Sheet Metal Workers v. Elite Erectors

Decision Date16 May 2000
Docket NumberNo. 99-3410,99-3410
Citation212 F.3d 1031
Parties(7th Cir. 2000) Board of Trustees, Sheet Metal Workers' National Pension Fund, et al., Plaintiffs-Appellants, v. Elite Erectors, Inc., Skylight Consultants of America, Inc., and Mary Lowry, Defendants-Appellees
CourtU.S. Court of Appeals — Seventh Circuit

Appeal from the United States District Court for the Southern District of Indiana, Indianapolis Division. No. IP 98-298-C H/G--David F. Hamilton, Judge. [Copyrighted Material Omitted] Before Harlington Wood, Jr., Easterbrook, and Kanne, Circuit Judges.

Easterbrook, Circuit Judge.

Elite Erectors, which installed skylights, was obliged under collective bargaining agreements to contribute to the Sheet Metal Workers' National Pension Fund and other trusts covered by ERISA. When Elite went out of business it owed plaintiffs (collectively "the Funds") about $18,000. ERISA allows litigation "in the district where the plan is administered, where the breach took place, or where a defendant resides or may be found". 29 U.S.C. sec.1132(e)(2). Plaintiffs, which are administered in Alexandria, Virginia, filed their suit in the United States District Court for the Eastern District of Virginia. Elite Erectors defaulted. Before the district court entered judgment, the Funds amended their complaint to name Skylight Consultants of America, Inc., and Mary Lowry as Elite's alter egos. Skylight and Lowry also defaulted, and the district court eventually entered judgment holding all three jointly and severally liable to the Funds.

Just as they had ignored the suit, Elite, Skylight, and Lowry ignored the judgment: they neither appealed nor paid. After registering the judgment in the United States District Court for the Southern District of Indiana, where Lowry lives and Skylight carries on a business, see 28 U.S.C. sec.1963, the Funds initiated collection proceedings. At last stirred to action, Skylight and Lowry (who, unlike Elite, are solvent) filed a motion under Fed. R. Civ. P. 60(b)(4), asking the district judge in Indiana to declare the Virginia judgment void because, they asserted, the Eastern District of Virginia lacked personal jurisdiction over them. Skylight and Lowry did not deny that they had been served with process but observed that neither carried on any business in Virginia. This much the Funds concede; they rely, however, on another portion of sec.1132(e)(2), which says that in a collection action by a pension or welfare plan "process may be served in any other district where a defendant resides or may be found." That nationwide-service clause enabled the Eastern District of Virginia to acquire personal jurisdiction, the Funds contended, and required Skylight and Lowry to litigate in Virginia whether they were Elite's alter egos. But the district judge in Indiana concluded that Skylight and Lowry could be defendants in Virginia only if they actually were Elite's alter egos. Just as Skylight and Lowry had declined to join issue on that subject in Virginia, the Funds declined to join issue in Indiana, deeming the subject foreclosed by the Virginia judgment. Considering only the arguments and evidence presented by Skylight and Lowry, the district judge in Indiana concluded that they were not Elite's alter egos and therefore had not been subject to suit in Virginia. 46 F. Supp. 2d 852, reconsideration denied, 64 F. Supp. 2d 839 (1999). Because the Virginia court lacked personal jurisdiction over Skylight and Lowry, the Indiana judge held, its judgment is void with respect to them.

Logically the first question is whether a district court in which a judgment is registered under sec.1963 may modify or annul that judgment under Rule 60(b). Some courts have held that the final sentence of sec.1963 para.1--"A judgment so registered shall have the same effect as a judgment of the district court of the district where registered and may be enforced in like manner."--means that the original judgment becomes a judgment of the court in which it has been registered, and therefore may be modified or set aside by the court of registration. See Rector v. Peterson, 759 F.2d 809 (10th Cir. 1985); Covington Industries, Inc. v. Resintex A.G., 629 F.2d 730 (2d Cir. 1980). But sec.1963 does not say that the original judgment becomes a local one; it says that the original judgment has the effect of a local judgment. This is a substantial difference, because the registered judgment does not lose its existence in the court that rendered the decree. Could the Southern District of Indiana tell the Eastern District of Virginia that it may not enforce its own judgment if, for example, Skylight or Lowry should have assets in Virginia? A judgment may be registered in many districts, see Charles Alan Wright, Arthur R. Miller & Mary Kay Kane, 11 Federal Practice and Procedure sec.2787 (2d ed. 1995), and it would not make much sense to allow each of these districts to modify the judgment under Rule 60(b), potentially in different ways. Rector and Covington state a minority view. Other circuits conclude (with the support of Wright & Miller, Federal Practice at sec.2865) that requests for modification under Rule 60(b) must be presented to the rendering court. E.g., Indian Head National Bank of Nashua v. Brunelle, 689 F.2d 245 (1st Cir. 1982); First Beverages, Inc. v. Royal Crown Cola Co., 612 F.2d 1164, 1172 (9th Cir. 1980). This circuit is among the majority that require Rule 60(b) motions to be presented to the rendering court. Fuhrman v. Livaditis, 611 F.2d 203, 204-05 (7th Cir. 1979). Cf. Harris Trust & Savings Bank v. Ellis, 810 F.2d 700, 705-06 (7th Cir. 1987).

None of the parties alerted the district judge to Fuhrman and similar cases; the Funds did not question the employment of Rule 60(b)(4), only the district court's conclusion that the Eastern District of Virginia lacked jurisdiction over Skylight and Lowry. Still, the Southern District of Indiana was free to disregard the judgment, without formally annulling it under Rule 60(b)(4), if the rendering court lacked jurisdiction. Adam v. Saenger, 303 U.S. 59, 62 (1938); Hanes Supply Co. v. Valley Evaporating Co., 261 F.2d 29 (5th Cir. 1958). A motion in the registration court under Rule 60(b)(4) is functionally identical to a motion to preclude enforcement under Adam; perhaps this is why In re Joint Eastern & Southern District Asbestos Litigation, 22 F.3d 755, 762 n.15 (7th Cir. 1994), approved the practice. Whether or not the district court enters an order under Rule 60(b)(4), principles of issue preclusion would prevent relitigation of the jurisdictional question in other courts of registration.

"A party that simply refuses to appear may contend in a later case that the first tribunal lacked jurisdiction--though jurisdiction is the only issue thus preserved, and if the first court had jurisdiction then the judgment must be enforced. See Earle v. McVeigh, 91 U.S. 503, 507 (1875); Williams v. General Electric Capital Auto Lease, Inc., 159 F.2d 266 (7th Cir. 1998); Metropolitan Life Insurance Co. v. Cammon, 929 F.2d 1220, 1222-23 (7th Cir. 1991). . . . [O]therwise a court that lacked jurisdiction could strong-arm a party to litigate the subject, decide in favor of its own power, and thus block any review of its adjudicatory competence." United States v. Cook County, 167 F.3d 381, 388 (7th Cir. 1999) (emphasis in original). Skylight and Lowry, who did not appear in the Virginia action, therefore are entitled to resist enforcement in Indiana if, but only if, the United States District Court for the Eastern District of Virginia lacked personal or subject- matter jurisdiction.

The district judge in Indiana concluded that personal jurisdiction could be established in Virginia only if Skylight and Lowry were Elite's alter egos, as the Funds' complaint asserted. This interprets sec.1132(e)(2) as if it allowed nationwide service (and thus personal jurisdiction) only with respect to "employers" or, more generally, "persons liable under ERISA"--a step that would conflate jurisdiction with the merits. Section 1132(e)(2) does not say this; it provides nationwide service to bring "a defendant" into the action. Whether the defendant is liable under ERISA is the subject to be litigated following service; it is not a condition precedent to personal jurisdiction. The Indiana judge gave an unnatural reading to sec.1132(e)(2) in order to avoid what he perceived to be a constitutional problem. Ambiguous language that is constitutional when read one way and unconstitutional when read another properly may be understood the first way; judges assume that Congress did not set out to transgress constitutional limits. But the constitutional penumbra is large; almost any statute can be thought to raise "constitutional issues," and treating these as license to rewrite the law would divest Congress of effective lawmaking power. Judges therefore must not manufacture ambiguity or disregard straightforward language. United States v. Marshall, 908 F.2d 1312, 1318 (7th Cir. 1990) (en banc), affirmed under the name Chapman v. United States, 500 U.S. 453, 464 (1991). "[A]voidance of a difficulty will not be pressed to the point of disingenuous evasion." Rust v. Sullivan, 500 U.S. 173, 191 (1991). Section 1132(e)(2) does not require or tolerate creative interpretation. "Defendant" means defendant; Skylight and Lowry were defendants in the Virginia action and were served with process under sec.1132(e)(2); the district court therefore had personal jurisdiction unless sec.1132(e)(2) violates the Constitution.

Three other circuits have held that sec.1132(e)(2) and its counterpart 29 U.S.C. sec.1451(d) (which applies exclusively to multi- employer plans such as the Funds) comport with all constitutional requirements. United Electrical Workers v. 163 Pleasant Street Corp., 960 F.2d 1080, 1085 (1st Cir. 1991); IUE AFL-CIO Pension Fund v. Herrmann, 9 F.3d 1049, 1056-57 (2d...

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