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Acosta v. DT & C Global Management, LLC

United States Court of Appeals, Seventh Circuit

October 25, 2017

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. Mark Krantz, et al., Plaintiff-Appellees,
v.
DT & C Global Management, LLC, and John Jansen, Defendants-Appellants.

          Argued October 3, 2017

         Appeals from the United States District Court for the Northern District of Illinois, Eastern Division. No. l:15-cv-02010 - Virginia M. Kendall, Judge. No. l:14-cv-00998 - Milton I. Shadur, Judge.

          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 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 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 violations. In the second, the Secretary 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 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 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 ...


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