Klein v. Stahl Gmbh Co ( 1999 )

Opinions of the United
1999 Decisions States Court of Appeals
for the Third Circuit
7-15-1999
Klein v. Stahl Gmbh Co
Precedential or Non-Precedential:
Docket 98-3185
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Filed July 15, 1999
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
NO. 98-3185
JANET MARTIN KLEIN,
Appellant
v.
STAHL GMBH & CO. MASCHINEFABRIK AND
HEIDELBERG USA, SUCCESSOR-IN-INTEREST TO
HEIDELBERG EASTERN, INC.,
Appellees
On Appeal from the United States District Court
for the Western District of Pennsylvania
D.C. No. 95-448
Magistrate Judge: Honorable Kenneth J. Benson
Argued March 22, 1999
Before: GREENBERG and ROTH, Circuit Judges and
POLLAK, District Judge*
(Filed July 15, 1999)
Timothy D. Appelbe (argued)
The Bank Tower, Suite 1208
307 Fourth Avenue
Pittsburgh, PA 15222
_________________________________________________________________
* Honorable Louis H. Pollak, United States District Judge for the Eastern
District of Pennsylvania, sitting by designation.
Michael J. Bruzzese
The Bank Tower, Suite 1201
307 Fourth Avenue
Pittsburgh, PA 15222
Attorneys for Appellants
Mark C. Schultz (argued)
Cozen & O'Connor
200 Four Falls Corporate Center
Suite 400
West Conshohocken, PA 19428
Charles Kirshner
Margolis Edelstein
1500 Grant Building
Pittsburgh PA 15219
Attorneys for Appellees
OPINION OF THE COURT
POLLAK, District Judge
This products liability case was commenced in a
Pennsylvania state court and was then removed, on
grounds of diversity, to the District Court for the Western
District of Pennsylvania. After discovery had begun under
the supervision of a Magistrate Judge, the parties agreed to
have the Magistrate Judge take full charge of the case with
responsibility for its disposition. Thereafter, the Magistrate
Judge granted summary judgment in favor of defendants.
From that judgment plaintiff has appealed.
In granting summary judgment, the Magistrate Judge
concluded that a party who has asserted conflicting factual
positions in two different affidavits has done so in bad faith
and should be barred by judicial estoppel from adopting the
second position, even where the parties and the Magistrate
Judge recognize that the second position is more likely
truer to the underlying facts. We find that the Magistrate
Judge abused his discretion by (1) invoking judicial
estoppel without considering the sufficiency of less extreme
sanctions that he might have found available under the
Federal Rules of Civil Procedure or federal statutes, or
2
under the court's inherent power, and (2) determining that
the fact that a party has espoused two inconsistent
positions is, without more, conclusively demonstrative of
bad faith. We will therefore vacate the judgment entered by
the Magistrate Judge and remand for further proceedings.
I. Facts
Plaintiff Janet Klein worked for a Pittsburgh printer,
where she operated a commercial printing machine known
as a "buckle folder," which folded paper and trimmed it as
it flowed out of the machine. The parties agree that, at least
if improperly used, several parts of the buckle folder are
capable of causing injury. There is an "upper slitter," which
is a rotating shaft equipped with cutting knives, located
above the level of the output table, and there is a"lower
slitter" of somewhat different construction below the table.
The two are not far apart.
Though the folded paper flowed onto a "delivery table,"
the machine did not include a depository for the trimmed
paper scraps. Klein and her co-workers generally placed
cardboard boxes on the floor below the place from which
the paper flowed. The paper scraps fell into the boxes in
what the plaintiff describes as a "pillar-like effect," and
when the pillar of paper scraps built up to the part of the
machine in which the rotating shafts and knife blades were
located, Klein would pat the pillar down. On February 22,
1992, when Klein was reaching to pat a pillar down, her
hand made contact with part of the machine and was
seriously injured.
II. Procedural History
Klein sued the machine's manufacturer (Stahl GMBH &
Co. Maschinefabrik) and its American distributor
(Heidelberg USA) in state court, alleging that she had
"attempted to clear scrap paper that had accumulated
underneath the machine when her right hand became
trapped in the unguarded and unprotected folding rollers."
Complaint P4. The defendants removed the case to federal
court on diversity grounds, and the District Judge to whom
the matter was assigned referred the case to a Magistrate
3
Judge for the conduct of the pretrial phases of the
litigation.
The defendants filed a motion for summary judgment on
June 17, 1996 ("first summary judgment motion"),
asserting that the machine had been built and distributed
with "a barrier guard protecting the nip point between the
slitter shaft and the shaft below it." A104. Klein responded
to the motion by arguing that there had never been a
barrier guard on the machine during her year and a half on
the job. She argued in the alternative that if there ever had
been a guard, "it interfered with the efficient operation of
the machine and it was never identified as a guard or other
type of safety device." Pl. Br. at 6.
Klein's last contention in her response to the first
summary judgment motion set the direction for much of
the pre-trial practice that followed, and forms an important
ingredient of the subject of this appeal. Klein argued that a
barrier guard -- even if one had been present on the
machine and did not interfere with its operation-- would
not have prevented her injury "because she was injured on
the upper slitter shaft, not at the location of the lower
slitter shaft and drive shaft where the guard was designed
to be installed." Id. In support of this last statement, Klein
attached an affidavit dated July 10, 1996 in which she
swore that "[e]ven if the [barrier guard] had been in place
before my accident it would not have prevented my accident
because my hand made contact with the upper slitter shaft
located above the area where the [barrier guard] is located
. . . ." A149-50 (hereinafter the "first affidavit").
Surprised by Klein's contention that she had been
injured through contact with the upper slitter shaft-- not
the lower slitter shaft, where they had presumed the injury
had occurred -- the defendants, by letter, informed the
Magistrate Judge that there was some likelihood that
Klein's response had rendered the summary judgment
motion moot and requested twenty days in which to
"investigate whether [they] wish[ed] to file a reply brief or
take some other action." A151. The Magistrate Judge
granted the request. A153. The defendants subsequently
decided not to file any further response to the summary
judgment motion. On November 15, 1996, the Magistrate
4
Judge ruled on the defendants' first motion for summary
judgment:
. . . counsel for defendants having sent the court a
letter . . . asserting that the facts presented in the
response to the motion may result in the motion being
rendered moot . . . [and] it appearing to the court that
defendants' motion for summary judgment has been
rendered moot by these developments;
IT IS ORDERED that the defendants' motion for
summary judgment (Docket #17) is withdrawn as
MOOT.
A176-77. The order made no mention of Klein's first two
arguments -- that there had been no barrier guard affixed
to the machine during the period that she operated the
machine, and, alternatively, that if there was a guard or
other safety device auxiliary to the machine it had not
functioned properly and had not been properly labeled.
On January 27, 1997, the District Court, acting pursuant
to the parties' agreement, assigned the case to the
Magistrate Judge for disposition. Three days later, the
defendants submitted three motions in limine, one of which
sought "to preclude evidence of subsequent accidents/
incidents occurring on the same machine." A194-204. In
particular, the defendants sought to preclude evidence of
an accident suffered subsequent to Klein's accident by
Carol Lamothe -- one of Klein's former co-workers-- on the
same machine.1 The motion relied chiefly on the following
short excerpt from deposition testimony that Lamothe had
given in a case that she had also brought against Stahl and
Heidelberg:
Q. If I asked you to point on one of these photographs
to the place where your hand got caught, could
you do that or no?
A. No, I could not.
A195; see also A208. Defendants argued that the
deposition testimony showed "that there is no evidence that
Ms. Lamothe caught her hand in the same location where
_________________________________________________________________
1. The same attorney represented both Klein and Lamothe.
5
the plaintiff in the case at bar alleges that she caught her
hand." A195. Because Lamothe did not know precisely
where her hand was caught, and Klein had averred in her
first affidavit that her "hand made contact with the upper
slitter shaft," A150, defendants contended that evidence of
the Lamothe accident was not probative, or at least was
more prejudicial than probative. A196.
The Magistrate Judge granted the motion and precluded
the evidence. A218. Relying on Barker v. Deere & Co., 60
F.3d 158 (3d Cir. 1995) -- which holds that a"district court
must be apprised of the specific facts of previous accidents
in order to make a reasoned determination as to whether
the prior accidents are `substantially similar' " and thus
admissible in evidence -- the Magistrate Judge reasoned as
follows:
[Lamothe stated] that she cannot point to the place on
the machine where her hand got caught. Plaintiff has
described with some specificity where her hand got
caught in the machine. She states that she was patting
down paper which had accumulated in a box adjacent
to the machine, and that her hand got caught in the
"upper slitter shaft." Plaintiff has presented several
pages from Ms. Lamothe's deposition in which she
states that she was patting down scrap paper, and that
her hand got caught in the machine, but that she is
not sure where it got caught. On the evidence
presented, it is not clear that the accidents occurred in
"substantially similar" circumstances . . . .
A216 (citations to record omitted).
Klein subsequently learned through discovery that
several other accidents had occurred on the same machine.
The defendants, apparently aware that Klein had learned
this information, filed a new motion in limine on June 17,
1997, seeking to preclude evidence of these accidents.
A219-21. On the same day, the defendants filed a separate
motion in limine, seeking to preclude Klein's expert witness
from testifying about the guard on the lower slitter shaft or
guards that Stahl was then developing. A9. In the new
motion in limine seeking to preclude evidence of other
accidents on the same machine, the defendants argued that
6
preclusion of evidence of other accidents was necessary
because Klein had not demonstrated that the accidents
were substantially similar to her own accident. A220. Of
the six accidents, three had occurred through contact with
the lower slitter; other than one accident -- in which the
victim had not described the point of contact -- none
involved the upper slitter. A223.
Klein's counsel responded to both of the June 17, 1997
motions in limine with one memorandum. See A10. The
memorandum addressed the issue of evidence of other
accidents by changing the factual averments that Klein had
made in her first affidavit. Specifically, Klein's
memorandum in opposition stated that:
At the time of contact between the plaintiff 's hand and
the machine, the plaintiff was not in a position where
she could have seen the precise location on the
machine where her hand was injured. The general area
of the machine where the accident occurred contains
five shafts, four of which rotate. The shafts are all
within approximately one foot of each other. In normal
operation, the view of the rotating shafts is blocked by
a delivery table onto which product is fed from the
production end of the folder. The area is illuminated
only by ambient light, with light from overhead blocked
by the delivery table. At the time of her accident, the
plaintiff's view of the area would have been further
obstructed by scrap paper which had built up from a
cardboard box situated on the floor all the way up to
the area of the rotating shafts. The plaintiff, even if she
had been attempting to locate the area where her hand
eventually made contact with the machine, would have
been unable to do so. Naturally, when contact with the
machine occurred, her primary focus was on
extricating her hand, not attempting to pinpoint precise
parts of the machine causing the lacerations for
purposes of future litigation.
A230-31. Moreover, the memorandum indicated that Klein
had "not set up the machine" and "was not trained or
skilled in setting up the machine and was never asked to
do so. Her familiarity with the parts of the machine was,
therefore, limited." A231. Perhaps recognizing that this shift
7
in factual averment might spark controversy, the
memorandum went to some trouble to explain the shift:
The plaintiff, at the time that she made her affidavit,
understood that, at the time of her accident, the only
rotating shaft equipped with slitters or cutting knives
was the upper slitter shaft. Without being able to
directly see what caused her injury, the plaintiff
surmised, based upon information and belief, that the
rotating slitters affixed to the upper slitter shaft had
caused her injury.
It should be noted that the upper and lower slitter
shafts, based upon measurements made by the
plaintiff 's expert, are located less than one inch from
each other. Based upon her understanding that the
upper slitter shaft was the only one equipped with
slitters at the time of her accident, the close proximity
between the upper and lower slitter shafts, and her
inability to see exactly what had caused her
lacerations, the plaintiff's affidavit was supported by a
reasonable belief that the upper slitter shaft was the
culprit.
At the time of her affidavit the plaintiff was unaware
that the edges of the collars of the lower slitter shaft
were also capable of causing the types of lacerations
that she sustained.
A231 (record citations and footnote omitted). Describing the
progress of discovery, the memorandum suggested-- but
did not expressly state -- that Klein had learned details
about the buckle folder that caused her to change her
factual averment.2 The memorandum did, however, assert
_________________________________________________________________
2. Plaintiff 's brief before this court is considerably less indirect:
Following the submission of [Klein's first] affidavit, the
depositions of
William Klein and Ronald Bereksazi were taken on November 4,
1996 in connection with [Lamothe's] case . . .. The testimony of
the
deponents in that case revealed for the first time that the inside
edges of the collars on the lower slitter, when rotating at high
speeds, could cause the type of injury sustained by the plaintiff.
Faced with the information that the collars which were attached to
the lower slitter shaft at the time of the accident were sharp
enough,
8
that "the defendants have consistently maintained that . . .
[Klein's injury] had to have occurred between the lower
slitter shaft and the drive shaft." A233. As evidence of that
assertion, the memorandum pointed to a report by the
defendants' corporate designee3 and the defendants'
engineering expert.4 Given Klein's new factual averment, the
memorandum argued, the six accidents were, manifestly,
"substantially similar" to Klein's accident, thus requiring
denial of the motion in limine. A233-34. The memorandum
argued further that the court should reconsider its order
granting defendants' earlier motion in limine to preclude
evidence of the Lamothe accident. A234-36.
The memorandum seemed simultaneously to maintain
that Klein had not changed her position:
The plaintiff has always acknowledged that her injury
occurred at the production end of the machine which
contains a complex of four rotating shafts. She has
never stated that she actually saw the precise location
on the machine where her hand was injured. She was
simply not in a position to do so at the time of her
accident. . . . She has made a reasonable assumption,
upon which her affidavit is based, that the slitting
knives on the upper slitter shaft caused her injury.
A234. In support of the proposition that Klein's position
had not changed, the memorandum reminded the court
that
The plaintiff has also proceeded on the alternative
theory . . . that if her hand was injured at the location
on the machine where the defendants insist it must
_________________________________________________________________
when rotating at high speeds, to lacerate her hand, the plaintiff
could no longer state with certainty that her hand had made contact
with the upper slitter shaft at the time of the accident.
Pl. Br. at 10-11.
3. "Based on the deposition of both Ms. Martin and Ms. Lamothe, their
injuries must have occurred between the lower slitter shaft and the shaft
below it." A233.
4. "It is most probable that [Klein] became involved between the lower
slitter collars and the drive shaft." A233.
9
have been injured, the in-running nip point between
the lower slitter shaft and the drive shaft, and if the
machine came equipped with a guard at the time it was
distributed to Hoechstetter, her employer, then it was
entirely foreseeable . . . that the guard would be
removed.
Id.
Klein's memorandum in opposition was supported by an
affidavit in which Klein swore that "[w]hen I made the
statement in my affidavit of July 10, 1996, that my injury
occurred on the upper slitter shaft, I made that statement
in the good faith belief that it was true." A394. The affidavit
tracked the memorandum in its explanation of why Klein
originally thought the injury occurred on the upper slitter,
and how she came to think differently. See A394-95. The
affidavit concluded with Klein's statement that"I can now
no longer say with any certainty exactly where at the
output end of the machine my injury occurred." A395.
After the defendants filed a reply brief, the Magistrate
Judge granted the motion in limine to preclude evidence of
other accidents and denied plaintiff 's request for
reconsideration. A277-83. The Magistrate Judge rejected
Klein's contention that she had been "proceeding under
alternate theories of how her injury occurred, i.e., either
that it occurred at the upper slitter shaft, or that it
occurred at the lower slitter shaft," A280, and found that
plaintiff had changed her position. Without mentioning the
doctrine of judicial estoppel or any finding that he might
have made as to the disingenuousness of Klein's change of
position, the Magistrate Judge held that "at this stage,
plaintiff cannot be heard to assert that her injury occurred
at any point on the machine other than the upper slitter
shaft." A280.
Several months later, on December 29, 1997, the
defendants moved again for summary judgment (the
"second summary judgment motion"). Aside from a
recitation of the procedural background and the applicable
legal standards, the brief contained only two paragraphs. In
full, those paragraphs stated:
10
Plaintiff alleges that her injuries occurred at the
upper slitter shaft. The affidavit of Severino Roderick,
attached hereto as exhibit "B", establishes that the
upper slitter shaft is not capable of causing injury, as
the exposed nip point is out running. It further would
have been physically impossible for plaintiff to reach
this point based on her description of her activities at
the time of her injury.
At this point, this fact is undisputed, and the burden
is on plaintiff to produce contrary evidence by way of
affidavit or deposition. It would be a waste of judicial
resources to conduct a trial on a theory which is
physically inconsistent with the undisputed facts, and
defendants' motion should be granted.
A287-88 (emphasis in original).
Klein's memorandum in opposition to the motion for
summary judgment began by reiterating Klein's explanation
of why her change in position had been the result of new
information legitimately acquired during discovery. A298-
99. Klein did not dispute that her injury could not have
been caused by the upper slitter. The memorandum noted
that "[t]he basis for the defendants' Motion is not entirely
clear," A299, but hypothesized two possible bases for the
second motion for summary judgment: the first involved
Pennsylvania's substantive law of products liability, and the
second was "that the defendants are entitled to summary
judgment because they have demonstrated that the plaintiff
Janet Klein is not infallible," A299 -- apparently meant as
a reference to Klein's change in factual averments. As to the
second, the memorandum stated:
The defendants seem to be arguing that, although
they (the manufacturer and distributor of this machine)
know that Janet Klein could only have been injured on
the lower slitter shaft, judgment should be entered in
their favor because Janet Klein mistakenly stated that
she was cut on the upper slitter shaft, based upon an
assumption that knives [present on the upper slitter]
cut and collars [present on the lower slitter] do not. In
other words, because Janet Klein might have made a
mistake in identifying the location of her injury in an
affidavit, they are entitled to judgment.
11
Such an argument might have some merit if the
defendants could demonstrate some surprise leading to
prejudice. However, the defendants cannot raise that
argument because they cannot be surprised about
something they claim they already knew. The cynicism
is particularly virulent when considering that, in
connection with defendants' Motion In Limine to
exclude evidence of the Lamothe accident, they argued
that evidence of the Lamothe accident could not be
admitted in this case because the accidents were not
substantially similar, Klein's accident occurring in
what she "claimed" was the upper slitter shaft. As early
as that time, it is now obvious that the defendants
knew that, based upon their superior knowledge with
respect to the workings of this machine, Klein's
accident, as described by her and demonstrated in her
deposition, could have only involved the lower slitter
shaft, not the upper slitter shaft.
A300.
Oral argument on the motion was held on February 3,
1998. Klein's counsel began by describing the defendants'
argument that they were entitled to summary judgment by
virtue of Klein's change in position as "absurd and cynical."
A332. He proceeded to address what he saw as "the real
issue," which involved substantive Pennsylvania products
liability law. A332-33. Counsel then returned to defendant's
`absurd' argument, which he summarized as being:"we
know what happened, but you aren't allowed to prove it, so
we win." A334. He then explained to the court the way in
which the progress of discovery had revealed facts to Klein
that led her to change her factual position, A334-42,
stating that Klein had sworn to her first affidavit "[i]n good
faith." A338. The Magistrate Judge remarked that he
thought it appropriate to reconsider his first summary
judgment motion when deciding the second motion for
summary judgment. A344-46.
Before the Magistrate Judge adjourned the proceedings,
plaintiff 's counsel made "a few comments on the estoppel
issue." A349.
I'm not clear on what that means. I've never been
involved in a case where somebody makes a good faith
12
but erroneous statement under oath, and I always
thought that was a matter for cross examination. I've
never heard of it causing a default by the plaintiff.
The plaintiff is going to have to get up and testify to
what she knows, and then she's going to be confronted
by [defense counsel] with the [first] affidavit, and she's,
she's going to give her explanation . . . .
A349. In response, the Magistrate Judge explained to
plaintiff 's counsel that defense counsel was"arguing
judicial estoppel." Id. The Magistrate Judge then explained
his understanding of the law of judicial estoppel. A350-53.
He did not use the term "bad faith." He acknowledged that
plaintiff 's counsel had "argue[d] alternatively throughout"
-- i.e., argued that if the accident had occurred at the lower
slitter the barrier guard allegedly installed was improperly
designed, or that the accident had occurred at the upper
slitter -- but stated that the conflict between Klein's first
and second affidavits might nonetheless require him to
apply judicial estoppel. A351-52.
The Magistrate Judge issued his opinion granting the
second summary judgment motion one week later, on
February 10, 1998. The central question he addressed was
whether Klein should "be judicially estopped from now
asserting that her hand was caught in the lower slitter
shaft?" A315. To answer that question, the Magistrate
Judge set forth what he believed to be the threshold inquiry
for the application of judicial estoppel: " `(1) Is the party's
present position inconsistent with a position formerly
asserted? (2) If so, did the party assert either or both in bad
faith -- i.e., "with intent to play fast and loose" with the
court?' " A315-16 (quoting McNemar v. Disney Store, Inc., 91
F.3d 610, 618 (3d Cir. 1996) (quoting Ryan Operations G.P.
v. Santiam-Midwest Lumber Co., 81 F.3d 355, 361 (3d Cir.
1996)). The Magistrate Judge thought that the first
question had to be answered in the affirmative, because
Klein's two affidavits directly conflicted. A316. He did not
find it significant that, in her memorandum in opposition to
the defendants' first motion for summary judgment, Klein
had argued in the alternative -- either (1) there was not a
barrier guard, or (2) the removal of the lower barrier guard
was foreseeable or (3) she had injured her hand in the
13
upper slitter. The Magistrate Judge believed that the
relevant conflict was not the conflict between the
memorandum in opposition to the first motion for summary
judgment and the memorandum in opposition to the
second motion for summary judgment, but the conflict
between the affidavit submitted in support of the
memorandum in opposition to the first motion for summary
judgment and the affidavit submitted in response to the
defendants' second series of motions in limine. A316-17.
Having concluded that Klein's positions were
inconsistent, the Magistrate Judge went on to consider
whether Klein had assumed either of her positions in bad
faith. He acknowledged that not all changes in position
during litigation are undertaken in bad faith, but felt that
this one was:
In this case, however, plaintiff asserts that she was
never sure where her hand contacted the machine, but
simply assumed that it was the upper slitter shaft
since she believed (mistakenly) that the lower slitter
shaft could not have caused her injuries. This lack of
assurance concerning how the accident occurred,
however, is not reflected in plaintiff 's affidavit, or in
counsel's argument in response to defendants' initial
motion for summary judgment. Plaintiff 's statement is
made without equivocation (not, for example, to the
best of her knowledge and belief). If plaintiff was
unsure where her hand came in contact with the
machine, she could (and should) simply have said so.
Instead, she stated as a fact, known to her, that her
hand came into contact with the upper slitter shaft.
Further, she did so with the intent that this
representation would defeat the motion for summary
judgment.
In this case, the unequivocal nature of plaintiff 's
affidavit and counsel's argument (not to mention the
reliance of plaintiff 's expert on plaintiff 's affidavit)
militate against a finding that she was previously
unsure of the facts, and that she is now simply making
clear was what [sic] left unclear before.
A317-18. The Magistrate Judge acknowledged that Klein
asserted she had not sworn to either affidavit in bad faith,
14
but stated that "[i]n the context of judicial estoppel . . . bad
faith is defined as playing [fast] and loose with the court."
A319. The Magistrate Judge thought that Klein had`played
fast and loose' with the court by attesting, in herfirst
affidavit, "to a version of the facts which she knew was not
accurate." Id. (The Magistrate Judge implied that, had Klein
conditioned her first affidavit -- e.g., by introducing it with
words such as "to the best of my knowledge and belief " --
he would not have found that she had `played fast and
loose' with the court. A318-19.) Accordingly, Klein was held
by the Magistrate Judge to be judicially estopped from
arguing that her hand was injured in the lower slitter.
Since Klein had not produced any evidence refuting the
defendants' claim that her hand could not have been
injured in the upper slitter, the Magistrate Judge granted
summary judgment. A319-20, 324.
Before concluding his opinion, the Magistrate Judge
made it plain that granting summary judgment was not an
easy course to pursue. A320. He noted that "[t]he reader
may well wonder how plaintiff can be put out of court
when, after all, she is now simply trying to prove that she
was injured precisely where defendants have consistently
maintained she must have been injured." Id. 5 To justify
invoking judicial estoppel despite his "real reluctance," the
Magistrate Judge returned to what he saw as the
underlying rationale of judicial estoppel: it "is designed to
avoid the type of unnecessary litigation the parties and this
court have just gone through." Id.
Had plaintiff 's affidavit been accurate (e.g., had it
stated that she was unsure where her hand contacted
the machine, but assumed that it was in the area of
the upper slitter shaft), the efficient administration of
_________________________________________________________________
5. After granting summary judgment, the Magistrate Judge explained at
some length what would have happened if Klein had stated in her first
affidavit that she was not sure where her hand had made contact with
the buckle folder, A321-24, concluding that Klein's"claim would have
survived summary judgment." A321. The Magistrate Judge made it plain
that, even if Klein had not claimed in her first affidavit that she
injured
her hand in the upper slitter, he would have found that Klein's argument
that the removal of the barrier guard was foreseeable precluded
summary judgment. A323-4 & n.1.
15
this case would have been promoted. As it is, the
inaccuracy which plaintiff alleges exists in her earlier
affidavit has caused this court to once again revisit
summary judgment instead of proceeding timely to
trial.
A321.
Plaintiff filed a motion to alter or amend the judgment,
A434-35, to which defendants responded, A446-48. The
Magistrate Judge denied the motion. A12. Klein then timely
appealed under 28 U.S.C. S 1291.
III. Standard of Review
We review the application of judicial estoppel under an
"abuse of discretion" standard. McNemar v. Disney Store,
Inc., 91 F.3d 610, 613 (3d Cir. 1996), cert. denied, 510 U.S.
1115 (1997). We exercise plenary review over a grant of
summary judgment. Ryan Operations G.P. v. Santiam-
Midwest Lumber Co., 81 F.3d 355, 358 (3d Cir. 1996).
IV. Discussion
A. The Sequential Order of Use of Sanctions
As the Magistrate Judge correctly noted, this circuit's
"doctrine of judicial estoppel is an equitable doctrine which
vests considerable discretion in the court." A315 (citing
McNemar v. Disney Store, Inc., 91 F.3d 610, 617 (3d Cir.
1996)). Proper exercise of that discretion requires the court
to focus attentively on the particularly distinctive features
of the case before the court, since "each case must be
decided upon its own particular facts and circumstances."
McNemar, 91 F.3d at 617 (citing Ryan Operations, 81 F.3d
at 360).6 There are, therefore, few overarching principles
about the proper application of judicial estoppel that cover
all cases. But some generalizations can be ventured:
"judicial estoppel is an `extraordinary remed[y] to be
_________________________________________________________________
6. Cleveland v. Policy Management Systems Corp., 119 S. Ct. 1597 (1999)
casts doubt on the particular holding in McNemar, but it does not call
into question the principles stated in McNemar which we quote.
16
invoked when a party's inconsistent behavior will otherwise
result in a miscarriage of justice.' " Ryan Operations, 81
F.3d at 365 (citing Oneida Motor Freight, Inc. v. United
Jersey Bank, 848 F.2d 414, 424 (3d Cir. 1988) (Stapleton,
J., dissenting)). Further, as we learn from case law dealing
with other forms of judicial sanctions, a trial court should
consider invoking its inherent sanctioning powers only
where no sanction established by the Federal Rules or a
pertinent statute is "up to the task" of remedying the
damage done by a litigant's malfeasance, Chambers v.
NASCO, Inc., 501 U.S. 32, 50 (1991), and only then when
the sanction is "tailored to address the harm identified,"
Republic of the Philippines v. Westinghouse Elec. Corp., 43
F.3d 65, 73 (3d Cir. 1995).
Judicial estoppel is one arrow in the quiver of sanctions
at a court's disposal. Each of those arrows is a defensive
weapon, loosed to protect the integrity of the court's
processes. See Chambers v. NASCO, Inc., 501 U.S. 32, 44
(1991) ("A primary aspect of [a district court's] discretion is
the ability to fashion an appropriate sanction for conduct
which abuses the judicial process."); McNemar v. Disney
Store, Inc., 91 F.3d 610, 616 (3d Cir. 1996) ("[t]he doctrine
of judicial estoppel serves a consistently clear and
undisputed jurisprudential purpose: to protect the integrity
of the courts."). A trial court should avail itself of its
inherent sanctioning power only when absolutely
necessary. As the Supreme Court has said, "[b]ecause of
their very potency, inherent powers must be exercised with
restraint and discretion." Chambers, 501 U.S. at 44.
In Chambers, the Court addressed a district court's
decision to require a plaintiff who had engaged in repeated
and varied misbehavior to pay almost a million dollars to
defendant to defray defendant's attorney's fees and related
litigation expenses. Writing for the Court, Justice White
noted that a federal court is not "forbidden to sanction bad-
faith conduct by means of the inherent power simply
because that conduct could also be sanctioned under[a
federal] statute or the Rules." 501 U.S. at 50. He warned
that "[a] court must, of course, exercise caution in invoking
its inherent power, and it must comply with the mandates
of due process . . . in determining that the requisite bad
17
faith exists . . . ." Id. Thus, "when there is bad-faith
conduct in the course of litigation that could be adequately
sanctioned under the Rules, the court ordinarily should
rely on the Rules rather than the inherent power." Id. But
"if in the informed discretion of the court, neither the
statute [28 U.S.C. S 19277] nor the Rules are up to the task,
the court may safely rely on its inherent power." Id. Justice
White's statement of general principle -- that a court may
rely on its inherent power where "neither the statute nor
the Rules are up to the task" -- was followed directly by an
application to the case then at bar that sheds light on the
principles themselves:
It is true that the District Court could have employed
Rule 11 to sanction Chambers for filing "false and
frivolous pleadings," 124 F.R.D., at 138, and that some
of the other conduct might have been reached through
other Rules. Much of the bad-faith conduct by
Chambers, however, was beyond the reach of the
Rules; his entire course of conduct throughout the
lawsuit evidenced bad faith and an attempt to
perpetrate a fraud on the court, and the conduct
sanctionable under the Rules was intertwined within
conduct that only the inherent power could address. In
circumstances such as these in which all of a litigant's
conduct is deemed sanctionable, requiring a courtfirst
to apply Rules and statutes containing sanctioning
provisions to discrete occurrences before invoking
inherent power to address remaining instances of
sanctionable conduct would serve only to foster
extensive and needless satellite litigation . . . .
Id. at 50-51. The foregoing suggests that the Rules are not
"up to the task" when they would not provide a district
_________________________________________________________________
7. 28 U.S.C. S 1927 provides that:
Any attorney or other person admitted to conduct cases in any court
of the United States or any Territory thereof who so multiplies the
proceedings in any case unreasonably and vexatiously may be
required by the court to satisfy personally the excess costs,
expenses, and attorneys' fees reasonably incurred because of such
conduct.
18
court with the authority to sanction all of the conduct
deserving of sanction.8
When the Rules or pertinent statutes are "up to the
task," they should be used.9 When they are not, a trial
court may turn to its inherent sanctioning power, but
should exercise that power with caution.10 Within that
inherent sanctioning power, judicial estoppel is often the
harshest remedy. Cf. Poulis v. State Farm Fire & Casualty
Co., 747 F.2d 863, 867, 870 (3d Cir. 1984) (characterizing
dismissal sanction as "extreme"). The Magistrate Judge in
this case evidently thought himself confronted by an all-or-
_________________________________________________________________
8. Such an interpretation gains credence from the views of the dissenters
in Chambers. Justice Scalia noted that he had "no doubt of a court's
authority to go beyond the Rules in [the circumstances of the case]. And
I agree with the Court that an overall sanction resting at least in
substantial portion upon the court's inherent power need not be broken
down into its component parts, with the actions sustainable under the
Rules separately computed." Id. at 60. Justice Kennedy, joined by Chief
Justice Rehnquist and Justice Souter, dissented on the ground that
district courts could justify invocation of inherent sanctioning powers
only where they can detail "special justification"; i.e., where a federal
statute or Rule does not cover the misbehavior in question and where
the court must sanction that misbehavior in order to safeguard its own
functioning. Id. at 63. All nine Justices thus agreed on the minimum
proposition that a federal district court considering sanctions should
first turn to the Federal Rules and applicable statutes.
9. Our prior decisions support this view. See Gillette Foods Incorp. v.
Bayernwald-Fruchteverwertung, GmbH, 977 F.2d 809, 814 n.10 (3d Cir.
1992) (assuming that a district court should consider the Federal Rules
and applicable statutes before turning to its inherent powers); In Tutu
Wells Contamination Litigation, 120 F.3d 368, 183 n.13 (3d Cir. 1995)
(describing Chambers as having "observed . . . that normally a court
should look first to those rule-based or statute-based powers before
turning to its inherent powers").
10. We noted in In re Tutu Wells Contamination Litigation that the fact
"[t]hat `inherent powers are shielded from direct democratic controls'
makes [the] exercise of restraint and discretion even more important."
120 F.3d 368, 383 (3d Cir. 1995) (citing Roadway Express, Inc. v. Piper,
447 U.S. 752, 764 (1980)). By contrast, statutes are direct expressions
of the people's representatives in Congress, and the Federal Rules --
though drafted by committees of the Judicial Conference composed of
members of the bar, academia, and judges -- are subject to veto by
Congress.
19
nothing choice: dealing with what he saw as bad faith
through the invocation of judicial estoppel, or ignoring that
bad faith. In electing to invoke judicial estoppel, the
Magistrate Judge foreclosed a plaintiff with a potentially
meritorious claim from presenting her case in court.
Had the Magistrate Judge first asked whether the Rules
were "up to the task," he might not have found himself
confronting such a stark choice. The Federal Rules present
a district court encountering perceived bad faith with less
severe sanctions, such as the remedial sanction set forth in
Rule 56(g), which vests a court with authority to charge the
misfeasant with expenses, including attorney's fees,
attributable to the additional litigation generated by a bad-
faith affidavit -- and, where appropriate, to adjudge the
misfeasant guilty of contempt.11 Such a sanction allows a
court to penalize disingenuousness without foreclosing a
potentially meritorious claim.
Had the Magistrate Judge concluded that invoking the
court's inherent sanctioning authority was preferable to use
of Federal Rules or statutes -- either because the Rules and
statutes did not cover a particular person or a particular
act, or because misfeasance sanctionable under the Rules
was intertwined with misfeasance not sanctionable under
the Rules -- he would still have had available the full range
of sanctions within the inherent power. A court choosing
among such sanctions must "ensure that the sanction is
tailored to address the harm identified." Republic of the
Philippines v. Westinghouse Elec. Corp., 43 F.3d 65, 73 (3d
Cir. 1995).
_________________________________________________________________
11. Rule 56(g) states:
Should it appear to the satisfaction of the court at any time that
any
of the affidavits presented pursuant to this rule are presented in
bad
faith or solely for the purpose of delay, the court shall forthwith
order the party employing them to pay to the other party the
amount of the reasonable expenses which the filing of the
affidavits
caused the other party to incur, including reasonable attorney's
fees, and any offending party or attorney may be adjudged guilty of
contempt.
20
B. Bad Faith Inquiry Prior to the Extreme Sanction of
Judicial Estoppel
Judicial estoppel is not a sanction "tailored to address
the harm" if it does not, at a minimum, pass the"two-part
threshold inquiry" set out in Ryan Operations:
(1) Is the party's present position inconsistent with a
position formerly asserted? (2) If so, did the party
assert either or both of the inconsistent positions in
bad faith--i.e., "with intent to play fast and loose" with
the court?
81 F.3d at 360 (citation omitted).
The Magistrate Judge appears to have believed that (1)
Klein knew when she swore to her first affidavit that she
was not sure where her hand was injured and (2) Klein
should have at least conditioned her first affidavit with
words such as "to the best of my knowledge and belief." By
considering Klein's initial failure to include conditional
language as per se evidence of bad faith, the Magistrate
Judge folded the second prong of the judicial estoppel test
back into the first prong -- merely asking, again, whether
the two affidavit positions were inconsistent. 12 As the
Magistrate Judge observed, judicial estoppel can be a
draconian sanction, one that should be invoked only with
"reluctance." Ryan Operations sought to give analytical
expression to that reluctance by requiring district courts to
find bad faith in addition to inconsistency.13
_________________________________________________________________
12. Klein does not seriously contest that her statements were
contradictory. In her first affidavit, Klein asserted that her hand had
been injured on the upper slitter. In her second affidavit, she stated
that
she could no longer be certain where her hand had been injured. In
combination with her choice not to contest the defendants' argument
that it was physically impossible for her hand to have been injured on
the upper slitter, her second affidavit may be read to assert that she was
not injured on the upper slitter.
13. One need not read Ryan Operations's requirement for independent
evidence of bad faith to mean, as plaintiff argues, that a district court
must conduct an evidentiary hearing to determine whether a litigant has
acted in bad faith whenever the court is considering applying judicial
estoppel. There is no question that Ryan Operations stands for the
21
V. Conclusion
If on remand the court finds that Klein acted in bad faith
-- a finding that must be based on more than inconsistency
in factual positions -- the court should lookfirst to Federal
Rules and statutes. E.g., Fed. R. Civ. Pro. 56(g). If no Rule
or statute appears appropriate -- or if, as in Chambers, the
perceived misbehavior combines some actions that are
sanctionable under Federal Rules and statutes and some
actions that are not -- then the court should turn to its
inherent sanctioning power. If the court turns to its
inherent sanctioning power, it should select a sanction
"tailored to address the harm identified."
For the reasons set forth above, the order granting
summary judgment will be vacated and the case remanded
for further proceedings consistent with this opinion.
A True Copy:
Teste:
Clerk of the United States Court of Appeals
for the Third Circuit
_________________________________________________________________
proposition that a district court must "discern" intent, not "infer" it.
See
81 F.3d at 364. That does not mean, however, that Ryan Operations
requires a district court to discern intent by way of an evidentiary
hearing. The court in Ryan Operations did not consider a review of the
record to be an improper way to discern intent; to the contrary, Ryan
Operations assessed the appellant's intent by conducting its own review
of the procedural history, rather than vacating the district court's
finding
of bad faith and remanding for an evidentiary hearing. Id. at 361-64.
Moreover, the panel noted that in a predecessor case, Oneida Motor
Freight, Inc. v. United Jersey Bank, 848 F.2d 414 (3d Cir. 1988), "there
was ample evidence in the record from which an inference of deliberate
manipulation could be drawn." Ryan Operations, 81 F.3d at 363. In
whatever way a trial court chooses to inquire into bad faith, it must of
course "comply with the mandates of due process." Chambers, 501 U.S.
at 50. We are not called on today to map the boundaries of the due
process right in a case of this kind.
22