How Taking Inconsistent Positions Can Lead to Dismissal under the Judicial Estoppel Doctrine

The doctrine of judicial estoppel serves to prevent litigants from asserting claims in a court proceeding that are directly contrary or inconsistent to a prior statement made in a previous proceeding. With this doctrine, its purpose is to preserve the integrity of the judicial process by prohibiting parties from deliberately changing positions because of exigencies of the moment, or the likelihood of being defeated by opposing party in court. In particular, when this doctrine is applied, a court uses its inherent discretion in an effort to prohibit fraudulent activities by litigants. For example, if a litigant prevails in a judicial proceeding and stands on a particular position, that litigant cannot later present an inconsistent position in related judicial proceedings. Additionally, some courts have treated this doctrine as an affirmative defense under Federal Rule of Civil Procedure 8(c).

In New Hampshire v. Maine, the U.S. Supreme Court held that the doctrine of judicial estoppel may not apply if a party's prior position was based on mistake or inadvertence. Even though there is no precise formula for determining when to apply this doctrine, the Court provided three factors that typically determine whether the doctrine applies. These factors are:

• whether a party's later position is clearly inconsistent with its earlier position;
• whether the party successfully persuaded a court to accept that party's position in a later proceeding would create the perception that either the first or the second court misled; and
• whether the party seeking to assert an inconsistent position would derive an unfair advantage or impose an unfair advantage or impose an unfair detriment on the opposing party if not estopped.

In Shufeldt v. Baker, a recent decision out of the U.S. District Court for the Middle District of Tennessee, the court found that the doctrine of judicial estoppel applied to the plaintiff’s legal-malpractice claims against his former law firm. In the underlying litigation, the plaintiff reached a settlement in which he contended that his claims were not time-barred. But in his legal-malpractice claim, the plaintiff contended that the settlement was less favorable than it could have been because his claims were time-barred. Because the plaintiff presented distinct positions during the judicial proceedings, the court used its discretion and determined that the doctrine of judicial estoppel was applicable.

Moreover, there are three notable tips regarding the application of the doctrine of judicial estoppel. First, when invoking the doctrine, cautionary measures should be taken to avoid the destruction of the truth-seeking function of the courts. This is because the doctrine prevents a contradictory position, but does not examine the truth of either statement made by a litigant. Second, pay close attention to the opposing party's initial position in a judicial proceeding to insure that he or she is not wavering from either side. If this happens, it is likely that the litigant's claims in the judicial proceeding can be dismissed entirely. Lastly, if the doctrine is applicable, be sure to first consider the factors from the New Hampshire case. Keep in mind that there are other factors that may render the doctrine applicable depending on the facts of the case.