Limo company owners' failure to understand personal liability for judgment in OT case dooms appeal

By DM Herra | Nov 3, 2017

Former business partners sued for failing to pay their employees overtime lost their appeal of the judgment against them, when a federal appeals court found the men had spent years ignoring both the litigation and the judgment.

Two former drivers for limousine company DT & C Global Management LLC sued the company and owner John Jansen, claiming the company failed to pay overtime and took unauthorized wage deductions. Later, the U.S. Secretary of Labor sued the company, Jansen and another owner, William Lynch, on the same charges.

According to court documents, none of the defendants responded to requests for discovery, even after a motion to compel. A year later, attorneys for the defendants were allowed to withdraw after telling the court they could not reach their clients. Jansen was ordered to appear for a hearing, which he did not attend, and the judge awarded the plaintiffs’ attorney fees and entered a default judgment.

Eleven months later, in October 2016, the defendants moved to vacate the judgment. As an excuse for his failure to appear at court proceedings, Jansen reportedly said he had received no notice of his counsel’s motion to withdraw or of the order for him to appear. The business had closed and he had moved, so he didn’t receive mail sent to either his business or home address. He said he first became aware of the default judgment in the summer of 2016.

Jansen also said he could not keep in touch with his attorneys because of his poor health, though he acknowledged he had met with a new attorney several times in the summer of 2015. After hiring the attorney, who never entered an appearance, he had no further contact with the office for more than six months.

In their appeal, the defendants claim Jansen’s poor health and his failure to receive notices of the court proceedings were valid reasons to neglect the case. A three-judge panel of the U.S. Seventh Circuit Court of Appeals was not convinced, however, agreeing with the district court that Jansen’s health did not establish good cause for the default.

“Jansen … offers no medical opinion suggesting [his medications] impaired his ability to handle his affairs,” the appellate court wrote in its opinion. “To the contrary, Jansen said that he was able to conduct business when he wanted.”

The court had even less sympathy for the excuse that Jansen had not received notices from the court. The judges said it was Jansen’s responsibility to check in with his lawyer periodically – and even that would not have been necessary if he had just notified the court of his new address when he moved.

The court said the defendants also did not act quickly enough to file their motion to vacate. Despite not receiving court notices, both Jansen and Lynch said they read a Department of Labor press release in January 2016 that announced a default judgment of more than $381,000 against them, but the news did not disturb them because they had closed the business four months earlier and did not think they were personally liable.

“They didn’t take the easy and prudent step of checking the link in the article to see if the judgment applied to them,” the judges wrote. “Instead they let more than nine months pass before going to court.”

The original motions to vacate were denied by judges Milton I. Shadur and Virginia M. Kendall. The appeal was denied by circuit judges Michael S. Kanne, Ilana D. Rovner and Diane S. Sykes.

The plaintiffs were represented by the firm of Werman Salas P.C., of Chicago.

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U.S. Court of Appeals for the Seventh Circuit U.S. District Court for the Northern District of Illinois Werman Salas

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