author: SUTTON, Circuit Judge.

text:
    PREFERRED CARE OF DELAWARE, INC.; Preferred Care Partners Management Group, L.P.; Kentucky Partners Management, LLC; Cadiz Health Facilities, L.P., Plaintiffs-Appellees, v. ESTATE OF Marilyn HOPKINS, BY AND THROUGH Stephen Edward HOPKINS, Executor, Defendant-Appellant.
    No. 16-6180
    United States Court of Appeals, Sixth Circuit.
    Decided and Filed: January 11, 2017

      ON BRIEF: Robert E. Salyer, Brian M. Jasper, WILKES & MCHUGH, P.A., Lexington, Kentucky, for Appellant. Donald L. Miller, II, Kristin M. Lomond, QUINTAI-ROS, PRIETO, WOOD & BOYER, P.A., Louisville, Kentucky, for Appellees.
    Before: BATCHELDER, SUTTON, and KETHLEDGE, Circuit Judges.
   OPINION

SUTTON, Circuit Judge.

After Marilyn Hopkins died in a nursing home, her estate sued the 'owners and operators of the nursing home (together, “Preferred Care”) in Kentucky state court; raising several claims under Kentucky law. Preferred Care asked a federal court to enforce the arbitration provision in Hopkins’ admissions agreement. The district court obliged — compelling arbitration, enjoining Hopkins from proceeding in the state court action, and staying the federal case until arbitration concluded. Hopkins appealed the order. Preferred Care moved to dismiss for lack of appellate jurisdiction. Because the Federal Arbitration Act forbids us from hearing these challenges, we must dismiss the appeal.

Consistent with the Federal Arbitration Act’s policy of favoring agreements to arbitrate disputes, its appeal provisions prioritize review of district court orders that interfere with arbitration and limit review of orders that compel arbitration. The Act permits litigants to appeal from:

(1) an order—
(A) refusing a stay of any action under section 3 of this title,
(B) denying a petition under section 4 of this title to order arbitration to proceed,
(C) denying an application under section 206 of this title to compel arbitration,
(D) confirming or denying confirmation of an award or partial award, or
(E) modifying, correcting, or vacating an award;
(2) an interlocutory order granting, continuing, or modifying an injunction against an arbitration that is subject to this title; or
(3) a final decision with respect to an arbitration that is subject to this title.

9 U.S.C. § 16(a).

The Act forbids litigants from appealing in other circumstances:

(b) Except as otherwise provided in section 1292(b) of title 28, an appeal may not be taken from an interlocutory order—
. (1) granting a stay of any action under section 3 of this title;
(2) directing arbitration to proceed under section 4 of this title;
(3) compelling arbitration under section 206 of this title; or
(4) refusing to enjoin an arbitration that is subject to this title.

Id. § 16(b). The provisions that § 16 refers to halt federal lawsuits covered by an arbitration agreement (section 3), require federal courts to honor arbitration agreements (section 4), and give federal courts authority to direct where an arbitration occurs in international disputes (section 206). See 9 U.S.C. §§ 3, 4, 206.

In contrast to the general rules for appealing decisions from the district court, see, e.g„ 28 U.S.C. §§ 1291, 1292, the Act precisely regulates the kinds of arbitration-related decisions a litigant may appeal. It permits review of orders that interfere with arbitration, such as those “refusing” stays of federal proceedings in favor of arbitration and those “denying” petitions to enforce arbitration agreements, as well as interlocutory orders “granting, continuing, or modifying an injunction against an arbitration.” 9 U.S.C. § 16(a). But it prohibits appeals from other interlocutory orders that favor arbitration, such as those “granting” stays in favor of arbitration, “directing” or “compelling” arbitration, or “refusing” to enjoin an arbitration. Id. § 16(b).

Through it all, the Act does not suspend the final-judgment rule. A litigant may appeal from a “final decision” with respect to an arbitration. Id. § 16(a)(3). As to this last point, a party may appeal an order compelling arbitration when the district court dismisses the underlying action, because the dismissal constitutes a “final decision” within the meaning of the statute. Green Tree Fin. Corp.-Ala. v. Randolph, 531 U.S. 79, 86-87, 121 S.Ct. 513, 148 L.Ed.2d 373 (2000). By contrast, a party may not appeal an order compelling arbitration if the court stays the underlying suit, which makes everything interlocutory and non-appealable under § 16. Id. at 87 n.2, 121 S.Ct. 513; ATAC Corp. v. Arthur Treacher’s, Inc., 280 F.3d 1091, 1097-99 (6th Cir. 2002).

What did the district court do here? Three things: It compelled the parties to arbitrate their claims; it stayed the federal case until the arbitration concluded; and it enjoined Hopkins’ estate from proceeding against Preferred Care in the state court action.

Congress has foreclosed jurisdiction over each action. The first two orders are easy. Section 16(b)(2) forbids review of the first order by name, removing jurisdiction over orders “directing arbitration.” And § 16(b)(1) does the same as to the second order, removing jurisdiction over orders “granting a stay” of the federal court action until the arbitration ended.

What of the state-court injunction? Section 16(b)(2) bars review of that as well. It not only bars appeals of orders “directing arbitration,” but it usually bars what comes with them — orders enjoining a lawsuit covered by the arbitration clause. Because § 16(b)(2) prohibits appeals of interlocutory orders “directing arbitration to proceed under section 4” of the Act, and because section 4 says that courts “shall” direct arbitration to proceed “in accordance with the terms” of the arbitration agreement, an order to arbitrate typically will prohibit court litigation from continuing. Few arbitration clauses permit litigation to continue during the arbitration with respect to covered claims. Else, what would be the point of the arbitration clause? And this arbitration contract, no surprise, does not permit litigation to continue during the arbitration. By halting Hopkins’ state-court litigation, the district court simply exercised its power under § 4: Directing arbitration to proceed according to the terms of the arbitration agreement. That means the injunction falls within the bar on appeals in § 16(b). See Moglia v. Pac. Emp’rs Ins. Co., 547 F.3d 835, 838 (7th Cir. 2008) (“§ 16(b) would forbid appeal” from “an injunction”); see also 16 Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 3923 (3d ed. 2016) (“[Mjost orders of federal courts respecting arbitration will fall within the reach of § 16”). This approach aligns with Congress’s “liberal federal policy favoring arbitration,” AT & T Mobility LLC v. Concepcion, 563 U.S. 333, 339,131 S.Ct. 1740,179 L.Ed.2d 742 (2011) (quotation omitted), and its efforts to “move the parties to an arbitrable dispute out of court and into arbitration as quickly and easily as possible,” Moses H. Cone Mem’l Hosp. v. Mercury Constr. Corp., 460 U.S. 1, 22, 103 S.Ct. 927, 74 L.Ed.2d 765 (1983).

That is not to say that an arbitration agreement might not permit relief in court either for matters not covered by the arbitration agreement or for interim forms of judicial relief contemplated by the arbitration agreement. See, e.g., Manion v. Nagin, 255 F.3d 535, 538 (8th Cir. 2001). Arbitration after all is a matter of contract. But Hopkins makes no argument that this is such an agreement. And a review of the arbitration agreement confirms as much.

What of § 1292(a), which permits appeals from injunction orders? May litigants use this provision to create an exception to the bar on appeals of orders directing arbitration or enjoining state or federal court litigation during the arbitration? No. When two statutes conflict, the specific governs the general. See Morales v. Trans World Airlines, Inc., 504 U.S. 374, 384, 112 S.Ct. 2031, 119 L.Ed.2d 157 (1992). Section 1292(a) generally provides for immediate appeals of injunctions, while § 16 specifically forecloses appeals of pro-arbitration interlocutory orders. We know that § 16 is the more specific provision because it directly addresses the issue— arbitration-related appeals — and because its exception for § 1292(b) shows that the statute reflects (and limits) the pre-exist-ing rules for appeals. See 9 U.S.C. § 16(b). That means “[o]ther possible sources of appellate jurisdiction, including 28 U.S.C. § 158(d) (final decisions in bankruptcy), § 1291 (final decisions in civil suits), and § 1292(a) (injunctions), are superseded for orders to arbitrate.” Moglia, 547 F.3d at 837 (emphasis added); see ConArt, Inc. v. Hellmuth, Obata + Kassabaum, Inc., 504 F.3d 1208, 1210 (11th Cir. 2007); 15B Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 3914.17 (2d ed. 2016) (“These rules [in § 16] should supersede any attempt to rely on the general interlocutory injunction appeal provisions of § 1292(a)(1).”); 16 id. § 3923 (3d ed. 2016) (“The explicit provisions of § 16 should prevail in these cases, superseding any use that might be made of § 1292(a)(1).”). Notably, we have dismissed a case just like this one for just this reason. Preferred Care of Del., Inc. v. Konicov, No. 16-5574, at 2 (6th Cir. Oct. 14, 2016) (“The more specific appellate-review provisions of the FAA control over § 1292(a)(1), which is a general statute governing appellate jurisdiction”).

Other provisions in § 16 reinforce the conclusion that “[a] pro-arbitration decision, coupled with a stay (rather than a dismissal) of the suit, is not appealable” even when it includes an injunction. Moglia, 547 F.3d at 837. Section 16(a)(2) per mits an appeal from an “interlocutory order granting, continuing, or modifying an injunction against an arbitration.” (Emphasis added). That shows that the existence of an injunction does not give us appellate jurisdiction. Otherwise, Congress would not have needed to authorize appeals from interlocutory injunction orders against arbitration. We would have had jurisdiction already under 28 U.S.C. § 1292(a). In addition, § 16(b) incorporates an exception for 28 U.S.C. § 1292(b) (which gives us jurisdiction when the district court certifies appealable issues) but not § 1292(a) (which generally provides for appeals from injunctions). That shows that § 16(b) was drafted with other appellate jurisdictional provisions in mind, and that Congress declined to create a categorical exception to § 16(b) for appeals from injunctions regarding arbitration. When a district court directs arbitration and stays the proceedings, “[t]he only exception to § 16(b) is an appeal by permission under § 1292(b).” Moglia, 547 F.3d at 838; see Johnson v. Consumerinfo.com, Inc., 745 F.3d 1019,1023 (9th Cir. 2014).

This approach also avoids undermining the efficiencies, speed, and lowered costs of arbitration. If our § 1292(a) appellate jurisdiction over injunctions remained unaffected by § 16, even the most clumsy litigants could delay an arbitration and drive up costs with procedural fencing. All they would have to do is ask for an injunction — any injunction — other than one enjoining the arbitration itself. The district court would have to rule on it. And any denial would invoke our jurisdiction by the terms of § 1292(a). 28 U.S.C. § 1292(a) (granting appellate jurisdiction over interlocutory orders “granting, continuing, modifying, refusing or dissolving injunctions”). Congress deserves more credit than to have created such a two-faced regime — carefully restricting appeals from arbitration decisions in one direction, then indulging all manner of appeals in the other.

When all is said and done, there is no good reason to distinguish between orders like this one, which “enjoins” a party from pursuing an arbitrable claim outside of arbitration, and orders that merely “compel” or “direct” the parties to arbitrate. An order “compelling” parties to do something, when it resolves the merits of the dispute, is an injunction — an order of specific performance on the merits. See Gulfstream Aerospace Corp. v. Mayacamas Corp., 485 U.S. 271, 279, 108 S.Ct. 1133, 99 L.Ed.2d 296 (1988); Moglia, 547 F.3d at 838.

The order at issue does exactly, and only, what § 16 contemplates. The district court found that the wrongful death claim could not be subject to the arbitration clause because that right of action belonged to Hopkins’ surviving family rather than Hopkins herself under Kentucky law. (No one appeals that ruling.) All of the other claims, however, were subject to the arbitration clause. Accordingly, the district court ordered that “Defendant [Hopkins] is ENJOINED from proceeding against Plaintiffs in the State Court Action, except for the wrongful death claims. The parties to this action are COMPELLED to arbitrate all claims (except the wrongful death claims), which are the subject of the State Court Action.” R. 15 at 13. And finally the court ordered the case “STAYED until the conclusion of the ordered arbitration.” Id. Those acts are each aimed at enforcing the commands of the Federal Arbitration Act, and going no further. In view of § 16’s prohibition on such appeals, we may not review them.

Hopkins counters that the district court’s order is appealable because it is “structurally a final decision,” leaving “nothing more for the court to do but execute the judgment.” Appellant’s Resp. Br. 4 (quoting Green Tree, 531 U.S. at 86, 121 S.Ct. 513). But form matters in this area, as Green Tree itself reminds us. Green Tree held that, if a district court orders arbitration and dismisses the case before it, the order is an appealable “final decision with respect to an arbitration” under § 16(a)(3). 531 U.S. at 86-87, 121 S.Ct. 513. But if the district court enters a stay instead of a dismissal, “that order [is] not ... appealable” under § 16(b)(1). Id. at 87 n.2, 121 S.Ct. 513; see ATAC Corp., 280 F.3d at 1097-99. The broader final-judgment rule confirms that form matters. Final judgments are appealable, 28 U.S.C. § 1291; interlocutory orders generally are not. Even final orders are not typically considered appealable until a separate final judgment — the right form — is entered. See Fed. R. Civ. P. 58; Fed. R. App. P. 4(a); see also Kraus v. Taylor, 715 F.3d 589, 593 (6th Cir. 2013)

Nor does Great Earth Companies, Inc. v. Simons, 288 F.3d 878 (6th Cir. 2002), aid Hopkins. That’s because the district court in that case entered a final judgment rather than staying the action pending arbitration. Great Earth Cos., Inc. v. Simons, No. 00-cv-72720-DT (E.D. Mich. July 31, 2000); see 9 U.S.C. § 16(a)(3). Under the “well-established meaning” of a “final decision,” the entry of judgment was appeal-able. Green Tree, 531 U.S. at 86, 121 S.Ct. 513; Great Earth, 288 F.3d at 885. Today’s district court proceedings have no final judgment. The district court has yet to enforce or decline to enforce the arbitration award. And the entry of a stay order “suggests that the district court perceives that it might have more to do than execute the judgment once arbitration has been completed.” ATAC Corp., 280 F.3d at 1099. This order is interlocutory and not appeal-able.

One last issue. Hopkins maintains that, if we have power to review the injunction, we should exercise pendent jurisdiction over the other issues raised on appeal on the ground that they are “inextricably intertwined” with the injunction claim. See AmSouth Bank v. Dale, 386 F.3d 763, 774 (6th Cir. 2004). The “if’ is a fatal qualifier. Because we lack jurisdiction over the injunction, we lack jurisdiction over anything potentially pendent to it.

For these reasons, we dismiss the appeal.


source: Caselaw Access Project

license: Public Domain

text:
    Glenn Patrick BRADFORD, Petitioner-Appellant, v. Richard BROWN, Superintendent, Respondent-Appellee.
    No. 15-3706
    United States Court of Appeals, Seventh Circuit.
    October 27, 2016
    Deborah Ann Bone, Ronald S. Safer, Riley Safer Holmes <& Candía LLP, Chicago, IL, for Petitioner-Appellant.
    Kelly A. Loy, Office of the Attorney General, Indianapolis, IN, for Respondent-Appellee.
   ORDER

By the Court:

The petition for rehearing en banc is granted, and the panel’s opinion and judgment are vacated. Oral argument will be heard on Wednesday, November 30, 2016.


author: ROYNER, Circuit Judge.

text:
    Armando RAMIREZ, Plaintiff-Appellant, v. T&H LEMONT, INCORPORATED, Defendant-Appellee.
    No. 16-1753
    United States Court of Appeals, Seventh Circuit.
    Argued November 1, 2016
    Decided December 30, 2016

      James Joseph Macchitelli, Attorney, Schaumburg, IL, for Plaintiff-Appellant.

      Cinthia G. Motley, Esq., Attorney, Sedg-wick LLP, Chicago, IL, for Defendant-Appellee.
    Before EASTERBROOK, ROVNER, and SYKES, Circuit Judges.
   ROYNER, Circuit Judge.

Upon finding that plaintiff Armando Ramirez had offered a witness money in exchange for his favorable testimony, the district court dismissed Ramirez’s suit with prejudice. Ramirez appeals, contending that the district court erred in finding that he engaged in witness tampering and that it abused its discretion in dismissing the case with prejudice as a sanction. We affirm.

I.

Ramirez’s amended complaint alleges that his former employer, T&H Lemont, Inc., subjected him to discriminatory working conditions and a hostile work environment based on his national original (Ramirez is Hispanic and was born in Mexico) and then fired him in retaliation for reporting the harassment, in violation of Title VII of the Civil Rights Act of 1964, 42 U.S.C. § 2000e-2(a) & -3(a). Nearly three years into the litigation, with discovery essentially concluded Ramirez and his counsel had not located any witnesses to corroborate his allegations, which were vigorously denied by the defendant, and his attorney was seeking leave to withdraw from the case. But at the eleventh hour, Ramirez located three witnesses, all former T&H Lemont employees who had worked with Ramirez in the company’s machine shop, willing to give testimony on his behalf. Ramirez’s counsel abandoned his motion to withdraw, the district court ordered that the new witnesses be deposed, and all three of those witnesses— Francisco Hernandez, Miguel Velasquez, and Santiago Villagrana — were serially deposed on the same day. Each testified in substance that he had observed ways in which two T&H Lemont managerial and supervisory employees had purposely made life difficult for Ramirez at the firm; all three testified that they had witnessed one of those supervisors refer to Ramirez as a burro or donkey on one or more occasions.

Three months after these depositions took place, as defense counsel was seeking to re-depose Villagrana, Villagrana sent a text to Ramirez’s counsel asking for a letter “saying what percent I will receive when the case is settled.” R. 59-1 at 2. Ramirez’s counsel reported the text to defense counsel. As it turned out, on the same day that Villagrana texted Ramirez’s lawyer, he also contacted a T&H Lemont employee informing him that he and the other two witnesses were no longer supporting Ramirez and that he (Villagrana) was willing to testify for T&H Lemont if he could get his old job back.

At the defendant’s request, the district court convened an evidentiary hearing in order to determine whether any witness had provided false deposition testimony in the case and, if so, whether anyone else was involved in that false testimony. Two witnesses testified in person at that hearing: Oberlin Luis, the T&H Lemont employee whom Villagrana had contacted to report that he was willing to testify on the company’s behalf; and Francisco Hernandez, one of the other witnesses who had given deposition testimony supporting Ramirez. A third witness, Villagrana, was subsequently deposed in California, where he was then living. His deposition was videotaped, and a transcript of his testimony was submitted to the court after the hearing. Villagrana testified in substance that Ramirez had offered him money in exchange for his favorable testimony; that he accepted the offer because he was in urgent need of money; that he had not observed the harassment of which Ramirez was complaining; that all three of the belatedly-located witnesses had met with Ramirez before they were deposed in May and discussed using the word “donkey”; and that he had testified falsely at his deposition in exchange for the money Ramirez had offered him. Hernandez denied that anyone had offered him money in exchange for his deposition testimony. He did acknowledge, however, that he and the other two witnesses had met with Ramirez twice before they were deposed. During the first meeting, Ramirez had asked them whether they would be willing to testify on his behalf, and during both meetings, they had discussed what their testimony would be. There were certain inconsistencies in Hernandez’s testimony on other points that would lead the district court to observe that his credibility appeared “questionable” at times. App. 102. Finally, Luis recounted the offer he had received from Villagrana to testify on the company’s behalf.

Based on this testimony, the district court, on T&H Lemont’s motion, dismissed the case with prejudice. After summarizing the testimony presented to him, the district judge observed:

Throughout the evidentiary hearing, counsel for Plaintiff has been forthcoming and cooperative — I am convinced that he played no role in Plaintiffs misconduct. Because I have found clear and convincing evidence of witness tampering, I am dismissing this case with prej-. udice to sanction Plaintiff.

R. 80 at 2. The court later denied Ramirez’s request, pursuant to Fed. R. Civ. P. 59(e), to reconsider the dismissal. R. 84.

II.

Ramirez contends on appeal that the record does not support a finding by clear and convincing evidence that he engaged in witness tampering and that the district court abused its discretion in dismissing the case with prejudice as a sanction for that misconduct. Villagrana’s testimony that Ramirez had offered him money in exchange for his testimony was not credible, Ramirez contends, in view of Luis’s testimony that Villagrana had offered to testify for the defendant if he could get his job back and the conflicts between Villagrana’s testimony and Hernandez’s testimony. And dismissing the suit with prejudice was an inappropriate sanction, Ramirez argues, when it otherwise appears he may have a meritorious claim of employment discrimination.

T&H Lemont asked the district court to dismiss the case with prejudice pursuant to Federal Rule of Civil Procedure 87 and the court’s inherent authority to sanction misconduct. When it granted that request and dismissed the case, the district court did not specify which source of authority it was relying upon. Either would appear to support the court’s decision. Rule 37(b)(2)(A)(v) authorizes a range of sanctions, including the dismissal of a suit, for a party’s failure to comply with the court’s discovery orders; and Rule 37(a)(4) treats an evasive and incomplete answer in discovery as equivalent to no answer, and thus a failure to comply with court-ordered discovery. We have construed the sanctioning power conveyed by Rule 37 to extend to instances of a party hiding evidence and lying in his deposition. Negrete v. Nail R.R. Passenger Corp., 547 F.3d 721, 723-24 (7th Cir. 2008). We can think of no reason why the power would not also extend to a party soliciting a witness to lie at his court-ordered deposition. See, e.g., Quela v. Payco-Gen. Am. Credits, Inc., No. 99 C 1904, 2000 WL 656681 (N.D. Ill. May 18, 2000), j. aff'd on other grounds, Hakim v. Payco-Gen. Am. Credits, Inc., 272 F.3d 932 (7th Cir. 2001). Apart from the discovery rule, a court has the inherent authority to manage judicial proceedings and to regulate the conduct of those appearing before it, and pursuant to that authority may impose appropriate sanctions to penalize and discourage misconduct. See Chambers v. NASCO, Inc., 501 U.S. 32, 46-50, 111 S.Ct. 2123, 2134-36, 115 L.Ed.2d 27 (1991). Thus, as we noted in Secrease v. Western & Southern Life Ins. Co., 800 F.3d 397, 401 (7th Cir. 2015), “[dismissal [pursuant to the court’s inherent authority] can be appropriate when the plaintiff has abused the judicial process by seeking relief based on information that the plaintiff knows is false.”

The exercise of either power requires the court to find that the responsible party acted or failed to act with a degree of culpability that exceeds simple inadvertence or mistake before it may choose dismissal as a sanction for discovery violations. Any sanctions imposed pursuant to the court’s inherent authority must be premised on a finding that the culpable party willfully abused the judicial process or otherwise conducted the litigation in bad faith. See Chambers, 501 U.S. at 50, 111 S.Ct. at 2135-36; Secrease, 800 F.3d at 401; Trade Well Int’l v. United Cent. Bank, 778 F.3d 620, 626 (7th Cir. 2015) (negligence is insufficient to support a finding of bad faith). Rule 37 itself does not specify a requisite mental state, but in Societe Internationale pour Participations Industrielles et Commerciales, S.A. v. Rogers, 357 U.S. 197, 212, 78 S.Ct. 1087, 1096, 2 L.Ed.2d 1255 (1958), the Supreme Court concluded that Rule 37 should not be construed to authorize dismissal of an action when a plaintiffs failure to comply with his discovery obligations was due to his inability to comply rather than his “willfulness, bad faith, or any fault.” See also Nat’l Hockey League v. Metro. Hockey Club, Inc., 427 U.S. 639, 640, 96 S.Ct. 2778, 2779, 49 L.Ed.2d 747 (1976) (per curiam) (reaffirming that holding). Fault, in contrast to wilfulness or bad faith, does not require a showing of intent, but presumes that the sanctioned party was guilty of “extraordinarily poor judgment” or “gross negligence” rather than mere “mistake or carelessness.” Marrocco v. Gen. Motors Corp., 966 F.2d 220, 224 (7th Cir. 1992); Long v. Steepro, 213 F.3d 983, 987 (7th Cir. 2000) (“[f]ault in this context suggests objectively unreasonable behavior”); see also e360 Insight, Inc. v. Spamhaus Project, 658 F.3d 637, 642-43 (7th Cir. 2011) (distinguishing degree of fault necessary to support dismissal or default from that necessary to support lesser sanctions).

Our decision in Maynard v. Nygren, 332 F.3d 462, 468 (7th Cir. 2003), held that clear and convincing evidence is required in order to dismiss a case as a sanction for discovery-related misconduct pursuant to Rule 37. Citing a series of cases from other circuits (most of which dealt with sanctions imposed for conduct amounting to fraud on the court rather than abuse of the discovery process) we reasoned that “considering the severe and punitive nature of dismissal as a discovery sanction, a court must have clear and convincing evidence of willfulness, bad faith, or fault before dismissing a case.” Id. By its own terms, that rationale presumably would apply to a dismissal imposed pursuant to the court’s inherent authority, as the severity of the sanction remains the same. See Ty Inc. v. Softbelly’s, Inc., 517 F.3d 494, 498-99 (7th Cir. 2008).

But we have questioned Maynard’s holding on multiple occasions. See Wade v. Soo Line R.R. Corp., 500 F.3d 559, 564 (7th Cir. 2007) (“We doubt that ‘clear and convincing’ evidence is required” to establish a wilful violation of Rule 37); Ridge Chrysler Jeep, LLC v. DaimlerChrysler Fin. Servs. Americas LLC, 516 F.3d 623, 625-26 (7th Cir. 2008) (renewing Wade’s criticism of Maynard); Ty, 517 F.3d at 498-99 (considering appropriate standard for sanctions imposed for witness tampering pursuant to court’s inherent authority and noting that Maynard’s soundness as to standard for Rule 37 sanctions had been questioned); see also Brown v. Columbia Sussex Corp., 664 F.3d 182, 191 n.8 (7th Cir. 2011) (noting “some discussion” as to whether finding of wilfulness for purposes of Rule 37 dismissal must be based on clear and convincing evidence, but finding it unnecessary to address it); Watkins v. Nielsen, 405 Fed.Appx. 42, 44 (7th Cir. 2010) (nonprecedential decision) (“We have not resolved definitively whether a finding of wilfulness must be premised on clear and convincing evidence or simply a preponderance.”); Negrete, 547 F.3d at 724 n.l (“[t]here is no need to resolve the standard here because the evidence was clear and convincing”). We believe it is time to put an end to the questions and make clear that a preponderance of the evidence is sufficient.

Maynard failed to consider “the presumption that the burden of proof in federal civil cases is proof by a preponderance of the evidence,” Yi v. Sterling Collision Ctrs., Inc., 480 F.3d 505, 507 (7th Cir. 2007), a presumption reinforced by the Supreme Court’s repeated rejection of more demanding evidentiary burdens in the civil setting. See, e.g., Halo Electronics, Inc. v. Pulse Electronics, Inc., — U.S. —, 136 S.Ct. 1923, 1934, 195 L.Ed.2d 278 (2016) (rejecting requirement that egregious patent infringement behavior warranting enhanced damages under 35 U.S.C. § 284 be proved by clear and convincing evidence); Octane Fitness, LLC v. ICON Health & Fitness, Inc., — U.S. —, 134 S.Ct. 1749,1758,188 L.Ed.2d 816 (2014) (rejecting requirement that patent litigant must establish by clear and convincing evidence that case is sufficiently “exceptional” as to warrant fee shifting under 35 U.S.C. § 285); Grogan v. Garner, 498 U.S. 279, 286-87, 111 S.Ct. 654, 659, 112 L.Ed.2d 755 (1991) (rejecting clear- and-convincing standard for non-dis-chargeability of debts in bankruptcy pursuant to 11 U.S.C. § 523); Price Waterhouse v. Hopkins, 490 U.S. 228, 253-54, 109 S.Ct. 1775, 1792-93, 104 L.Ed.2d 268 (1989) (rejecting requirement in Title VII ease that employer with mixed motives prove by clear and convincing evidence that it would have made same decision absent discriminatory motive); Herman & MacLean v. Huddleston, 459 U.S. 375, 387-90, 103 S.Ct. 683, 690-92, 74 L.Ed.2d 548 (1983) (rejecting clear-and-convincing standard for civil claims alleging securities fraud in violation of section 10(b) of the Securities Exchange Act of 1934,15 U.S.C. § 78j(b)). Our decisions in Ridge Chrysler Jeep, 516 F.3d at 625-26, and Wade, 500 F.3d at 564, both noted that Maynard omitted any mention of such precedents and of the Supreme Court’s rationale as to heightened burdens of proof.

As Grogan and Huddleston make clear, unless the governing statute (or in this case, the rule) specifies a higher burden, or the Constitution demands a higher burden because of the nature of the individual interests at stake, proof by a preponderance of the evidence will suffice. Huddleston, 459 U.S. at 389, 103 S.Ct. at 691; Grogan, 498 U.S. at 296, 111 S.Ct. at 659. Rule 37 is silent as to a standard for sanctions; and, of course, the inherent authority to impose sanctions for litigation misconduct is judicially derived and specifies no particular standard of proof. Maynard implies that dismissal of a suit as a sanction for discovery misconduct implicates rights that warrant a more demanding standard than a preponderance of evidence. But it makes no case for why that is so. Huddleston explains that the standard of proof “serves to allocate the risk of error between the litigants and to indicate the relative importance attached to the ultimate decision.” 459 U.S. at 389, 103 S.Ct. at 691 (quoting Addington v. Texas, 441 U.S. 418, 423, 99 S.Ct. 1804, 1808, 60 L.Ed.2d 323 (1979)). Price Waterhouse adds that “[exceptions to [the preponderance standard in civil cases] are uncommon, and in fact are ordinarily recognized only when the government seeks to take unusual coercive action — action more dramatic than entering an award of money damages or other conventional relief— against an individual.” 490 U.S. at 253, 109 S.Ct. at 1792. To illustrate that point, Price Waterhouse and Huddleston collect cases involving the termination of parental rights, involuntary commitment, deportation, and denaturalization as examples of proceedings in which particularly important individual interests are at stake, such that the Constitution warrants a higher burden of proof (namely, clear and convincing evidence). Id., 109 S.Ct. at 1792; Huddleston, 459 U.S. at 389, 103 S.Ct. at 691; see also Liquid Air Corp. v. Rogers, 834 F.2d 1297,1302-03 (7th Cir. 1987). “By contrast,” Huddleston proceeds, the “imposition of even severe civil sanctions that do not implicate such interests has been permitted after proof by a preponderance of the evidence.” Id. at 389-90,103 S.Ct. at 691 (citing United States v. Regan, 232 U.S. 37, 48-49, 34 S.Ct. 213, 217, 58 L.Ed. 494 (1914) (proof by preponderance of evidence suffices in civil suits that entail proof of acts exposing a party to criminal prosecution)).

The interests implicated by the dismissal of a suit as a sanction for misconduct occurring in civil litigation (including discovery) are not so important as to demand that the facts underlying the dismissal be established by clear and convincing evidence. Certainly a dismissal of the suit with prejudice constitutes a severe sanction; but as Huddleston indicates, that alone does not warrant a standard of proof more burdensome than a preponderance of the evidence. The preponderance standard allocates the risk of error more or less equally between Ramirez and T&H Lem-ont as parties to the suit. See Huddleston, 459 U.S. at 390, 103 S.Ct. at 691 (citing Addington, 441 U.S. at 423, 99 S.Ct. at 1808); Yi, 480 F.3d at 507. As in most civil suits between private parties, what is at stake in this suit is money (Ramirez did not ask for equitable relief), and thus a factual error in the determination of the merits of the case exposes both parties to the same type and magnitude of risk — the loss or gain of the damages that Ramirez seeks. The same is true with respect to the imposition of sanctions. Nothing about the nature of sanctions in a civil case places one party or the other in a unique position: either party may be sanctioned for its misconduct, and either might lose the right to present its case if the court decides to enter an adverse judgment as a sanction, as occurred here. (Rule 37(b)(2)(A) (v) and (vi) authorizes both the dismissal of the action and the entry of a default judgment against the offending plaintiff or defendant; and the court’s inherent power to sanction misconduct is likewise symmetrical, see Secrease, 800 F.3d at 401.) Even if the court decides to impose a lesser, issue-related sanction, such as excluding the testimony of a particular witness (see Rule 37(b)(2)(A)(ii)), the sanction may so hobble the sanctioned party that the result of the case is foreordained. At all events, the sanctioned party does not stand to forfeit more than he might have lost were the case resolved against him on the merits. Ramirez has been deprived of the opportunity to vindicate his rights under Title VII, and those rights are highly important, we agree. But, important as they are, the loss of the opportunity to vindicate those rights in a civil suit against one’s employer is not of the same constitutional magnitude as the liberty interests at stake in proceedings involving the termination of parental rights or involuntary commitment to an institution for psychiatric care, for example. Cf. Addington, 441 U.S. at 427, 99 S.Ct. at 1810 (“The individual [named in a civil commitment petition] should not be asked to share equally with society the risk of error when the possible injury to the individual is significantly greater than any possible harm to the state.”).

The gravity of dismissing a suit with prejudice based on litigation misconduct certainly warrants the careful exercise of the court’s discretion. But that is a matter distinct from the standard of proof by which the underlying facts must be proven. See Ty, 517 F.3d at 499-500. Given that the facts bearing on the merits of a Title VII suit need only be proven by a preponderance of the evidence, see Price Waterhouse, 490 U.S. at 253, 109 S.Ct. at 1792, we see no reason why the facts bearing on whether sanctionable misconduct has occurred during the course of such a suit that warrants the entry of judgment must be established by clear and convincing evidence. Huddleston recognizes that any standard other than a preponderance of the evidence “expresses a preference for one side’s interests.” 459 U.S. at 390, 103 S.Ct. at 691. Like any other civil litigant, Ramirez is obliged under Rule 37 to comply with the court’s discovery orders and, more broadly, to comport himself appropriately before the court and refrain from attempts to deceive his opponent and to perpetrate a fraud on the court. His adversary, T&H Lemont, shares the same obligations and faces the same penalties should it ignore them. The preponderance standard appropriately reflects the mutuality of the parties’ obligations; the clear- and-convincing standard, by contrast, would reflect an unwarranted preference for one party over the other.

We recognize that our decision places us into conflict with the decisions of certain other circuits, a sampling of which we cited and followed in Maynard. 332 F.3d at 468 (collecting cases). The case for the clear and convincing standard adopted in those cases is best articulated by Shepherd v. Am. Broadcasting Cos., 62 F.3d 1469, 1476-78 (D.C. Cir. 1995), which concluded that a preponderance of evidence was insufficient to support a dismissal of the case pursuant to the court’s inherent authority as a sanction for discovery-related misconduct. Focusing on the punitive aspect of inherent-authority sanctions, the court likened the sanction of dismissal or default judgment to civil contempt, a sanction designed to coerce a recalcitrant litigant into compliance with the court’s orders, and reasoned that the two types of sanctions should be governed by the same evidentia-ry standard. Id. at 1477. It is true enough that there is “[a] large body of case law holding] that civil contempt must be proved by clear and convincing evidence.” S.E.C. v. First Choice Mgmt. Servs., Inc., 678 F.3d 538, 544 (7th Cir. 2012) (collecting cases). But we have pointed out that this very line of authority itself is “in tension with the Supreme Court’s insistence on a presumption in favor of the less onerous standard of preponderance of the evidence in federal civil cases.” Id.

Shepherd added that a heightened standard is appropriate for inherent-power sanctions because the predicate misconduct for such sanctions typically involves some type of fraudulent or quasi-criminal misconduct. 62 F.3d at 1477. Yet the Supreme Court has dispelled the notion that a finding of fraud in civil litigation invariably demands clear and convincing evidence: Huddleston adopted the preponderance standard for civil claims of securities fraud, 459 U.S. at 388-90,103 S.Ct. at 690-92, and Grogan held that a creditor need only show by a preponderance of evidence that a claim was incurred through fraud in order to establish that the claim is not dischargeable in bankruptcy, 498 U.S. at 286-87, 111 S.Ct. at 659. Both decisions acknowledged the very tradition of requiring that fraud be proved by clear and convincing evidence that Shepherd invoked, see Huddleston, 459 U.S. at 388-89, 103 S.Ct. at 690-91; Grogan, 498 U.S. at 288, 111 S.Ct. at 660, and yet both concluded that the particular interests implicated by a finding of fraud in those cases were not sufficient to overcome the presumption that the preponderance standard will govern civil litigation. See also Liquid Air, 834 F.2d at 1302-03 (rejecting clear and convincing standard for civil claims under Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. §§ 1962 & 1964, notwithstanding fact that certain predicate acts of racketeering involve fraud).

What is patently clear from the Court’s decisions in Huddleston and Gro-gan is that labels matter less than substance. Simply because a sanction is premised on conduct that can be described as fraudulent does not mean that the court must by rote adopt an evidentiary standard historically associated with fraud claims. The Supreme Court instead directs us to focus on the pragmatic implications of the sanctions decision and to consider whether they transform a civil case that is otherwise about money into one that may implicate much more substantial interests. In that vein, our decision in Ty recognized the pragmatic differences between a civil merits judgment deeming a party guilty of fraud and a sanction imposed by the court for a fraud on the court committed in the course of the litigation. 517 F.3d at 499. We have, in this case, already explained at some length why the interests at stake in the court’s decision to dismiss the suit as a sanction for witness tampering are not sufficient to overcome the presumption that the relevant facts will be determined by a preponderance of the evidence. And as with use of the term “fraud,” affixing the “quasi-criminal” label to the sanctioned conduct does not alter the calculus. See Sedima, S.P.R.L. v. Imrex Co., 473 U.S. 479, 491, 105 S,Ct. 3275, 3282, 87 L.Ed.2d 346 (1985) (“In a number of settings, conduct that can be punished as criminal only upon proof beyond a reasonable doubt will support civil sanctions under a preponderance standard.”) (collecting cases); see also Huddleston, 459 U.S. at 390, 103 S.Ct. at 691 (citing Regan, 232 U.S. at 48-49, 34 S.Ct. at 217, for the proposition that, in civil litigation, preponderance is sufficient as proof of acts that expose a party to criminal prosecution); Liquid Air, 834 F.2d at 1302-03 (civil RICO claims are subject to proof by preponderance of evidence notwithstanding that predicate acts of racketeering are criminal in nature: “A civil RICO defendant does not face imprisonment, nor does the defendant suffer the collateral consequences associated with conviction of a criminal offense”). Regardless of whether the litigation misconduct at issue is characterized by fraud, bad faith, fault, or quasi-criminal misconduct, the case remains a civil suit between private litigants, and what is at stake for Ramirez is the loss of the opportunity to win money damages from his former employer. See Kunkel v. Com’r of Internal Revenue, 821 F.3d 908, 910 (7th Cir. 2016) (Supreme Court’s jurisprudence indicates that “in civil litigation over money, the appropriate standard is the preponderance of the evidence”); Liquid Air, 834 F.2d at 1302 (clear and convincing standard “is used in civil cases in which more is at stake than mere loss of money”).

Because our holding today conflicts with our decision in Maynard and with like decisions of other circuits as to the applicable evidentiary standard, this opinion was circulated to all active judges pursuant to Circuit Rule 40(e). No judge in active service wished to hear this case en banc. Our decision in Maynard is overruled in that respect. In civil cases, the facts underlying a district court’s decision to dismiss the suit or enter a default judgment as a sanction under Rule 37 or the court’s inherent authority need only be established by a preponderance of the evidence.

The evidence presented to the district court was sufficient to support a finding by the preponderance of the evidence that Ramirez engaged in witness tampering. Villagrana testified that Ramirez offered him money in exchange for favorable testimony, that he accepted the offer due to a variety of financial hardships he faced, that he discussed with Ramirez (and the other two witnesses) what his testimony would be, that the testimony he gave in exchange for money Ramirez offered was false, and that, in truth, he had never observed any discrimination against Ramirez while in T&H Lemont’s employ. The district court obviously credited Villagra-na’s testimony, and it is worth noting that no other witness (including Ramirez, who chose not to testify) disputed his account. It is true that Hernandez denied that he was bribed, but that does not undercut the notion that Villagrana was. And, of course, the district court indicated that portions of Hernandez’s testimony were questionable. At the same time, Hernandez did corroborate Villagrana’s testimony in part by confirming that the three witnesses had met and discussed their testimony with Ramirez in advance of their depositions. It is also true that, according to Luis, Villagra-na offered to testify for T&H Lemont if he could get his job back. That testimony raises the possibility that Villagrana was a mercenary witness whose testimony was for sale to the highest bidder (he himself acknowledged that he agreed to testify for Ramirez because he was in dire straits financially), and it permitted, but did not compel, the district court to discredit his testimony. But the court chose instead to credit Villagrana, and we have no ground on which to second-guess its credibility determination. Having credited Villagra-na’s testimony that he was offered money to testify (falsely) for Ramirez, the district court was on solid ground in finding by a preponderance of the evidence that Ramirez had engaged in witness tampering.

In light of that finding, the court certainly did not abuse its discretion in dismissing the case with prejudice rather than imposing a lesser sanction. The court considered the possibility — indeed, it expressly assumed — that Ramirez may have had a meritorious case of employment discrimination, and that dismissal would foreclose Ramirez from pursuing relief for that injury. See R. 73 at 12-14. But witness tampering is among the most grave abuses of the judicial process, and as such it warrants a substantial sanction. See, e.g., Recrease, 800 F.3d at 402 (“falsifying evidence to secure a court victory undermines the most basic foundations of our judicial system”); Ty, 517 F.3d at 498 (“[tjrying to improperly influence a witness is fraud on the court and on the opposing party”). Crediting Villagrana’s account, Ramirez made a calculated effort to bolster his floundering case by offering payment to a witness to support his allegations of employment discrimination when the witness had, in fact, observed no such discrimination. Dismissing the case with prejudice is an entirely reasonable response to such a deliberate attempt to deceive the court.

III.

Finding no clear error in the district court’s finding that Ramirez engaged in witness tampering and no abuse of discretion in the court’s decision to dismiss the case with prejudice as a sanction, we AFFIRM the judgment.

      . As part of the inquiry, the district court ordered Ramirez and all three of his witnesses to submit their cell phones for forensic imaging. So far as the record reveals, that examination produced no evidence relevant to the alleged witness tampering.

      . The record does not make clear whether the district court reviewed only the written transcript of Villagrana’s testimony or also the video recording.

      . We have signaled a willingness to broadly construe what constitutes a court order for purposes of imposing sanctions under Rule 37. See Brandt v. Vulcan, Inc., 30 F.3d 752, 756 n. 7 (7th Cir. 1994) (collecting cases); Halas v. Consumer Servs., Inc., 16 F.3d 161, 164 (7th Cir. 1994) (oral directive from court to provide discovery sufficient).

      . Huddleston noted that the clear and convincing standard was adopted at common law for fraud claims in part out of a fear that such claims could be easily concocted. 459 U.S. at 388 n,27, 103 S.Ct. at 690 n.27. That concern is not present here, when a court is called upon to determine whether a party has engaged in fraudulent conduct during the litigation over which the court is presiding.

      . No issue is presented as to the procedure the district court followed in making its factual findings, including the manner in which Villagrana’s testimony was presented to the court.


author: FLAUM, Circuit Judge.

text:
    Dee FRYE and Lanhui Frye, Plaintiffs-Appellants, v. AUTO-OWNERS INSURANCE CO., Defendant-Appellee.
    No. 16-1677
    United States Court of Appeals, Seventh Circuit.
    Argued September 21, 2016
    Decided January 3, 2017

      Peter J. Agostino, Attorney, Matthew James Anderson, Attorney, Anderson, Agostino & Keller PC, South Bend, IN, for Plaintiffs-Appellants.
    Stephen C. Wheeler, Attorney, Smith Fisher Maas Howard & Lloyd, P.C., Indianapolis, IN, for Defendant-Appellee.
    Before FLAUM, KANNE, and WILLIAMS, Circuit Judges.
   FLAUM, Circuit Judge.

Dee Frye was injured in a car accident caused by an underinsured driver. Frye sued his insurance company for coverage, and the parties reached a partial settlement, but Frye thought he was entitled to additional payments under the policy. The district court disagreed, and awarded summary judgment to the insurer, Frye appeals, and for the reasons that follow, we reverse the decision of the district court.

I. Background

In'January 2011, Dee Frye was seriously injured in a car accident while driving for his job. The other driver admitted responsibility for the collision, and the latter’s insurance company agreed to pay Frye $100,000, the applicable per-person limit. Frye accepted the payment and offered to assign it to his lawyer and to his employer’s insurer, Auto-Owners Insurance Company, from which Frye had already received $692,895.79 in workers’compensation benefits. Auto-Owners took $75,000 of the third-party payment (in partial satisfaction of a statutory lien), and the remaining $25,000 went to Frye’s attorney. See Ind. Code § 22-3-2-18.

Frye’s injuries were also covered by two other insurance policies — a commercial automobile policy, and a commercial umbrella policy — issued by Auto-Owners to Frye’s employer. The former policy required Auto-Owners to pay any compensatory damages Frye was legally entitled to recover for bodily injuries caused by an underinsured motorist, and defined the insurer’s per-occurrence limit of liability as the lesser of:

(1) the difference between:
(a) the amount paid in compensatory damages ... to the injured person by or for any person ... who may be liable for the injured person’s bodily injury; and
(b) the “each person” limit for ... Underinsured Motorist Coverage stated in the Declarations [ie., $1 million]; [and]
(2) the difference between:
(a) the total amount of compensatory damages ... incurred by the injured person; and
(b) the amount paid by or for any person ... liable for the injured person’s bodily injury.

The latter policy afforded follow-on coverage to the automobile policy, and stated with respect to the insurer’s limit of (excess) liability:

The most we shall pay under this [umbrella policy] in any one occurrence shall not exceed the Limit of Liability shown in the Declarations for ... [t]he combined coverages of Uninsured Motorist and Underinsured Motorist,...

The declarations reflected an uninsured- and-underinsured-motorist liability limit of $1 million. (The general limit for bodily injury was also $1 million when the umbrella policy was first issued in November 2007. Beginning in May 2010, however, the general limit was increased to $5 million per occurrence.) As to underinsured-mo-torist (or UIM) coverage in particular, the umbrella policy stated:

For [such] coverage, our Limit of Liability shall be reduced by any amounts:
2) Paid or payable for the same bodily injury covered under any workers compensation or similar law; and
3) Paid by or on behalf of any person ... who may be legally responsible for the bodily injury
which are in excess of the retained limit.

“Retained limit” was defined as the greater of:

(a) The highest applicable limits of liability of any and all underlying policies); [and]
(b) ... $500,000 for bodily injury_

In January 2013, Frye and his wife (collectively, “Frye”) sued Auto-Owners in Indiana state court, seeking payment under the aforementioned policies for damages arising from Frye’s January 2011 car accident. Auto-Owners removed the suit to federal court, and the parties later reached a partial settlement, through which Auto-Owners agreed to pay Frye $1,282,314.21. This amount included: $900,000 under the automobile policy ($1 million in total coverage, less $100,000 from the other motorist’s insurer); and $382,314.21 under the umbrella policy ($1 million in UIM coverage, less $617,685.79 in net workers’-compensation payments).

Auto-Owners asserted that the settlement amount exhausted its obligations under the relevant policies, but Frye disagreed. According to Frye, Indiana statutory law required Auto-Owners to provide through its umbrella policy UIM coverage in an amount equal to the policy’s general liability limit: $5 million (as of May 2010). Moreover, said Frye, the set-off for workers’-compensation payments was impermissible — both under the umbrella contract’s terms, and also as a matter of Indiana public policy. The district court rejected both arguments, and awarded summary judgment to Auto-Owners. Frye appeals.

II. Discussion

We review de novo a district court’s grant of summary judgment, construing all facts and drawing all reasonable inferences in favor of the non-moving party — here, Frye. See C.G. Schmidt, Inc. v. Permasteelisa N. Am., 825 F.3d 801, 805 (7th Cir. 2016) (citation omitted). Summary judgment is appropriate where there are no genuine issues of material fact and the movant is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(a).

A. The UIM Coverage Limit

Frye argues that § 27-7-5-2 of the Indiana Code obligates insurers who provide UIM coverage to provide such coverage in amounts equal to the limits of liability for bodily injury in general. Thus, says Frye, although the umbrella policy here purported to cap Auto-Owners’s UIM liability at $1 million, the statute required a UIM liability limit equal to the policy’s general per-incident limit of $5 million.

Section 27-7-5-2 states:

(a) Except as provided in subsection (d), the insurer shall make available, in each automobile liability or motor vehicle liability policy ... insuring against loss resulting from ... bodily injury ... arising from the ... use of a motor vehicle, ... the following types of coverage:
(1) ... for the protection of persons ... entitled to recover damages from owners or operators of uninsured or underinsured motor vehicles because of bodily injury [or] injury to or destruction of property ...; or
(2) ... for the protection of persons ... entitled to recover damages from owners or operators of uninsured or underinsured motor vehicles because of bodily injury....
The uninsured and underinsured motorist coverages must be provided by insurers ... in limits at least equal to the limits of liability specified in the bodily injury liability provisions of an insured’s policy, unless such coverages have been rejected in writing by the insured....
(d) An insurer is not required to make available the coverage described in subsection (a) in a commercial umbrella or excess liability policy....

Ind. Code § 27-7-5-2 (emphases added). In construing a state statute, we must interpret the statute as we think the state’s highest court would interpret it. United States v. Mohamed, 759 F.3d 798, 804 (7th Cir. 2014) (citing Laborers Local 236, AFL-CIO v. Walker, 749 F.3d 628, 634 (7th Cir. 2014)). Indiana courts employ the basic tools of statutory interpretation: Statutes are read as a whole, and words are given their plain and ordinary meaning. See id. (explaining that the plain language of the statute is the best evidence of legislative intent) (citations omitted); see also Ellis v. CCA of Tenn. LLC, 650 F.3d 640, 651 (7th Cir. 2011) (same) (quoting Estate of Moreland v. Dieter, 576 F.3d 691, 695 (7th Cir. 2009)).

The parties agree that the plain language of § 27-7-5-2(d) exempts insurers from having to provide UIM coverage in their commercial umbrella policies. The present dispute instead turns on the extent to which subsection (d) creates a carve-out. Auto-Owners argues that § 27-7-5-2(d) permits insurers issuing (or renewing) commercial umbrella policies to selectively dispense with any requirements set forth in subsection (a) of that statute. In other words, not only may insurance companies abstain from providing UIM coverage in the first place, but if they do provide such coverage, they may provide it in any form they choose. In Frye’s view, subsection (d) allows insurers to omit from commercial umbrella policies any UIM coverage, but if such coverage is included, it must otherwise comply with the limit-of-liability requirements set forth in subsection (a). Frye’s reading is the more sensible one.

Section 27-7-5-2(d) states that insurers are not required to make available in commercial umbrella policies “the coverage described in subsection (a).” Ind. Code § 27-7-5-2(d). And subsection (a) defines “coverage” as one of two things: UIM protection against bodily injury and property damage; or UIM protection against bodily injury only. Id. § 27-7-5-2(a). Subsection (a) then states that these “coverages must be provided ... in limits at least equal to the limits of liability [for] bodily injury” generally. Id. (emphasis added). So the limit-of-liability requirement is modifying the “coverage” already described; the liability requirement is not part of the description itself.

Auto-Owners nevertheless insists that the liability requirement must be part of the “coverage described in subsection (a)”—and that subsection (d) therefore exempts insurers from satisfying that requirement—because this is what the Indiana legislature intended in adding subsection (d) to the statute. We disagree. Initially, § 27-7-5-2 contained no affirmative exceptions to the UIM-coverage mandate (though the insured could still reject such coverage in writing). See Ind. Code § 27-7-5-2 (1995). So if an insurance policy was an “automobile liability” or “motor vehicle liability” policy — the types of policies to which the statute applied, see id. § 27-7-5-2(a) — then Indiana law required that the policy cover all injuries caused by underinsured motorists, see United Nat’l Ins. Co. v. DePrizio, 705 N.E.2d 455, 457-463 (Ind. 1999) (interpreting § 27-7-5-2 to impose the UIM-coverage requirement on umbrella policies insuring against motor-vehicle-related liability). In DePrizio, the Indiana Supreme Court made clear that if the state legislature wished to exclude any specific types of insurance contracts from the UIM-coverage mandate, only an explicit statutory carve-out would suffice. See id. at 463-64. Subsection (d), which was added to the statute in 2009, effected just such an exemption for commercial umbrella policies; and, because of that exemption, insurers need not include in such contracts any UIM coverage at all. Nothing in the language of subsection (d), however, permits insurance companies — to the extent they do include UIM coverage in their commercial umbrella policies — to provide that coverage in any manner they like.

That the Indiana legislature did not intend such a result is further evidenced by later amendments to the same statute. Section 27-7-5-2(h), which appeal’s in the current version of the statute, provides that insurers are not required to make available in personal (as distinguished from commercial) umbrella or excess liability policies “the coverage described in subsection (a).” Ind. Code § 27-7-5-2(h)(l) (2013). So subsection (h), like subsection (d), exempts insurers from having to include UIM coverage in certain types of insurance contracts. But subsection (h) also states that, where an insurer does include such coverage, the insurer “may make available the coverage in limits determined by the insurer,” and “is not required to make available the coverage in limits equal to the limits specified in the personal umbrella or excess liability policy.” Id. § 27-7-5-2(h)(3) (emphases added). We must therefore assume that the exception for commercial contracts in subsection (d) — which (still) contains no such language — grants no such permission. Otherwise, the permission explicitly afforded in subsection (h) would be redundant. See, e.g., Buelna v. State, 20 N.E.3d 137, 142 (Ind. 2014) (“We read statutes as a whole — avoiding an interpretation that makes any part of the statute superfluous.” (citing City of Carmel v. Steele, 865 N.E.2d 612, 618 (Ind. 2007)); Marquez v. Weinstein, Pinson & Riley, P.S., 836 F.3d 808, 811 (7th Cir. 2016)) (“It is a cardinal principle of statutory construction that a statute ought ... to be so construed that, if it can be prevented, no clause, sentence, or word shall be superfluous, void, or insignificant.” (quoting TRW Inc. v. Andrews, 534 U.S. 19, 31, 122 S.Ct. 441, 151 L.Ed.2d 339 (2001); United States v. Michalek, 54 F.3d 325, 335-36 (7th Cir. 1995))) (internal quotation marks omitted).

Section 27-7-5-2(d) allowed Auto-Owners to abstain from providing UIM coverage in the umbrella policy issued to Frye’s employer. Once the insurance company elected to afford such coverage, however, it was required under § 27-7-5-2(a) to provide that coverage in limits equal to or greater than the policy’s general liability limit: $5 million. We thus agree with Frye that the latter limit applies here by operation of statutory law.

B. The Workers’-Compensation Set-Off

The district court interpreted the umbrella policy to permit Auto-Owners to reduce its UIM liability limit by the amount of Frye’s previous workers’-compensation payments. Fiye argues that the set-off was contrary to both the contractual language and Indiana public policy. We do not reach the latter issue, as we agree with Frye that the set-off violated the contract’s terms.

We generally interpret insurance policies as we do other types of contracts, though a few “specialized” rules of construction apply. See Justice v. Am. Family Mut. Ins. Co., 4 N.E.3d 1171, 1176 (Ind. 2014) (citing Holiday Hosp. Franchising, Inc. v. AMCO Ins. Co., 983 N.E.2d 574, 577 (Ind. 2013); Everett Cash Mut. Ins. Co. v. Taylor, 926 N.E.2d 1008, 1012 (Ind. 2010); Wagner v. Yates, 912 N.E.2d 805, 811 (Ind. 2009)). Where a policy’s terms are ambiguous, for example, we construe them in favor of the insured. See id. (citing Am. States Ins. Co. v. Kiger, 662 N.E.2d 945, 947 (Ind. 1996)). We otherwise give to clear and unambiguous policy language its plain and ordinary meaning. See id. (citing Am. Econ. Ins. Co. v. Motorists Mut. Ins. Co., 605 N.E.2d 162,164 (Ind. 1992)); Holiday Hosp., 983 N.E.2d at 577 (citing Colonial Penn Ins. Co. v. Guzorek, 690 N.E.2d 664, 667 (Ind. 1997)).

Paragraph 4(b)(1)(c) of the umbrella policy provides that the insurer’s limit of liability for UIM coverage “shall be reduced by any amounts”:

2) Paid or payable for the same bodily injury covered under any workers compensation or similar law; and
3) Paid by or on behalf of any person ... who may be legally responsible for the bodily injury
which are in excess of the retained limit.
(emphasis added). “Retained limit” is in turn defined (in paragraph 1(a)(3)) as the greater of:
(a) The highest applicable limits of liability of any and all underlying policy(ies); [and]
(b) ... $500,000 for bodily injury....

The parties agree that “the highest applicable limit” of the relevant underlying policy — i.e., the automobile policy issued to Frye’s employer — is $1 million, thus making $1 million (which exceeds $500,000) the “retained limit” under the umbrella contract.

Frye’s workers’-compensation payments were “in excess of’ this limit, argues Auto-Owners, because Frye also received $900,000 from that insurance company under the automobile policy, as well as an additional $100,000 from the underinsured motorist’s own insurer. This is not quite right. Because “retained limit” is defined in the umbrella policy as simply a dollar amount (here, $1 million), the policy in effect states that Auto-Owners’s liability “shall be reduced by [workers’-compensation payments and payments made by or on behalf of the underinsured motorist] which are in excess of [$1 million].” However, the workers’-compensation payments that Frye received — even when considered in combination with the $100,000 obtained from the other motorist’s insurer — did not exceed $1 million; so no portion of those payments may be subtracted from Auto-Owners’s liability cap.

This is not to say that the workers’compensation payments may never be taken into account under the umbrella contract. Paragraph 4(b)(1)(b) of that policy makes clear that coverage exists only for damages “in excess of’ the retained limit and, among other things, amounts paid under any workers’-compensation laws. Thus, Auto-Owners need not pay anything under the umbrella policy unless and until Frye’s compensable damages have exceeded at least $1,617,685.79 (which includes the $1 million retained limit, plus $617,685.79 in net workers’-compensation payments). Should his damages clear that threshold, Auto-Owners is liable for the difference, up to $5 million. What Auto-Owners seeks to do here is to also decrease that $5 million cap. But such a reduction is not permitted in this case, as explained above.

III. Conclusion

For the foregoing reasons, we Reverse the judgment of the district court and ReMAND for further proceedings consistent with this opinion.

      . We omit in this opinion the emphases originally included in the quoted policy provisions.

      . Frye also sued Nationwide Mutual Insurance Company, the entity that had insured the car Frye was driving at the time of the collision, Nationwide was ultimately dismissed from the case, and is not a party to this appeal.

      . Frye claimed damages exceeding $1 million, so Auto-Owners maintained that it owed no more than $900,000 under the automobile policy — which, as already noted, capped the insurer’s liability at the lesser of:
      [the per-person limit ($ 1 million) ] - [amounts paid by the liable party ($100,000)] = $900,000;
      and
      [total damages ( > $ 1 million) ] - [amounts paid by the liable party ($100,000)] = > $900,000.
      Frye objected to this calculation before the district court, but has not renewed his objection on appeal.

      . It is unclear how Auto-Owners obtained this figure. Frye received $692,895.79 in workers’ compensation; and, as noted above, $75,000 of that amount was returned to his employer’s insurance carrier (also Auto-Owners) — thus yielding a net compensation payment of $617,895.79, not $617,685.79. We also question whether the net payment amount should not also reflect (i.e., be further reduced by) the $25,000 that went to Frye’s attorney. See Tunny v. Erie Ins. Co., 790 N.E.2d 1009, 1012, 1015-17 (Ind. Ct. App. 2003) (concluding that amounts assigned to an insured’s lawyer under Indiana Code § 22-3-2-13 were not amounts retained by the insured). As Frye does not object to the insurer’s calculation, however, we assume for present purposes that this calculation is correct.

      .Unless otherwise noted, we refer to the 2009 version of the statute, which was in effect when Auto-Owners renewed the umbrella policy for Frye’s employer. Frye argued in the district court that the 2009 version did not apply here, as the umbrella policy was first issued in 2007. The district court disagreed, and Frye has abandoned the issue on appeal. The quoted language from 2009 (with one immaterial exception) still appears in the current version of § 27-7-5-2.


author: POSNER, Circuit Judge.

text:
    Stacy L. CHILDRESS, Plaintiff-Appellant, v. Carolyn W. COLVIN, Acting Commissioner of Social Security, Defendant-Appellee.
    No. 16-1601
    United States Court of Appeals, Seventh Circuit.
    Argued December 13, 2016
    Decided January 4, 2017

      Eddy P. Pierre, Attorney, Charles Edward Binder, Attorney, Law Offices of Harry J. Binder & Charles E. Binder, P.C., New York, NY, for Plaintiff-Appellant.
    Lu Han, Attorney, Social Security Administration, Office of the General Counsel, Region V, Chicago, IL, for Defendant-Appellee.
    Before POSNER, KANNE, and SYKES, Circuit Judges.
   POSNER, Circuit Judge.

The plaintiff-appellant, Mr. Childress, applied to the Social Security Administration for disability benefits in 2008, when he was 35. Turned down in 2010 after a hearing before an administrative law judge, he appealed to the district court, which initially remanded the case to the Social Security Administration for reevaluation of the medical opinions in the record and reconsideration of the plaintiffs credibility. The upshot was a second hearing, held in 2013, before the same administrative law judge, who again ruled that Childress was not disabled; and this time the district court affirmed, precipitating his appeal to us. He complains that the administrative law judge again failed to give sufficient weight to the opinions of his treating physicians and did not accurately assess his credibility or his capacity to work.

The administrative law judge ruled in the second round that Childress could perform only limited sedentary work (and nothing more strenuous), because he is capable of standing .for only 25 to 30 minutes at a time and of walking 1 to 2 blocks at a time, adding up to a maximum of 2 hours a day of either walking or standing; he is capable of sitting 45 to 60 minutes at a time, for a total of 6 hours a day; and he is capable of carrying out workplace instructions — provided he was given them no more than 30 days earlier. The administrative law judge also ruled that he must avoid strenuous work, dangerous machinery, unprotected heights, and exposure to extreme heat.

The medical evidence presented by Chil-dress’s treating physicians was extensive. A cardiologist who had been treating Chil-dress for years, Dr. Theodore Addai, reported that Childress suffers from congestive heart failure, cardiomyopathy (another disease that diminishes cardiac performance), severe asthma, COPD (chronic obstructive pulmonary disease, actually one or more of a set of distinct diseases, all of which however are debilitating, progressive, and potentially fatal lung diseases), occasional chest pain, obesity (he weighs 350 pounds yet is only 69 inches — five feet nine inches — tall), hypertension, and dysp-nea (difficult or uncomfortable breathing, resulting in shortness of breath). He was prescribed a number of medications: Ad-vair, Benazepril, Coreg, Diovan, Lanoxin, Lasix, Norvasc, Proventil, and Spiriva. We are not told whether any of them have side effects that are harmful or that affect work capacity, either in general or with specific respect to Childress.

The percentage of blood pumped out of the ventricles with each contraction of the heart (i.e., each heartbeat) is called the “ejection fraction” (EF). The EF number helps a health-care provider determine whether a patient has heart disease. A normal heart has an EF of 50 to 75 percent in the left ventricle. (The right ventricle can have a lower EF without being abnormal, because it pumps blood only to the lungs, whereas the left ventricle pumps blood to the rest of the body.)

By 2010, Childress’s left-ventricle EF had fallen to 35 to 40 percent (though later in the year it rose to a normal 66 percent). ■The cardiologist estimated that in an eight-hour workday Childress would be able to stand or walk for no more than one hour and to sit for no more than two hours'.

The ups and downs continued, but the downs predominated. A stress test in 2011 showed “poor exercise tolerance for his age” (though he was still in his 30s). He had shortness of breath even at home, fatigue, tingling sensations, swelling in his feet and ankles, tightness in his chest, flashes of light in his vision, tingling all over, and continued diagnoses of serious heart problems. The following year his ejection fraction fell to a dangerously low 20 to 25 percent, requiring implantation of a cardiac defibrillator. The following year his ejection fraction rose to 30 to 35 percent, still abnormally low. Other heart problems that he was diagnosed with included diastolic dysfunction, severely dilated left ventricular chamber size, severely dilated left and right atriums, and mild aortic valve insufficiency.

Nor is the ejection fraction the only evidence that Childress’s left ventricle is impaired. If the left ventricle is wider than 6 centimeters in its diastolic state (that is, when it is expanded and full of blood), this indicates a severe thinning of the heart muscle. See 20 C.F.R. Part 404, Subpart P, App. 1, 4.02(A)(1). Childress’s heart measurements have consistently revealed that his left ventricle is more than 6 centimeters wide. This was actually noted by the administrative law judge at Childress’s first hearing. Yet at the second hearing, the one now under review, she did not mention it, thus overlooking an important fact supportive of his claim to be disabled.

Another doctor, Kari Cataldo, evaluated and treated Childress beginning in 2008. Her diagnoses were similar to Dr. Addai’s, but with the addition of diagnosing crackles in the lungs, bronchial markings, a hernia, acute bronchitis, depression, a systolic heart murmur, increased lung markings, increased dyspnea and chest pain, wheezing and coarse breath sounds, edema (swelling) of the ankles, headaches, and pain and swelling in the legs. In 2009 another doctor appeared on the scene, Patrick Hartman, who diagnosed acute bronchitis and hypertension, coarse breath sounds, shortness of breath, coughing, fatigue, decreased exercise tolerance, severe fatigue, congestive heart failure, chronic obstructive pulmonary disease, obesity, etc., and an ejection fraction,- still subnormal, of 35 to 40 percent. Childress also had painful cysts on his legs, which Dr. Hartman treated.

Dr. Hartman estimated that Childress would be able to sit for 3 hours total and stand or walk for 1 hour total in an 8-hour workday, though he would also have to lie down for an hour every 1 to 2 hours during the workday — which would reduce his workday. If he lay down only every 2 hours, say at 11 a.m. and 1 p.m. and 3 p.m., and his workday was 9 a.m. to 5 p.m., that would reduce the actual working part of his “working day” to 5 hours (9 to 11 a.m., 12 to 1 p.m., 2 to 3 p.m., and 4 to 5 p.m.), rendering him unemployable. Dr. Hartman also thought it likely that Childress’s medical symptoms would worsen in a work environment, and he concluded that Chil-dress is totally disabled from gainful employment.

Two nonexamining state agency physicians looked at a severely incomplete set of the plaintiffs medical records, and concluded without any real evidence that he can walk about 6 hours a day and sit about 6 hours a day. The second such physician summarily agreed with the first, after reviewing treatment records that ended at the end of January 2009.

Childress testified at length at his hearing before the administrative law judge. He described the bad effect of his obesity on his breathing (he is constantly short of breath), his joints, and his ability to get up and sit down. He testified that he was unable to lose weight through either dieting or exercise, despite trying — in part because his medications, which include steroids, have caused him to gain thirty to forty pounds. He leaves his home infrequently, sleeps a good deal during the day, has trouble showering and dressing, does very little work around the house, does not cook or do his laundry, and gets help from his parents in cleaning the house. His testimony was not contradicted. The picture it painted is not that of a person capable of full-time work even of a sedentary character, especially since Childress had not attended college; and although when younger he had had occasional jobs, they were as a cook and as a satellite antenna installer, which are not sedentary jobs.

Although the testimony of Drs. Addai and Hartman, if believed, established that Childress was totally disabled from gainful employment, the administrative law judge disbelieved them on the ground that them testimony was “not consistent with the medical record as a whole, or with their own progress notes.” Yet she gave little weight to the evidence presented by the nontreating physicians — and rightly so, as their evidence was essentially worthless since they had not had access to Chil-dress’s full (abundantly full) medical record. Her decision rejecting Childress’s claim of total disability rested on her belief that the two treating physicians had given evidence concerning Childress’s activities that contradicted the record: that Dr. Ad-dai had recommended that Childress walk 30 minutes a day, five to seven days a week, to help with his cardiac functioning — and he did walk, almost daily. He had worked as a part-time cook for three months ending in November 2009. And despite his disabilities he lives alone and cares for himself.

These are feeble points. Ability to walk 30 minutes a day doesn’t contradict Chil-dress’s need for sleeping (or at least lying down) at work 3 hours a day, which would surely disable him from gainful, full-time employment, as the vocational expert agreed. Furthermore the Social Security Administration defines gainful sedentary employment as comprising at least 6 hours of sitting and 2 hours of standing or walking — not 30 minutes. The administrative law judge seems not to have realized that Childress’s treating physicians considered all his problems in combination when assessing his ability to stand or sit for long periods of time. That is the correct approach. Engstrand v. Colvin, 788 F.3d 655, 661 (7th Cir. 2015).

Childress lives by himself but receives lots of assistance in his home from his parents and does very little himself besides sleeping. As for working as a part-time cook for three months, the precise nature of the job and the reasons for his being employed for so short a period were never explored in the hearing. We have emphasized that “working sporadically or performing household chores are not inconsistent with being unable to engage in substantial gainful activity.” Engstrand v. Colvin, supra, 788 F.3d at 661. See also Bjornson v. Astrue, 671 F.3d 640, 647 (7th Cir. 2012), noting that failing to recognize the difference between performing activities of daily living with flexibility (and often with help from family and friends) and performing to the standards required by an employer “is a recurrent, and deplorable, feature of opinions by administrative law judges in social security disability cases.”

The administrative law judge was critical of the fact that two of Childress’s visits to doctors’ offices recorded symptoms after he’d run out of his medications, when one would expect his symptoms to worsen. But there is no evidence that he failed to take any of his medications after April 2009, and yet despite that his symptoms were worse by March 2010. The medications, numerous and formidable as they were, were unable to improve his perilous health.

Very strangely the administrative law judge thought that the fact that, as mentioned by the treating physicians, Chil-dress has been given a Class III rating on the New York Heart Association Functional Classification scale showed he can do full-time sedentary work. Not so. A Class III rating is indicative of “marked limitation in physical activity,” such that “less than ordinary activity causes fatigue, palpitation, or dyspnea.” See American Heart Association, “Classes of Heart Failure,” www.heart.org/HEABTORG/Conditions/ HeartFailure/AboutHeartFailure/Classes-of-Heart-Failure_UCM_306328_Article.jsp (visited Jan. 3, 2017).

Another curious observation made by the administrative law judge was that Chil-dress does not have the “usual objective signs of severe pain ... such as abnormal weight loss or muscular atrophy.” No, he does not have those particular objective signs of severe pain; but does the administrative law judge really believe that an obese person with very serious heart and lung problems will not have severe pain? Nor is severity the only pain dimension worth considering; to be plagued by constant pain can be torture even if the individual spasm is not severe. Similarly, it was wrong of the administrative law judge to fault Childress for not taking strong opioids for pain, when his medical conditions did not require them and, as is now well known, opioids can be very dangerous.

She said “the doctor concluded [that Childress had] possible sleep apnea, and advised referral for a sleep study. This is not a medically determinable impairment.” What could she have meant? Sleep apnea is a serious, medically determinable condition, which if not diagnosed and treated can kill.

Between them, Drs. Addai and Hartman treated Childress for a total of about 30 months, the treatment including numerous medical tests. There is no suggestion that the two doctors are not reputable physicians specializing in the specific health problems that afflict Childress. Their testimony and records were entitled to significant weight, see 20 C.F.R. § 404.1527(c); Meuser v. Colvin, 838 F.3d 905, 912 (7th Cir. 2016) (per curiam), yet the administrative law judge gave their testimony and records virtually no weight, as a result leaving the record of the hearing almost blank. Her conclusion that Childress can sit for at least 6 hours a day at work and stand and/or walk another 2 hours a day, while sleeping 3 hours a day at work and missing 3 or more days of work per month, and keep to this schedule week after week, and continue employed until his sleeping on the job and absenteeism is noticed by the employer is — absurd. The vocational expert admitted that an employee who misses three or more days of work a month is unemployable. The administrative law judge never explained why she thought this limitation did not apply to Childress.

A final botch by the administrative law judge was her remark that if Childress was really suffering he would have stopped smoking cigarettes earlier; he stopped only four days prior to the second hearing. But there is no evidence of whether on balance his smoking relieved or increased his pain, or, most important, given the gravity of his medical condition, whether stopping smoking would improve his health significantly — as we explained in Shramek v. Apfel, 226 F.3d 809, 812-13 (7th Cir. 2000). Nor is there evidence of how much he was smoking before he stopped.

The judgment of the district court is reversed and the case remanded to that court with directions to remand the case to the Social Security Administration.