Acosta v. DT & C Global Management, LLC

874 F.3d 557
CourtCourt of Appeals for the Seventh Circuit
DecidedOctober 25, 2017
DocketNo. 16-4076, No. 16-4077
StatusPublished
Cited by27 cases

This text of 874 F.3d 557 (Acosta v. DT & C Global Management, LLC) is published on Counsel Stack Legal Research, covering Court of Appeals for the Seventh Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Acosta v. DT & C Global Management, LLC, 874 F.3d 557 (7th Cir. 2017).

Opinion

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 defauit judgments for the plaintiffs. Eleven months later, the defendants moved to vacate both judgments. See Fed. R. Civ. P. 60(b). Deeming their excuses too little, too late, the judges denied the motions, precipitating this appeal. Because the defendants did not show good cause for the default, did hot 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 violations. In the second, the Sec-retaiy of Labor sued the company, Jansen, and William Lynch, another owner, for the same violations.

The Employees’ Case

Mark Krantz and William Dunne, two former drivers for' the company, alleged that the defendants failed to pay overtime 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 unauthorized wage .deductions in violation of Illinois’s Wage Payment and Collection Act, 820 ILCS 115/9. '

The case proceeded to discovery, but ended with a default judgment. When the defendants didn’t respond to discovery requests, the plaintiffs' filed á motion to compel, which the judge granted. About a year later, in late 20Í5, the plaintiffs moved for sanctions because the defendants had not complied 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). Jansen 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 judgment 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 “unspecified neurological issues” created “difficulty attending to business affairs.” He acknowledged, however, that in the summer of 2015 he met with Attorney James E. Gorman several times in Chicago. After hiring Gorman, Jansen had no further contact 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 illness, and the defendants had not shown that they had a legitimate defense.

The Department of Labor Case

The Secretary of Labor alleged the same Fair Labor Standards 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. Defendants’ counsel—the same as in the employees’ case—moved to withdraw, again citing an inability to reach defendants. The following month the Secretary asked the court to enter a default for failure to defend. When defendants didn’t respond, 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 apprised 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 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, 82 S.Ct. 1386, 8 L.Ed.2d 734 (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 F.3d 935, 937 (7th Cir. 2015).

The district judges reasonably concluded that the defendants didn’t establish good cause for their default.

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Cite This Page — Counsel Stack

Bluebook (online)
874 F.3d 557, Counsel Stack Legal Research, https://law.counselstack.com/opinion/acosta-v-dt-c-global-management-llc-ca7-2017.