Cracco v. Vitran Exp., Inc.

Decision Date17 March 2009
Docket NumberNo. 07-3827.,07-3827.
Citation559 F.3d 625
PartiesKevin CRACCO, Plaintiff-Appellant, v. VITRAN EXPRESS, INCORPORATED, Defendant-Appellee.
CourtU.S. Court of Appeals — Seventh Circuit

Brian R. Holman (argued), Holman & Stefanowicz, Chicago, IL, for Plaintiff-Appellant.

Sara L. Pettinger, Adam C. Smedstad (argued), Scopelitis, Garvin, Light, Hanson & Feary, Chicago, IL, for Defendant-Appellee.

Before RIPPLE, MANION and SYKES, Circuit Judges.

RIPPLE, Circuit Judge.

Kevin Cracco brought this action against Vitran Express, Inc. ("Vitran") for violating the Family Medical Leave Act ("FMLA"), 29 U.S.C. §§ 2601-2654, by terminating his employment upon his return from a medical leave. The district court entered an order of default against Vitran. However, before the district court entered a final judgment, Vitran filed a motion to vacate the default order. The district court granted that motion and, later, granted summary judgment in favor of Vitran. Mr. Cracco filed a timely appeal. For the reasons set forth in this opinion, we affirm the judgment of the district court.

I BACKGROUND
A.

In 1991, Vitran, a trucking company, hired Mr. Cracco. He later became a Service Center Manager for Vitran's Markham, Illinois terminal. On October 5, 2006, while serving in that capacity, Mr. Cracco was hospitalized with a serious health condition that rendered him temporarily unable to work. He requested approval from Vitran to take medical leave under the FMLA; Vitran approved his leave and, during the leave period, continued to pay him as provided by the company's salary continuation policy.1

Vitran hired several replacement employees to cover Mr. Cracco's job responsibilities. According to Vitran, as these employees undertook Mr. Cracco's responsibilities, they discovered several problems. "[T]he terminal was disorganized, employees were not following procedures, freight was sitting on the dock, damaged freight was hidden in trailers, safety concerns were noted, customers were complaining and overtime was not being handled properly." R.38 at ¶ 33.

One of the replacement employees, Steve Perry, discovered discrepancies in the freight documents maintained by Mr. Cracco. He noticed that there were several shipments that Mr. Cracco had entered into the system as "waiting for an appointment"; however, the shipments were not appointment deliveries, but, rather, were deliveries that had not been made on time. Appellee Br. 7. Perry also noticed that Mr. Cracco had entered many of the freight deliveries as "delivered clear" when, in fact, the freight delivery receipt showed that they were delivered late, damaged or incomplete. Id. at 8. Mr. Cracco disputes that he falsified any records.

Perry subsequently contacted John Hartman, Vitran's Vice-President of Operations, regarding the discrepancies. Hartman examined a thirty-day sample of freight delivery receipts and compared them to the corresponding computer entries made under Mr. Cracco's computer log-in code. The freight delivery receipts reflect the date and actual quality of the delivery.

Hartman's examination uncovered problems similar to those described by Perry. He also discovered that Mr. Cracco had identified shipments as "drop" deliveries to customers who never received deliveries in such a fashion. Appellee Br. 9. In addition, Hartman observed that the majority of Mr. Cracco's computer entries were late at night and within minutes of each other. These findings led Hartman to conclude that Mr. Cracco's entries were not errors, but, rather, Mr. Cracco's deliberate attempts to disguise late and damaged deliveries.

Hartman traveled to the Markham terminal where he observed the problems that Perry had described. He later spoke with Chuck Weber, a former Regional Vice-President and one of Mr. Cracco's past supervisors, who stated that, in 2005, Mr. Cracco had refused to admit that he was responsible for problems at the terminal. Hartman discussed his findings with employees in Vitran's Human Resources department and with Richard Gray, the Assistant Vice-President of Operations. At Hartman's request, Gray reviewed the sample of freight records and agreed with Hartman's findings. On November 13, 2006, the day that Mr. Cracco returned from medical leave, Vitran terminated his employment.

B.

Mr. Cracco brought this action against Vitran, alleging that the company interfered with his FMLA rights by failing to restore him to his previous position and retaliating against him by terminating his employment. Vitran did not file a response, and the district court consequently entered an order of default against Vitran. However, prior to the court's entry of final judgment, Vitran filed a motion to vacate the default order. Vitran initially told the court that it had no record of having received the summons and complaint from its registered agent. Later, it clarified that its registered agent had received the summons and complaint, but that the documents had been forwarded to employees who did not understand their significance. The district court granted Vitran's motion and vacated the order of default.

Vitran later moved for summary judgment and filed a Local Rule 56.1(a) statement. In Paragraph 33 of its statement of material facts, Vitran stated:

When [the replacement] employees arrived at the Markham terminal, they discovered several problems. The terminal was disorganized, employees were not following procedures, freight was sitting on the dock, damaged freight was hidden in trailers, safety concerns were noted, customers were complaining and overtime was not being handled properly.

R.38 at ¶ 33. In his response, Mr. Cracco objected to Paragraph 33 on the ground that it violated Rule 56.1 because it was not short and concise, but, rather, constituted a compound paragraph alleging multiple facts. Mr. Cracco moved to bar the use of evidence in the form of printouts of computer screens that allegedly showed entries made under his login name, as well as printouts of shipment delivery receipts that contained handwritten notations.

On October 24, 2007, the district court granted Vitran's motion for summary judgment. The court deemed Paragraph 33 admitted by Mr. Cracco and held that he failed to establish a retaliation claim under either the direct or indirect method of proof. The court further held that Mr. Cracco could not prevail on his interference claim because there was undisputed evidence that Mr. Cracco had been terminated for performance issues unrelated to taking FMLA leave. The court denied as moot Mr. Cracco's motion to bar evidence because it had not relied upon that evidence in granting summary judgment. Mr. Cracco filed this appeal.

II DISCUSSION

We review evidentiary rulings and decisions regarding compliance with local rules for an abuse of discretion. Thanongsinh v. Bd. of Educ., 462 F.3d 762, 775 (7th Cir.2006); Koszola v. Bd. of Educ., 385 F.3d 1104, 1108 (7th Cir.2004).

On appeal, Mr. Cracco challenges the district court's decision to vacate the order of default, its decision to deem admitted Paragraph 33 of Vitran's statement of material facts, its grant of summary judgment in favor of Vitran on Mr. Cracco's retaliation and interference claims under the FMLA, and its finding that Mr. Cracco's motion to bar evidence is moot. We shall address each of these issues in turn.

A.

We first examine the district court's decision to vacate the order of default against Vitran. Mr. Cracco submits that Vitran did not make a sufficient showing in its motion to vacate the order of default to warrant the district court vacating the default order. He maintains that Vitran was required to make a showing of a meritorious defense. He claims that Vitran's general statement that he was terminated for cause was insufficient to meet this burden and that Vitran needed to present a developed legal and factual basis for its assertion that Mr. Cracco was terminated for cause. See Jones v. Phipps, 39 F.3d 158, 165 (7th Cir.1994).

Federal Rule of Civil Procedure 55(c) states: "The court may set aside an entry of default for good cause, and it may set aside a default judgment under Rule 60(b)." We are concerned only with Rule 55(c) because the district court did not enter a final default judgment awarding damages to Mr. Cracco. See Merrill Lynch Mortgage Corp. v. Narayan, 908 F.2d 246, 252 (7th Cir.1990). The calculus involved in Rule 55(c) decisions, as with Rule 60(b) decisions, "leads us to give great deference to the district court's eventual decision." See Swaim v. Moltan Co., 73 F.3d 711, 722 (7th Cir.1996) (applying Rule 60(b)). We shall reverse such a determination only if the district court abused its discretion. Sun v. Bd. of Trs. of the Univ. of Ill., 473 F.3d 799, 810 (7th Cir.2007).

A party seeking to vacate an entry of default prior to the entry of final judgment must show: "(1) good cause for the default; (2) quick action to correct it; and (3) a meritorious defense to the complaint." Id. (citing Pretzel & Stouffer v. Imperial Adjusters, Inc., 28 F.3d 42, 45 (7th Cir.1994)); see also Fed.R.Civ.P. 55(c). While the same test applies for motions seeking relief from default judgment under both Rule 55(c) and Rule 60(b), the test "is more liberally applied in the Rule 55(c) context." United States v. Di Mucci, 879 F.2d 1488, 1495 (7th Cir. 1989). Our cases articulate a policy of favoring trial on the merits over default judgment. Sun, 473 F.3d at 811 (citing C.K.S. Eng'rs, Inc. v. White Mountain Gypsum Co., 726 F.2d 1202, 1205 (7th Cir.1984) (collecting cases)).

To have the entry of default vacated, Vitran must show that it had good cause for the late submission of its answer and that it acted in a timely fashion to have the default order set aside. These two inquiries are not in serious contention. Vitran has shown good cause for the lateness of its answer; it did not willfully ignore the pending litigation, but, rather, failed to respond...

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