Digital Library: Supreme Court Limits Landmine Lurking in Many Consumer Cases

By: Geoff Walsh

June 25, 2026 — Article

The Supreme Court ruling in Keathley v. Buddy Ayers Construction, Inc., 608 U.S. __, 2026 WL 1686028 (June 11, 2026) is a notable step forward in helping consumer plaintiffs overcome a hidden but troublesome affirmative defense, when, as often happens, current consumer claims were left off schedules in a consumer’s prior bankruptcy.  Previously, too often meritorious cases with these facts have been dismissed under the doctrine of bankruptcy judicial estoppel. 

The unanimous ruling in Keathley rejects a commonly applied test for judicial estoppel and sends a clear message that application of judicial estoppel based on a prior bankruptcy has gotten out of hand.  Keathley offers clear signs of the Court’s skepticism as to any use of bankruptcy judicial estoppel to dismiss consumer law claims. 

This article first explains judicial estoppel and bankruptcy judicial estoppel and its dangers to consumer litigation.  Then both the Keathley holding and its broader implications are analyzed. Finally, for litigation after Keathley, advice is provided on how to overcome bankruptcy judicial estoppel, including six litigation tips.