806 F.3d 935
7th Cir.2015Background
- Multi-employer ERISA funds sued Con-Tech Carpentry for about $70,000 in delinquent contributions; complaint filed Sept 25, 2014.
- Con-Tech was served Oct 14, 2014; the 21-day deadline to answer passed (Nov 4) without a response.
- Plaintiffs moved for default; Magistrate judge entered default Dec 1 and gave plaintiffs 14 days to prove damages; Con‑Tech did not timely move to vacate under Rule 55(c).
- Plaintiffs submitted evidence of damages; the district court entered judgment Jan 13, 2015 awarding delinquent contributions, interest, liquidated damages, audit costs, and attorneys’ fees.
- Con‑Tech’s counsel appeared Dec 30 and later filed a Rule 60(b) motion (Jan 15) to set aside the default judgment, asserting negotiations and a request to arbitrate; the district court denied relief.
- Con‑Tech appealed; the Seventh Circuit affirmed, holding Con‑Tech forfeited Rule 55(c) relief and had no excuse for ignoring the litigation process.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether default judgment should be set aside | Default judgment valid after Con‑Tech failed to answer or move to vacate; damages proven | Con‑Tech argued it negotiated, sought arbitration, and had "good cause" for not answering | Affirmed: Con‑Tech forfeited Rule 55(c) relief; Rule 60(b) relief denied for failure to show excusable neglect or other grounds |
| Whether Con‑Tech’s settlement negotiations justified silence | Negotiations do not excuse compliance with rules; defendant must still participate in litigation | Negotiations meant it reasonably expected a stay and thus could refrain from answering | Rejected: litigant must both litigate (answer) and negotiate; silence is not permitted |
| Whether filing substantive papers waives arbitration rights | Plaintiffs: defendant could not pursue arbitration after seeking court relief | Con‑Tech: feared waiver of arbitration by filing an answer or other papers | Rejected: filing an answer that asserts arbitration and other defenses does not necessarily waive arbitration; parties may demand arbitration in filings |
| Whether court lacked authority to award damages benefiting a non‑party | Implicit plaintiff concern not reached on merits | Con‑Tech argued jurisdictional defect re: real party in interest | Rejected: argument pertains to Rule 17 real‑party issues, not subject‑matter jurisdiction; not persuasive here |
Key Cases Cited
- Moje v. Federal Hockey League, LLC, 792 F.3d 756 (7th Cir.) (appellate review of Rule 60(b) relief is deferential)
- Sharif v. Wellness Int’l Network, Ltd., 376 F.3d 720 (7th Cir.) (a party cannot litigate in court then seek arbitration as a fallback)
- Cabinetree of Wisconsin, Inc. v. Kraftmaid Cabinetry, Inc., 50 F.3d 388 (7th Cir.) (same principle regarding waiver of arbitration)
- St. Mary’s Medical Center of Evansville, Inc. v. Disco Aluminum Prods. Co., 969 F.2d 585 (7th Cir.) (same arbitration waiver doctrine)
- Kawasaki Heavy Indus., Ltd. v. Bombardier Recreational Prods., Inc., 660 F.3d 988 (7th Cir.) (a defendant may file an answer demanding arbitration without waiving the arbitration right)