Schmit v. Federal Elec. Intern.
| Decision Date | 26 December 1991 |
| Docket Number | No. 91 C 3697.,91 C 3697. |
| Citation | 780 F. Supp. 1213 |
| Parties | William K. SCHMIT, Plaintiff, v. FEDERAL ELECTRIC INTERNATIONAL, Defendant, and Director, Office of Workers' Compensation Programs, United States Department of Labor, Administrator, Intervenor. |
| Court | U.S. District Court — Northern District of Illinois |
William K. Schmit, pro se.
Gregory P. Sujack, Garofalo, Hanson, Schreiber & Vandlik, Chicago, Ill., for Federal Elec. Intern.
Plaintiff William Schmit instituted this action pursuant to 33 U.S.C. § 918(a) to enforce a supplementary order issued by a deputy commissioner of the Office of Workers' Compensation Programs ("OWCP") of the United States Department of Labor. On October 10, this court entered default judgment against Schmit's employer, Federal Electric International, Inc., and against Federal Electric's insurance carrier, Cigna. In an oral ruling in open court on December 19, 1991, this court vacated the October 10 judgment by default, but then ordered judgment under 33 U.S.C. § 918(a) in favor of Schmit and against Federal Electric and Cigna. In view of the dearth of Seventh Circuit opinions on point, the court has decided to issue this memorandum opinion in order to commit to writing the reasons for the ruling.
Schmit worked for Federal Electric in Thule, Greenland as a power plant specialist at a United States Air Force Base. He sustained a work-related injury to his neck and arms and filed a claim for workers compensation under the Longshore and Harbor Workers' Compensation Act, as amended, 33 U.S.C. §§ 901-950 (1988), and as extended to private employees under the Defense Base Act, 42 U.S.C. §§ 1651-1654. The Defense Base Act incorporated large parts of the Longshore and Harbor Workers' Compensation Act. 42 U.S.C. § 1651(a) states that, "Except as herein modified, the provisions of the Longshoremen's and Harbor Workers' Compensation Act ... shall apply...."
A formal administrative hearing was held pursuant to 33 U.S.C. § 919 before Administrative Law Judge Robert Mahoney. ALJ Mahoney issued a decision and order stating that Schmit was entitled to compensation. The deputy commissioner of the Office of Workers Compensation (now titled district director) filed the order on May 14, 1990. Federal Electric then appealed that decision to the Benefits Review Board under 33 U.S.C. § 921(b) and also applied for a stay of Schmit's compensation benefits. The Board denied the stay, ruling that Federal Electric had failed to demonstrate the irreparable injury that would ensue if it paid Schmit pending the appeal. § 921(b) requires a showing of irreparable injury in order for the Benefits Review Board to issue a stay. The employer's appeal to the Board remains pending, B.R.B. # 90-1557 BLA.
Even after the Board's denial of the stay, Federal Electric failed to pay the amount ordered by ALJ Mahoney in May of 1990. Schmit then applied to the Office of Workers Compensation Programs (OWCP) in Chicago for a supplementary order declaring Federal Electric in default. He applied for the supplementary order under 33 U.S.C. § 918(a) which allows for such supplementary orders.
The supplementary order was granted on April 1, 1991 by District Director Thomas Hunter. It included a declaration that Federal Electric was in default in the amount of $87,836.96 plus interest of $28,675.18, the sums that Federal Electric was ordered to pay on May 14, 1990. The supplementary order then imposed an additional assessment of $17,567.39 (20% of the $87,836.96). The additional assessment was authorized under 33 U.S.C. § 914(f).
The supplementary order recites that on February 7, 1991, the attorney for Federal Electric's "insurance carrier/adjustor" Cigna was notified of Schmit's request for a Supplementary Order and was also "referred to Section 18 of the Longshore and Harbor Workers' Act." The attorney for Cigna was the same as for Federal Electric. The Supplementary Order states that there was no response to the notice.
Thomas Hunter, the District Director, certified that on April 1, 1991, he mailed by certified mail a copy of the Supplementary Order to Cigna, Federal Electric's Insurance Carrier and to Greg Sujack of Garofalo, Hanson, Schreiber & Vandlik, the law firm representing both Cigna and Federal Electric. The entire Supplementary Order was certified on May 7, 1991 by an Authentication Officer of the Department of Labor.
Schmit still received no payment, notwithstanding the certified Supplementary Order. Schmit then turned to this court. He filed a copy of the certified supplementary order with the court under 33 U.S.C. § 918(a), a provision of the Longshore and Harbor Workers Act incorporated into the Defense Base Act with modifications. Taking into account the modifications of the Defense Base Act (modifications located at 42 U.S.C. § 1653(b) and identified below with parentheses), 33 U.S.C. § 918(a) states:
The applicant may file a certified copy of such supplemental order with the clerk of the Federal district court for the judicial district (wherein is located the office of the deputy commissioner whose compensation order is involved). Such supplementary order of the deputy commissioner shall be final, and the court shall upon the filing of the copy enter judgment for the amount declared in default by the supplementary order if such supplementary order is in accordance with law. Review of the judgment so entered may be had as in civil suits for damages at common law. Final proceedings to execute the judgment may be had by writ of execution in the form used by the court in suits at common law in actions of assumpsit. No fee shall be required for filing the supplementary order nor for entry of judgment thereon, and the applicant shall not be liable for costs in a proceeding for review of the judgment unless the court otherwise directs. The court shall modify such judgment to conform to any later compensation order upon presentation of a certified copy thereof to the court.
No complaint was filed in this court. In addition, no summons was issued on Defendant nor was any notice of filing of any sort. According to the passage just quoted from 33 U.S.C. § 918(a), no complaint is required; only a certified copy of the supplementary order need be filed. The court is then directed by the statute to enter judgment "for the amount declared in default by the supplementary order if such supplementary order is in accordance with law."
On October 10, 1991, this court entered an order of judgment by default against the Defendant, Federal Electric. Eleven days later, on October 21, 1991, Federal Electric filed a motion for relief from the October 10 judgment. On November 14, 1991, the Director of the Office of Workers' Compensation of the U.S. Department of Labor filed a motion to intervene on behalf of Mr. Schmit which this court granted.
In its motion to vacate the default judgment, Federal Electric argued that the court lacks subject matter jurisdiction to issue judgment on the supplementary order. Federal Electric apparently has abandoned its jurisdictional argument as it does not refer to that argument in its reply brief. Moreover, as discussed above, this court does in fact have jurisdiction thanks to 42 U.S.C. § 1653(b) which modified 33 U.S.C. § 918(a) and which creates jurisdiction in the judicial district wherein a district director issues a supplementary order. In this case, a Chicago district director issued the supplementary order so jurisdiction exists in the Northern District of Illinois.
According to Rule 55 Fed.R.Civ. Pro., "When a party against whom a judgment for affirmative relief is sought has failed to plead or otherwise defend as provided by these rules," default judgment may be entered. (emphasis supplied). Rule 55 thus makes clear that a default judgment in the federal courts is warranted when a defendant fails an obligation created by the Federal Rules to plead or defend. In this case, the Defendant did not fail an obligation of the federal rules. No complaint was ever filed in this action (only a certified copy of the supplementary order was), and Defendant was not given notice or a summons. Rule 7 requires a complaint and Rule 4 requires the delivery of a summons. Rule 12(a) states that "a defendant shall serve an answer within 20 days after the service of the summons and complaint upon that defendant." Because there was no complaint and no summons, Rule 12 did not impose on the Defendant the obligation to answer or otherwise defend. Therefore, default judgment under Rule 55 was improper, because Federal Electric did not "fail to plead or otherwise defend as provided by these rules." Consequently, the court's October 10 entry of default judgment is vacated.
Although the entry of default judgment is vacated, judgment in favor of Mr. Schmit is still warranted. As quoted above, 33 U.S.C. § 918(a) states in part:
The applicant may file a certified copy of such supplemental order with the clerk of the Federal district court for the judicial district wherein is located the office of the deputy commissioner whose compensation order is involved. Such supplementary order of the deputy commissioner shall be final, and the court shall upon the filing of the copy enter judgment for the amount declared in default by the supplementary order if such supplementary order is in accordance with law.
Accordingly, the court shall upon the filing of the certified copy of the supplementary order enter judgment for the amount declared in default if "such supplementary order is in accordance with law." The court believes that its review of the supplementary order is limited to ensuring that the district director followed the procedures of 33 U.S.C. § 918(a).
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