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North Central Illinois Laborers' District Council v. Groves

decided: March 10, 1988.

NORTH CENTRAL ILLINOIS LABORERS' DISTRICT COUNCIL, PLAINTIFF-APPELLEE,
v.
S. J. GROVES & SONS COMPANY, INC., DEFENDANT-APPELLANT



Appeal from the United States District Court for the Central District of Illinois, Peoria Division, No. 86-1133--Michael M. Mihm, Judge.

Flaum and Ripple, Circuit Judges, and Eschbach, Senior Circuit Judge.

Author: Flaum

FLAUM, Circuit Judge.

On June 13, 1986, the United States District Court for the Central District of Illinois entered a default judgment in favor of North Central Illinois Laborers' District Council, Local 1203 ("North Central") and against S. J. Groves & Sons Company, Inc. ("S. J. Groves"). S. J. Groves filed a motion seeliing to have the default judgment set aside under Federal Rules of Civil Procedure 60(b)(1) and 55(b)(2). The district court denied the motion. We affirm.

I.

On July 8, 1985, North Central filed a grievance alleging that S. J. Groves violated the parties' collective bargaining agreement. Specifically, North Central alleged that crews which included non-union employees performed "dismantling" work on the "LaSalle Bridge Project." The parties' collective bargaining agreement specified that only union members were to perform this type of work. On April 8, 1986, attorneys for S. J. Groves and North Central appeared before an arbitrator to resolve the grievance. S. J. Groves' attorney, Mr. Kaplan, contested the arbitrability of the grievance. Evidence was presented to the arbitrator, including the testimony of four witnesses, on the issue of the arbitrability of the grievance. On May 5, 1986, S. J. Groves moved for dismissal of the grievance on the grounds that the arbitrability of the grievance was a question to be resolved by the federal courts.

On May 8, 1986, North Central's counsel, Mr. Stuckel, agreed to stay the arbitration proceedings pending a judicial decision on the arbitrability of the grievance. On the same day, North Central filed suit in federal district court seeking to compel S. J. Groves to submit the grievance to arbitration. S. J. Groves was properly served with a copy of the complaint and the summons in accordance with Federal Rule of Civil Procedure 4(d)(3) on May 21, 1986. S. J. Groves' in-house legal staff overlooked the notice and took no action in response to it. On June 13, 1986, the district court entered a judgment and an "order for default" directing S. J. Groves to submit the grievance to arbitration.*fn1 Mr. Stuckel mailed a copy of the default judgment to the company's registered agent on June 18, 1986. On July 9, 1986, S. J. Groves discovered the default judgment and notified Mr. Kaplan. Five days later*fn2 Mr. Kaplan filed a motion for relief from the default judgment under Rules 60(b) and 55(c). On May 18, 1987, the district court denied this motion. S. J. Groves appeals.

II.

A.

S. J. Groves' motion to vacate the default judgment was predicated in part on Rule 60(b)(1) of the Federal Rules of Civil Procedure.*fn3 Rule 60(b)(1) states that a court, upon motion by the party against whom judgment is entered, "may relieve [the] party or [the] party's legal representative from a final judgment" for "mistake, inadvertence, surprise, or excusable neglect. . . ." (emphasis added).*fn4 S. J. Groves argues that its in-house counsel's failure to take action was due to mistake, inadvertence and excusable neglect within the scope of Rule 60(b)(1). The company states:

It is to be noted that the in-house legal staff of S. J. Groves was small, consisting of only two attorneys. At the time in question, one of the attorneys was disabled, and the entire burden of disposing of incoming legal documents devolved on one individual, Michael P. Katz. Amid the pressure, confusion, and increased workload caused by this situation [North Central's] complaint was inadvertently overlooked by the clerical staff until it was brought to Mr. Katz' attention on July 9, 1986.

Appellant's Brief at 7. The district court, however, concluded that S. J. Groves was not entitled to relief under Rule 60(b)(1). The court reasoned that "[S. J.] Groves' in-house counsel's failure to discover North Central's properly executed service of process and ensure that an appearance was entered on behalf of Groves for a period of seven weeks may have been inadvertent, but is not excusable."*fn5 North Central Illinois Laborers' District Council, Local 1203 v. S. J. Groves & Sons Co., No. 86-1133, slip op. at 6 (C.D.Ill. May 18, 1987) (order denying motion to set aside default judgment) (emphasis in original). The district court therefore denied the company's motion for relief.

B.

Motions to set aside a default judgment under Rule 60(b) require a court to reconcile the goal of permitting the defaulting party an opportunity to contest the merits of the dispute with the practical requirements of judicial administration. "A default judgment, like a dismissal, is a harsh sanction which should usually be employed only in extreme situations, or when less drastic sanctions have proven unavailable." Ellingsworth v. Chrysler, 665 F.Zd 180, 185 (7th Cir. 1981). We have recently re-affirmed that "this circuit has a well-established policy favoring a trial on the merits over a default judgment." Passarella v. Hilton Int'l Co., 810 F.2d 674, 675 (7th Cir. 1987). District courts, however, have a responsibility to keep their court calendars as current as possible. Kagan v. Caterpillar Tractor Co., 795 F.2d 601, 608 (7th Cir. 1986) (setting forth statistics as to caseload of district courts). This responsibility requires compliance with the rules of procedure and finality of judgment. Tolliver v. Northrop Corp., 786 F.2d 316, 318 (7th Cir. 1986). "In order for the default judgment to be an effective deterrent against irresponsible conduct in litigation, relief from a default judgment under Rule 60(b) must be perceived as an exceptional remedy." C.K.S. Engineers, Inc. v. White Mountain Gypsum Co., 726 F.2d 1202, 1206 (7th Cir. 1984). Because the balancing of these competing interests ...


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