Court Opinion

ID: 3157490
Source: CourtListenerOpinion
Date Created: 2015-11-24 17:00:56.31093+00
Date Added: 2024-06-11T09:17:25.414961
License: Public Domain

In the

      United States Court of Appeals
                     For the Seventh Circuit
                          ____________________  
No.  15-­‐‑1269  
CENTRAL   ILLINOIS   CARPENTERS   HEALTH   AND   WELFARE   TRUST  
FUND,  et  al.,  
                                             Plaintiffs-­‐‑Appellees,  
                                         v.  

CON-­‐‑TECH  CARPENTRY,  LLC,  
                                                         Defendant-­‐‑Appellant.  
                          ____________________  

                Appeal  from  the  United  States  District  Court  
                     for  the  Central  District  of  Illinois.  
                 No.  14-­‐‑CV-­‐‑3293  —  Colin  S.  Bruce,  Judge.  
                          ____________________  

  ARGUED  NOVEMBER  6,  2015  —  DECIDED  NOVEMBER  24,  2015  
                ____________________  

   Before  WOOD,  Chief  Judge,  and  POSNER  and  EASTERBROOK,  
Circuit  Judges.  
    EASTERBROOK,   Circuit   Judge.   Several   multi-­‐‑employer  
health  and  welfare  funds  filed  this  suit  under  the  Employee  
Retirement   Income   Security   Act   (ERISA),   seeking   about  
$70,000   in   what   they   labeled   delinquent   contributions.   The  
suit   was   filed   on   September   25,   2014,   and   Con-­‐‑Tech   Car-­‐‑
pentry,   the   assertedly   delinquent   employer,   was   served   on  
2                                                                   No.  15-­‐‑1269  

October   14.   Service   started   a   21-­‐‑day   period   for   an   answer,  
see   Fed.   R.   Civ.   P.   12(a)(1)(A)(i),   giving   Con-­‐‑Tech   until   No-­‐‑
vember  4.  It  did  not  meet  that  deadline,  and  on  November  5  
plaintiffs  filed  and  served  a  motion  asking  the  district  court  
to  find  Con-­‐‑Tech  in  default.  
     Con-­‐‑Tech  did  not  respond  to  that  motion.  After  a  hearing  
on   December   1,   which   Con-­‐‑Tech   did   not   attend,   Magistrate  
Judge  Bernthal  entered  an  order  finding  Con-­‐‑Tech  in  default  
and   giving   plaintiffs   14   days   to   prove   their   damages.   (Con-­‐‑
Tech   has   not   argued   that,   by   entering   a   default   rather   than  
recommending  this  step  to  the  district  judge,  the  magistrate  
judge   exceeded   his   powers   under   28   U.S.C.   §636.)   At   this  
point  Con-­‐‑Tech  could  have  asked  the  district  court  to  vacate  
the   default,   which   under   Fed.   R.   Civ.   P.   55(c)   it   may   do   for  
“good  cause.”  But  Con-­‐‑Tech  ignored  the  December  1  order,  
as  it  had  ignored  the  earlier  procedural  steps.  
    Plaintiffs  filed  documents  showing  to  the  district  judge’s  
satisfaction  that  Con-­‐‑Tech  was  delinquent  in  payment.  Con-­‐‑
Tech  did  not  reply  to  these  documents.  On  January  13,  2015,  
the   court   entered   a   judgment   in   the   funds’   favor,   awarding  
them  about  $70,000  in  past-­‐‑due  contributions,  $14,000  in  in-­‐‑
terest,   $7,000   in   liquidated   damages,   $3,000   in   audit   costs,  
and  $4,000  in  attorneys’  fees.  
    Meanwhile,  Con-­‐‑Tech  had  belatedly  begun  filing  papers.  
Counsel  for  Con-­‐‑Tech  filed  an  appearance  on  December  30,  
2014.   On   the   same   date   he   also   filed   a   motion   for   an   exten-­‐‑
sion  of  time  to  answer  the  complaint.  Given  the  entry  of  de-­‐‑
fault,  however,  an  answer  was  not  what  was  required;  Con-­‐‑
Tech  needed  to  file  a  Rule  55(c)  motion  to  vacate  the  default.  
Plaintiffs   helpfully   told   Con-­‐‑Tech   just   this   in   a   document  
filed   on   January   5.   Instead   of   filing   a   Rule   55(c)   motion,  
No.  15-­‐‑1269                                                                     3  

however,  Con-­‐‑Tech  filed  a  motion  for  a  stay  in  favor  of  arbi-­‐‑
tration.   So   by   January   13,   when   the   district   judge   turned   to  
the   subject   of   damages,   the   complaint   had   not   been   an-­‐‑
swered,   a   default   had   been   entered,   no   Rule   55(c)   motion  
had   been   filed,   and   Con-­‐‑Tech   had   not   contested   the   plain-­‐‑
tiffs’  evidentiary  submissions  about  relief.  And  once  the  dis-­‐‑
trict   court   entered   its   judgment,   the   time   to   seek   relief   for  
“good  cause”  under  Rule  55(c)  expired.  
   Rule  55(c)  says  that  to  set  aside  a  default  judgment  a  liti-­‐‑
gant   must   file   a   motion   under   Fed.   R.   Civ.   P.   60(b).   The   re-­‐‑
quirements   under   that   rule   are   steeper   (for   example,   relief  
under   Rule   60(b)(1)   depends   on   excusable   neglect),   and   ap-­‐‑
pellate  review  is  deferential.  See,  e.g.,  Moje  v.  Federal  Hockey  
League,  LLC,  792  F.3d  756  (7th  Cir.  2015).  
     Con-­‐‑Tech   filed   a   Rule   60(b)   motion   on   January   15.   The  
motion   also   invoked   Rule   55(c),   but   too   late.   Con-­‐‑Tech   told  
the  district  judge  that  it  had  not  ignored  the  suit  but  had  in-­‐‑
stead   started   negotiating   with   plaintiffs’   lawyers,   seeking   a  
satisfactory  settlement.  The  judge  replied  that  Con-­‐‑Tech  may  
not   have   ignored   the   plaintiffs’   demands,   but   that   it   had   ig-­‐‑
nored  the  litigation.  The  judge  observed  that  it  is  impossible  
to   handle   a   suit   in   which   a   litigant   unilaterally   decides   to  
march  to  the  beat  of  its  own  drum.  A  defendant  can  both  file  
an  answer  and  try  to  negotiate  a  settlement;  doing  the  latter  
does  not  eliminate  the  need  to  do  the  former.  The  judge  de-­‐‑
nied  the  Rule  60(b)  motion,  and  Con-­‐‑Tech  appealed.  
    Con-­‐‑Tech   repeats   in   this   court   the   argument   the   district  
judge  rejected,  but  the  district  court  did  not  abuse  its  discre-­‐‑
tion   in   holding   Con-­‐‑Tech   to   the   Civil   Rules’   requirements.  
Con-­‐‑Tech  could  have  filed  an  answer  and  asked  the  district  
court   to   stay   the   litigation   while   the   parties   negotiated.   It  
4                                                                     No.  15-­‐‑1269  

was  not  free  to  keep  silent  and  hope  that  the  equivalent  of  a  
stay  would  be  afforded  retroactively.  Con-­‐‑Tech’s  brief  in  this  
court   ignores   the   need   to   show   excusable   neglect;   it   argues  
instead   that   it   had   “good   cause”   for   proceeding   as   it   did.  
That’s  the  Rule  55(c)  standard,  and  we  have  explained  why  
Rule   55(c)   is   not   now   relevant.   Con-­‐‑Tech   has   forfeited   its  
opportunity  to  make  an  argument  under  the  applicable  legal  
standard.  At  all  events,  its  conduct  was  not  “neglect”  of  any  
kind.   Con-­‐‑Tech   made   a   deliberate   decision   to   disregard   the  
pending   suit.   No   district   judge   has   to   put   up   with   that,   or  
excuse  it  in  retrospect.  
     Con-­‐‑Tech   thinks   that   plaintiffs   were   not   chivalrous   in  
seeking   a   default   judgment   while   negotiations   continued,  
and  that  may  be  so,  but  Con-­‐‑Tech  could  have  protected  itself  
easily—and  district  judges  are  entitled  to  protect  the  judicial  
system  from  litigants  such  as  Con-­‐‑Tech  who  choose  to  play  
by   their   own   rules.   Con-­‐‑Tech   also   complains   that   plaintiffs’  
motions  were  served  on  non-­‐‑lawyers  (Con-­‐‑Tech’s  corporate  
officers   and   agents   for   service   of   process)   and   should   have  
been   sent   to   counsel.   Yet   until   counsel   files   an   appearance,  
which  did  not  happen  until  December  30,  adverse  parties  are  
supposed   to   serve   the   litigant   itself,   just   as   plaintiffs   did.  
Fed.   R.   Civ.   P.   5(b).   Plaintiffs   went   beyond   their   legal   re-­‐‑
quirements,  for  “[n]o  service  is  required  on  a  party  who  is  in  
default  for  failing  to  appear.”  Fed.  R.  Civ.  P.  5(a)(2).  
    In   this   court,   Con-­‐‑Tech   maintains   that   it   was   legally   re-­‐‑
quired   to   spurn   the   judicial   process.   It   asserts   that,   if   it   had  
filed   an   answer   or   any   other   substantive   paper,   it   would  
have  waived  its  right  to  arbitrate  under  the  Federal  Arbitra-­‐‑
tion   Act   (which   it   mistakenly   invokes,   although   29   U.S.C.  
§1401(a)(1),   part   of   the   Multiemployer   Pension   Plan  
No.  15-­‐‑1269                                                                   5  

Amendment  Act,  is  the  governing  statute).  Nonsense.  True,  
a   litigant   cannot   attempt   to   prevail   in   court,   then   seek   arbi-­‐‑
tration  only  as  a  fallback.  See,  e.g.,  Sharif  v.  Wellness  Interna-­‐‑
tional  Network,  Ltd.,  376  F.3d  720,  726  (7th  Cir.  2004);  Cabine-­‐‑
tree  of  Wisconsin,  Inc.  v.  Kraftmaid  Cabinetry,  Inc.,  50  F.3d  388,  
391  (7th  Cir.  1995);  St.  Mary'ʹs  Medical  Center  of  Evansville,  Inc.  
v.   Disco   Aluminum   Products   Co.,   969   F.2d   585,   589   (7th   Cir.  
1992).   But   nothing   prevents   a   defendant   from   filing   an   an-­‐‑
swer  that  demands  arbitration  and  offers  other  reasons  why  
plaintiffs  should  not  receive  judicial  relief.  See,  e.g.,  Kawasaki  
Heavy  Industries,  Ltd.  v.  Bombardier  Recreational  Products,  Inc.,  
660  F.3d  988,  993–98  (7th  Cir.  2011).  
      Con-­‐‑Tech’s   remaining   arguments   have   been   considered  
but  do  not  require  discussion.  All  but  one  concern  the  mer-­‐‑
its,  which  the  district  court  did  not  reach.  The  one  exception  
is  a  contention  that  the  district  court  did  not  have  “jurisdic-­‐‑
tion”  to  award  damages  that  could  benefit  a  non-­‐‑party.  That  
is   an   argument   about   the   real   party   in   interest,   see   Fed.   R.  
Civ.  P.  17(a),  not  about  subject-­‐‑matter  jurisdiction.  
                                                                      AFFIRMED