DC Circuit Rules Waiver of Res Judicata Not Binding on the Court and Once Raised A Debtor Needs to Submit Evidence To Support Mistaken Nondisclosure

DC Circuit Rules Waiver of Res Judicata Not Binding on the Court and Once Raised A Debtor Needs to Submit Evidence To Support Mistaken Nondisclosure

On June 7, 2019 the United States Court of Appeals for the District of Columbia Circuit addressed whether the failure to disclose their discrimination claims judicially estopped them from participating in a lawsuit.

The Debtors were part of a 47-member class action against the District of Columbia (DC) alleging race and age discrimination. One Debtor filed an EEOC charge two weeks after filing bankruptcy and the other filed bankruptcy three years after the class action was filed. Neither Debtor amended schedules to disclose the claim. DC did not raise judicial estoppel as a defense in its answer. The District Court dismissed the Debtors based on judicial estoppel for failure to list the claims.

On appeal the Debtors argued that DC forfeited the affirmative defense of judicial estoppel and even if judicial estoppel was properly reviewed it is inappropriate in cases of inadvertent or mistaken failure to disclose claims or potential claims.

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