Arwa Chiropractic, P.C. v. Med-Care Diabetic & Medical Su ( 2020 )

In the
United States Court of Appeals
For the Seventh Circuit
____________________
No. 19‐1916
ARWA CHIROPRACTIC, P.C., individually and as representative
of the certified class,
Plaintiff‐Appellant,
v.
MED‐CARE DIABETIC & MEDICAL SUPPLIES, INC., et al.,
Defendants‐Appellees.
____________________
Appeal from the United States District Court for the
Northern District of Illinois, Eastern Division.
No. 1:14‐cv‐05602 — John Z. Lee, Judge.
____________________
ARGUED DECEMBER 6, 2019 — DECIDED JUNE 5, 2020
____________________
Before ROVNER, BRENNAN, and ST. EVE, Circuit Judges.
BRENNAN, Circuit Judge. A medical supply company sent
faxes to thousands of medical providers to solicit prescrip‐
tions to sell medical equipment to the providers’ patients. One
provider received numerous faxes and filed this class action
challenging the faxing practices under the Telephone Con‐
sumer Protection Act (“TCPA”), 47 U.S.C. § 227 et seq.
2 No. 19‐1916
As the case worked its way through the district court, the
supply company failed to appear and had default judgment
entered against it as to liability but not damages. Later the
supplier’s chief executive officer was granted summary judg‐
ment. Concerned with an inconsistency, the district court va‐
cated the default judgment against the supply company and
entered judgment for both the executive and the company.
The medical provider appeals that decision.
We affirm the judgment for the executive. But because the
good cause standard was not applied in vacating the default
judgment against the company, and inconsistent judgments
between the individual and corporate defendants do not pre‐
sent a problem, we reverse and remand for further proceed‐
ings on the claim against the company.
I. Factual and Procedural Background
Plaintiff Arwa Chiropractic, P.C. is an Illinois medical pro‐
vider. On six occasions Arwa received nearly identical faxes
containing a prescription request form for a nebulizer (which
turns liquid medicine into a mist) from defendant Med‐Care
Diabetic & Medical Supplies, Inc. Med‐Care used a third
party, WestFax, to send the faxes in bulk. Med‐Care provided
WestFax with blank templates for the prescription request
forms, along with spreadsheets of contact information to fill
in the forms. WestFax then sent Med‐Care’s faxes to thou‐
sands of medical providers. Those Arwa received were part
of a broadcast of 46,051 faxes in which each differed only by
the patient and doctor information.
Med‐Care’s chief executive officer, Dr. Steven Silverman,
explained “Med‐Care’s business model as a mail‐order medi‐
cal equipment company involved reaching out to physicians
No. 19‐1916 3
to request prescriptions after first being contacted by patients
needing medical products.” Silverman asserted he had no
personal control over the faxing operations of Med‐Care. He
claimed the “day to day operations of the business were del‐
egated to others” while he “focused more on big picture busi‐
ness development and the overall health of the business.”
Silverman did not send any faxes on behalf of Med‐Care. He
did not oversee, supervise, or participate in sending faxes,
and he did not design or draft any of the prescription request
forms. He did not execute Med‐Care’s contract with WestFax,
and he was not involved with uploading order requests to
WestFax. Others signed the contract with WestFax, oversaw
Med‐Care’s operations, and uploaded the faxes to WestFax.
Arwa sued Med‐Care and Silverman on behalf of a puta‐
tive class of fax recipients, claiming defendants’ faxing prac‐
tices violated the TCPA. Arwa moved to certify the class,
which the district court granted. Defense counsel then moved
to withdraw as the attorney for Med‐Care but continued to
represent Silverman. Counsel also informed the court that
Med‐Care had commenced a proceeding in Florida court as‐
signing its assets for the benefit of creditors, see generally FLA.
STAT. ch. 727, a state proceeding similar to bankruptcy.
The district court granted counsel’s motion to withdraw
from representing Med‐Care and ordered it to have an attor‐
ney appear if it wished to continue to defend this case. When
none did, Arwa moved for default against Med‐Care under
Federal Rule of Civil Procedure 55(a), which was granted.
Later Arwa moved for default judgment against Med‐Care.
See FED. R. CIV. P. 55(b). The district court granted that motion
and entered default judgment for Arwa against Med‐Care as
to liability, but the court deferred the question of damages.
4 No. 19‐1916
Moving to the next defendant, Arwa sought partial sum‐
mary judgment against Dr. Silverman on its TCPA claim, and
Silverman moved for summary judgment on all claims. After
reviewing the parties’ briefing and the law, the district court
concluded that Med‐Care’s faxes were not advertisements,
and it denied Arwa’s motion for summary judgment. Arwa
argued Silverman directly participated in or authorized the
faxes and should also be liable, but the only evidence Arwa
cited to support this theory was that Silverman “knew” or
“was aware” that Med‐Care’s procedures included sending
faxed prescription requests to physicians. So the court
granted Silverman’s motion for summary judgment because
even if the faxes were advertisements, he could not be person‐
ally liable unless he was a “sender” under the TCPA or had
“direct personal participation in or personally authorized”
the faxes.
Arwa then renewed its motion for default judgment
against Med‐Care and submitted its damages calculation. Sil‐
verman, who despite receiving summary judgment in his fa‐
vor had remained active in the case. He opposed Arwa’s re‐
quest and argued the default judgment against Med‐Care was
logically inconsistent with the court’s ruling that the Med‐
Care faxes were not advertisements.
At an April 11, 2019 hearing, after Arwa and Silverman
supplemented their arguments, the district court considered
this question of inconsistent judgments. Arwa had sought to
hold Med‐Care and Silverman liable based on the same con‐
duct: the sending of unsolicited fax advertisements. The court
concluded that defendants sued jointly should not be sub‐
jected to inconsistent judgments. Given the court had found
that faxes were not advertisements, it reasoned that Arwa was
No. 19‐1916 5
not entitled to a default judgment on liability against Med‐
Care. So the court denied Arwa’s renewed motion for default
judgment, vacated the default judgment on liability against
Med‐Care, and entered judgment for both Silverman and
Med‐Care.
Arwa appeals those rulings, arguing Med‐Care’s prescrip‐
tion request forms are advertisements under the TCPA, a
genuine issue of material fact exists as to Silverman’s personal
liability, and summary judgment for Silverman does not pre‐
clude a default judgment against Med‐Care. Silverman disa‐
grees with each of these arguments. He believes the district
court was correct to vacate the previous default judgment as
to liability against Med‐Care and to enter judgment for Med‐
Care. Med‐Care has not participated in this appeal.1
II. Discussion
Two standards of review apply to the parties’ arguments
on appeal.
The first, as to Silverman, is the familiar de novo review of
a grant of summary judgment, which is appropriate when
there is no genuine dispute as to any material fact and the
moving party is entitled to judgment as a matter of law. FED.
R. CIV. P. 56(c). We view the record and draw all reasonable
inferences in the light most favorable to the nonmoving party.
See, e.g., Driveline Sys., LLC v. Arctic Cat, Inc., 936 F.3d 576, 579
(7th Cir. 2019). We may affirm summary judgment on any
ground supported in the record, provided the parties
1Med‐Care’s last appearance in this litigation was in November 2017
when its counsel (who also represents Silverman) was allowed to with‐
draw.
6 No. 19‐1916
adequately addressed the issue in the district court and the
non‐moving party had an opportunity to contest it. Id.The second is for abuse of discretion on the entry or vaca‐
tion of a default judgment as to Med‐Care, and the denial of a
renewed motion for default judgment by Arwa. See Relational,
LLC v. Hodges, 627 F.3d 668, 671 (7th Cir. 2010); Pretzel &
Stouffer v. Imperial Adjusters, 28 F.3d 42, 44–45 (7th Cir. 1994).
A. Silverman’s Liability
We first consider whether the district court erred in grant‐
ing summary judgment to Silverman on Arwa’s claims. Per‐
sonal liability under the TCPA is analyzed by examining
whether the individual was a “sender” under the TCPA, or
whether the person had direct, personal participation in or
personally authorized the conduct found to have violated the
statute. Physicians Healthsource, Inc. v. A‐S Medication Sols.
LLC, 324 F. Supp. 3d 973, 983 (N.D. Ill. 2018), aff’d 950 F.3d 959(7th Cir. 2020) (citing Texas v. Am. Blastfax, Inc., 164 F. Supp.
2d 892, 898 (W.D. Tex. 2001)). “In addition to the person who
physically sends the fax, federal regulations bring within the
definition of ‘sender’ the person or entity on whose behalf a
facsimile unsolicited advertisement is sent or whose goods or
services are advertised or promoted in the unsolicited adver‐
tisement.” Heather McCombs, DPM, LLC v. Cayan LLC, 2017
WL 1022013, at *5 (N.D. Ill. Mar. 16, 2017) (citing 47 C.F.R.
§ 64.1200(f)(10)).
Silverman did not fit within the definition of sender be‐
cause he did not send any of the faxes, the faxes were sent on
behalf of Med‐Care and not Silverman personally, and if the
faxes were advertisements, they advertised Med‐Care’s prod‐
ucts, not Silverman’s.
No. 19‐1916 7
Even though Silverman was not a “sender,” some courts
have found a corporate officer “personally liable under the
TCPA if he had direct, personal participation in or personally
authorized the conduct found to have violated the statute,
and was not merely tangentially involved.” Physicians
Healthsource, Inc., 324 F. Supp. 3d at 983 (noting regulatory
definition of “sender”); see also City Select Auto Sales Inc. v.
David Randall Assoc., Inc., 885 F.3d 154, 162 (3d Cir. 2018) (as‐
suming personal‐participation liability is available under
TCPA, direct, personal participation of corporate officer is re‐
quired).
Our court has not decided whether personal‐participation
liability is available under the TCPA. The district court in
Physicians Healthsource noted that the “direct, personal partic‐
ipation” standard “has been adopted across the country, in‐
cluding by other judges in this district,” and rejected the
requirement that officer liability requires only knowledge of
the wrongful conduct or willful violation. 324 F. Supp. 3d at
983. This court affirmed, 950 F.3d 959 (7th Cir. 2020), includ‐
ing, on that case’s facts, the personal liability of the chief ex‐
ecutive officer.
The personal‐participation standard has been criticized as
resting on the challenged assumption that traditional forms
of common‐law personal liability remain available under fed‐
eral statutes by default. City Select, 885 F.3d at 160–61 (citing
Boim v. Holy Land Found. for Relief & Dev., 549 F.3d 685, 689
(7th Cir. 2008) (en banc)). But we need not decide whether
personal‐participation liability is present here. The only claim
Arwa offers in support of Silverman’s liability was that he
“knew” or “was aware” that Med‐Care’s procedures included
sending the faxes. Mere knowledge is insufficient. See
8 No. 19‐1916
Physicians Healthsource, 324 F. Supp. 3d at 983 (citing Am.
Blastfax, 164 F. Supp. 2d at 898). Even assuming personal‐par‐
ticipation liability is the standard, direct participation or au‐
thorization would be required, and that is absent here. So we
conclude that the district court did not err in granting sum‐
mary judgment in Silverman’s favor.
B. Default and Default Judgment as to Liability against
Med‐Care
Before considering whether the vacation of default judg‐
ment was proper, as background we examine the district
court’s entry of default under Rule 55(a) and subsequent en‐
try of default judgment as to liability against Med‐Care under
Rule 55(b). “When a party against whom a judgment for af‐
firmative relief is sought has failed to plead or otherwise de‐
fend, and that failure is shown by affidavit or otherwise, the
clerk must enter the party’s default.” FED. R. CIV. P. 55(a). Rule
55(b)(2) provides that the court may enter judgment on a de‐
fault.
When counsel for Med‐Care withdrew, the district court
instructed that an attorney must appear for the company if it
wished to defend this lawsuit. When after two months none
appeared, the court granted Arwa’s request for an entry of de‐
fault. After two more months Med‐Care still failed to appear,
so the court granted Arwa’s motion for default judgment as
to liability.
When a court enters a default judgment as to liability, it
must accept as true all factual allegations in the complaint, ex‐
cept those regarding the amount of damages. FED. R. CIV. P.
8(b)(6); see, e.g., Quincy Bioscience, LLC v. Ellishbooks, 957 F.3d
725, 725 (7th Cir. 2020) (affirming entry of default judgment).
No. 19‐1916 9
That occurred here. Arwa’s requests for default and default
judgment contained all the information necessary for the dis‐
trict court to issue its rulings. Med‐Care did not appear after
November 2017 and failed to explain its absence. Indeed,
Med‐Care has not appeared on appeal and no defense to the
contrary has been offered for us to hold otherwise. These rul‐
ings by the district court were within its discretion, which it
properly exercised.
C. Vacation of the Default Judgment on Liability for
Med‐Care
Arwa has challenged the district court’s decision to vacate
the default judgment on liability against Med‐Care and to
deny Arwa’s request for default judgment as to damages.
“The court may set aside an entry of default for good cause,
and it may set aside a default judgment under Rule 60(b).”
FED R. CIV. P. 55(c). Relief from a final judgment is available
because of mistake, inadvertence, excusable neglect, newly
discovered evidence, fraud, the judgment is void or has been
satisfied, or any other reason that justifies relief. FED. R. CIV.
P. 60(b)(1)–(6); see Chrysler Credit Corp. v. Macino, 710 F.2d 363,
367 (7th Cir. 1983) (affirming grant of default judgment). The
Rule 60(b) standard is “applied more stringently” than the
Rule 55(c) good cause standard. Chrysler, 710 F.2d at 368.
Upon initial review, the district court’s grant of Arwa’s
motion for “default judgment,” which was as to liability but
not damages, suggests that Rule 60(b) should apply. The
court’s order used the term “judgment,” and the court and
counsel referred to the ruling in that manner.
But the district court did not enter a final judgment until
over one year later, after it had ruled on the parties’ motions
10 No. 19‐1916
for summary judgment and vacated the entry of default judg‐
ment as to liability.2 The more stringent Rule 60(b) standard
is not applied unless a final judgment was entered. FED. R.
CIV. P. 60(b) (noting ground for relief from “final” judgments);
see also Kapco Mfg. v. C&O Enters., 773 F.2d 151, 153 (7th Cir.
1985) (quoting Rule 60(b) that it “applies only to a final judg‐
ment, order, or proceeding” (internal quotation marks omit‐
ted)); Dassault Systemes, SA v. Childress, 663 F.3d 832, 840 (6th
Cir. 2011) (noting “the well‐established rule that Rule 60(b)
applies only to final, appealable judgments”). So the “default
judgment” against Med‐Care is better characterized as an en‐
try of default, for which the Rule 55(c) good cause standard
applies. See, e.g., O.J. Distrib. v. Hornell Brewing Co., 340 F.3d
345, 353 (6th Cir. 2003) (noting the stricter Rule 60(b) standard
applies once the default has ripened into a judgment, mean‐
ing the court has entered a judgment and determined
damages); Chrysler Credit Corp., 710 F.2d at 367 (noting the dif‐
ferent standards between Rule 55(c) and Rule 60(b)).
The scope of our review here is limited. Stafford v. Mesnik,
63 F.3d 1445, 1450 (7th Cir. 1995). We may consider only
whether the court’s decision was an abuse of discretion, and
“we cannot reach the merits of the underlying judgment.”
Stafford, 63 F.3d at 1450 (quoting Lee v. Village of River Forest,
936 F.2d 976, 979 (7th Cir. 1991)); see also Wehrs v. Wells, 688
F.3d 886, 890 (7th Cir. 2012) (reviewing the district court’s de‐
nial of a motion to vacate default judgment only for an abuse
2The district court entered default judgment as to liability in March
2018, and then vacated the default judgment as to liability and entered
judgment for Med‐Care in April 2019.
No. 19‐1916 11
of discretion); Merrill Lynch Mortg. Corp. v. Narayan, 908 F.2d
246, 250 (7th Cir. 1990) (reviewing entry of default, entry of
default judgment, and motions to vacate those rulings under
an abuse of discretion standard).
“To succeed in the vacation of a default order under Rule
55(c), the defendant must show ‘(1) good cause for [its] de‐
fault; (2) quick action to correct it; and (3) a meritorious de‐
fense to the plaintiff’s complaint.’” O’Brien v. R.J. O’Brien &
Assoc., Inc., 998 F.2d 1394, 1401 (7th Cir. 1993) (quoting United
States v. DiMucci, 879 F.2d 1488, 1495 (7th Cir. 1989)). “The
same requirements, although more strictly applied, must be
met to set aside a default judgment under Rule 60(b).” Id.None of the factors above have been shown. Indeed, Med‐
Care has not appeared or put forth a defense since the class‐
certification stage. Med‐Care never moved to set aside the
default judgment; the district court did that sua sponte. Cf.
Van Cannon v. United States, 890 F.3d 656, 661 (7th Cir. 2018)
(noting that Rule 60’s revised text of “[o]n motion and just
terms” may foreclose the district court’s ability to vacate a de‐
fault judgment sua sponte but leaving the question for an‐
other day). Relief from default judgment will be granted only
where actions leading to default were not willful, careless, or
negligent, also referred to as “excusable neglect.” Johnson v.
Gudmundsson, 35 F.3d 1104, 1117 (7th Cir. 1994). Although we
consider this case under the more lenient Rule 55 standard,
the defendant must still show good cause under either stand‐
ard. O’Brien, 998 F.2d at 1402 (affirming denial of motions to
vacate default and default judgment when defendant failed to
demonstrate good cause). Here, there is no evidence of excus‐
able neglect or good cause for Med‐Care’s default. Med‐Care
failed to appear after November 2017, has not appeared on
12 No. 19‐1916
appeal, and offers no explanation for its default. See id. (find‐
ing no good cause for default where defendant had been
served over 17 months before entry of default, failed to ap‐
pear, and offered no explanation for its default). The good
cause requirement has not been met, even under the more le‐
nient Rule 55 standard, when Med‐Care has failed to appear
or offer any explanation for its default.
We conclude that the district court abused its discretion in
vacating its default judgment as to liability for Arwa and
against Med‐Care. It did not analyze the circumstances under
the good cause standard of Rule 55(c). A court abuses its dis‐
cretion when it fails to consider a motion under the proper
legal standard. See, e.g., Smego v. Payne, 854 F.3d 387, 391 (7th
Cir. 2017) (noting “[a]buse of discretion means a serious error
of judgment, such as … use of an incorrect legal standard”);
Jones v. Ill. Cent. R. Co., 617 F.3d 843, 850 (6th Cir. 2010) (re‐
viewing denial of Rule 60(b) motion for abuse of discretion for
committing “a clear error of judgment, such as applying the
incorrect legal standard”). The district court violated this re‐
quirement when it issued its April 11, 2019 rulings without
considering the applicable Rule 55(c) standard.
It follows that the district court also abused its discretion
by not reaching Arwa’s motion for default judgment as to
damages. When Arwa presented this motion, it sought a final
judgment as to Med‐Care, including a damages amount. Be‐
cause the district court did not apply the appropriate stand‐
ard, Arwa’s motion for default judgment as to damages did
not receive proper consideration and is subject to the district
court’s resolution on remand.
No. 19‐1916 13
D. The Inconsistency Analysis
On appeal the parties take opposite positions on the dis‐
trict court’s conclusion that Med‐Care’s prescription request
forms are not advertisements for purposes of the TCPA. Arwa
argues the faxes are advertisements, and Silverman asserts
they are not. This question is the primary topic of the briefing
on appeal, and federal courts have reached different conclu‐
sions on this question based on the facts before them. We need
not reach this issue, though. Whether or not the faxes were
advertisements under the TCPA, the question before us is
whether the district court abused its discretion in finding in‐
consistent the summary judgment for Silverman and default
judgment on liability against Med‐Care.
When the district court decided the parties’ cross‐motions
for summary judgment, it granted summary judgment to
Silverman and ruled that Med‐Care’s prescription request
forms were not advertisements for purposes of the TCPA. To
the district court, this created an inconsistency that required
reconciliation. This issue was briefed and addressed in the
April 11, 2019 hearing.
At that hearing, the district court reasoned “that when a
claim is based on joint or vicarious conduct, no matter how
the plaintiff characterizes the suit against defendants, the con‐
cern reflected in [Frow v. De La Vega, 82 U.S. 552 (1872)] about
inconsistent judgments is present and must be considered.”
But the district court’s reliance on Frow was misplaced. In that
case a plaintiff alleged several defendants conspired to de‐
fraud him out of title to land in Texas. 82 U.S. at 552–53. One
of the alleged co‐conspirators defaulted, resulting in an entry
of a “final decree absolute against him, adjudging the title of
the land to be [plaintiff’s].” Id. at 553. The remaining
14 No. 19‐1916
defendants prevailed at trial, resulting in dismissal of the
plaintiff’s complaint. Id. Frow appealed, focusing on the di‐
rectly inconsistent judgments. Id. at 552–53. The Court held
that a “final decree on the merits cannot be made separately
against one of several defendants upon a joint charge against
all, where the case is still pending as to the others.” Id. at 554.
So Frow stands for the proposition that when several defend‐
ants are sued jointly and one of them defaults, a default judg‐
ment should not be entered until the matter has been resolved
for all defendants. See In re Uranium Antitrust Litig., 617 F.2d
1248, 1256–57 (7th Cir. 1980).3
This court limited the broad rule of Frow in In re Uranium
Antitrust Litigation, which distinguished between defendants
sued jointly, and defendants sued jointly and severally. 617
F.2d at 1257; see also Douglas v. Metro Rental Servs., Inc., 827
F.2d 252, 255 (7th Cir. 1987) (noting In re Uranium Antitrust
Litigation limited Frow to cases where all the defendants were
claimed to be jointly, not severally, liable). Defendants sued
jointly should not be subjected to inconsistent judgments.
Nevertheless, “when different results as to the different par‐
ties are not logically inconsistent or contradictory, the ra‐
tionale for the Frow rule is lacking.” In re Uranium Antitrust
Litig., 617 F.2d at 1257–58. One example of when different re‐
sults as to different parties is not logically inconsistent is when
defendants are sued jointly and severally. Id. A second exam‐
ple is when the facts and theories of the case do not require
3 To deal with this problem, nearly a century later Federal Rule of Civil
Procedure 54(b) was amended to permit entry of judgment in multiple
party litigation to avoid the hardship resulting from delay in waiting until
completion of the entire case. See FED. R. CIV. P. 54(b) advisory committee’s
note to 1961 amendment.
No. 19‐1916 15
uniformity of liability as to different defendants. See Douglas,
827 F.2d at 255 (finding different judgments against corpora‐
tion and its agent were not logically inconsistent). In those ex‐
amples, the court has discretion to decide whether to enter
judgment against fewer than all the defendants under Rule
54(b).
This is not a case of joint liability requiring uniformity of
judgment among all defendants. Plaintiffs have alleged joint
and several liability, not merely joint liability. So an entry of
default judgment against one defendant but not another is not
precluded. See In re Uranium Antitrust Litig., 617 F.2d at 1262.
This is also not a case of vicarious liability. Arwa did not seek
to hold Med‐Care vicariously liable for Silverman’s violation
of the TCPA, or vice versa. Rather, Arwa argued Med‐Care
and Silverman were both directly and independently liable
for TCPA violations.
Although the elements for TCPA liability for Med‐Care
and Silverman may overlap, the theories of liability for each
defendant do not require uniformity of judgments. Med‐Care
may be liable as a “sender” under 47 C.F.R. § 64.1200(f)(10) as
an entity on whose behalf a facsimile unsolicited advertise‐
ment was sent or whose goods or services are advertised.
Silverman’s liability also turns on whether he was a “sender”
under the TCPA, but Arwa must show different proof for
Silverman to be liable than Med‐Care. And Silverman may
show he is not liable because he was not a “sender” under the
TCPA, but the court may still hold Med‐Care liable as a
“sender.” So judgment against Med‐Care would not neces‐
sarily be inconsistent with a judgment for Silverman.
Med‐Care “by defaulting, admitted its guilt.” Douglas, 827
F.2d at 255. Med‐Care “cannot now take advantage of the
16 No. 19‐1916
judgment in favor of” Silverman when “exoneration of one
defendant of charges of [a TCPA violation] does not compel
the finding that no [TCPA violation] occurred.” Id. Because
judgments against these two defendants would not neces‐
sarily be inconsistent, the concerns described in Frow are not
present here.
The district court also mistakenly believed that Arwa
sought to “essentially” hold Silverman vicariously liable as an
officer of Med‐Care, which would require uniformity in judg‐
ments. No record evidence suggests Arwa wanted to hold
Silverman liable based on vicarious liability. Arwa alleged
joint and several liability, which is critically different from vi‐
carious liability when considering the issues the Supreme
Court described in Frow.
We do not fault the district court for this slip, as this case
is procedurally complex. Nevertheless, we cannot uphold a
judgment in Med‐Care’s favor when the good cause factors
under Rule 55 were not analyzed, and joint and several liabil‐
ity was conflated with vicarious liability. We cannot find any
evidence of good cause when Med‐Care has not appeared in
this case past the class certification stage and has not put on a
defense as to whether the faxes are advertisements. And the
district court’s ruling that the faxes were not advertisements
was not necessary for its holding that Silverman was not lia‐
ble.
It also gives us pause that while Silverman has put on this
defense for Med‐Care, there are serious questions as to his
standing to do so.4 Silverman argues that the default judg‐
ment for Med‐Care implicates him because he weighed in on
4 Silverman recognizes this weakness. Appellee’s Br. p. 40 n.10.
No. 19‐1916 17
Arwa’s motion for default judgment as to damages against
Med‐Care, and Arwa has said it will pursue him personally
in the assignment for benefit of creditors case in Florida.
But “[s]tanding to defend on appeal in the place of an orig‐
inal defendant, no less than standing to sue, demands that the
litigant possess a direct stake in the outcome.” Arizonans for
Official English v. Arizona, 520 U.S. 43, 64 (1997) (quoting
Diamond v. Charles, 476 U.S. 54, 62 (1986)) (internal quotation
marks omitted). Silverman’s stake has been resolved and can‐
not be conditioned on relief an opponent seeks from him in
another forum. Even more so, Silverman specifically opposed
Arwa’s request for declaratory judgment against Med‐Care.
That differs materially from requesting that the district court
enter judgment in favor of Med‐Care, which is what the dis‐
trict court did here.
“Even if the entry of the default judgment resulted in a
judgment inconsistent with the judgment on the merits for
[Silverman], the issue is not properly before us,” as we do not
review the merits of the underlying judgment as to Med‐Care
or whether the faxes are advertisements. Angelo Iafrate Constr.,
LLC v. Potashnick Constr., Inc., 370 F.3d 715, 722 (8th Cir. 2004)
(citing Pfanenstiel Architects, Inc. v. Chouteau Petrol. Co., 978
F.2d 430, 433 (8th Cir. 1992)). Because the district court va‐
cated the entry of default judgment as to liability and denied
Arwa’s motion for renewed default judgment without analyz‐
ing the good cause factors of Rule 55(c), and did so based on
a misplaced concern of inconsistent judgments, we conclude
that the district court abused its discretion in its April 11, 2019
ruling vacating the default judgment as to liability against
Med‐Care and entering judgment for Med‐Care.
18 No. 19‐1916
III. Conclusion
Arwa has not provided sufficient evidence to establish Dr.
Silverman’s personal liability under the TCPA, so we AFFIRM
the district court’s grant of summary judgment to him.
But the district court failed to apply the correct good cause
factors in analyzing the default judgment on liability as to
Med‐Care, and that judgment is not inconsistent with sum‐
mary judgment for Silverman. So we REVERSE the district
court’s vacation of the default judgment on liability against
Med‐Care and the denial of Arwa’s renewed motion for de‐
fault judgment, and REMAND this case to the district court for
further proceedings consistent with this opinion.