Court Opinion

ID: 2756333
Source: CourtListenerOpinion
Date Created: 2014-12-01 23:00:55.815015+00
Date Added: 2024-06-11T10:31:02.330913
License: Public Domain

In the

      United States Court of Appeals
                  For the Seventh Circuit
                      ____________________
No. 13-3693
GENERAL PARKER,
                                                   Plaintiff-Appellant,

                                  v.

SCHECK MECHANICAL CORPORATION,
                                                  Defendant-Appellee.
                      ____________________

          Appeal from the United States District Court for the
            Northern District of Illinois, Eastern Division.
             No. 13-C-722 — James F. Holderman, Judge.
                      ____________________

    SUBMITTED AUGUST 18, 2014 ∗ — DECIDED DECEMBER 1, 2014

                      ____________________

     Before BAUER, ROVNER, and HAMILTON, Circuit Judges.
    HAMILTON, Circuit Judge. Plaintiff General Parker, an Afri-
can American, alleges that he was fired from his job because
of his race and in retaliation for complaints of racial discrim-

∗ After examining the briefs and the record, we have concluded that oral
argument is unnecessary. Thus the appeal is submitted on the briefs and
the record. See FED. R. APP. P. 34(a)(2)(C).
2                                                   No. 13-3693

ination. He filed suit under Title VII of the Civil Rights Act
of 1964, 42 U.S.C. § 2000e-2(a), and 42 U.S.C. § 1981. His suit
never got off the ground because the district court thought
that Parker was confused about which of two related compa-
nies—Scheck Mechanical Corporation or Scheck Industrial
Corporation—employed him. The court reasoned that Par-
ker had sued the wrong Scheck company and thus, at sum-
mary judgment, dismissed the suit. We disagree with that
analysis, so we reverse and remand for further proceedings.

I. Factual and Procedural Background
   In a charge of discrimination filed with the Equal Em-
ployment Opportunity Commission in 2012, Parker asserted
that “Scheck Industries” had fired him after just a few
months on the job; he alleged that his race and several com-
plaints to management about workplace discrimination had
motivated his discharge. As best we can tell, the name
“Scheck Industries” refers not to a legal entity but to a group
of closely held construction companies including
Scheck Mechanical and Scheck Industrial.
   The EEOC issued Parker a right-to-sue letter, explaining
that the agency had investigated but was unable to confirm
his allegations. The agency’s letter did not suggest that
“Scheck Industries” never employed Parker or that an entity
with that name did not exist. In fact, Parker’s employer ap-
parently used that name in dealing with the EEOC, since the
agency’s letter to Parker was copied to “Scheck Industries.”
   After receiving that letter, Parker decided to sue. In draft-
ing his pro se complaint, he visited the “Scheck Industries”
website but found it unhelpful in identifying the correct de-
No. 13-3693                                                 3

fendant. That website implies that “Scheck Industries” is a
single company. For example, a visitor exploring “Career
Opportunities” is told that “Scheck Industries has unique
opportunities available where you can use your skills and
make a difference for our Company and our Clients.”
See Career Opportunities, SCHECK INDUSTRIES, http://www.go
scheck.com/contact/careers.php (last visited Dec. 1, 2014)
(emphasis added). And visitors who select “Contact Us” are
told that “Scheck Mechanical Corp.” is the “corporate head-
quarters,” while “Scheck Industrial Corp.” is listed as one of
several “regional offices.” See Contact Us, SCHECK
INDUSTRIES,      http://www.goscheck.com/contact/index.php
(last visited Dec. 1, 2014).
    Like Scheck’s website, Parker’s complaint treats the dif-
ferent Scheck entities interchangeably, naming the defendant
sometimes as “Scheck Mechanical Corp.,” sometimes as
“Scheck Industrial,” and sometimes as “Scheck Corporation”
or simply “Scheck.” For example, the caption names Scheck
Industrial as the defendant, but Scheck Mechanical is listed
under “Parties.” Parker, who was proceeding both without
an attorney and in forma pauperis, instructed the Mar-
shals Service to serve process on David O’Sullivan, who was
at the time the registered agent for both Scheck Mechanical
and Scheck Industrial. The form that Parker gave the Mar-
shals Service identifies the defendant as “Scheck Mechanical
Corporation.”
    O’Sullivan was served with process, but no one filed a
timely answer to Parker’s complaint. After three months the
clerk of the court entered a default against
Scheck Mechanical. See Fed. R. Civ. P. 12(a)(1)(A)(i) and
55(b). That prompted counsel for Scheck Mechanical to ap-
4                                                 No. 13-3693

pear and move to set aside the default. Counsel acknow-
ledged receipt of service but explained that the company’s
liability insurer, to whom the complaint had been forward-
ed, failed to file an answer after misidentifying the com-
plaint as one “to be monitored” rather than “in litigation.”
Counsel further asserted that Scheck Mechanical had two
meritorious defenses: (1) the company never employed Par-
ker and (2) his claims under Title VII of the Civil Rights Act
of 1964 were untimely.
   In support of its motion, Scheck Mechanical submitted
declarations from its insurance company’s agent and its own
vice president of operations, Randy Peach. Peach said in his
declaration that he had “verified that the plaintiff … was
never employed by Scheck Mechanical Corporation, and that
he had been employed by Scheck Industrial Corporation, a
completely separate company.” Peach also swore that his
“review of the facts showed” that Parker was fired not be-
cause of his race but rather “because he had made a threat-
ening statement.”
    In a minute entry, the district court vacated the default.
Three weeks later, before discovery had commenced,
Scheck Mechanical filed an answer and moved for summary
judgment. Again the company asserted that Parker was nev-
er an employee and that his Title VII claims were untimely.
These defenses rested on a new declaration from Peach that
essentially repeated his earlier statements.
   Parker responded that he was actually employed by
Scheck Mechanical because, by all appearances, that compa-
ny and Scheck Industrial are one and the same. The line be-
tween them is “blurred,” he insisted, as is evident from their
overlapping corporate officers and shared office space. He
No. 13-3693                                                 5

noted that Peach—while saying that he worked only for
Scheck Mechanical—claimed to have personal knowledge of
why Parker had been fired, which implied access to Parker’s
employment records with Scheck Industrial. Parker also
maintained that amending his complaint or serving
Scheck Industrial would be redundant because he had al-
ready named Scheck Industrial in the complaint and served
process on O’Sullivan, who was the registered agent for both
Scheck Mechanical and Scheck Industrial. Alternatively, Par-
ker argued, the district court should grant him leave to serve
Scheck Industrial with process or to amend his complaint to
clarify that Scheck Industrial is a defendant.
    With respect to timeliness, Parker asserted that the dis-
trict court had already ruled that his Title VII claims were
not time-barred. Parker was referring to the district court’s
grant of in forma pauperis status, which came after the court
had initially expressed doubt about the timeliness of those
claims. Parker answered the court’s concern by explaining
that a clerk’s office employee had said that the Title VII
claims would be timely so long as he mailed his complaint to
the court within 90 days of receiving the right-to-sue letter.
The court then granted in forma pauperis status without
commenting further on the timeliness issue.
    In granting summary judgment for Scheck Mechanical,
the district court reasoned that Parker had “confused de-
fendant Scheck Mechanical with a separate corporate entity,
Scheck Industrial.” The court added that Parker had asserted
but “presented no basis to pierce any identified corporate
veil.” The court’s brief order did not mention Parker’s re-
quests to serve Scheck Industrial or to amend his complaint.
6                                                   No. 13-3693

II. Analysis
    A. Vacating the Entry of Default
    On appeal Parker argues first that the district court
abused its discretion by vacating the default entered against
Scheck Mechanical. We analyze the court’s order under Fed-
eral Rule of Civil Procedure 55(c), as opposed to Rule 60(b),
because Scheck Mechanical filed its motion before the court
entered a final default judgment awarding damages.
See Cracco v. Vitran Express, Inc., 559 F.3d 625, 630 (7th Cir.
2009). An entry of default may be set aside before entry of
judgment upon showing good cause for the defendant’s in-
action, prompt steps to correct the default, and an arguably
meritorious defense to the lawsuit. Sun v. Board of Trustees of
the University of Illinois, 473 F.3d 799, 809–10 (7th Cir. 2007).
When we say the defendant must show a “meritorious de-
fense” to the lawsuit, we mean more than bare legal conclu-
sions, e.g., Breuer Electric Mfg. Co. v. Toronado Systems of
America, Inc., 687 F.2d 182, 186 (7th Cir. 1982), but less than a
definitive showing that the defense will prevail. See, e.g.,
Cracco, 559 F.3d at 631 (affirming discretionary decision to
vacate default where defendant explained nature of defense
and provided the factual basis for it).
    Scheck Mechanical showed good cause through declara-
tions establishing that its failure to file a timely answer was
not willful but the result of a mistake in processing the doc-
uments with its insurer. See id. The company acted quickly
when it learned of the default, moving to set it aside just five
days later. And the company made clear that, if it is a proper
defendant, the evidence would establish that Parker was
fired for a legitimate, non-discriminatory reason. Given the
“lenient standard” for applying Rule 55(c) and the “policy of
No. 13-3693                                                     7

favoring trial on the merits over default judgment,” Cracco,
559 F.3d at 631, the district court acted well within its discre-
tion when it set aside the default.

   B. Summary Judgment on Identity of Employer
    Parker next argues that the district court erred by grant-
ing summary judgment, and on this issue we agree with
him. As an initial matter, we reject Scheck Mechanical’s posi-
tion, adopted by the district court, that Parker sued only
Scheck Mechanical. The complaint includes multiple refer-
ences to Scheck Industrial. Most significant, the complaint
lists Scheck Industrial as a defendant in the caption, giving
rise to the presumption that he made the company a party to
the litigation. See Myles v. United States, 416 F.3d 551, 551 (7th
Cir. 2005) (to make someone a party-defendant, a plaintiff
must identify him in the caption and arrange for service of
process). Scheck Mechanical has not explained why it
thought it was being sued if Parker worked for the other,
“completely separate company” named in his complaint. As
best we can tell, a “Scheck Industries” lawyer declared that
Parker was suing only Scheck Mechanical. But that reading
of Parker’s pro se complaint is both strained and unreason-
able.
   Scheck Mechanical and Scheck Industrial shared the
same registered agent, and there is no indication in the rec-
ord that service of process on the latter was defective.
See Mid-Continent Wood Products, Inc. v. Harris, 936 F.2d 297,
301–02 (7th Cir. 1991); Tremps v. Ascot Oils, Inc., 561 F.2d 41,
43–44 (7th Cir. 1977). True, the form Parker gave to the Mar-
shals Service identified only Scheck Mechanical as a defend-
8                                                   No. 13-3693

ant, but that form is only a “control document” designed by
the Marshals Service. It is distinct from both the complaint
and the summons. See Process Receipt and Return, U.S.
MARSHALS SERVICE, http://www.usmarshals.gov/process/
usm285.htm (last visited Dec. 1, 2014).
    Even if there had been an issue with service, the appro-
priate remedy would have been to give Parker more time to
cure any mistake. Service of process usually must be com-
pleted within 120 days, Fed. R. Civ. P. 4(m), but that period
must be extended on a showing of good cause, and may be
extended even without a showing of good cause. United
States v. Ligas, 549 F.3d 497, 501 (7th Cir. 2008); United States
v. McLaughlin, 470 F.3d 698, 700–01 (7th Cir. 2006). Parker
demonstrated good cause by explaining his belief that the
various Scheck entities were one and the same, headquar-
tered—as their website says—at the address of
Scheck Mechanical. Parker’s belief was not unreasonable.
And even the EEOC apparently was led to believe that
“Scheck Industries” was Parker’s employer.
    For completeness, we add that even if doubt remained
whether Scheck Industrial was already a defendant, the dis-
trict court would have abused its discretion by not allowing
Parker to amend his complaint to add Scheck Industrial.
Scheck Mechanical maintains that Parker never properly
asked to amend because he never filed a separate motion re-
questing leave to amend and never submitted a proposed
amended complaint. But Federal Rule of Civil Procedure
15(a), which governs pretrial amendments, does not require
a stand-alone motion. See Aetna Casualty & Surety Co. v. Ani-
ero Concrete Co., 404 F.3d 566, 603 (2d Cir. 2005); Elliott v.
Foufas, 867 F.2d 877, 883 (5th Cir. 1989).
No. 13-3693                                                    9

    We have often held that a district court may deny leave to
amend when the plaintiff does not submit a proposed
amended complaint, at least where the substance of the pro-
posed amendment is not clear. See Arlin-Golf, LLC v. Village of
Arlington Heights, 631 F.3d 818, 822–23 (7th Cir. 2011); Hecker
v. Deere & Co., 556 F.3d 575, 590–91 (7th Cir. 2009). A court
need not decide in the abstract whether a proposed amend-
ment would be sufficient or futile. In this case, however, the
district court did not reject Parker’s request on that basis,
and we do not see how a proposed amended complaint
would have been needed to evaluate this particular request
for leave to amend. The nature of the amendment was obvi-
ous: to include Scheck Industrial as a defendant and to retain
Scheck Mechanical. A request for leave to amend “may be
acceptable so long as it puts the opposing party on notice of
the content of the amendment,” Moore v. Indiana, 999 F.2d
1125, 1131 (7th Cir. 1993), and there is no question that
Scheck Mechanical had notice of the content of the amend-
ment.
     Moreover, an amendment adding Scheck Industrial as a
defendant would relate back to the date of Parker’s original
filing. It is difficult to imagine that Scheck Industrial did not
realize that Parker meant to sue his employer—whichever
company that was—and Scheck Industrial would not be pre-
judiced by the proposed amendment. See Krupski v. Costa
Crociere S.p.A., 560 U.S. 538, 548–50 (2010); Joseph v. Elan Mo-
torsports Technologies Racing Corp., 638 F.3d 555, 559–61 (7th
Cir. 2011); Peterson v. Sealed Air Corp., 902 F.2d 1232, 1236–37
(7th Cir. 1990).
  What remains is Scheck Mechanical’s contention that it
was entitled to summary judgment because it never em-
10                                                   No. 13-3693

ployed Parker. We disagree, at least on the present summary
judgment record. First, it may not matter which company
employed Parker if, as Parker asserts, the line between the
different Scheck companies is blurred. A defendant may be
liable under Title VII if, by ignoring corporate formalities, its
actions cannot be separated from an affiliate that employed
the plaintiff. See Worth v. Tyer, 276 F.3d 249, 259–60 (7th Cir.
2001); Papa v. Katy Indus., Inc., 166 F.3d 937, 941 (7th Cir.
1999). Parker does not have overwhelming evidentiary sup-
port for the proposition that the line between the two com-
panies is blurred. Scheck Mechanical moved for summary
judgment before he had conducted discovery. But he does
have some evidence, including the representation on
Scheck Industries’ own website that the various Scheck enti-
ties are all one company with one “corporate headquarters.”
See Contact Us, Scheck Industries, http://www.goscheck.com/
contact/index.php (last visited Dec. 1, 2014). Also, the pur-
ported lack of an employment relationship might not matter
for Parker’s claims under 42 U.S.C. § 1981. In some circum-
stances, a third party may be liable for interfering with a
person’s equal opportunity to make and enforce contracts.
See Shaikh v. City of Chicago, 341 F.3d 627, 630–31 (7th Cir.
2003); see also Painter’s Mill Grille, LLC v. Brown, 716 F.3d
342, 350–51 (4th Cir. 2013); Harris v. Allstate Ins. Co., 300 F.3d
1183, 1197 (10th Cir. 2002).
   More fundamental, though, the evidence that
Scheck Mechanical submitted to support its motion for
summary judgment did not meet “the initial burden of prov-
ing there is no material question of fact with respect to an
essential element of the non-moving party’s case.” See MMG
Financial Corp. v. Midwest Amusements Park, LLC, 630 F.3d
651, 657 (7th Cir. 2011).
No. 13-3693                                                   11

    The declaration from Peach, Scheck Mechanical’s vice
president of operations, also undermines the company’s
claim that Scheck Mechanical and Scheck Industrial “are two
separate and distinct legal entities.” Peach averred that
Scheck Mechanical “has no involvement in the internal op-
erations of Scheck Industrial.” As Parker points out, howev-
er, Peach’s assertion that the two companies’ operations are
wholly separate is difficult to reconcile with his earlier decla-
ration that his “review of the facts showed [that] Mr. Parker
was terminated by Scheck Industrial … because he had made
a threatening statement.” Peach has not explained how he
had personal knowledge of any details of Parker’s discharge
or, indeed, how he knew that Parker was employed by
Scheck Industrial at all.
    Remember that Peach’s affidavit asserted direct personal
knowledge of the facts; otherwise he could not offer admis-
sible evidence. See Fed. R. Civ. P. 56(c)(4); Johnson v. Holder,
700 F.3d 979, 982 (7th Cir. 2012); Luster v. Illinois Dep’t of
Corrs., 652 F.3d 726, 731 & n.2 (7th Cir. 2011). At the same
time, Peach also asserted that he is employed by
Scheck Mechanical, not Scheck Industrial. His apparent ac-
cess to Scheck Industrial’s records requires at least some ex-
planation in light of his assertion that there is no unity of in-
terest between these two Scheck entities.
    Finally, we touch briefly on the timeliness of the Title VII
claims. If, as Parker maintains, the clerk’s office gave him in-
accurate information about the non-jurisdictional statute of
limitations, he would have an argument for equitable tolling,
which “is properly invoked in any case in which the court
has led the plaintiff to believe that she had done everything
required of her … or has misled a party regarding the steps
12                                                 No. 13-3693

that the party needs to take to preserve a claim.” Prince v.
Stewart, 580 F.3d 571, 575 (7th Cir. 2009) (quotation marks
and citations omitted); cf. Bowles v. Russell, 551 U.S. 205
(2007) (holding that district court’s mistaken advice about
jurisdictional deadline for filing notice of appeal did not ex-
cuse appellant’s failure to meet deadline). But we need not
decide whether these claims were timely because
Scheck Mechanical has not raised this affirmative defense in
this appeal.
    Accordingly, the judgment is REVERSED, and the case is
REMANDED for further proceedings. On remand the dis-
trict court should revise the docket to add Scheck Industrial
as a second defendant and direct that company to file an an-
swer to Parker’s complaint without further delay.