Trustees of The National Automatic Sprinkler Industry Welfare Fund et al v. Westland Fire Protection, Inc. et al, No. 8:2012cv01421 - Document 13 (D. Md. 2012)
Court Description: MEMORANDUM OPINION (c/m to Defendants 12/4/12 sat). Signed by Chief Judge Deborah K. Chasanow on 12/4/12. (Chasanow, Deborah)
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IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MARYLAND : TRUSTEES OF THE NATIONAL AUTOMATIC SPRINKLER INDUSTRY WELFARE FUND, et al. : : v. : Civil Action No. DKC 12-1421 : WESTLAND FIRE PROTECTION, INC., et al. : MEMORANDUM OPINION Presently pending and ready for resolution in this action arising under the Employee Retirement Income Security Act of 1974 ( ERISA ) is a motion for default judgment filed by Plaintiffs, the trustees of various funds associated with the National Sprinkler Industry (collectively, the Funds ). No. 9). (ECF The relevant issues have been briefed and the court now rules pursuant to Local Rule 105.6, no hearing being deemed necessary. For the reasons that follow, the motion will be granted in part and denied in part. I. Background The following facts are alleged in the complaint. Funds are multiemployer benefit plans within section 3(3) of ERISA, 29 U.S.C. § 1002(3). the meaning The of Defendant Westland Fire Protection, Inc., d/b/a Advanced Fire Protection, Inc., a Michigan contractor or subcontractor in the sprinkler industry, is an employer in an industry affecting commerce, as defined in sections 501(1), (3), 2(2) of the Labor Management Relations Act ( LMRA ), 29 U.S.C. §§ 141(1), (3), and 152(2); sections 3(5), (9), (11), (12), and (14) of ERISA, 29 U.S.C. §§ 1002(5), (9), (11), (12), and (14); and section 3 of the Multiemployer Pension Plan Amendments Act of 1980, 29 U.S.C. § 1001a.1 Pursuant to collective bargaining agreements ( CBAs ) with Sprinkler Fitters Union Nos. 669 and 704, Defendants agreed to pay certain employees. and sums of Agreements ). verify the for each hour worked by covered Defendants are also bound by the Restated Agreements Declarations Plaintiffs money to of Trust The audit accuracy CBAs establishing and Trust the Funds Agreements Defendants payroll of contributions. monthly and wage ( Trust authorize records to Beginning in December 2011, on behalf of the Funds, an auditor made numerous attempts to conduct an audit of Defendants records for the period of Defendants January have 1, 2009, through the date consistently refused access to of the the audit. necessary records. Plaintiffs commenced this action on May 10, 2012, alleging that Defendants breached the CBAs when, from December 2011 through February 2012, they refused access to the company s 1 The complaint additionally names Westland Fire Protection, Inc., and Advanced Fire Protection, Inc., but the allegations appear to relate to a single business entity. 2 records that were requested by the . . . Funds auditor for the period of January 1, 2009[,] through the date of the audit. (ECF No. 1 ¶ 11). to the Trust The complaint further recites that, pursuant Agreements, an Employer that fails to pay contributions in a timely fashion shall be liable for liquidated damages, interest on the amounts owing and for all expenses incurred in including enforcing but not payment limited to of an order judgment for liquidated requiring the damages, of any interest, attorneys (Id. at ¶ 16). Defendants amount contributions reasonable accountant s fees, and court costs. seek the to permit unpaid attorneys an due, fees, Defendants audit contributions, and audit fees, and plus and costs. Service of process was effected on May 29, 2012. When Defendants failed to respond within the requisite time period, Plaintiffs concomitantly filed a motion for entry of default (ECF No. 8) and the pending motion for default judgment (ECF No. 9). Defendants failed to respond, and the clerk entered default on August 3. II. (ECF No. 10). Standard of Review Under Federal Rule of Civil Procedure 55(a), [w]hen a party against whom a judgment for affirmative relief is sought has failed to plead or otherwise defend, and that failure is shown by affidavit or otherwise, 3 the clerk must enter the party s default. Where a default has been previously entered by the clerk and the complaint does not specify a certain amount of damages, the court may enter a default judgment upon the plaintiff s application and notice to pursuant to Fed. R.Civ.P. 55(b)(2). the defaulting party, A defendant s default does not automatically entitle the plaintiff to entry of a default judgment; rather, that decision is left to the discretion of the See Lewis v. Lynn, 236 F.3d 766, 767 (5th Cir. 2001). court. The Fourth Circuit has a strong policy that cases be decided on their merits, Dow v. Jones, 232 F.Supp.2d 491, 494 (D.Md. 2002) (citing United States v. Shaffer Equip. Co., 11 F.3d 450, 453 (4th Cir. 1993)), but default judgment may be appropriate where a party is unresponsive, see S.E.C. v. Lawbaugh, 359 F.Supp.2d 418, 421 (D.Md. 2005) (citing Jackson v. Beech, 636 F.2d 831, 836 (D.C.Cir. 1980)). Upon [entry of] default, the well-pled allegations in a complaint as to liability are taken as true, but the allegations as to Federal damages Rule are of not. Civil Lawbaugh, Procedure 359 54(c) F.Supp.2d limits the at 422. type of judgment that may be entered based on a party s default: A default judgment must not differ in kind from, or exceed in amount, what is demanded in the pleadings. Thus, where a complaint specifies the amount of damages sought, the plaintiff is limited to entry of a default 4 judgment in that amount. [C]ourts have generally held that a default judgment cannot award additional damages . . . because the defendant could not reasonably amount. have expected his damages would exceed that In re Genesys Data Technologies, Inc., 204 F.3d 124, 132 (4th Cir. 2000). amount, that the Where a complaint does not specify an court is required to make determination of the sum to be awarded. F.Supp.2d 15, 17 (D.D.C. 2001) an independent Adkins v. Teseo, 180 (citing S.E.C. v. Management Dynamics, Inc., 515 F.2d 801, 814 (2nd Cir. 1975); Au Bon Pain Corp. v. Artect, Inc., 653 F.2d 61, 65 (2nd Cir. 1981)). While the court may hold a hearing to consider evidence as to damages, it is not required to do so; it may rely instead on detailed affidavits or documentary evidence to determine the appropriate sum. v. Adkins, 180 F.Supp.2d at 17 (citing United Artists Corp. Freeman, 605 F.2d 854, 857 (5th Cir. 1979)); see also Laborers District Council Pension, et al. v. E.G.S., Inc., Civ. No. WDQ 09 3174, 2010 WL 1568595, at *3 (D.Md. Apr. 16, 2010) ( [O]n without default a judgment, hearing if the Court the record may only supports award damages the damages requested. ). III. Analysis Assuming the truth of the well-pleaded allegations of the complaint, as the court must upon entry of default, Plaintiffs have established a violation under ERISA. 5 Section 502(a)(3) authorizes parties to enforce the provisions of CBAs and trust agreements. See 29 U.S.C. § 1132(a)(3) (providing that a civil action may be brought: (A) to enjoin any act or practice which violates . . . the terms of the plan, or (B) to obtain other appropriate equitable relief (i) to redress such violations or (ii) to enforce any . . . terms of the plan ). complaint, Defendants therefore, obligated are to signatories comply with to According to the the terms the CBAs and of the are, Trust Agreements, which require them to submit to an audit at the request of the Funds trustees. Despite repeated demands, Defendants have refused to permit the Funds to conduct an audit of their records for the years 2009 to the present. Based on these undisputed allegations, the Funds have stated a sufficient claim for relief under ERISA. See La Barbera v. Fed. Metal & Glass Corp., 666 F.Supp.2d 341, 348 (E.D.N.Y. 2009) (entering default judgment in favor of trustees where the complaint alleged that an employer refused to submit an audit despite being contractually bound to do so by a CBA and trust agreement); see also National Elec. Ben. Fund v. AC-DC Elec., Inc., Civ. No. DKC 11-0893, 2011 WL 6153022 (D.Md. Dec. 9, 2011). ERISA authorizes courts to grant equitable relief as . . . appropriate where a plaintiff brings a successful action to enforce its requirements. See 29 U.S.C. § 1132(g)(2)(E); see 6 also La Barbera, 666 F.Supp.2d at 350. Such relief may include an injunction ordering the defendant to submit to an audit. Int l Painters & Allied Trades Indus. Pension Fund v. Exec. Painting, Inc., 719 F.Supp.2d 45, 52 (D.D.C. 2010). pursuant to ERISA, benefit plan trustees have the Indeed, right review the records of employers contributing to the plans. to Id. (citing Central States, Southeast and Southwest Areas Pension Fund v. Central Transport, Inc., 472 U.S. 559, 581 (1985)). Because ERISA authorizes injunctive relief as a possible remedy, an injunction requiring Defendants to submit to an audit is warranted as long as the Funds establish the prerequisites for an injunction namely, a showing of irreparable harm and the absence of an adequate F.Supp.2d at 350-51. legal remedy. La Barbera, 666 In support of their motion for default judgment, the Funds have submitted the declaration of assistant administrator John P. Eger. (ECF No. 9-3). While Mr. Eger s declaration does not explicitly assert that there is no adequate remedy at law or that irreparable harm will result if injunctive relief is not granted, the record clearly reflects that those elements are present. Specifically, if an audit is not permitted, Plaintiffs will have no means of ensuring Defendants compliance with the terms of the CBAs and Trust Agreements, nor will they be able to collect any amounts to which they may be entitled. Accordingly, Plaintiffs are entitled to conduct an 7 audit and Defendants will be directed to produce any records requested Should the Plaintiffs by Plaintiffs audit may reveal petition auditor unpaid the within or court, thirty delinquent with (30) days. contributions, proper evidentiary support, requesting appropriate relief, including reimbursement of the audit fee and attorneys fees and costs associated with the litigation.2 IV. Conclusion For the foregoing reasons, Plaintiffs motion for default judgment will be granted in part and denied in part. A separate order will follow. ________/s/_________________ DEBORAH K. CHASANOW United States District Judge 2 While Plaintiffs have attached to their motion two declarations in support of an award of attorneys fees and costs, their request is premature. Pursuant to the Trust Agreements, they may recover these amounts only upon showing that Defendants fail[ed] to pay contributions in a timely fashion. (ECF No. 1 ¶ 16; see also ECF No. 9-3 ¶ 12). Because no such showing has yet been made, Plaintiffs may not recover attorneys fees and costs at this juncture. Accordingly, their motion in this regard will be denied without prejudice to renewal. 8
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