The Supreme Court on Thursday unanimously overturned a Fifth Circuit ruling in a bankruptcy dispute, but Justice Clarence Thomas used the same case to ask the court to take a broader look at judicial estoppel itself. In a concurring opinion, Thomas said lower federal courts have applied the doctrine too broadly and wrote that “we should reexamine it.”
The case was Keathley v. Buddy Ayers Construction, and it turned on whether Thomas Keathley could pursue a personal injury claim after failing to disclose it during his Chapter 13 bankruptcy. Keathley filed for bankruptcy in 2019 and agreed to repay creditors in full over time. While that case was still open, he was involved in a car accident, hired a lawyer and later filed a lawsuit without telling the bankruptcy court about the claim. The defendant company argued that judicial estoppel should bar the suit, and lower courts agreed.
That made the case a clean test of a doctrine federal courts use to stop litigants from taking inconsistent positions in different proceedings. The Supreme Court, in an opinion written by Justice Ketanji Brown Jackson, rejected the Fifth Circuit’s rigid test, saying it was too limited because it focused too narrowly on whether the debtor knew about the claim and had a motive to hide it. Justice Sonia Sotomayor agreed with the result and warned that the circuit’s approach was effectively a “one-size-fits-all” rule that could punish honest mistakes.
Thomas went further than that. He traced judicial estoppel back to an 1857 Tennessee state court decision, called it roughly 169 years old and said it moved from a fringe concept to a commonplace tool in federal litigation only much later. He said some courts still declined to apply it as late as the mid-20th century, and that one appeals court had noted it was not embraced by anything close to a majority of jurisdictions. His point was blunt: the doctrine may be doing work that courts never clearly authorized it to do.
That leaves the larger question unresolved. The court has now rejected the Fifth Circuit’s most rigid version of the rule, but Thomas wants the justices to revisit whether judicial estoppel should survive in its current form at all. For Keathley, that means his case is over at the Supreme Court level; for future litigants, it may be the opening shot in a broader fight over how far federal courts can go when they police inconsistent positions.
