Krantz v. DT & C Global Management LLC, No. 16-4077 (7th Cir. 2017)
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DT&C, a Chicago ground transportation company, and its owners were sued by former employees and the Secretary of Labor for violating state wage‐payment laws and the Fair Labor Standards Act, 29 U.S.C. 201. After the defendants ignored court orders, the district judges entered default judgments for the plaintiffs. Eleven months later, the defendants moved to vacate both judgments, FRCP 60(b), arguing that the company had closed in 2015 and no longer received mail at the office address and that one of the owners was in poor health so that he did not keep in contact with the lawyer. The Sixth Circuit affirmed the denial of the motions. Because the defendants did not show good cause for the default, did not act quickly in filing motions to vacate, and failed to articulate any meritorious defenses, the district judges did not abuse their discretion. The default was the result of “inattention to the litigation” rather than illness, and the defendants had not shown that they had a legitimate defense.
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In the United States Court of Appeals For the Seventh Circuit ____________________ No. 16 4076 R. ALEXANDER ACOSTA, Secretary of Labor, Plaintiff Appellee, v. DT & C GLOBAL MANAGEMENT, LLC, d/b/a TOWN & COUNTRY LIMOUSINE, and JOHN JANSEN, and WILLIAM LYNCH, Defendants Appellants. ____________________ No. 16 4077 MARK KRANTZ, et al., Plaintiff Appellees, v. DT & C GLOBAL MANAGEMENT, LLC, and JOHN JANSEN, Defendants Appellants. ____________________ Appeals from the United States District Court for the Northern District of Illinois, Eastern Division. No. 1:15 cv 02010 – Virginia M. Kendall, Judge. No. 1:14 cv 00998 — Milton I. Shadur, Judge. ____________________ ARGUED OCTOBER 3, 2017 — DECIDED OCTOBER 25, 2017 ____________________ 2 Nos. 16 4076 & 16 4077 Before KANNE, ROVNER, and SYKES, Circuit Judges. PER CURIAM. DT & C Global Management operated a ground transportation company in Chicago. The company and two of its owners were sued by former employees and the government for violating state and federal wage payment laws. After the defendants ignored court orders, the district judges entered default judgments for the plaintiffs. Eleven months later, the defendants moved to vacate both judg ments. See FED. R. CIV. P. 60(b). Deeming their excuses too lit tle, too late, the judges denied the motions, precipitating this appeal. Because the defendants did not show good cause for the default, did not act quickly in filing motions to vacate, and failed to articulate any meritorious defenses, we conclude that the district judges did not abuse their discretion. We affirm the judgments. I. BACKGROUND This appeal consolidates two lawsuits. In the first, drivers sued their former employer, DT & C Global Management, LLC, and John Jansen, an owner, for wage payment viola tions. In the second, the Secretary of Labor sued the company, Jansen, and William Lynch, another owner, for the same vio lations. The Employees’ Case Mark Krantz and William Dunne, two former drivers for the company, alleged that the defendants failed to pay over time rates, a violation of the Fair Labor Standards Act, 29 U.S.C. § 201, and the Illinois Minimum Wage Act, 820 ILCS 105/1. The plaintiffs also contended that defendants took un authorized wage deductions in violation of Illinois’s Wage Payment and Collection Act, 820 ILCS 115/9. Nos. 16 4076 & 16 4077 3 The case proceeded to discovery, but ended with a default judgment. When the defendants didn’t respond to discovery requests, the plaintiffs filed a motion to compel, which the judge granted. About a year later, in late 2015, the plaintiffs moved for sanctions because the defendants had not com plied with the discovery order. After the defendants’ counsel responded that they couldn’t reach the defendants, the judge allowed counsel to withdraw. Because the company could not represent itself without counsel, the judge ordered Jansen to appear for a hearing. When Jansen didn’t show up, the judge entered sanctions: he struck the defendants’ answer, awarded the plaintiffs their attorneys’ fees, and entered a default. The plaintiffs then moved for a default judgment, which the judge granted in November 2015. Eleven months later, the defendants moved to vacate that judgment under Federal Rule of Civil Procedure 60(b)(1). Jan sen offered two excuses. He first asserted that he had received no notices during the last few months of the case. He said he didn’t get notice of counsel’s motion to withdraw or the judge’s order directing him to appear because his company closed its business in September 2015 and no longer received mail at their office address. Jansen didn’t get any mail sent to his home or e mail addresses, he thinks, because he had moved to Indiana and his emails were “forwarded to another company.” As a result, he was unaware of the default judg ment against him until “summer 2016.” Second he said he could not keep in contact with his lawyers because of his poor health. He explained that surgeries in 2011 and 2014, ongoing medication, and a hospitalization in April 2016 for “unspeci fied neurological issues” created “difficulty attending to busi ness affairs.” He acknowledged, however, that in the summer of 2015 he met with Attorney James E. Gorman several times 4 Nos. 16 4076 & 16 4077 in Chicago. After hiring Gorman, Jansen had no further con tact with Gorman’s office until around “late March, early April” 2016, when Jansen learned that Gorman had died. The judge denied the motion. He ruled that the default was the result of “inattention to the litigation” rather than ill ness, and the defendants had not shown that they had a legit imate defense. The Department of Labor Case The Secretary of Labor alleged the same Fair Labor Stand ards Act violations in its suit against DT & C, Jansen, and also William Lynch (minority owner and president of DT & C). Discovery disputes arose here, too. The Secretary moved to compel defendants to respond to discovery requests. De fendants’ counsel—the same as in the employees’ case— moved to withdraw, again citing an inability to reach defend ants. The following month the Secretary asked the court to en ter a default for failure to defend. When defendants didn’t re spond, the judge entered the default and default judgment. As with the employees’ case, eleven months passed before the defendants moved to vacate the judgment. This motion was almost identical to the other one, but adds two points. First, Lynch swore that he relied on Jansen to keep him ap prised of the case. Second, Lynch and Jansen admitted seeing a press release from the Department of Labor announcing the default judgment in January 2016. They both thought after reading it that they weren’t individually liable, and they Nos. 16 4076 & 16 4077 5 weren’t worried about the company’s judgment because they had closed the business.1 The judge denied the motion to vacate. She explained that Jansen’s surgeries, which occurred before the litigation started, did not excuse the default or Jansen’s failure to learn about the default judgment. She also found that defendants had failed to show a meritorious defense. II. ANALYSIS On appeal, the defendants argue that the district judges abused their discretion by denying the motions to vacate. They repeat that because Jansen did not receive notice of the judgments and suffered from bad health, their neglect of the cases is excusable. See FED. R. CIV. P. 60(b)(1). For a court to set aside a default judgment under Rule 60(b)(1), the movant must show good cause, quick action to respond to the default, and a meritorious defense to the underlying allegations. See Wehrs v. Wells, 688 F.3d 886, 890 (7th Cir. 2012). In most cases, a party is bound to the actions of its attorney even when those actions are errors or omissions. See Link v. Wabash R.R. Co., 370 U.S. 626 (1962), Moje v. Fed. Hockey League, LLC, 792 F.3d 756 (7th Cir. 2015). We review the denial of a Rule 60(b) motion for abuse of discretion. See Cent. Ill. Carpenters Health & Welfare Tr. Fund v. Con Tech Carpentry, LLC, 806 F3.d 935, 937 (7th Cir. 2015). 1 The press release contains a hyperlink to the judgment, which named Jansen and Lynch as individual defendants. See U.S. Dep’t of Labor, Fed eral judge orders Chicago limo company to pay more than $381K in back wages damages (2016), https://www.dol.gov/newsroom/re leases/whd/whd20160121.) 6 Nos. 16 4076 & 16 4077 The district judges reasonably concluded that the defend ants didn’t establish good cause for their default. The defend ants first point to Jansen’s health problems, but it was within the district judges’ discretion to reject this excuse given the timeline and lack of corroborating information. Jansen’s sur geries were in 2011 and 2014, yet he remained inattentive to the cases for all of 2015, well after these surgeries. Jansen re plies that he remained on various medications, but he offers no medical opinion suggesting that they impaired his ability to handle his affairs. To the contrary, Jansen said that he was able to conduct business when he wanted. He met with Gor man in Chicago many times in the summer of 2015, during the same time that he was ignoring the courts’ discovery or ders. The defendants respond with their second excuse: Jan sen’s move to Indiana in 2015, combined with problems of mail and email forwarding, also show good cause for losing contact with his lawyers and the court, and the resulting de fault. The district judges reasonably found this excuse defi cient. When Jansen moved away and closed the business, he should have notified the court of his new address. See Soliman v. Johanns, 412 F.3d 920, 922 (8th Cir. 2005); Carey v. King, 856 F.2d 1439, 1441 (9th Cir. 1988). This step was especially im portant because Jansen was considering hiring Gorman to re place his original attorneys with whom he apparently had a breakdown in communication. Gorman may have later let Jansen down by not doing anything to defend the suit, but Jansen had a duty, which he ignored, to check and see if his lawyer was doing something to represent him. See Moje, 792 F.3d at 759. If Jansen had simply looked at the docket or called his lawyer once after fall 2015, he would have learned that his Nos. 16 4076 & 16 4077 7 former lawyers had withdrawn, that Gorman didn’t even en ter and appearance in the case, and that Jansen needed to act promptly. See id. And even those simple steps would have been unnecessary if Jansen had merely notified the court of his new address in the summer of 2015. The district judges also reasonably decided that the de fendants did not respond quickly after learning about the de fault judgment. The defendants argue that they waited only “two, three months” between when Jansen learned of the de fault judgment in “summer 2016” and when they filed the Rule 60(b) motion in October. (Appellants’ Br. App. at A 12, A 27.) They also point to Jansen’s undocumented hospitaliza tion for “unspecified neurological issues” in April 2016. The defendants’ account does not reflect quick action. First, they don’t explain how Jansen’s hospital stay in April disabled him from filing a motion to vacate until six months later, in October. Second, the defendants’ “two, three months” delay after “summer 2016” was not quick. In Jones v. Phipps, this court decided that an appellant failed to show quick ac tion when she moved to vacate five weeks after she knew about the judgment and was capable of getting help from a lawyer. 39 F.3d 158, 165 (7th Cir. 1994); see also C.K.S. Eng’rs Inc. v. White Mountain Gypsum Co., 726 F.2d 1202, 1208 (7th Cir. 1984) (stating movant’s two month delay before moving to vacate default judgment was not quick action). Finally, the two to three months that the defendants calculate ignores the January 2016 press release that both Jansen and Lynch read shortly after it was published. Despite reading this notice, they didn’t take the easy and prudent step of checking the link 8 Nos. 16 4076 & 16 4077 in the article to see if the judgment applied to them. Instead they let more than nine months pass before going to court. Defendants also failed to proffer a meritorious defense to the complaint. The defense doesn’t need to be a clearly victo rious argument, but it must contain more than “bare legal conclusions.” Parker v. Scheck Mech. Corp., 772 F.3d 502, 505 (7th Cir. 2014). Yet that is all that the defendants offered. In their motion to vacate, the defendants said that Jansen has “defenses of good faith and that the amounts awarded are ex cessive and he has not received all credits he and other de fendants should have with respect to the judgment amount.” (R. 71 at 5.) The defendants don’t elaborate on these defenses, nor do they provide any support for them. Although some courts will look to other pleadings to flesh out a possible de fense, in this circuit district courts may reasonably demand that the defenses be included and developed in the motion to vacate. See Jones v. Phipps, 39 F.3d 158, 166 (7th Cir. 1994) (re marking that district court didn’t abuse its discretion in con cluding defense with “unsatisfactory” explanation was mer itless). But the defendants did not provide anything else, thereby dooming their motion. III. CONCLUSION For the foregoing reasons, we AFFIRM the district courts’ grants of Appellees’ motions to dismiss.
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