The opinion of the court was delivered by: David R Her|do| Chief Judge United States District Court
I. Introduction and Procedural Background
Now before the Court are Defendant's motion to set aside entry of default and vacate default judgment under Rule 55(c) and Rule 60(b) (Doc. 21) and Plaintiff's motion to strike the affidavits of Christopher R. Karsten (Doc. 56). The motions have been fully briefed by the parties and are ripe for ruling. For the following reasons, the Court GRANTS the both motions.
On May 25, 2007, Billy J. Hamilton filed a two-count Complaint against Illinois Central Railroad Company d/b/a CN/IC pursuant to the Federal Employers' Liability Act, 45 U.S.C. § § 51-60 and the Locomotive Inspection Act, 49 U.S.C. § 20701 et seq. (Doc. 2.) On May 30, 2007, a Summons was issued as to Illinois Central Railroad Company ("Illinois Central") (Doc. 4) and on July 12, 2007, the Summons was returned executed indicating that Illinois Central was served on June 14, 2007. (Doc. 5.) Thereafter, Hamilton moved for entry of default (Doc. 6) which the Clerk of the Court entered on July 20, 2007. (Doc. 7.) That same day, Hamilton moved for default judgment. (Doc. 8.) On July 24, 2007, the Court entered an Order granting Hamilton's motion for default judgment and ordered a hearing on the issue of damages only. (Doc. 9.) On August 9, 2007, the Court held a hearing on the issue of damages and took the matter under advisement. (Doc. 15.) During the hearing, Hamilton asked for damages totaling $4,195,466.90.
On September 5, 2007, Illinois Central, by and through its outside counsel Kurt Reitz, entered an appearance, filed a jury demand and filed a notice of its intent to file a motion to set aside default. (Docs. 18, 19, & 20, respectively.) The next day, Illinois Central filed its motion to set aside default and vacate default judgment under Rule 55(c) and Rule 60(b). (Doc. 21.) On September 19, 2007, the Court set the matter for hearing on the motion to set aside and vacate default judgment for November 2, 2007. (Doc. 35.)
On November 2, 2007, the Court held a hearing on the issue of default and took the matter under advisement. (Doc. 57.) The Court now turns to address the merits of the motion to strike the affidavits of attorney Christopher R. Karsten*fn1 and the motion to set aside default and vacate default judgment under Rule 55(c) and Rule 60(b). The Court first addresses the motion to strike.*fn2
Hamilton argues that during the November 2, 2007 evidentiary hearing, it was established that Illinois Central's purported in-house counsel, Christopher Karsten, was not a properly registered attorney within the State of Illinois during the time he supposedly managed, controlled and supervised the handling of this lawsuit. Hamilton also argues that it was also established that Karsten was participating during the relevant times in this lawsuit in the unauthorized practice of law in Illinois. Thus, Hamilton moves the Court to exercise its inherent power and authority to sanction parties and their representatives and to strike the affidavits submitted by Karsten in this case. Illinois Central opposes the motion asserting that Karsten's status as an attorney is a collateral fact.*fn3 Specifically, Illinois Central argues that Hamilton "does not challenge the accuracy of the facts averred by Christopher Karsten in any way, but attacks only Christopher Karsten's status as a licensed Illinois attorney." (Doc. 60, p. 2.) (emphasis in original). Illinois Central also argues that there is no basis for the Court to invoke its inherent powers to sanction as Hamilton has provided the Court with no evidence that Karsten acted in bad faith, vexatiously, wantonly or for oppressive reasons.
Federal courts have the inherent authority to manage their own affairs so as to achieve the orderly and expeditious disposition of cases. Chambers v. NASCO, Inc., 501 U.S. 32, 43-45 (1991)(citations omitted). The unauthorized practice of law is sanctionable under the court's inherent authority. United States v. Johnson, 327 F.3d 554, 560 (7th Cir. 2003)("considering the serious threat that the unauthorized practice of law poses both to the integrity of the legal profession and to the effective administration of justice, resort to the inherent powers ... is an appropriate remedial measure."). Coextensive with the inherent authority to mete out sanctions is the requirement that these implied powers be exercised with restraint and discretion. Chambers, 501 U.S. at 44 (citing Roadway Express v. Piper, 447 U.S. 752, 764 (1980)). "Any unauthorized practice of law impacting federal court proceedings necessarily raises the specter of interference with that court's function in a manner effectively indistinguishable from fraud or deceit. The inherent power of the federal courts is thus a proper basis for the imposition of sanctions for the unauthorized practice of law." Johnson, 327 F.3d at 561. "Because the inherent powers are so broad in scope, they are to be narrowly tailored in their application." Id. at 562 (citing Chambers, 501 U.S. at 44-45; Diettrich v. Northwest Airlines, Inc., 168 F.3d 961, 964 (7th Cir. 1999)).
During the hearing, Gary Rappaport, senior counsel for the Illinois Attorney Registration and Disciplinary Commission ("ARDC"), testified that on February 6, 2007, Karsten was removed from the master roll of attorneys eligible to practice law in Illinois. (Doc. 59; November 2, 2007 Transcript, p. 24 lines 6-8.) As to Karsten's status as an Illinois attorney and the affidavits Karsten made in this case, Rappaport testified the following:
I think that this is problematic. Mr. Karsten had been removed from the master roll. If this was filed on September 10th, if I am understanding this correctly, or June 19th, you know, the representation that his is an attorney licensed to practice law is incorrect, and certainly appears he's holding himself out in that fashion, so this is problematic. (Doc. 59; November 2, 2007 Transcript, p. 30 lines 6-11.) The record is clear that at the time Karsten made/signed the affidavits in this case he was engaged in the unauthorized practice of law as he was not a properly registered attorney with the ARDC when he was required to be, see Ill. Sup. Ct. Rule 756(g).*fn4 Based on the case law and the circumstances of this case, the Court finds that it is appropriate to strike the affidavits submitted by ...