“Admit Nothing. Deny Everything.” An Alabama Tax Ruling Draws a Warning From the Bench

Before the courts made it decisive, Alabama put one sentence into the record. The principal competitors to rail carriers moving interstate freight in Alabama, the State stipulated, were motor carriers and water carriers.

The stipulation removed a factual dispute from trial, spared the parties the cost of proving it, and allowed the court to focus on the legal theory Alabama believed would decide the case. The same concession later bound the State in the related lawsuits.

Years later, after two trips to the Supreme Court and a final defeat in litigation brought by CSX Transportation, competition had become decisive. Other railroads sought the same protection from Alabama’s diesel tax. This time, the State denied that water carriers were their principal competitors and demanded proof.

On July 31, 2026, a divided United States Court of Appeals for the Eleventh Circuit held that the denial came too late. The majority affirmed judgment on the pleadings for the railroads, reasoning that Alabama was judicially estopped from contradicting its earlier stipulation. The State, the court concluded, had tried to preserve the benefits of the concession while escaping its consequences once the governing law made the conceded fact dispositive.

Judge Gerald Tjoflat dissented. He saw a rule that would punish the ordinary work of narrowing litigation and teach government lawyers a different lesson: “Admit nothing. Deny everything.”

The Fact the State Gave Away

The dispute arose under the Railroad Revitalization and Regulatory Reform Act of 1976, known as the 4-R Act. The statute prohibits states from imposing taxes that discriminate against rail carriers. Alabama taxes diesel fuel purchased or used by railroads while exempting water carriers engaged in interstate commerce.

CSX challenged that difference in 2008. Alabama’s principal defense did not depend on whether railroads competed with trucks or barges. The State argued that the relevant comparison class should include commercial and industrial taxpayers generally. Because the diesel levy was broadly applicable, Alabama contended, it did not single out railroads for disfavored treatment.

Because Alabama argued that all commercial and industrial taxpayers formed the comparison class, it treated the railroads’ direct competitors as secondary. Alabama admitted in its pleadings and later stipulated that the principal competitors to rail carriers in Alabama were motor carriers and carriers operating by ships, barges, and other vessels. The stipulation contained no limitation to CSX, no geographic qualification, and no reservation for another railroad whose tracks might be far from navigable water.

The Supreme Court then made the stipulated relationship central. In 2011, it held that a generally applicable tax could violate the 4-R Act when it applied to railroads but exempted their interstate competitors. In 2015, the Court again reviewed the litigation and accepted motor and water carriers as the comparison class in light of the parties’ stipulation.

When the case returned to the Eleventh Circuit, Alabama could justify the exemption for motor carriers because they paid a roughly comparable alternative tax. It could not identify an equivalent burden on water carriers. In 2018, the court ordered relief preventing the State from taxing CSX’s diesel while continuing to exempt the competing water carriers.

The Cases That Were Waiting

BNSF Railway, Norfolk Southern Railway, and several smaller carriers had filed parallel challenges. Their cases remained stayed while the courts decided the CSX litigation.

Once the stay ended, Alabama gave a different answer to the same factual question. It denied that water carriers were principal competitors to the other railroads, pointed to changed maritime conditions following the BP oil spill, and argued that competition had to be proved railroad by railroad.

The later cases involved different plaintiffs and routes. BNSF’s Alabama line, for example, covered 115 miles through counties unconnected to navigable waterways. Alabama argued that each railroad had to prove which carriers actually competed for its freight.

But the railroads did not have to prove the competitive relationship on the merits. They invoked judicial estoppel, an equitable doctrine used to prevent a party from gaining an advantage by taking inconsistent positions in separate proceedings. Because the later plaintiffs had not been parties to the CSX case, the doctrine was being used nonmutually: new litigants sought to bind Alabama to a factual position taken in litigation with someone else.

The Majority’s Hedge

Judge Robert Luck, writing for himself and Judge Elizabeth Branch, treated the contradiction as deliberate. Alabama first made the stipulation before competition became legally significant. It then repeated the broad statement after the BP oil spill, reaffirmed it at a later bench trial, and continued to rely on it after the Supreme Court made the competitive relationship important.

The majority also looked beyond the CSX docket. The stayed cases had relieved Alabama of litigating competition on several fronts while it pursued a legal theory that, if successful, could have disposed of them all. Once that theory failed, the State sought the discovery and railroad-specific proof it had avoided for years. The district court described the strategy as an effort to “hedge its bets,” and the Eleventh Circuit found no clear error in that assessment.

Under the circuit’s test, the court asked whether Alabama had taken an inconsistent position under oath and whether the reversal was calculated to make a mockery of the judicial system. The majority answered both questions yes. Sophisticated counsel represented the State, the stipulation was categorical, multiple courts had relied on it, and Alabama never claimed it resulted from accident or mistake.

Judicial estoppel supplied the missing element of the railroads’ tax claims. Alabama could not deny competition; water carriers remained exempt; and the unequal treatment therefore violated the 4-R Act. The court affirmed declaratory and injunctive relief against the State and against local governments whose authority to impose parallel taxes derived from Alabama.

A Concession or an Advantage

Judge Tjoflat disputed whether Alabama had gained any advantage from the stipulation. Judicial estoppel ordinarily prevents a litigant from winning with one position and then seeking another advantage by contradicting it. Alabama did not win because of the principal-competitor stipulation; the concession ultimately helped defeat the State.

Judge Tjoflat viewed Alabama’s concession as ordinary trial management. The State believed competition was legally immaterial and surrendered the factual issue so the parties would not spend time and money proving it. The lower courts initially agreed with Alabama’s legal theory. The concession became dispositive only after the Supreme Court rejected the State’s proposed comparison class.

The dissent would have applied judicial estoppel only when a party later contradicted a position it had previously urged a court to accept. Alabama had instead conceded a fact to simplify the case. On that view, the State had misjudged which issues were worth contesting, and the mistaken concession supplied no proof that it manipulated a court.

The majority answered that the stipulation conferred a litigation benefit even though it did not produce victory. Alabama avoided discovery in the related cases and preserved the possibility of a broad legal win. It gained time while its preferred theory remained viable, then returned to the facts after that theory failed.

The dissent measured advantage by the judgment Alabama lost. The majority measured it by the discovery Alabama avoided and the alternative path it kept open.

The Price of Narrowing a Case

Stipulations make civil litigation manageable. Parties concede authentication, dates, ownership, commercial relationships, and other facts so a trial can address the disputed issues. A concession may reflect agreement, uncertainty, expense, or a strategic decision that an issue is not worth litigating. A party may concede a fact for one case without intending it to govern later disputes involving different plaintiffs.

Judge Tjoflat’s warning extends beyond Alabama tax law. If strangers to the first case can invoke a concession after later decisions make it important, counsel must treat every stipulation as a possible rule for future litigation. Risk-averse lawyers may refuse to concede facts that would otherwise narrow the case.

The majority tied its ruling to an unusual record: Alabama’s repeated and unqualified representation, the reliance of the Supreme Court and the Eleventh Circuit, the coordinated stays, and the State’s continued adherence to the stipulation after competition became important. It left open whether a genuine industrywide change might someday justify relief from the old factual position.

Alabama failed to preserve the broader objection that judicial estoppel cannot generally be applied against a State, so the court left it unresolved. The judgment nevertheless used a judge-made equitable doctrine to prevent Alabama and its local governments from collecting the challenged diesel taxes.

The Doctrine the Supreme Court Just Questioned

Seven weeks earlier, the Supreme Court had decided Keathley v. Buddy Ayers Construction, Inc., rejecting a rigid application of judicial estoppel against a bankruptcy debtor who failed to disclose a personal-injury claim. The unanimous Court required judges to examine the totality of the circumstances rather than infer bad faith from knowledge and motive alone.

The Eleventh Circuit majority saw no conflict. The district court had considered the totality of Alabama’s conduct, and the panel reviewed that conduct across more than forty pages. Keathley required a holistic inquiry, and the majority concluded that the record supported intentional contradiction.

Judge Tjoflat relied on separate opinions in Keathley that questioned judicial estoppel itself. Justice Clarence Thomas, joined by Justice Neil Gorsuch, had questioned whether the doctrine rests on any statute, federal rule, or traditional inherent power. Justice Sonia Sotomayor separately doubted whether it makes sense to apply the doctrine in bankruptcy at all. Those opinions, Tjoflat concluded, counseled restraint before extending the doctrine against a State’s taxing authority.

The majority confined its review to Alabama’s conduct under the circuit’s test. The dissent would have included the doctrine’s effect on future stipulations and state taxing authority in the equitable inquiry.

The Unpublished Warning

The Eleventh Circuit designated the decision “not for publication,” making it nonprecedential within the circuit. Judge Tjoflat closed by objecting to that choice. The case had received oral argument, involved a tax provision twice considered by the Supreme Court, and arrived shortly after Keathley. A decision of that magnitude, he wrote, should not be difficult to find.

The majority answered in a footnote that the opinion was publicly available and that the Supreme Court knew where to look. The panel thus bound Alabama to a stipulation from an earlier case in an opinion that would not bind future Eleventh Circuit panels.

Alabama’s original stipulation narrowed one trial. Fourteen years later, the majority used it to resolve the related cases without additional proof of competition.

Judge Tjoflat warned that the ruling will make future litigants less willing to narrow cases by stipulation.