Trustees of the Local 309 Electrical Health and Welfare Fund et al v. Schuh

Filing 22

ORDER: For the reasons set forth in the attached Memorandum and Order, the Court DENIES AT THIS TIME plaintiff's Motion for Contempt (Doc. 21 ). The Clerk's Office SHALL send a copy of this Order by certified mail to Defendant at the address listed in Doc. 17 . Signed by Chief Judge Michael J. Reagan on 12/12/16. (rah)

IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF ILLINOIS
TRUSTEES OF LOCAL 309 ELECTRICAL
HEALTH AND WELFARE FUND, et al.,
Plaintiffs,
vs.
RICHARD SCHUH,
d/b/a Edwardsville Electric,
Defendant.

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Case No. 16-cv-0275-MJR-RJD

MEMORANDUM AND ORDER
REAGAN, Chief Judge:
Plaintiffs (a labor union and the trustees of various employee benefit funds) filed
this suit to recover delinquent fringe benefit contributions and liquidated damages and
to otherwise enforce obligations under labor agreements executed by Richard Schuh,
who does business as Edwardsville Electric (Defendant). Subject matter jurisdiction lies
under the federal question statute, 28 U.S.C. 1331.

In addition to damages, the

complaint prayed for an order requiring Defendant to submit his books and records for
financial examination by an accountant, to determine the precise amounts due.
Properly served, Defendant failed to respond to the complaint.

Plaintiffs

obtained a clerk’s entry of default against Defendant under Federal Rule of Civil
Procedure 55(a) on May 24, 2016. In July 2016, they moved for default judgment under
Federal Rule of Civil 55(b). The motion sought all the components of relief requested in
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the complaint, including damages and an accounting/audit of Defendant’s payroll
records. The latter is required so that Plaintiffs can “completely calculate the interest
and liquidated damages due” on the unpaid contributions for the period in question
(Doc. 11, p. 3). Defendant filed no response to the motion for default judgment.
On August 5, 2016, the undersigned District Judge granted the motion for default
judgment finding, inter alia (Doc. 13, pp. 2-3): “that Plaintiffs are entitled to an
accounting and audit (at Defendant’s expense) of Defendant’s books and records to
determine the precise amounts owed to Plaintiffs for the period of January 1, 2012
through present. Plaintiffs also are entitled to payment of unpaid contributions owed
by Defendant for that period, together with interest and liquidated damages, reasonable
attorneys’ fees, and costs incurred in this case, as set forth in the complaint and in the
motion at Doc. 11, p. 4.” The undersigned directed Plaintiffs’ counsel after the audit was
completed to submit a supplemental motion and proposed order setting forth the exact
amount of each component of damages.
Two months later, Plaintiffs advised the Court that they had served a copy of the
August 5th Order on Defendant by mail, and that Defendant had not responded to the
Order or produced any documents needed to complete the audit, thereby hampering
Plaintiffs (fiduciaries of the benefit funds) in performing their duty to review the
records and collect the contributions. Plaintiffs asked for issuance of a show cause
order against Defendant.
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The Honorable Reona J. Daly, United States Magistrate Judge, granted the
motion on October 13, 2016, in an Order directing Defendant to show cause why he
shouldn’t be sanctioned for failure to comply with the August 5, 2016 directive. Judge
Daly ordered Defendant to respond by November 18, 2016 but did not specify what
sanction or action might be imposed if he failed to do so and did not set a hearing or
direct Defendant to appear at a specified date and place with the payroll records. Judge
Daly’s Order was mailed by Plaintiffs to Defendant on October 14, 2016 (see Doc. 17).
Defendant filed no response by the November 18th deadline Judge Daly imposed.
On December 9, 2016, Plaintiffs filed a motion asking that Defendant be held in
contempt for failure to comply with Judge Daly’s show cause Order. The December 9th
motion (supported by an affidavit from Plaintiffs’ counsel) attests that Defendant has
failed to produce any documents as directed by the August 5th default judgment Order
and failed to respond to Judge Daly’s October 13th show cause Order. Plaintiffs ask that
the Court hold Defendant in contempt and, as a sanction, (1) assess a fine of $200 per
day of noncompliance with the Court’s 8/5/16 and 10/13/16 Orders, (2) award Plaintiffs
their attorneys’ fees and costs resulting from Defendant’s noncompliance, and (3) issue
a writ of body attachment for Defendant.1

A writ of body attachment typically is used to seize a party to a civil
proceeding and bring him before the court, for instance if he failed to appear for
a prior court hearing. Plaintiffs have not specifically requested a hearing or
explained what the writ would be used for here, they simply note that a writ of
body attachment “has … been recognized as an appropriate sanction to compel
an employer to submit to an ERISA audit” Doc. 21, p. 2).
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The record indicates disregard by Defendant Schuh for the Orders issued herein.
And the undersigned appreciates Plaintiffs’ frustration in attempting to obtain the
payroll records to determine the amounts to which they are entitled by the default
judgment Order herein. But it is premature to grant the December 9, 2016 motion for
contempt without an additional step being taken. So the Court DENIES AT THIS TIME
Doc. 21, as explained below.
The motion asks the Court to hold Defendant in civil contempt for refusing to
comply with lawful orders issued in this case. Caselaw makes clear that a court’s
contempt power must be exercised with utmost restraint. Similarly, a court’s inherent
power to sanction a party for conduct which abuses the judicial process (e.g., by
assessing attorney’s fees as a sanction), “must be exercised with restraint and
discretion.” Trade Well Intern. v. United Cent. Bank, 778 F.3d 620, 626 (7th Cir. 2015),
citing Chambers v. Nasco, Inc., 501 U.S. 32, 44 (1991). The Seventh Circuit recently
explained that the civil contempt and criminal contempt are governed by significantly
distinct procedures and designed to achieve different purposes, so a district court must
take care not to blur the lines in handling a motion for contempt.
As a general rule, civil contempt relief is coercive or remedial. It is “designed
either to compel the contemnor into compliance with an existing court order or to
compensate the complainant for losses sustained as a result of the contumacy.”
Lightspeed Medial Corp. v. Smith, 830 F.3d 500, 508 (7th Cir. 2016), quoting United
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States v. Dowell, 257 F.3d 694, 699 (7th Cir. 2001). Criminal contempt sanctions are
punitive, meant to “vindicate the authority of the court.” Id.

Civil contempt may be

imposed if proven by clear and convincing evidence, but criminal contempt can be
imposed only after the alleged contemnor has been afforded the full protections the
Constitution provides for criminal proceedings (and the procedures set forth in Federal
Rule of Criminal Procedure 42, which include notice, appointment of a prosecutor, and
a trial). Lightspeed, 830 F.3d at 508, citing Dowell, 257 F.3d at 699, and Hicks ex rel.
Feiock v. Feiock, 485 U.S. 624, 632 (1988).
Fines can be a form of civil contempt or criminal contempt. A monetary penalty
for a wrong committed in federal court is civil if designed to compensate for harm done
but criminal if its purpose is to vindicate the court’s authority. Lightspeed, 739 F.3d at
508. See also Autotech Tech. LP v. Integral Research & Dev. Corp., 499 F.3d 737, 752 (7th
Cir. 2007), cert. denied, 562 U.S. 1231 (2008) (Civil contempt sanctions “must relate” to
one of two purposes – compel compliance with a court order or compensate the
complainant for a loss caused by the contemptuous action; if the former, the court
must consider the “character and magnitude of the harm threatened ... and the
probable effectiveness of any suggested sanction in bringing about the desired
result.”).
The undersigned believes the appropriate next step is for Judge Daly – by separate
Order to be served on Defendant by the United States Marshals Service (with proof of service
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made in the record) – to set an in-court hearing at a specified date and time, and order
Defendant to attend and produce the relevant payroll records. Defendant should be
plainly warned that if he fails to appear and produce the records at the show cause
hearing, the Court then will reconsider (and set an in-court hearing on) the motion at
Doc. 21, and will issue a writ of body attachment to bring Defendant before Judge Daly
for a hearing on the imposition of possible sanctions, including civil contempt
proceedings or whatever other sanction Judge Daly deems applicable and appropriate
here.
The Clerk’s Office shall send a copy of this Order by certified mail to Defendant
at the address listed in Doc. 17 (and make an entry on the docket reflecting
service/mailing).
IT IS SO ORDERED.
DATED: December 12, 2016.
s/ Michael J. Reagan
Michael J. Reagan
United States District Judge

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