Court Opinion

ID: 3001116
Source: CourtListenerOpinion
Date Created: 2015-09-24 20:12:57.857471+00
Date Added: 2024-06-11T13:22:59.105105
License: Public Domain

NONPRECEDENTIAL DISPOSITION
                     To be cited only in accordance with Fed. R. App. P. 32.1

                    United
                     To be citedStates       Court
                                 only in accordance      of R.Appeals
                                                    with Fed.  App. P.
                            32.1Not to be cited per Circuit Rule 53
                                    For the Seventh Circuit
                                    Chicago, Illinois 60604

                                Submitted November 6, 2007∗
                                 Decided November 8, 2007

                                             Before

                       Hon. FRANK H. EASTERBROOK, Chief Judge

                       Hon. ILANA DIAMOND ROVNER, Circuit Judge

                       Hon. DIANE S. SYKES, Circuit Judge

Nos. 07-1689 and 07-2604
                                                              Appeals from the United
SECURITIES AND EXCHANGE COMMISSION,                           States District Court for the
     Plaintiff-Appellee,                                      Northern District of Illinois,
                                                              Eastern Division.
               v.
                                                              No. 05 C 4259
MICHAEL SPADACCINI and RAYMOND J.                             Milton I. Shadur, Judge.
MCNAMEE,
     Defendants-Appellants.

                                              Order

      These appeals are successive to one resolved earlier this year. Our opinion,
SEC v. McNamee, 481 F.3d 451 (7th Cir. 2007), rejected a challenge to a
preliminary injunction requiring McNamee to comply with the Securities Act of
1933 and limiting his ability to participate in offerings of penny stocks. It also
affirmed the district court’s decision that McNamee is in contempt of court but

       ∗ These successive appeals have been submitted to the original panel under Operating
Procedure 6(b). After examining the briefs and the record, we have concluded that oral argument is
unnecessary. See Fed. R. App. P. 34(a); Cir. R. 34(f).
Nos. 07-1689 & 07-2604                                                  Page 2

remanded for further proceedings concerning the remedy. Our opinion noted that a
separate appeal, No. 07-1351, had been filed from the permanent injunction and
would be dealt with separately.

      McNamee failed to pay the filing and docket fees for that appeal, which was
dismissed. But he did file in the district court a motion for relief from judgment
under Fed. R. Civ. P. 60(b) and has appealed from the denial of that motion.
Another of the defendants, Michael Spadaccini, appeals directly from the entry of
the permanent injunction.

       Both McNamee and Spadaccini failed to file timely answers to the SEC’s
complaint, and the district court defaulted each of them. Both defendants say that
the district court should have allowed them further opportunities to answer; they
maintain that judges should tolerate slipshod litigation because they represented
themselves. The premise of this argument is incorrect. Although federal judges give
indulgent readings to documents filed by pro se litigants, everyone is bound by the
rules of procedure concerning what must be filed, and when. So the Supreme Court
held in McNeil v. United States, 508 U.S. 106, 113 (1993) (“we have never suggested
that procedural rules in ordinary civil litigation should be interpreted so as to
excuse mistakes by those who proceed without counsel”). We see no reason to
disregard not only the Rules of Civil Procedure but also the views expressed in
McNeil.

        To obtain relief from a default, a defendant must establish a good reason for
the failure to file on time, prompt action to correct the problem, and a plausible
defense on the merits. See, e.g., Pretzel & Stouffer v. Imperial Adjusters, Inc., 28
F.3d 42, 46 (7th Cir. 1994). McNamee flunks all of these requirements: his failure to
file a timely answer to the SEC’s complaint reflects (at best) carelessness by one of
his employees; he did not try to correct the problem for more than six months (and
did not show up in court at proceedings held in the interim), and he lacks a
plausible defense, as our prior opinion shows. In arguing that he has a good defense,
McNamee just repeats arguments that were rejected in our prior opinion—which
his brief does not mention.

       Spadaccini acted with more dispatch after his failure to file a timely answer
was brought to the court’s attention, but the district judge did not abuse his
discretion in concluding that Spadaccini lacks a plausible defense on the merits.
Indeed, when asked repeatedly what defense he has, Spadaccini offered none;
everything he said concerned the remedy, not the wrong. Spadaccini had every
opportunity to address remedial issues (he was defaulted on the merits, not with
respect to relief), so there was no need to set aside the default.

      Appellants’ other arguments are frivolous and need not be addressed
separately.

                                                                            AFFIRMED