Arwa Chiropractic, P.C. v. Med-Care Diabetic & Medical Su
961 F.3d 942
7th Cir.2020Background:
- Med-Care Diabetic & Medical Supplies sent bulk prescription-request faxes (part of a 46,051-fax broadcast) via vendor WestFax; Arwa Chiropractic received six such faxes and sued as a putative class under the TCPA.
- Dr. Steven Silverman was Med-Care’s CEO; he disclaimed personal involvement in faxing operations (no sending, oversight, drafting, or contract execution with WestFax).
- Med-Care’s counsel withdrew; the district court ordered the company to obtain counsel; none appeared, so the court entered default against Med-Care and later a default judgment on liability (damages deferred).
- Silverman moved for summary judgment; the district court granted it, finding no personal liability and ruling the faxes were not advertisements for TCPA purposes.
- The district court then sua sponte vacated the default judgment against Med-Care (citing concern about inconsistent judgments) and entered judgment for Med-Care; Arwa appealed.
- The Seventh Circuit affirmed summary judgment for Silverman but held the district court abused its discretion in vacating Med-Care’s default because it failed to apply Rule 55(c)’s good-cause standard and because inconsistent judgments were not necessarily implicated; the case is remanded for proceedings as to Med-Care.
Issues:
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Silverman’s personal liability under the TCPA | Silverman knew of and was aware of faxing practices, so he should be liable | Silverman did not send, authorize, or directly participate; not a “sender” | Affirmed summary judgment for Silverman; mere knowledge insufficient; no direct participation shown |
| Entry of default against Med-Care | Med-Care failed to appear after counsel withdrew; default and default judgment as to liability were proper | N/A (Med-Care did not appear or defend) | Entry of default and default judgment on liability was within district court’s discretion and appropriate |
| Vacatur of default judgment (proper standard) | Vacatur improper because good cause under Rule 55(c) not shown | District court vacated citing inconsistency with Silverman ruling | Reversed: district court abused discretion by not applying Rule 55(c) good-cause analysis before vacating |
| Whether inconsistent judgments barred judgment against Med-Care | Different results can stand; plaintiffs alleged joint and several, not solely vicarious, liability | District court thought judgments would be inconsistent under Frow and thus vacated default | Held that inconsistent-judgment concern was misplaced; joint & several liability and differing theories permit different results; Frow inapplicable here |
Key Cases Cited
- Frow v. De La Vega, 82 U.S. 552 (1872) (rule against entering a final decree against some joint defendants while the case remains pending against others)
- In re Uranium Antitrust Litig., 617 F.2d 1248 (7th Cir. 1980) (limits Frow; allows differing results when joint and several liability or theories differ)
- Physicians Healthsource, Inc. v. A-S Medication Sols. LLC, 950 F.3d 959 (7th Cir. 2020) (discusses corporate-officer personal-participation liability under the TCPA)
- City Select Auto Sales Inc. v. David Randall Assoc., Inc., 885 F.3d 154 (3d Cir. 2018) (critiques broad application of personal-participation standard for TCPA officer liability)
- O’Brien v. R.J. O’Brien & Assoc., Inc., 998 F.2d 1394 (7th Cir. 1993) (elements for setting aside default: good cause, prompt action, meritorious defense)
- Chrysler Credit Corp. v. Macino, 710 F.2d 363 (7th Cir. 1983) (Rule 60(b) standard is more stringent than Rule 55(c))