Window World of Chicagoland, et al v. Window World, Inc., et al
Filing
Filed opinion of the court by Judge Easterbrook. AFFIRMED. Frank H. Easterbrook, Circuit Judge; Daniel A. Manion, Circuit Judge and Diane S. Sykes, Circuit Judge. [6724020-1] [6724020] [15-2224]
Case: 15-2224
Document: 26
Filed: 01/27/2016
Pages: 5
In the
United States Court of Appeals
For the Seventh Circuit
____________________
No. 15-‐‑2224
WINDOW WORLD
HAMPTON,
OF
CHICAGOLAND, LLC, and DAVID L.
Plaintiffs-‐‑Appellants,
v.
WINDOW WORLD, INC., et al.,
Defendants-‐‑Appellees.
____________________
Appeal from the United States District Court for the
Northern District of Illinois, Eastern Division.
No. 13 C 4624 — John Robert Blakey, Judge.
____________________
ARGUED JANUARY 7, 2016 — DECIDED JANUARY 27, 2016
____________________
Before EASTERBROOK, MANION, and SYKES, Circuit Judges.
EASTERBROOK, Circuit Judge. Between 2005 and 2009 Da-‐‑
vid Hampton and his business (collectively Hampton) en-‐‑
tered into several contracts with Window World, Inc., which
allowed Hampton to use its trademarks and business meth-‐‑
ods for the retail sale and installation of windows and doors.
In 2011 Window World alerted Hampton that their dealings
were subject to the Illinois Franchise Disclosure Act, 815
Case: 15-2224
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No. 15-‐‑2224
ILCS 705/1 to 705/44. (Earlier in 2011 the Attorney General of
Illinois had sued Window World under that Act; the case
was settled and a consent decree entered a month after Win-‐‑
dow World notified Hampton.)
Window World told Hampton that he had 35 days to
elect between rescinding the contracts (which would mean
stopping the use of Window World’s intellectual property)
and signing a formal franchise agreement. Hampton did not
pursue either alternative. Instead he filed a federal suit, un-‐‑
der the diversity jurisdiction, accusing Window World of
violating the Act, of fraud, and of other wrongs, all under
state law. This suit, No. 12 C 579, was assigned to Judge
Lindberg. We call it Suit 1.
While Suit 1 was pending, Window World filed litigation
of its own, under the Lanham Act, seeking (among other
things) damages for continued use of its intellectual proper-‐‑
ty after the 35-‐‑day option had expired, and an injunction
against future use of its marks and methods. That suit, No.
12 C 4329, also was assigned to Judge Lindberg. We call it
Suit 2.
In Suit 2 Hampton signed and returned a waiver of ser-‐‑
vice, see Fed. R. Civ. P. 4(d), which meant that the time to
answer the complaint started to run. But Hampton did not
hire a lawyer to represent him in Suit 2, even though he was
represented by counsel in Suit 1. Hampton dismissed Suit 1,
without prejudice, three weeks after Suit 2 began, but he did
not respond to the complaint in Suit 2. After enough time
had passed, Window World moved in Suit 2 for entry of de-‐‑
fault, which was granted, and then for default judgment. All
motions and notices in Suit 2 were duly entered in the
court’s electronic filing system, but Hampton was not pay-‐‑
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Pages: 5
3
ing attention to that system. So he did not respond to Win-‐‑
dow World’s motions or appear at the hearings scheduled to
address them. (Written service on a defaulting party is not
required, see Fed. R. Civ. P. 5(a)(2), and Window World did
not go the extra mile.) On December 4, 2012, Judge Lindberg
entered a default judgment that awarded Window World
more than $100,000 in damages and costs and permanently
enjoined Hampton from using any of Window World’s intel-‐‑
lectual property (including the name “Window World”) or
doing anything that might cause confusion between his
business and the Window World franchise organization.
Hampton went right on calling his business Window
World of Chicagoland but did not make the payments re-‐‑
quired by the contracts. (He had not paid Window World
since filing Suit 1.) Nor did he pay a penny of the damages
or costs. Oddly, Window World did not ask the district court
to hold him in contempt. Hampton has since shuttered the
business, which may explain Window World’s inaction. But
Hampton has not stopped litigating. In 2013 he filed a new
federal suit (Suit 3) presenting the same claims as the dis-‐‑
missed Suit 1. Hampton also asked the district court to reo-‐‑
pen Suit 2 and set aside the default judgment. Judge Lind-‐‑
berg having retired, that request was assigned to Judge
Durkin.
Judge Durkin concluded that Hampton’s failure to follow
the electronic filings in Suit 2, coupled with his professed be-‐‑
lief that Suits 1 and 2 had been dismissed as a package,
amounted to excusable neglect that justified vacatur. 2014
U.S. Dist. LEXIS 44244 (N.D. Ill. Apr. 1, 2014). But Judge
Durkin added that Hampton’s inaction in Suit 2 had put
Window World to unnecessary expense, and he conditioned
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No. 15-‐‑2224
the reopening of Suit 2 on Hampton’s payment of some
$33,000. Once again Hampton did not pay. That led Judge
Durkin to vacate his vacatur. On August 5, 2015, Judge
Durkin reinstated Judge Lindberg’s default judgment (both
damages and injunction). Suit 2 then was reassigned to
Judge Blakey, who was handling Suit 3.
Hampton did not appeal from the re-‐‑entered judgment in
Suit 2. One would have thought this the end of matters, be-‐‑
cause the claims that Hampton presses against Window
World in Suit 3 were compulsory counterclaims in Suit 2.
When Hampton nonetheless pursued Suit 3, Window World
asked Judge Blakey to dismiss it under principles of claim
preclusion (res judicata). Judge Blakey did so. He concluded
that the twice-‐‑final, and unappealed, judgment in Suit 2
forecloses any claim that Window World owes damages to
Hampton or that Hampton can continue using Window
World’s name or other trademarks.
Hampton insists on appeal that this decision is mistaken.
Preclusion (res judicata) cannot apply, he maintains, because
it concerns how the final decision in one suit affects proceed-‐‑
ings in a different suit. Suits 2 and 3 are now the same suit,
according to Hampton, because they have been consolidated
before Judge Blakey.
That contention confuses administrative and full consoli-‐‑
dation. Judge Blakey wrote that the consolidation is for ad-‐‑
ministrative convenience, avoiding the need for multiple
district judges to address the same arguments; the suits have
not been fully consolidated, he observed, if only because
they still carry separate docket numbers. That is why Judge
Blakey held that the outcome of Suit 2 is preclusive in Suit 3.
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The difference between administrative and full consoli-‐‑
dation is established by Fed. R. Civ. P. 42(a). Subsection
(a)(2) provides for full consolidation, while subsections (a)(1)
and (a)(3) authorize other forms of consolidation. Suits 2 and
3 have been joined for hearings, see Rule 42(a)(1), rather than
fully consolidated under Rule 42(a)(2). Suits administratively
consolidated for hearings retain their independent existence.
See Gelboim v. Bank of America Corp., 135 S. Ct. 897 (2015)
(same result for cases consolidated under 28 U.S.C. §1407 for
pretrial proceedings). So Judge Blakey was right, for the
right reason. (Hampton concedes that, if Suit 2 remains sepa-‐‑
rate from Suit 3, his current claims are barred.)
Suppose this is wrong, however, and that Suits 2 and 3
have been fully consolidated. The fact remains that Hamp-‐‑
ton is subject to a permanent injunction—and an injunction
is immediately appealable under 28 U.S.C. §1291(a) even
though the award of trademark damages could not have
been appealed (given the assumption of full consolidation)
in the absence of a partial final judgment under Fed. R. Civ.
P. 54(b). The right doctrine for full consolidation would be
law of the case rather than claim preclusion, because the re-‐‑
lief Hampton seeks under state law would be inconsistent
with the relief Window World already has received. See Pep-‐‑
per v. United States, 562 U.S. 476, 506 (2011). Hampton gave
up his chance to have the judgment in Window World’s fa-‐‑
vor set aside, and there is no other plausible exception to law
of the case, which means that it just does not matter which
doctrine applies. If the suits are separate, claim preclusion
blocks Hampton’s current claims; if they are fully consoli-‐‑
dated, law of the case leads to the same outcome.
AFFIRMED
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