California Law on Judicial Estoppel
The equitable doctrine of judicial estoppel can be invoked to prevent a party from taking a position contrary to one the party advanced in prior litigation. The purpose of the doctrine has been stated in multiple, but substantially similar, forms: to "protect the integrity of the judicial process," Jackson v. County of Los Angeles; to "protect against a litigant playing fast and loose with the courts"; and to implement "general considerations of the orderly administration of justice and regard for the dignity of judicial proceedings," Prilliman v. United Air Lines, Inc.
While the doctrine of judicial estoppel has long been recognized in California, as of 1998 the California courts had not established a clear set of principles for applying it (i.e., a standard with well-defined elements). Instead, the courts had merely recited certain observations about the doctrine, such as that "one to whom two inconsistent courses of action are open and who elects to pursue one of them is afterward precluded from pursuing the other," that the "seemingly conflicting positions must be clearly inconsistent so that the one necessarily excludes the other," and that the doctrine "cannot be invoked where the position first assumed was taken as a result of ignorance or mistake."
The uncertainty disappeared in 1998 with the publication of Jackson v. County of Los Angeles by the Second District Court of Appeal, which held that the doctrine of judicial estoppel "should apply" whenever:
(1) the same party has taken two positions; (2) the positions were taken in judicial or quasi-judicial administrative proceedings; (3) the party was successful in asserting the first position (i.e., the tribunal adopted the position or accepted it as true); (4) the two positions are totally inconsistent; and (5) the first position was not taken as a result of ignorance, fraud, or mistake.
This precise recitation of the elements of judicial estoppel was later adopted by another court of appeal and ultimately by the California Supreme Court in two separate decisions.
For those with litigation pending in California (or involving California substantive law), there are at least two aspects of judicial estoppel law that bear mention:
The Meaning of "Adopted" or "Accepted." When the earlier litigation resulted in, say, a jury verdict specifically adopting the argument advanced, element three is easily satisfied. But what about litigation resulting instead in a settlement or stipulated judgment?
The law of some federal circuits, such as the D.C. Circuit, Second Circuit, and Sixth Circuit, appears to hold that private settlements will rarely, if ever, satisfy the "success" requirement. However, more recent decisions from other circuits (and even from the Sixth Circuit itself) suggest that Konstantinidis, Bates, Edwards do not state the prevailing view of the courts, and even if their holdings did technically state the majority position, they should be limited to their particular facts. For example, after Edwards was decided, the Sixth Circuit held, distinguishing Edwards, that a settlement did satisfy the "success" element of judicial estoppel where the settlement was approved by a probate court, Warda v. Commissioner of Internal Revenue, 15 F.3d 533, 538-39 (6th Cir. 1994), as did a compromise between a debtor and his creditors approved by the bankruptcy court. See Reynolds v. Commissioner of Internal Revenue, 861 F.2d 469, 473 (6th Cir. 1988). And the Seventh Circuit, when faced with an argument that success requires "the existence of a judicial opinion adopting the litigant's positions," flatly rejected the contention, holding that parties "who triumph by inducing their opponents to surrender" in the form of a settlement "have 'prevailed' as surely as person who induce the judge to grant summary judgment." Kale v. Obuchowski, 985 F.2d 360, 362 (7th Cir. 1993).
The California Supreme Court has not yet spoken on the issue. But the California courts of appeal have ruled that the following acts constitute adoption or acceptance: a stipulation entered into by a party at trial, see City of Lodi v. Randtron, 118 Cal. App. 4th 337, 351 n.18 (2004), a stipulation signed by a party which a workers' compensation judge adopted in making an award, Drain v. Betz Laboratories, Inc., 69 Cal. App. 4th 950, 958-59 (1999), and a debtor's intentional failure in a bankruptcy proceeding to disclose all of its interests and property rights. See International Engine Parts, Inc. v. Feddersen & Co., 66 Cal. App. 4th 345, 351-52 (1998).
The Ninth Circuit — whose pronouncements a California court would presumably view most favorably — has embraced a more straightforward position: In answering the question "whether obtaining a favorable settlement is equivalent to winning a judgment for purposes of applying judicial estoppel," it has held, without equivocation, that "a favorable settlement constitutes the success required." Rissetto v. Plumbers & Steamfitters Local 343, 94 F.3d 597, 604-605 (9th Cir. 1996). The Ninth Circuit analogized the situation to the award of attorneys' fees in civil rights cases to "prevailing parties," observing that a party that obtains a favorable consent decree is generally considered a prevailing party for purposes of the award of fees. Id. at 605.
While the California Supreme Court may not ultimately adopt the categorical position announced by the Ninth Circuit in Rissetto — that settlement is always equivalent to winning a judgment — the prevailing trend is to embrace settlement, and especially settlements approved in some way by a tribunal, as a form of "adoption" or "acceptance" such that judicial estoppel applies.
The Meaning of "Totally Inconsistent." The mere fact that a position taken in the current litigation is somewhat inconsistent with, or merely in tension with, a position taken in the prior litigation, is insufficient. Rather, to satisfy the inconsistency element, a party must show that the two positions taken are "totally inconsistent," MW Erectors, 36 Cal. 4th at 422, which at least one California court has defined as meaning "logically inconsistent." Browne v. Turner Const. Co., 127 Cal. App. 4th 1334, 1349 (2005). Looking at published decisions, courts tend to interpret the term "totally inconsistent" somewhat narrowly, limiting its application to situations in which a party has argued that a certain fact or rule of law is true, and then switched course and in a separate litigation, "reverse[d]" its position. Furia v. Helm, 111 Cal. App. 4th 945, 958-59 (2003).
For example, in Scripps Clinic, the party being estopped had argued that the clinic's termination of care "violates the professional duty of care" but then argued, with respect to a different issue, that the termination was an "administrative," and not a "professional" decision. Scripps Clinic, 134 Cal. App. 4th at 943.
In Jackson, the police officer plaintiff had sought and obtained a finding on a workers' compensation claim of "permanent disability," but then argued in a subsequent Americans With Disabilities Act suit that he was a "qualified individual with a disability," which necessarily required that be able to "perform the essential functions of the employment position" (i.e., not be permanently disabled). 60 Cal. App. 4th at 179; see also Drain, 69 Cal. App. 4th at 958 (same factual scenario, but subsequent claim brought under the California Fair Employment and Housing Act).
And in Furia, the plaintiff, a general contractor hired to remodel a residence who become embroiled in a dispute with the owners, sued an attorney retained to mediate the dispute, on the basis that he had relied upon the mediator's legal advice and abandoned the remodeling project, causing plaintiff to incur damages. Yet, in cross-claims and in disciplinary proceedings brought by the Contractors' State License Board, plaintiff "denied that he abandoned the project." 111 Cal. App. 4th at 957. Because the "capstone" of plaintiff's damage claim was that he withdrew from the project in "reliance" on the mediator's advice — exactly the opposite of what he had argued in other litigation or regulatory forums — the application of judicial estoppel precluded him from showing reliance/causation, and thus prevailing on his claim for damages. Id. at 958.
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Stephen M. Silver
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