Judge OKs employment discrimination lawsuit, despite plaintiff's failure to list lawsuit on bankruptcy filing

By Scott Holland | Nov 8, 2018

A federal judge will allow a man to continue pushing an employment discrimination lawsuit despite his failure to list the possible proceeds from the lawsuit in an unrelated bankruptcy filing.

When Derell Pruitt filed for Chapter 7 bankruptcy protection in March 2016, he didn’t disclose to the court seven Equal Employment Opportunity Commission discrimination charges pending against Quality Labor Services and Highland Baking Co., one of which — filed a year earlier — proceeded to a lawsuit.

The companies say Pruitt’s failure to disclose the charges should prevent him from pursuing the claim under the legal principle known as judicial estoppel, and asked U.S. District Judge Edmond Chang to grant summary judgment. Chang initially denied both motions, saying it wasn’t clear if Pruitt intentionally omitted his EOC charge from his bankruptcy filing. However, the judge conducted an evidentiary hearing on the issue in mid-September, ultimately deciding the companies failed to prove Pruitt attempted to conceal assets.

“When a debtor conceals a contingent or unliquidated claim during bankruptcy and then seeks to profit from the claim, judicial estoppel might apply to bar the debtor from bringing the concealed claim,” Chang wrote in his Nov. 6 opinion. However, he continued, the U.S. Seventh Circuit Court of Appeals has established only intentional concealment triggers that clause, and the burden of proof is on the defendants, not the debtor.

According to Chang, Pruitt filed similar EEOC charges against other companies around the same time in early 2015. EEOC investigators questioned him in June and July that year, right before he began working as a caretaker for adults and children at Riverside Foundation in Lincolnshire. It wasn’t until November 2015 that he agreed to be a named plaintiff in a Fair Labor Standards Act class action stemming from one of the EEOC complaints, a few months before initiating his Chapter 7 pursuit with attorney Kenneth Borcia, of Libertyville.

Pruitt maintained he didn’t mention the EEOC charges in his bankruptcy filing because he didn’t know they constituted a legal asset, nor did Borcia ask a question that would prompt him to provide that information. Pruitt also didn’t disclose his bankruptcy filing to employment attorney Chris Williams, who filed the EEOC charges. The record also shows bankruptcy trustee John Gierum didn’t ask Pruitt any questions about employment disputes.

Further, Chang explained, when the companies filed for summary judgment, Pruitt realized the oversight and contacted Borcia, who moved the bankruptcy court to reopen Pruitt’s case. Although that happened, Gierum determined the “charges and other claims were likely not worth enough to pursue on Pruitt’s creditors’ behalf,” according to Chang.

A key distinction is that when Borcia met with Pruitt, the EEOC charges were not yet a lawsuit — “I didn’t ask him about the discrimination, but I did ask him about lawsuits,” Borcia said during hearings — and that Pruitt did disclose an old dispute with a landlord, evidence he was forthcoming about his legal past. Chang further pointed to Pruitt’s lack of college or legal training which otherwise might have helped him intuitively connect an EEOC administrative charge to a potential lawsuit.

The companies said Pruitt’s contract with Williams should have been an indicator, but Chang noted there is no evidence “Williams discussed whether or how much money Pruitt was likely to recover.” Chang also said Pruitt was believable when testifying, admitting past instances of being untruthful but maintaining a consistent story about his EEOC claim, and that the companies failed to establish a motive for what they assert was intentional concealment.

The discrimination complaint was to continue with a Nov. 8 state hearing.

Pruitt is represented in his current lawsuit against Quality Labor Services and Highland Baking Co. by attorneys Robert S. Libman and Benjamin J. Blustein, of the firm of Miner Barnhill & Galland, of Chicago, and attorney Christopher J. Williams, of Workers' Law Office PC, of Chicago.

Quality Labor Services is represented by attorneys Elliot S. Richardson, Carter A. Korey and Michele D. Dougherty , of the firm of Korey Richardson LLC, of Chicago.

Highland Baking is represented by attorneys Eric D. Kaplan and Christopher S. Wunder, of the firm of Kaplan Papadakis & Gournis P.C., of Chicago.

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Organizations in this Story

Highland Baking Co Kaplan Papadakis & Gournis, PC. Korey Richardson LLC Miner, Barnhill & Galland PC. U.S. District Court for the Northern District of Illinois Workers' Law Office

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