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. e du/thir dc ir c uit_1999/199Filed 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 c ase with responsibility for its disposition. Thereafter, the Magistrate Judge granted summary judgment in favor of defendan ts. 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 i n bad faith and should be barred by judicial estoppel from adop ting the second position, even where the parties and the Mag istrate Judge recognize that the second position is more li kely truer to the underlying facts. We find that the Mag istrate Judge abused his discretion by (1) invoking judicia l estoppel without considering the sufficiency of les s extreme sanctions that he might have found available under the
Federal Rules of Civil Procedure or federal statute s, or

2under the court's inherent power, and (2) determini ng that

the fact that a party has espoused two inconsistent positions is, without more, conclusively demonstrat ive of bad faith. We will therefore vacate the judgment en tered by the Magistrate Judge and remand for further proceed ings.

I. Facts

Plaintiff Janet Klein worked for a Pittsburgh print er, where she operated a commercial printing machine kn own as a "buckle folder," which folded paper and trimme d it as it flowed out of the machine. The parties agree tha t, at least if improperly used, several parts of the buckle fol der are capable of causing injury. There is an "upper slitt er," which is a rotating shaft equipped with cutting knives, l ocated above the level of the output table, and there is a "lower
slitter" of somewhat different construction below t he table. The two are not far apart.

Though the folded paper flowed onto a "delivery tab le," the machine did not include a depository for the tr immed paper scraps. Klein and her co-workers generally pl aced cardboard boxes on the floor below the place from w hich the paper flowed. The paper scraps fell into the bo xes in what the plaintiff describes as a "pillar-like effe ct," and when the pillar of paper scraps built up to the par t of the machine in which the rotating shafts and knife blad es were located, Klein would pat the pillar down. On Februa ry 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 accumulate d underneath the machine when her right hand became trapped in the unguarded and unprotected folding ro llers." Complaint P4. The defendants removed the case to fe deral court on diversity grounds, and the District Judge to whom the matter was assigned referred the case to a Magi strate

3Judge 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 distr ibuted with "a barrier guard protecting the nip point betw een 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 ther e ever had been a guard, "it interfered with the efficient ope ration 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 firs t 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 arg ued that a barrier guard -- even if one had been present on th e machine and did not interfere with its operation-- would not have prevented her injury "because she was inju red on the upper slitter shaft, not at the location of the lower slitter shaft and drive shaft where the guard was d esigned to be installed." Id. In support of this last state ment, 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 a ccident 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 shaf t-- not the lower slitter shaft, where they had presumed th e injury had occurred -- the defendants, by letter, informed the Magistrate Judge that there was some likelihood tha t 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 repl y brief or take some other action." A151. The Magistrate Judge granted the request. A153. The defendants subsequen tly decided not to file any further response to the sum mary judgment motion. On November 15, 1996, the Magistra te

4Judge ruled on the defendants' first motion for sum mary

judgment:

. . . counsel for defendants having sent the court a letter . . . asserting that the facts presen ted in the response to the motion may result in the mot ion being rendered moot . . . [and] it appearing to th e court that defendants' motion for summary judgment has been rendered moot by these developments;

IT IS ORDERED that the defendants' motion f or summary judgment (Docket #17) is withdrawn a s
MOOT.

A176-77. The order made no mention of Klein's first two arguments -- that there had been no barrier guard a ffixed to the machine during the period that she operated the machine, and, alternatively, that if there was a gu ard or other safety device auxiliary to the machine it had not functioned properly and had not been properly label ed.

On January 27, 1997, the District Court, acting pur suant to the parties' agreement, assigned the case to the Magistrate Judge for disposition. Three days later, the defendants submitted three motions in limine, one o f which sought "to preclude evidence of subsequent accident s/ incidents occurring on the same machine." A194-204. In particular, the defendants sought to preclude evide nce 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 fol lowing short excerpt from deposition testimony that Lamoth e had given in a case that she had also brought against S tahl and Heidelberg:

Q. If I asked you to point on one of these p hotographs to the place where your hand got caught, cou ld 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 evide nce that Ms. Lamothe caught her hand in the same location wh ere

___________________________________________________ ______________

1. The same attorney represented both Klein and Lam othe.

5the plaintiff in the case at bar alleges that she c aught 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 th e upper slitter shaft," A150, defendants contended that evi dence of the Lamothe accident was not probative, or at least was more prejudicial than probative. A196.

The Magistrate Judge granted the motion and preclud ed the evidence. A218. Relying on Barker v. Deere & Co ., 60 F.3d 158 (3d Cir. 1995) -- which holds that a"distr ict court must be apprised of the specific facts of previous accidents
in order to make a reasoned determination as to whe ther the prior accidents are `substantially similar' " a nd thus admissible in evidence -- the Magistrate Judge reas oned as

follows:

[Lamothe stated] that she cannot point to th e place on the machine where her hand got caught. Plain tiff has described with some specificity where her ha nd got caught in the machine. She states that she w as patting down paper which had accumulated in a box ad jacent to the machine, and that her hand got caught in the "upper slitter shaft." Plaintiff has present ed 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 evidenc e presented, it is not clear that the accident s occurred in "substantially similar" circumstances . . .

.

A216 (citations to record omitted).

Klein subsequently learned through discovery that
several other accidents had occurred on the same ma chine. The defendants, apparently aware that Klein had lea rned this information, filed a new motion in limine on J une 17, 1997, seeking to preclude evidence of these acciden ts. A219-21. On the same day, the defendants filed a se parate motion in limine, seeking to preclude Klein's exper t witness from testifying about the guard on the lower slitte r shaft or guards that Stahl was then developing. A9. In the n ew motion in limine seeking to preclude evidence of ot her accidents on the same machine, the defendants argue d that

6preclusion of evidence of other accidents was neces sary

because Klein had not demonstrated that the acciden ts were substantially similar to her own accident. A22 0. Of the six accidents, three had occurred through conta ct with the lower slitter; other than one accident -- in wh ich the victim had not described the point of contact -- no ne involved the upper slitter. A223.

Klein's counsel responded to both of the June 17, 1 997
motions in limine with one memorandum. See A10. The
memorandum addressed the issue of evidence of other accidents by changing the factual averments that Kl ein 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 posi tion where she could have seen the precise location on the machine where her hand was injured. The gene ral area
of the machine where the accident occurred c ontains five shafts, four of which rotate. The shaft s are all within approximately one foot of each other. In normal operation, the view of the rotating shafts i s blocked by a delivery table onto which product is fed f rom the production end of the folder. The area is il luminated only by ambient light, with light from overh ead blocked by the delivery table. At the time of her ac cident, 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 plainti ff, even if she had been attempting to locate the area where her hand eventually made contact with the machine, wo uld have been unable to do so. Naturally, when contac t with the machine occurred, her primary focus was on extricating her hand, not attempting to pinp oint precise parts of the machine causing the lacerations for purposes of future litigation.

A230-31. Moreover, the memorandum indicated that Kl ein had "not set up the machine" and "was not trained o r skilled in setting up the machine and was never ask ed to do so. Her familiarity with the parts of the machin e was, therefore, limited." A231. Perhaps recognizing that this shift

7in factual averment might spark controversy, the

memorandum went to some trouble to explain the shif t:

The plaintiff, at the time that she made he r affidavit, understood that, at the time of her accident , the only rotating shaft equipped with slitters or cut ting knives was the upper slitter shaft. Without being a ble to directly see what caused her injury, the pla intiff surmised, based upon information and belief, that the rotating slitters affixed to the upper slitt er 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 o ne inch from each other. Based upon her understanding tha t the upper slitter shaft was the only one equippe d with slitters at the time of her accident, the cl ose proximity between the upper and lower slitter shafts, and her inability to see exactly what had caused her lacerations, the plaintiff's affidavit was s upported by a reasonable belief that the upper slitter sha ft was the culprit.

At the time of her affidavit the plaintiff was unaware that the edges of the collars of the lower s litter shaft were also capable of causing the types of la cerations
that she sustained.

A231 (record citations and footnote omitted). Descr ibing the progress of discovery, the memorandum suggested-- b ut did not expressly state -- that Klein had learned d etails about the buckle folder that caused her to change h er factual averment.2 The memorandum did, however, ass ert

___________________________________________________ ______________

2. Plaintiff 's brief before this court is consider ably less indirect:

Following the submission of [Klein's first] affidavit, the depositions of
William Klein and Ronald Bereksazi were take n on November 4, 1996 in connection with [Lamothe's] case . . .. The testimony of

the deponents in that case revealed for the firs t time that the inside edges of the collars on the lower slitter, w hen rotating at high speeds, could cause the type of injury susta ined by the plaintiff.
Faced with the information that the collars which were attached to
the lower slitter shaft at the time of the a ccident were sharp enough,

8that "the defendants have consistently maintained t hat . . .

[Klein's injury] had to have occurred between the l ower slitter shaft and the drive shaft." A233. As eviden ce of that assertion, the memorandum pointed to a report by th e defendants' corporate designee3 and the defendants' engineering expert.4 Given Klein's new factual aver ment, the memorandum argued, the six accidents were, manifest ly, "substantially similar" to Klein's accident, thus r equiring
denial of the motion in limine. A233-34. The memora ndum argued further that the court should reconsider its order granting defendants' earlier motion in limine to pr eclude
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 h er injury occurred at the production end of the machin e which contains a complex of four rotating shafts. She has never stated that she actually saw the preci se location on the machine where her hand was injured. S he was simply not in a position to do so at the tim e of her
accident. . . . She has made a reasonable as sumption, 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 po sition had not changed, the memorandum reminded the court

that

The plaintiff has also proceeded on the alte rnative theory . . . that if her hand was injured at the location
on the machine where the defendants insist i t must

___________________________________________________ ______________

when rotating at high speeds, to lacerate he r hand, the plaintiff could no longer state with certainty that he r 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 slitt er shaft and the shaft
below it." A233.

4. "It is most probable that [Klein] became involve d between the lower
slitter collars and the drive shaft." A233.

9have 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 ti me it was distributed to Hoechstetter, her employer, t hen it was entirely foreseeable . . . that the guard wo uld be

removed.

Id.

Klein's memorandum in opposition was supported by a n 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 st atement in the good faith belief that it was true." A394. T he affidavit tracked the memorandum in its explanation of why Kl ein 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 c an now no longer say with any certainty exactly where at t he output end of the machine my injury occurred." A395

.

After the defendants filed a reply brief, the Magis trate Judge granted the motion in limine to preclude evid ence of other accidents and denied plaintiff 's request for reconsideration. A277-83. The Magistrate Judge reje cted Klein's contention that she had been "proceeding un der alternate theories of how her injury occurred, i.e. , either that it occurred at the upper slitter shaft, or tha t it occurred at the lower slitter shaft," A280, and fou nd that plaintiff had changed her position. Without mention ing the doctrine of judicial estoppel or any finding that h e might have made as to the disingenuousness of Klein's cha nge of position, the Magistrate Judge held that "at this s tage, plaintiff cannot be heard to assert that her injury occurred at any point on the machine other than the upper sl itter

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 app licable legal standards, the brief contained only two parag raphs. In full, those paragraphs stated:

10Plaintiff alleges that her injuries occurre d at the

upper slitter shaft. The affidavit of Severi no Roderick, attached hereto as exhibit "B", establishes that the upper slitter shaft is not capable of causin g injury, as the exposed nip point is out running. It fur ther would have been physically impossible for plaintif f to reach this point based on her description of her a ctivities 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 whi ch 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 expla nation of why her change in position had been the result o f 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 no ted that "[t]he basis for the defendants' Motion is not entirely clear," A299, but hypothesized two possible bases f or the second motion for summary judgment: the first invol ved Pennsylvania's substantive law of products liabilit y, and the
second was "that the defendants are entitled to sum mary judgment because they have demonstrated that the pl aintiff 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, alt hough they (the manufacturer and distributor of th is machine) know that Janet Klein could only have been i njured on the lower slitter shaft, judgment should be entered in their favor because Janet Klein mistakenly s tated that she was cut on the upper slitter shaft, base d upon an assumption that knives [present on the upper slitter] cut and collars [present on the lower slitte r] do not. In other words, because Janet Klein might have made a mistake in identifying the location of her i njury in an affidavit, they are entitled to judgment.

11Such an argument might have some merit if t he

defendants could demonstrate some surprise l eading to prejudice. However, the defendants cannot ra ise that argument because they cannot be surprised ab out something they claim they already knew. The cynicism is particularly virulent when considering th at, in
connection with defendants' Motion In Limine to exclude evidence of the Lamothe accident, th ey argued
that evidence of the Lamothe accident could not be
admitted in this case because the accidents were not substantially similar, Klein's accident occu rring in what she "claimed" was the upper slitter sha ft. As early as that time, it is now obvious that the def endants knew that, based upon their superior knowled ge with respect to the workings of this machine, Kle in's accident, as described by her and demonstrat ed in her deposition, could have only involved the low er 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 defen dants' argument that they were entitled to summary judgmen t by virtue of Klein's change in position as "absurd and cynical." A332. He proceeded to address what he saw as "the r eal issue," which involved substantive Pennsylvania pro ducts liability law. A332-33. Counsel then returned to de fendant'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 w ay in which the progress of discovery had revealed facts to Klein that led her to change her factual position, A334-4 2, 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 summ ary judgment motion when deciding the second motion for summary judgment. A344-46.

Before the Magistrate Judge adjourned the proceedin gs, plaintiff 's counsel made "a few comments on the es toppel
issue." A349.

I'm not clear on what that means. I've neve r been involved in a case where somebody makes a go od faith

12but erroneous statement under oath, and I al ways

thought that was a matter for cross examinat ion. I've never heard of it causing a default by the p laintiff.

The plaintiff is going to have to get up an d testify to what she knows, and then she's going to be c onfronted by [defense counsel] with the [first] affida vit, and she's, she's going to give her explanation . . . .

A349. In response, the Magistrate Judge explained t o plaintiff 's counsel that defense counsel was"argui ng judicial estoppel." Id. The Magistrate Judge then e xplained his understanding of the law of judicial estoppel. A350-53. He did not use the term "bad faith." He acknowledge d that plaintiff 's counsel had "argue[d] alternatively th roughout" -- i.e., argued that if the accident had occurred a t the lower slitter the barrier guard allegedly installed was i mproperly designed, or that the accident had occurred at the upper slitter -- but stated that the conflict between Kle in's first and second affidavits might nonetheless require him to apply judicial estoppel. A351-52.

The Magistrate Judge issued his opinion granting th e second summary judgment motion one week later, on February 10, 1998. The central question he addresse d was whether Klein should "be judicially estopped from n ow asserting that her hand was caught in the lower sli tter shaft?" A315. To answer that question, the Magistra te Judge set forth what he believed to be the threshol d inquiry for the application of judicial estoppel: " `(1) Is the party's present position inconsistent with a position forme rly 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 Operatio ns 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, bec ause Klein's two affidavits directly conflicted. A316. H e did not find it significant that, in her memorandum in oppo sition to the defendants' first motion for summary judgment, Klein had argued in the alternative -- either (1) there w as not a barrier guard, or (2) the removal of the lower barr ier guard was foreseeable or (3) she had injured her hand in the

13upper slitter. The Magistrate Judge believed that t he

relevant conflict was not the conflict between the memorandum in opposition to the first motion for su mmary judgment and the memorandum in opposition to the second motion for summary judgment, but the conflic t between the affidavit submitted in support of the memorandum in opposition to the first motion for su mmary judgment and the affidavit submitted in response to the
defendants' second series of motions in limine. A31 6-17.

Having concluded that Klein's positions were inconsistent, the Magistrate Judge went on to consi der whether Klein had assumed either of her positions i n bad faith. He acknowledged that not all changes in posi tion during litigation are undertaken in bad faith, but felt that
this one was:

In this case, however, plaintiff asserts tha t she was

never sure where her hand contacted the mach ine, but simply assumed that it was the upper slitter shaft since she believed (mistakenly) that the low er slitter shaft could not have caused her injuries. Th is lack of assurance concerning how the accident occurr ed, however, is not reflected in plaintiff 's af fidavit, or in counsel's argument in response to defendants ' initial motion for summary judgment. Plaintiff 's st atement is made without equivocation (not, for example, to the best of her knowledge and belief). If plaint iff was
unsure where her hand came in contact with t he 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 slitte r shaft. Further, she did so with the intent that thi s representation would defeat the motion for s ummary judgment.

In this case, the unequivocal nature of pla intiff 's affidavit and counsel's argument (not to men tion the reliance of plaintiff 's expert on plaintiff 's affidavit) militate against a finding that she was prev iously unsure of the facts, and that she is now sim ply making clear was what [sic] left unclear before.

A317-18. The Magistrate Judge acknowledged that Kle in
asserted she had not sworn to either affidavit in b ad faith,

14but stated that "[i]n the context of judicial estop pel . . . bad

faith is defined as playing [fast] and loose with t he court." A319. The Magistrate Judge thought that Klein had`p layed fast and loose' with the court by attesting, in her first affidavit, "to a version of the facts which she kne w was not accurate." Id. (The Magistrate Judge implied that, had Klein conditioned her first affidavit -- e.g., by introdu cing it with words such as "to the best of my knowledge and beli ef " -- he would not have found that she had `played fast a nd loose' with the court. A318-19.) Accordingly, Klein was held by the Magistrate Judge to be judicially estopped f rom arguing that her hand was injured in the lower slit ter. 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 no t an easy course to pursue. A320. He noted that "[t]he r eader may well wonder how plaintiff can be put out of cou rt when, after all, she is now simply trying to prove that she was injured precisely where defendants have consist ently maintained she must have been injured." Id. 5 To ju stify invoking judicial estoppel despite his "real reluct ance," the Magistrate Judge returned to what he saw as the underlying rationale of judicial estoppel: it "is d esigned to avoid the type of unnecessary litigation the partie s 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 co ntacted the machine, but assumed that it was in the area of the upper slitter shaft), the efficient admi nistration of

___________________________________________________ ______________

5. After granting summary judgment, the Magistrate Judge explained at some length what would have happened if Klein had s tated 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 Ju dge made it plain that, even if Klein had not claimed in her first af fidavit 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 foreseeab le precluded summary judgment. A323-4 & n.1.

15this case would have been promoted. As it is , the

inaccuracy which plaintiff alleges exists in her earlier affidavit has caused this court to once agai n revisit summary judgment instead of proceeding timel y to
trial.

A321.

Plaintiff filed a motion to alter or amend the judg ment, A434-35, to which defendants responded, A446-48. Th e 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 unde r an "abuse of discretion" standard. McNemar v. Disney S tore, Inc., 91 F.3d 610, 613 (3d Cir. 1996), cert. denied , 510 U.S. 1115 (1997). We exercise plenary review over a gran t ofsummary judgment. Ryan Operations G.P. v. SantiamMidwest 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 circu it's "doctrine of judicial estoppel is an equitable doct rine 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 distinctiv e features of the case before the court, since "each case must be decided upon its own particular facts and circumsta nces." McNemar, 91 F.3d at 617 (citing Ryan Operations, 81 F.3d at 360).6 There are, therefore, few overarching pri nciples about the proper application of judicial estoppel t hat 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., 11 9 S.Ct. 1597 (1999) casts doubt on the particular holding in McNemar, b ut it does not call into question the principles stated in McNemar whic h we quote.

16invoked when a party's inconsistent behavior will o therwise

result in a miscarriage of justice.' " Ryan Operati ons, 81 F.3d at 365 (citing Oneida Motor Freight, Inc. v. U nited Jersey Bank, 848 F.2d 414, 424 (3d Cir. 1988) (Stap leton, J., dissenting)). Further, as we learn from case la w dealing with other forms of judicial sanctions, a trial cou rt should consider invoking its inherent sanctioning powers o nly 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 ident ified," Republic of the Philippines v. Westinghouse Elec. C orp., 43 F.3d 65, 73 (3d Cir. 1995).

Judicial estoppel is one arrow in the quiver of san ctions at a court's disposal. Each of those arrows is a de fensive weapon, loosed to protect the integrity of the cour t's processes. See Chambers v. NASCO, Inc., 501 U.S. 32 , 44 (1991) ("A primary aspect of [a district court's] d iscretion is the ability to fashion an appropriate sanction for conduct which abuses the judicial process."); McNemar v. Di sney Store, Inc., 91 F.3d 610, 616 (3d Cir. 1996) ("[t]h e doctrine of judicial estoppel serves a consistently clear an d 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]ecaus e of their very potency, inherent powers must be exercis ed 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 doll ars 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 san ction badfaith 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 i n invoking its inherent power, and it must comply with the man dates of due process . . . in determining that the requis ite bad

17faith exists . . . ." Id. Thus, "when there is bad- faith

conduct in the course of litigation that could be a dequately sanctioned under the Rules, the court ordinarily sh ould rely on the Rules rather than the inherent power." Id. But "if in the informed discretion of the court, neithe r 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." I d. Justice White's statement of general principle -- that a co urt may rely on its inherent power where "neither the statu te nor the Rules are up to the task" -- was followed direc tly by an application to the case then at bar that sheds ligh t on the principles themselves:

It is true that the District Court could hav e employed Rule 11 to sanction Chambers for filing "fal se and frivolous pleadings," 124 F.R.D., at 138, an d that some of the other conduct might have been reached through
other Rules. Much of the bad-faith conduct b y Chambers, however, was beyond the reach of t he Rules; his entire course of conduct througho ut the lawsuit evidenced bad faith and an attempt t o perpetrate a fraud on the court, and the con duct
sanctionable under the Rules was intertwined within conduct that only the inherent power could a ddress. 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 sanct ioning provisions to discrete occurrences before in voking inherent power to address remaining instance s of sanctionable conduct would serve only to fos ter 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 dist rict

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7. 28 U.S.C. S 1927 provides that:

Any attorney or other person admitted to con duct cases in any court of the United States or any Territory thereo f who so multiplies the proceedings in any case unreasonably and vex atiously may be required by the court to satisfy personally the excess costs, expenses, and attorneys' fees reasonably inc urred because of such

conduct.

18court with the authority to sanction all of the con duct

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 t rial court may turn to its inherent sanctioning power, b ut should exercise that power with caution.10 Within that inherent sanctioning power, judicial estoppel is of ten the harshest remedy. Cf. Poulis v. State Farm Fire & Ca sualty Co., 747 F.2d 863, 867, 870 (3d Cir. 1984) (charact erizing dismissal sanction as "extreme"). The Magistrate Ju dge in this case evidently thought himself confronted by a n all-or-

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8. Such an interpretation gains credence from the v iews of the dissenters
in Chambers. Justice Scalia noted that he had "no d oubt of a court's authority to go beyond the Rules in [the circumstan ces of the case]. And I agree with the Court that an overall sanction res ting at least in substantial portion upon the court's inherent power need not be broken down into its component parts, with the actions sus tainable under the Rules separately computed." Id. at 60. Justice Kenn edy, joined by Chief Justice Rehnquist and Justice Souter, dissented on the ground that district courts could justify invocation of inheren t sanctioning powers only where they can detail "special justification"; i.e., where a federal statute or Rule does not cover the misbehavior in q uestion and where
the court must sanction that misbehavior in order t o safeguard its own functioning. Id. at 63. All nine Justices thus agre ed on the minimum proposition that a federal district court consideri ng sanctions should first turn to the Federal Rules and applicable stat utes.

9. Our prior decisions support this view. See Gille tte Foods Incorp. v. Bayernwald-Fruchteverwertung, GmbH, 977 F.2d 809, 8 14 n.10 (3d Cir. 1992) (assuming that a district court should consid er the Federal Rules and applicable statutes before turning to its inher ent 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-ba sed powers before turning to its inherent powers").

10. We noted in In re Tutu Wells Contamination Liti gation that the fact "[t]hat `inherent powers are shielded from direct d emocratic controls' makes [the] exercise of restraint and discretion ev en more important." 120 F.3d 368, 383 (3d Cir. 1995) (citing Roadway Ex press, Inc. v. Piper, 447 U.S. 752, 764 (1980)). By contrast, statutes ar e direct expressions of the people's representatives in Congress, and th e Federal Rules -- though drafted by committees of the Judicial Confer ence composed of members of the bar, academia, and judges -- are sub ject to veto by Congress.

19nothing choice: dealing with what he saw as bad fai th

through the invocation of judicial estoppel, or ign oring that bad faith. In electing to invoke judicial estoppel, the Magistrate Judge foreclosed a plaintiff with a pote ntially meritorious claim from presenting her case in court

.

Had the Magistrate Judge first asked whether the Ru les were "up to the task," he might not have found hims elf confronting such a stark choice. The Federal Rules present a district court encountering perceived bad faith w ith less severe sanctions, such as the remedial sanction set forth in Rule 56(g), which vests a court with authority to c harge the misfeasant with expenses, including attorney's fees
, attributable to the additional litigation generated by a badfaith affidavit -- and, where appropriate, to adjud ge the misfeasant guilty of contempt.11 Such a sanction al lows a court to penalize disingenuousness without foreclos ing a potentially meritorious claim.

Had the Magistrate Judge concluded that invoking th e court's inherent sanctioning authority was preferab le to use
of Federal Rules or statutes -- either because the Rules and statutes did not cover a particular person or a par ticular act, or because misfeasance sanctionable under the Rules
was intertwined with misfeasance not sanctionable u nder
the Rules -- he would still have had available the full range of sanctions within the inherent power. A court cho osing 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).

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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, th e 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 r easonable attorney's fees, and any offending party or attorney ma y be adjudged guilty of
contempt.

20B. Bad Faith Inquiry Prior to the Extreme Sanction of

Judicial Estoppel

Judicial estoppel is not a sanction "tailored to ad dress the harm" if it does not, at a minimum, pass the"tw o-part threshold inquiry" set out in Ryan Operations:

(1) Is the party's present position inconsis tent with a position formerly asserted? (2) If so, did t he party assert either or both of the inconsistent po sitions in bad faith--i.e., "with intent to play fast a nd 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 th at she was not sure where her hand was injured and (2) Kle in
should have at least conditioned her first affidavi t with words such as "to the best of my knowledge and beli ef." By considering Klein's initial failure to include cond itional language as per se evidence of bad faith, the Magis trate Judge folded the second prong of the judicial estop pel test back into the first prong -- merely asking, again, whether the two affidavit positions were inconsistent. 12 A s the Magistrate Judge observed, judicial estoppel can be a draconian sanction, one that should be invoked only with "reluctance." Ryan Operations sought to give analyt ical expression to that reluctance by requiring district courts to find bad faith in addition to inconsistency.13

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12. Klein does not seriously contest that her state ments were contradictory. In her first affidavit, Klein assert ed that her hand had been injured on the upper slitter. In her second af fidavit, she stated

that she could no longer be certain where her hand had b een injured. In
combination with her choice not to contest the defe ndants' argument that it was physically impossible for her hand to h ave 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 wh ether a litigant has
acted in bad faith whenever the court is considerin g applying judicial estoppel. There is no question that Ryan Operations stands for the

21V. Conclusion

If on remand the court finds that Klein acted in ba d faith -- a finding that must be based on more than incons istency 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 Cham bers, the perceived misbehavior combines some actions that ar e sanctionable under Federal Rules and statutes and s ome actions that are not -- then the court should turn to its inherent sanctioning power. If the court turns to i ts inherent sanctioning power, it should select a sanc tion
"tailored to address the harm identified."

For the reasons set forth above, the order granting summary judgment will be vacated and the case reman ded for further proceedings consistent with this opinio n.

A True Copy:

Teste:

Clerk of the United States Court of Appeals
for the Third Circuit

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proposition that a district court must "discern" in tent, not "infer" it.

See 81 F.3d at 364. That does not mean, however, that R yan Operations requires a district court to discern intent by way of an evidentiary hearing. The court in Ryan Operations did not consi der a review of the record to be an improper way to discern intent; to the contrary, Ryan Operations assessed the appellant's intent by condu cting its own review of the procedural history, rather than vacating the district court's finding of bad faith and remanding for an evidentiary heari ng. Id. at 361-64. Moreover, the panel noted that in a predecessor cas e, 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 infe rence 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." C hambers, 501 U.S. at 50. We are not called on today to map the bounda ries of the due process right in a case of this kind.

22