.  Moreover, a substantial question of fairness arises in connection with the application of judicial estoppel to a party who has not prevailed on the basis of his prior inconsistent position.  It is surely easy to imagine that a litigant might take a position in good faith in the prior litigation and lose.  If the rules of claim preclusion do not bar the subsequent action, then it seems perverse to preclude the litigant from adjusting to the judicial determination that his position was incorrect and from seeking another remedy.  For example, consider a variation on the facts of Cleveland.  Suppose that Ms. Cleveland were denied disability benefits on the ground that she could work with a reasonable accommodation.  Surely, she should not then be precluded from bringing a lawsuit if her employer fails to provide such an accommodation.  Yet it is precisely this perverse result that strict application of the doctrine of judicial estoppel would require.

 

  If Ms. Cleveland brought her social security disability claims with her ADA claims in federal court, then Federal Rule of Civil Procedure 8(e)(2) would have permitted her to assert both claims in the alternative. [FN115]  But because the disability claim could only be as *493 serted in an administrative tribunal with limited subject matter jurisdiction, this option was not available to Ms. Cleveland. [FN116]  In these circumstances, the policies that support pleading in the alternative would also support actions in the alternative. [FN117]

 

  Judge Moore provided an eloquent summary of the relationship between the doctrine of judicial estoppel and the search for truth in an opinion for the Second Circuit:

    The doctrine of judicial estoppel, as urged here, would extend estoppel beyond all reasonable bounds.  In finding facts in a law suit the business of the court is to determine the truth or falsity of the controverted propositions of fact.  Collateral estoppel, or estoppel by judgment, was not developed to render immutable all statements or pronouncements of litigants but to protect the parties from the expense, delay, and harassment attendant upon having to prove de novo a fact already established in an action between the same parties or their privies.  [FN118] Judge Moore's point is simple and compelling: If the doctrine of judicial estoppel extends beyond the reach of the doctrines of claim and issue preclusion, it will distort the search for truth without compelling justification.

 

 

C. Judicial Estoppel Does Not Cure Unfairness to the Opponent in the Subsequent Action

 

  The second rationale for judicial estoppel advanced by the Third Circuit in Scarano v. Central Railroad Company [FN119] was based on the premise that the assertion of inconsistent positions may result in substantive unfairness to the opponent in the subsequent action.  Surely this would be the case if plaintiffs were permitted to bring actions based on inconsistent legal theories and obtain a double recovery *494 from the same defendant.  Such a scenario would be presented by a hypothetical variation on the facts of Cleveland. Suppose Ms. Cleveland brought a prior action against PMSC for disability benefits under an employee benefits plan and obtained a money judgment for her expected lifetime earnings on the basis of her assertion that she was permanently and totally disabled.  Assume further that she then brought a subsequent action on the basis that she was a qualified person with a disability under the Americans with Disabilities Act, once again seeking her expected lifetime earnings.  In other words, suppose that she had sought the same damages twice.  Under these circumstances, a good case can be made that her second claim should be precluded.  But it is not necessary to invoke the doctrine of judicial estoppel to obtain this result, because preclusion would obviously be available under conventional principles of claim preclusion or res judicata.  As we have already noted, under the Federal Rules of Civil Procedure, Ms. Cleveland would have been allowed to assert both claims simultaneously, by pleading in the alternative. [FN120]

 

  The rationale for judicial estoppel based on unfairness to defendants applies only if a mutuality rule is applied.  If mutuality is not required, then the stranger to the prior action against whom an inconsistent position is asserted in a subsequent action is not prejudiced.  Rather, the assertion of judicial estoppel in these circumstances is just as likely to result in an unfair advantage to the party in the second action.

 

  This point can be illustrated by the facts of Cleveland.  If the Court applies the judicial estoppel doctrine against Ms. Cleveland, then there are two possibilities with respect to the merits of her action.  If Ms. Cleveland's action against PMSC is not meritorious, then the application of the doctrine of judicial estoppel should make no difference to the outcome of the dispute. PMSC should prevail, either on summary judgment or at trial.  Ms. Cleveland's prior inconsistent statements might play a role in the fact-finding process, but they would simply be evidence to be given its due weight in light of any explanation Ms. Cleveland offers and all of the other evidence.  If Ms. Cleveland's action against PMSC were meritorious, then the application of the doctrine of judicial estoppel would create a *495 windfall for PMSC.  PMSC would avoid liability, even though it actually had violated the Americans with Disabilities Act.  In neither case would the doctrine of judicial estoppel operate to avoid substantive unfairness to PMSC.

 

 

V. Conclusion

 

  This brief Commentary on Cleveland v. Policy Management Systems Corporation raises the question of whether the Supreme Court should endorse the doctrine of judicial estoppel in its decision.  The answer to that question is "no."  What are the implications of this answer for the disposition of Cleveland?  Several options are available to the Court.  One option would be for the Court to reject the doctrine of judicial estoppel, and then consider whether the Fifth Circuit could be affirmed on other grounds.  A slight variation of this option would involve a remand to the Fifth Circuit, for consideration of the question whether summary judgment is appropriate on the basis of Ms. Cleveland's prior inconsistent statements or whether the doctrine of issue preclusion applies to the question whether she is a qualified individual with a disability.  Yet another option would be for the Court to affirm the Fifth Circuit on grounds other than judicial estoppel, and explicitly disclaim either approval or disapproval of an independent doctrine of judicial estoppel.

 

  The Supreme Court may disagree with the analysis presented in this Commentary and decide to endorse the doctrine of judicial estoppel.  This might or might not result in a decision to affirm the Fifth Circuit.  The Court might conclude that the requirements for judicial estoppel were not met on a number of grounds.  For example, the Court might conclude that judicial estoppel requires mutuality and prejudice to the party seeking to assert the estoppel defense. Accordingly, because PMSC was not a party to the social security disability application, it could not assert judicial estoppel if mutuality is required. Alternatively, the Supreme Court might endorse the doctrine of judicial estoppel but conclude that Ms. Cleveland's positions were not inconsistent. Indeed, under the substantive law governing the relationship between the ADA and the Social Security Act, Ms. Cleveland may be entitled to receive disability benefits while pursuing a claim that she is entitled to a reasonable accommodation from her employer.  Finally, the Court might endorse the *496 doctrine of judicial estoppel, but conclude that it does not apply when the prior proceeding was an administrative procedure that differs fundamentally from "judicial" proceedings between adversary parties.  If the Court chooses any of these options, it should precisely formulate the doctrine of judicial estoppel.  The relationship between that doctrine and the related doctrines of claim and issue preclusion should be stated clearly, and the requirements of judicial estoppel should be formulated with care.

 

  Yet another option exists.  The Court might take the position that it does not need to endorse the doctrine of judicial estoppel because the requirements for judicial estoppel have not been met on the facts before it.  This option has the consequence that the Supreme Court will have defined at least some of the elements of a form of preclusion whose very existence will be cast into doubt by the Court.  This would, I think, be the most unfortunate choice the Court could make.  Even within the scope of this brief Commentary, the uncertainty and confusion engendered by the doctrine of judicial estoppel has become apparent.  Because judicial estoppel is a form of preclusion, there is a special need for clarity and certainty in the law that governs the doctrine. Parties need the ability to gauge the effect that assertions made in one lawsuit will have in future litigation.  A decision that puts the doctrine of judicial estoppel in limbo would undermine the law developed in the various circuits without putting anything in its place, thus worsening an already bad situation.

 

  The doctrine of judicial estoppel may once have had a role to play in American procedure.  Judicial estoppel may have filled the gaps in the emerging doctrines of res judicata and collateral estoppel.  Before the adoption of the Federal Rules of Evidence, judicial estoppel may have been part of a system that gave judges substantial discretion to withhold relevant facts from the jury.  Before the Federal Rules of Civil Procedure, the doctrine of judicial estoppel may have been consistent with a system of pleading that did not allow allegations in the alternative.  All of this may once have been true.  But the procedural landscape has changed, and with it, the rationale for an independent doctrine of judicial estoppel has eroded.  The costs of that doctrine are now substantial, and its benefits are dubious. Cleveland v. Policy Management Systems Corporation should not be *497 the occasion for the Supreme Court to endorse the doctrine of judicial estoppel.

 

 

[FNa1]. Professor of Law and William M. Rains Fellow, Loyola Marymount University, Los Angeles, California.  I owe special thanks to Susanna Griffith for her research assistance on this project.

 

 

[FN1]. 120 F.3d 513 (5th Cir. 1997), cert. granted in part, 119 S. Ct. 39 (1998).

 

 

[FN2]. Cf. Huffman v. Pursue, Ltd., 420 U.S. 592, 606 n.18  (1975) (mentioning "judicial estoppel" but not analyzing it in context in which intent of Court to refer to preclusion against inconsistent positions, as opposed to other forms of preclusion law, can be inferred).  The Supreme Court addressed principles of law that are akin to judicial estoppel in the nineteenth century.  See Davis v. Wakelee, 156 U.S. 680, 689 (1895) ("It may be laid down as a general proposition that, where a party assumes a certain position in a legal proceeding, and succeeds in maintaining that position, he may not thereafter, simply because his interests have changed, assume a contrary position, especially if it be to the prejudice of the party who has acquiesced in the position formerly taken by him."); Philadelphia, Wilmington, & Baltimore R.R. Co. v. Howard, 54 U.S. (13 How.) 307, 337 (1851) (affirming exclusion of testimony contrary to position taken in prior litigation and stating "[w]e are clearly of opinion, that the defendant cannot be heard to say, that what was asserted on the former trial was false, even if the assertion was made by mistake.  If it was a mistake, of which there is no evidence, it was one made by the defendant, of which he took the benefit, and the plaintiff the loss, and it is too late to correct it.  It does not carry the estoppel beyond what is strictly equitable, to hold that the representation which defeated one action on a point of form should sustain another on a like point.").  Davis v. Wakelee and Philadelphia, Wilmington, & Baltimore Railroad Co. v. Howard addressed legal rules that appear to have operated both as rules of evidence-- excluding testimony inconsistent with prior statements-- and as equitable defenses.

 

 

[FN3]. See generally Lawrence B. Solum, Stare Decisis, Law of the Case, and Judicial Estoppel, in James Wm. Moore, Moore's Federal Practice P 134 (3d ed. 1998) (restating federal law of judicial estoppel); 18 Charles Alan Wright et al., Federal Practice and Procedure §  4477 (1981) (covering preclusion of inconsistent positions); Walter S. Beck, Estoppel Against Inconsistent Positions in Judicial Proceedings, 9 Brook. L. Rev. 245 (1940) (comparing equitable estoppel and judicial estoppel); Rand G. Boyers, Comment, Precluding Inconsistent Statements: The Doctrine of Judicial Estoppel, 80 Nw. U. L. Rev. 1244 (1986) (sketching out the general policies behind judicial estoppel); Douglas W. Henkin, Comment, Judicial Estoppel--Beating Shields into Swords and Back Again, 139 U. Pa. L. Rev. 1711 (1991) (arguing for the abandonment of the doctrine of judicial estoppel); Mark J. Plumer, Note, Judicial Estoppel: The Refurbishing of a Judicial Shield, 55 Geo. Wash. L. Rev. 409 (1987) (defending the workability of judicial estoppel); Eric A. Schreiber, Comment, The Judiciary Says, You Can't Have It Both Ways: Judicial Estoppel--A Doctrine Precluding Inconsistent Positions, 30 Loy. L.A. L. Rev. 323 (1996) (seeking to reinvigorate the doctrine of judicial estoppel); David M. Woolley, Note, Procedure--Judicial Estoppel--Sworn Statements, 11 Sw. L.J. 96, 96-97 (1957) (discussing relationship between judicial and equitable estoppel).

 

 

[FN4]. See Note, The Doctrine of Preclusion Against Inconsistent Positions in Judicial Proceedings, 59 Harv. L. Rev. 1132 (1946) [hereinafter Harvard Note].

 

 

[FN5]. See Cleveland, 120 F.3d at 513.

 

 

[FN6]. See 42 U.S.C. § §  12101-12134 (1994).

 

 

[FN7]. See infra text accompanying notes 13-32.

 

 

[FN8]. See infra notes 33-34 and accompanying text.

 

 

[FN9]. See infra Part II.

 

 

[FN10]. See infra Part III.

 

 

[FN11]. See infra Part IV.

 

 

[FN12]. See infra Part V.

 

 

[FN13]. Cleveland v. Policy Management Sys. Corp., 120 F.3d 513, 514 (5th Cir. 1997), cert. granted in part, 119 S. Ct. 39 (1998).

 

 

[FN14]. See id.

 

 

[FN15]. See id. at 515.

 

 

[FN16]. See id.