Trustees of the Rodman Local 201 Pension, Welfare, Vacation and Apprentice Funds et al v. Contract Design & Development, LLC, No. 8:2016cv03497 - Document 13 (D. Md. 2017)

Court Description: MEMORANDUM OPINION (c/m to Defendant 7/31/17 sat). Signed by Judge Deborah K. Chasanow on 7/31/2017. (sat, Chambers)
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Trustees of the Rodman Local 201 Pension, Welfare, Vacation and Appre...ct Design & Development, LLC Doc. 13 IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MARYLAND RODMAN LOCAL 201 PENSION, WELFARE, VACATION, AND APPRENTICE FUNDS, et al. : : v. : Civil Action No. DKC 16-3497 : CONTRACT DESIGN & DEVELOPMENT, LLC : MEMORANDUM OPINION Presently pending and ready for resolution in this action arising under the Employee Retirement Security Act (“ERISA”) is Plaintiffs’ motion for default judgment. 10). of 1974 (ECF No. 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, Plaintiffs’ motion will be granted in part and Defendant will be ordered to submit to an audit. I. Background Plaintiffs are trustees of various trust funds associated with the International Ornamental Funds”). & The Association Reinforcing Funds are of Ironworkers employee meaning of § 3(3) of ERISA. Bridge, Union benefit No. plans See 29 U.S.C. § 1002(3). Structural, 201 (“the within the Defendant Contract Design & Development, LLC is an employer engaged in an industry affecting commerce under ERISA. See 29 U.S.C. §§ 1002(5), (12). The Funds were established and are maintained pursuant to the Restated Agreements and Declarations of Trust (“the trust agreements”) and a collective bargaining agreement between Rodman Local No. 201 and Defendant. On October 21, 2016, Plaintiffs filed a complaint on behalf of the Funds alleging that Defendant breached the collective bargaining and trust agreements by failing to make contributions and submit December, required contribution 2015. to reports According make to contributions for the to October, November, and complaint, Defendant was the Funds for “each hour worked by employees of the Defendant performing work covered by the Collective Bargaining Agreement . . . .” Additionally, Defendant was obligated to (ECF No. 1 ¶ 11). submit month reporting the amount of contributions due. forms every The trust agreements provide that if an employer fails to make timely contributions, it must pay liquidated damages if payment is not postmarked by the last day of the month in which contributions are due. Plaintiffs further allege that Defendant was also obligated to remit employees’ dues deducted from their pay to the Funds’ third-party administrator. (Id. at ¶ 23). The Plaintiffs’ complaint claims that Defendant failed to make any payments. contributions, Plaintiffs In addition seek 2 to employees’ the outstanding dues, liquidated damages and interest for late payments, as well as attorneys’ fees and costs. Plaintiffs recite that they were made aware of the amounts due by a union member who previously worked for Defendant sheets. and provided Plaintiffs with his weekly payroll (ECF No. 10-4, p. 3, 4). Plaintiffs served the summons and complaint on Defendant on November 1, 2016. requisite default. time When Defendant failed to respond within the period, The clerk January 3, 2017. Plaintiffs entered moved default (ECF No. 8). for the against entry of Defendant on Plaintiffs filed the subject motion for entry of default judgment on February 2, 2017. (ECF No. 10). Plaintiffs Vacation and Trustees Apprentice of the Funds Rodman 201 (“Rodman Pension, Funds”) seek Welfare, default judgment in the amount of $4,793.04 which consists of $3,661.30 in contributions, liquidated damages of $366.13, and interest, at the time the motion was filed, of $765.61. Plaintiff unpaid the Annuity contributions in Fund the seeks amount (ECF No. 12). $1,234.52 of $924.00, representing liquidated damages of $184.80, and interest, at the time the motion was filed, of $125.72. (ECF No. 10-6, p. 5). Plaintiffs also seek unremitted union dues in the amount of $421.20, attorneys’ fees of $5,556.75, and costs of $675.00. 3 (ECF No. 10-1). Additionally, Plaintiffs move for an order directing Defendant to submit to a complete audit of its wage and payroll records for the period August 1, 2015 through the date of judgment. For the following reasons, Plaintiffs’ motion will be granted in part and denied in part. II. Standard of Review Pursuant to Fed.R.Civ.P. 55(a), “[w]hen a party against whom a judgment for affirmative relief is sought has failed to plead or otherwise affidavit or default.” defend, otherwise, and the that clerk failure must enter is shown the by party’s Where a default has been previously entered by the clerk and the complaint does not specify a certain amount of damages, the plaintiff’s court may application enter and a default notice pursuant to Fed.R.Civ.P. 55(b)(2). to judgment, the upon defaulting the 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 court. See Dow v. Jones, 232 F.Supp.2d 491, 494 (D.Md. 2002); Lipenga v. Kambalame, 219 F. Supp. 3d 517 (D.Md. 2016). The Fourth Circuit has a “strong policy” that “cases be decided on their merits,” id. (citing United States v. Shaffer Equip. Co., 11 F.3d 450, 453 (4th Cir. 1993)), but default judgment may be 4 appropriate when the adversary process has been halted because of an essentially unresponsive party, 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 damages are not. court first Lawbaugh, 359 F.Supp.2d at 422. determines whether the unchallenged The factual allegations constitute a legitimate cause of action, and, if liability is established, the court then makes an independent determination of damages. Fed. R. Civ. P. 55(a). While the court may hold a hearing to prove damages, it is not required to do so; it may rely instead on “detailed affidavits documentary evidence to determine the appropriate sum.” or Adkins, 180 F.Supp.2d at 17 (citing United Artists Corp. v. Freeman, 605 F.2d 854, 857 (5th Cir. 1979)); see also Laborers’ Dist. Council Pension v. E.G.S., Inc., Civ. No. WDQ-09-3174, 2010 WL 1568595, at *3 (D.Md. Apr. 16, 2010) (“on default judgment, the Court may only award damages without a hearing if the record supports 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 5 have established a violation under ERISA. authorizes parties agreements. to enforce the Section 502(a)(3) provisions of trust 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”). According to the complaint, Defendant is a signatory to the Restated Agreements and Declarations of Trust and is, therefore, obligated to comply with the terms of the Trust Agreements, which require it to submit to an audit at the request of the Funds’ trustees. on these undisputed allegations, the sufficient claim for relief under ERISA. Funds have Based stated a 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 legal remedy. La Barbera, 666 F.Supp.2d at 350-51. Plaintiffs have not explicitly asserted that there is no adequate remedy at law or that irreparable harm will result if injunctive relief is not granted; however, the record clearly reflects that these elements are present. audit is ensuring not permitted, Defendant’s Plaintiffs compliance with will the Specifically, if an have terms no of means the of Trust Agreements, nor will they be able to collect any amounts to which they may be entitled. Accordingly, Plaintiffs are entitled to conduct an audit and Defendant will be directed to 7 produce any records thirty (30) days. requested by Plaintiffs’ auditor within Should the audit reveal unpaid or delinquent contributions, Plaintiffs may petition the court, with proper evidentiary support, requesting appropriate relief, including reimbursement of the audit fee and attorneys’ fees and costs associated with the litigation. A. Unpaid Contributions The original motion for default judgment demands payment to Plaintiffs Rodman Funds of $3,738.55 in contributions. At the direction of the court, Plaintiffs supplemented their motion for default judgment reducing unpaid contributions. a spreadsheet Contributions amount sought to $3,661.30 in Plaintiffs support their request based on attached and the Dues to its which supplement reflect 235 titled hours Summary for of which Defendant failed to make contributions to the Rodman Funds and 231 hours for which Defendant failed to make contributions to the Annuity Fund. (ECF No. 12-1). Plaintiffs recite that the Annuity Fund failed to account for four (4) hours worked by Defendant’s employee in December, 2015, but does not wish to pursue collection contributions for these four hours. In support of these amounts, Plaintiffs submit the declarations of Cathy Cole (ECF No. 10-5) and Rhonda St. Clair (ECF No. 10-6). Ms. Cole is employed by GEMGroup, a third party 8 administrator for the Rodman Funds. Rhonda St. Clair is employed by Lawrence C. Musgrove Associates, Inc. which performs services as a third party administrator to jointly administered Taft-Hartley Trust Funds, as the Administrator of the Mid- Atlantic States District Council Participating Locals Annuity Fund (“Annuity Fund”). a spreadsheet Each of the subject affidavits contains specifying damages, and interest. unpaid contributions, liquidated The spreadsheet attached to Ms. Cole’s affidavit on behalf of the Rodman Funds is superseded by the spreadsheet attached to Plaintiffs’ supplement. Ellen submitted O. a Boardman of declaration O’Donoghue in support & of (ECF No. 12-1). O’Donoghue Plaintiffs’ LLP also claim for attorneys’ fees and costs (ECF No. 10-3). After an independent determination of damages based on the affidavits finds that payroll and supporting Plaintiffs sheets documentation are attached owed that for provided, only account 231 for the hours. October court Seven 9, 2015, through December 12, 2015, are clear and add up to a total of 207 hours. then (ECF No. 10-5, at 6-12). attached December three 13-19, more 2015, sheets each of Perplexingly, Plaintiffs accounting which worked, but in three different ways. shows for the week twenty-four of hours (ECF No. 10-5, at 13-15). One says the contractor worked eight hours per day on December 9 14, 15, and 16. (ECF No. 10-5, at 13). Another says the contractor worked eight hours per day December 13, 14, and 15, but was not paid for work on December 13 because he was required to repay an amount from November 22. third says that the contractor (ECF No. 10-5, at 14). worked eight hours per A day December 13, 14, and 15, and was paid in full for all three days. (ECF No. 10-5, at 15). If the contractor worked eight hours per day for three days, as each of these payroll sheets indicates, then the twenty-four hours worked that week added to the 207 hours from previous weeks entitles Plaintiffs to only 231 hours’ worth of contributions.1 Pursuant to the Agreement, Defendant, as employer, was to pay the Rodman Funds: $6.30 per hour to the Health & Welfare Fund, $7.65 per hour to the Pension Fund, $0.63 per hour to the Apprenticeship Fund, $1.00 per hour to the Vacation Fund, for a total of $15.58 per hour. Defendant was required to pay $4.00 per hour to the Annuity Fund. 1 Further, Defendant was to pay six Even if the contractor worked all four of the days from December 13 through 16, but somehow payroll failed to account for the fourth day in any of the three sheets Plaintiffs have submitted, then Plaintiffs would be owed contributions for 239 hours, not 235 hours. Because none of the individual payroll sheets suggest thirty-two, as opposed to twenty-four, hours worked that week, the court finds that Plaintiffs are entitled to only 231 hours. 10 percent (6%) of gross wages as “working assessment” (ECF No. 104, p. 215, ¶ G). Based on 231 hours worked, the court calculates the Rodman Funds are owed $3,598.98. Pursuant to the affidavit of Rhonda St. Clair, the Annuity Fund alleges it is owed $924 for unpaid contributions. The record supports the Annuity’s demand for $924 in unpaid contributions. B. Liquidated Damages and Interest The Rodman Funds seek $366.13 in liquidated damages and $765.61 in interest assessed through February 21, 2017, on late contributions. The affidavit of Kathy Cole indicates that the agreement between the parties obligates Defendant to pay ten percent (10%) as liquidated damages and one and one-half percent (1-1/2%) per month as interest from the date of delinquency to the date of payment. Pursuant to the Rodman Trust Funds collection and audit procedure (ECF No. 10-5, p. 21), reports and contributions are due by the 20th day of the month after hours were incurred. Interest at the rate of one and one-half percent (1.5%) per month is assessed from the due date until the date of payment. Liquidated damages of ten percent (10%) will be assessed if payment is not postmarked on the last day of the month in which contributions are due. 11 The court calculates interest through July 31, 2017, to be $1,013.68 and liquidated damages to be $359.90. The affidavit of Rhonda St. Clair recites that pursuant to the Annuity Funds’ Restated Agreement of Trust, the Defendant is obligated to pay it liquidated damages in the amount of $184.80 which represents twenty-percent (20%) of the contributions owed and $125.72 in interest from the date of delinquency through February 21, 2017, representing the rate of twelve percent (12%) per annum. These figures are supported by the record. The court calculates interest through July 31, 2017, to be $174.60. C. Working Assessment The Rodman Funds seek $421.20 as working assessment. Pursuant to the parties’ agreement, the employer is to deduct from employees’ wages the sum of six percent (6%) of the gross wages and remit same to the union (ECF No. 10-4, p. 215 ¶ G). Plaintiffs appear these dues. to have duplicated (ECF No. 12-1). certain calculations of For October, Plaintiffs identify gross wages of $1,539.00 that align with the payroll sheets for October 9-31. (ECF No. 10-5, at 6-8). For November Plaintiffs calculate $3,078.00 in wages, which seems to account for all hours worked from November 1 through December 4. at 8-11). (ECF No. 10-5, Plaintiffs then calculate total wages of $2,403.00 for December, which appears to account for: seventeen hours from 12 December 1-4 that are included in their November total, forty hours from the first full week in December that appear properly documented, and thirty-two hours for the week of December 13-19, for which, despite the conflicting information in each payroll sheet as discussed above, only twenty-four hours are indicated. (See ECF No. 10-5, at 11-15). The court calculates a total of $6,345.00 in gross wages, which entitles Plaintiffs to $380.70 in working assessment dues. D. Attorneys’ Fees Plaintiffs seek $5,556.75 in attorneys’ fees. In support of this request, Plaintiffs submit a Declaration of Attorney’s Fees and counsel. a spreadsheet of (ECF No. 10-3). the hours billed by Plaintiff’s Exhibit 1 indicates that the firm spent 23.25 hours on this case on behalf of the Plaintiffs at a rate of $239 per hour for attorney time. consistent with the rates and times The sum requested is listed by Exhibit 1. Plaintiffs attorneys’ fees will be reduced, however, for failing to explain sufficiently its damages calculations. In spite of the to court’s Plaintiffs’ supplement record, order damages seeking including to supplement calculations, amounts a that discrepancy the record Plaintiffs were between not the justify submitted supported hours by for a the which contributions were sought by the Annuity Fund and the Rodman 13 Funds, which should have indicated to Plaintiffs’ attorneys that further scrutiny was warranted. Accordingly, Plaintiffs will be awarded $3,556.75 for attorneys’ fees, a reduction of $2,000. E. Costs Plaintiffs seek $675.00 in costs. In support of this request, Plaintiffs recite that in addition to the $400 filing fee to commence this action, $275 process on Defendant (ECF No. 10-3). was spent for service of The record supports this requested amount. IV. Conclusion For the foregoing reasons, Plaintiffs’ motion for the entry of default judgment and supplement will be granted in part. separate order will follow. /s/ DEBORAH K. CHASANOW United States District Judge 14 A