Laborers' District Council Pension and Disability Trust Fund No. 2 et al v. E.G.S., Inc.

Filing 14

REPORT AND RECOMMENDATIONS re 8 MOTION for Default Judgment as to Defendant E.G.S., Inc. filed by Laborers' Joint Training Fund of Washington, DC and Vicinity, George Maloney, Laborers' District Council Pension and Disability Trust Fund No. 2, Justin Meighan, Laborers' District Council Health and Welfare Trust Fund No. 2 Signed by: Judge Magistrate Judge Paul W. Grimm Objections to R&R due by 5/3/2010 Responses due by 5/3/2010. Signed by Magistrate Judge Paul W. Grimm on 4/16/10. (c/m 4/16/10)(bmh, Deputy Clerk)

IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF MARYLAND

ZOin APR I b A '1: 21
CLER:rs OFFICE I,T B/tLTJr--"iGaE

LABORERS' DISTRICT COUNCIL PENSION, ET AL., Plaintiffs, v. E.G.S., INC., Defendant.
. .. 000 ...

CIVIL NO.: WDQ-09-3174

REPORT AND RECOMMENDATION This Report and Recommendation 8, that Plaintiffs Laborers' Laborers' District addresses the Motion for Default Judgment, Paper No. and Disability Trust Fund NO.2; the

Council Pension

District Council Health and Welfare Trust Fund No.2; D.C. and Vicinity; and Justin Meighan

the Laborers'

Joint Training

Fund of Washington,

and George Maloney, trustees,

filed. On February 24, 2010, in accordance with 28 U.S.c. Judge Quarles referred this case to me to review

9

636 and Local Rules 301 and 302, Motion and to make in this

Plaintiffs'

recommendations case.

regarding damages.

Paper NO.9.

I find that a hearing is unnecessary For the reasons

See Fed. R. Civ. P. 55(b)(2); that Plaintiffs'

Local Rule 105.6.

stated herein, I

recommend

Motion for Default Judgment be GRANTED

and that damages and

injunctive relief be A WARDED, as set forth herein. I. Factual and Procedural History On November 30, 2009, Plaintiffs filed a complaint against Defendant E.G.S., Inc.,

alleging that Defendant breached the collective bargaining agreement and trust agreements that obligated Defendant, as an employer, "to file timely reports of hours worked by covered

1

employees employee.

and to make

timely

contributions

to Plaintiff

Trust Funds"

for each covered of the terms of

CompI. ~~ 7-9, 11-15, Paper No. 1. Plaintiff sought "enforcement ... in accordance with

those agreements [Employment 1145; and

SS

502(a)(3)(B),

502(g)(2),

and 515 of ERISA 1 132(g)(2), and

Retirement 30l(a)

Income Security Act], 29 U.S.c. Act, 29 U.S.C.

SS

1 132(a)(3)(B),

S

of the Taft-Hartley

S

185(a)."

Id. ~ 16. The agreements

provided for "liquidated Id. ~ 7. According

damages in addition to the contributions

due the Plaintiff Trust Funds."

to Plaintiffs,

the exact amount

Defendant

owed was unknown

because

Defendant had not filed the Contribution continually. Id. ~ 10. However, Plaintiffs

Reports and interest and liquidated damages accrued alleged that they were able to determine that the

Defendant owed a total of $35,422.92 to various funds. this sum as the "amounts due and payable by Defendant"; represented liquidated liquidated damages. damages

!d. ~~ 12, 14. Plaintiffs characterized Plaintiffs did not claim that the sum

See id. To the contrary, Plaintiffs stated that the amount of because liquidated damages accrued continually. Id.

was "unknown"

Plaintiffs asked the Court to order Defendant to pay the known amount of $35,422.92; to order Defendant to submit the Trust Fund Contribution Reports and to pay the contributions and

liquidated damages due; to award Plaintiffs interest on delinquent contributions award Plaintiffs costs and attorneys'

as damages; to

fees pursuant to ERISA; and to order Defendant to comply

with its obligations in the future. Id. at 6. The Clerk of Court issued a Summons as to Defendant on December 2,2009. 2. Paper No.

The Summons and Complaint were served on Bruce Seiling, President of E.G.S., Inc., on Paper NO.5. Defendant made no response.

December 7,2009.

2

On January 22,2010, Plaintiffs filed a Request to Clerk of the Court for Entry of Default, Paper NO.6, and the Clerk entered an Order of Default on January 27, 2010, Paper NO.7. Plaintiffs filed a Motion for Default Judgment on January 27, 2010, asking the Court to order Defendant to pay the current known amount of money owed; to submit all outstanding Contribution Reports; to submit all amounts that become due and payable when the Contribution Reports are submitted; to pay interest on these amounts; and to order Defendant to comply with its future obligations. Pis.' Mot. 1. Plaintiffs also filed a Declaration of R. Renee Parenti, Executive Vice President of Carday Associates, Inc. and Plan Administrator to Plaintiffs' Trust Funds, in support of the known amount due to Plaintiffs, i.e., $35,422.92. Parenti Aff. ~ 19, Paper No. 13-1. Additionally, Plaintiffs requested $3,198.00 in attorney's fees. Pl.'s Mot. 2. In support thereof, Plaintiffs filed the Declaration of Richard S. Siegel in Support of Plaintiffs' Request for Attorney's Fees and Costs. Paper NO.8-I. Plaintiffs later filed an amended affidavit in support of attorney's fees, requesting a new total of $6,524. Amend. Declaration of Richard S. Siegel in Support of Plaintiffs' Request for Attorneys' Fees and Costs ~ 4 ("Amend. Siegel Aff."), Paper No. 13-8.
II. Discussion A. Default Judgment

Rule 55(b) of the Federal Rules of Civil Procedure governs default judgments.

Rule

55(b)(I) provides that the clerk may enter a default judgment if the plaintiffs claim is "for a sum certain or a sum that can be made certain by computation." A plaintiffs assertion of a sum in a complaint does not make the sum "certain" unless the plaintiff claims liquidated damages; otherwise, the complaint must be supported by affidavit or documentary evidence. See Medunic
v. Lederer, 64 F.R.D. 403, 405 n.7 (E.D. Pa. 1974), reversed on other grounds, 533 F.2d 891 (3d

3

Cir. 1976) (concluding liquidated).

that clerk could not enter default judgment

where damages were not

If the sum is not certain or ascertainable through computation, Rule 55(b )(2) provides: [T]he party must apply to the court for a default judgment. ... The court may conduct hearings or make referrals - preserving any federal statutory right to a jury trialwhen, to enter or effectuate judgment, it needs to: (A) conduct an accounting; (B) determine the amount of damages; (C) establish the truth of any allegation by evidence; or (D) investigate any other matter. As the Court noted in Disney Enters. v. Delane, 446 F. Supp. 2d 402,405 (D. Md. 2006),

The United States Court of Appeals for the Fourth Circuit has a "strong policy that cases be decided on the merits." United States v. Shaffer Equip. Co., 11 F.3d 450, 453 (4th Cir. 1993). However, default judgment is available when the "adversary process has been halted because of an essentially unresponsive party." s.E.c. v. Lawbaugh, 359 F. Supp. 2d 418, 421 (D.Md. 2005). As noted, Defendant received the Complaint on December 7, 2009, but did not respond.l Thus, all of Plaintiffs' are deemed admitted. allegations-other than those pertaining to damages, as discussed infra,

Fed. R. Civ. P. 8(b)( 6). Plaintiff moved for an entry of default on January It is

22, 2010, and a default judgment on January 27, 2010, and Defendant still did not respond. within the court's discretion to grant default judgment defend its case.

when a defendant does not respond or

See Park Corp. v. Lexington Ins. Co., 812 F.2d 894, 896 (4th Cir. 1987)

(upholding a default judgment when the defendant lost its summons and did not respond within the proper period); Disney Enters., 446 F. Supp. at 405-06 judgment (holding that entry of default

was proper because defendant had been properly served with complaint and did not

respond, even after plaintiffs tried repeatedly to contact him); see also s.E.c. v. Lawbaugh, 359 F. Supp. 2d 418, 422 (D. Md. 2005) (concluding that default judgment was appropriate because
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Defendant had twenty-one days after service to respond. 4

Fed. R. Civ. P. 12(a)(1).

defendant was "unresponsive though he was properly

for more than a year" after denial of his motion to dismiss, even motions for entry of default and default

served with plaintiffs

judgment). responded.

Four months have passed since Defendant received the Complaint, yet it still has not Thus, the Court should grant default judgment.

B. Damages
An allegation "relating to the amount of damages" is not deemed admitted based on a defendant's failure to deny in a required responsive pleading. Fed. R. Civ. P. 8(b)(6); see Trs. of 2009 WL

the Elec. Welfare Trust Fund v. MH Passa Elec. Contracting, Inc., No. DKC-08-2805, 2982951, at *1 (D. Md. Sept. 14,2009)

("Upon default, the well-pled allegations in a complaint

as to liability are taken as true, although the allegations as to damages are not."); Pentech Fin. Servs., Inc. v. Old Dominion Saw Works, Inc., No. 6:09cv00004, 2009 WL 1872535, at *1 (W.D. Va. June 30, 2009) ("Upon default judgment, for all purposes excluding determination Plaintiff's factual allegations are accepted as true see also Ryan v. Homecomings Fin.

of damages.");

Network, 253 F.3d 778, 780 (4th Cir. 2001) ("[D]efault is not treated as an absolute confession by the defendant of his liability and of the plaintiff's right to recover"). Therefore, on default judgment, the Court may only award damages without a hearing if the record supports (concluding damages" affidavits the damages requested. See, e.g., Pentech, 2009 WL 1872535, at *2 hearing on the issue of

that there was "no need to convene a formal evidentiary after default judgment was entered against Defendant records establishing

because Plaintiff submitted

and printouts

of electronic

the amount of damages it sought);

DirecTV, Inc. v. Yancey, No. Civ.A. 404CVOOOll, 2005 WL 3435030, at *2 (W.D. Va. Dec. 12, 2005) (concluding "presented that a hearing was "not required to enter default judgment" evidence to support its claim for damages, because Plaintiff

sufficient

costs and fees by way of

5

I

uncontradicted

affidavits");

JTH Tax, Inc. v. Smith, No. 2:06CV76,

2006 WL 1982762, at *3

(E.D. Va. June 23, 2006) (holding that damages could be awarded without hearing upon default judgment against Defendant because Plaintiff submitted invoices documenting the money owed

to Plaintiff); see also Trs. of the Elec. Welfare Trust Fund, 2009 WL 2982951, at *1 (discussing need for plaintiffs claiming monthly contributions, supporting calculations); affidavit that provides sufficient liquidated damages, and interest to submit

details for the Court to make any necessary

Virgin Records Am., Inc. v. Lacey, 510 F. Supp. 2d 588, 593 (S.D. Ala. 2007) of the

(noting that an entry of default judgment "in no way obviates the need for determinations

amount and character of damages," but an evidentiary hearing is not required if "all essential evidence is already of record"); see also Maloney v. Disciples Ltd., LLC, No. 1:06CVOOI24, 2007 WL 1362393, at *2 (M.D.N.C. judgments May 8, 2007) (noting that, in cases concerning default

and promissory notes, "it is not necessary to conduct a hearing and ... by way of affidavit and other documentary evidence").

damages may without a

be determined

Proceeding

hearing is the exception: "Claims for damages must generally be established proceeding

in an evidentiary

at which the defendant is afforded the opportunity to contest the amount claimed." Inc. v. Fu Shun Wang, 482 F. Supp. 2d 314, 318 (E.D.N.Y. 2007); see

U2 Home Entm't, Greyhound (same).

Exhibitgroup,

Inc. v. E.L.U.L. Realty Corp., 973 F.2d 155, 158 (2d Cir. 1992)

Here, Plaintiffs claim $35,422.92 in damages in their Motion for Default Judgment. noted, Plaintiffs submitted the Declaration of R. Renee Parenti, Executive for Plaintiffs'

As

Vice President of Parenti stated

Carday Associates, that "Defendant

Inc. and the Plan Administrator

Trust Funds.

owes $35,422.92 "liquidated

to the Plaintiff Trust Funds," and that the sum represented damages of 15% of the amount due . . . and interest in the

unpaid contributions,

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amount of 10% per annum." Parenti Aff. ,-r,-r 7-8

She explained how she reached the sum. Id.

,-r,-r 8-19. In support of her calculations, Parenti attached copies of the Amendments to the Trust
Fund Agreements, which indicate the deadlines for employers' submissions of contribution

reports and payments of contributions,

and provide for liquidated damages and interest, Parenti

Aff. Ex. 1, Paper No. 13-2; copies of contribution reports that Defendant submitted late, Parenti Aff. Ex. 2 & 5, Paper Nos. 13-3 & 13-6; copies of Statements of Accounts Receivable sent to

Defendant in March, 2010, Parenti Aff. Ex. 3 & 6, Paper No. 13-4 & 13-7; and a copy of the Agreement District for the Participation of Non-Collectively Bargained Employees in the Laborers'

Council Health & Welfare Trust Fund NO.2,

Parenti Aff. Ex. 4, Paper No. 13-5.

Because Plaintiffs presented recommend

sufficient evidence to support the amount of damages claimed, I See Pentech, 2009 WL 1872535, at

that the Court award $35,422.92 in damages.

*2; DirecTV, 2005 WL 3435030, at *2; JTH Tax, Inc., 2006 WL 1982762, at *3.

C. Attorney's Fees and Costs
Attorney's fees and costs are available in an ERISA action. 29 U.S.c.

S 1132(g)(2)(D).

Indeed, pursuant to 29 U.S.c.

S 1132(g)(2)(D),

when the Court enters judgment in favor of the it "shall award the plan In

plaintiff in an ERISA action for a plan to recover unpaid contributions, ... reasonable attorney's

fees and costs of the action, to be paid by the defendant."

calculating an award of attorney's

fees, the Court must determine the lodestar amount, defined as

a "reasonable hourly rate multiplied by hours reasonably expended." Grissom v. The Mills Corp., 549 F.3d 313, 320-21 (4th Cir. 2008); see Plyler v. Evatt, 902 F.2d 273, 277 (4th Cir. 1990) (stating that "[i]n addition to the attorney's satisfactory own affidavits, the fee applicant must produce for the

specific evidence of the prevailing market rates in the relevant community

type of work for which he seeks an award") (internal citations omitted). The plaintiff "must show

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that the number of hours for which he seeks reimbursement is reasonable and does not include hours that are excessive, redundant, or otherwise unnecessary." Travis v. Prime Lending, No. 3:07cv00065, 2008 WL 2397330, at *4 (W.D. Va. June 12, 2008) (concluding, after an initial determination attorney's that the attorney's hourly rate was reasonable for the particular district, that of hours worked and tasks

fees requested by Plaintiff, based on documentation

completed, were reasonable); Flynn v. Jocanz, 480 F. Supp. 2d 218, 220-21 (D.D.C. 2007) (awarding requested attorney's fees based on affidavits and the record). Of import, Appendix B to this Court's Local Rules, Rules and Guidelines for Determining Attorneys' Fees in Certain Cases, states that attorneys admitted to the bar for fifteen or more years may reasonably bill $275-400 per hour. Local Rules App'x B, at 3.d. Attorneys admitted to the bar for fewer than five years may reasonably bill $150-90 per hour. Id. at 3.a. When entering a default judgment, the Court may make an award of attorney's fees for a lesser amount than the moving party requested. See DirecTV v. Agee, 405 F. Supp. 2d 6, 8 (D.D.C. 2005) (concluding, on granting

default judgment, that "plaintiff s requested relief ... for attorneys' fees [was] excessive" and awarding half of what was requested in the plaintiffs motion). Here, Plaintiffs ask for $6,524.00 in attorney's fees and costs and offer an affidavit in support of the amount requested. Amend. Siegel Aff. ~ 4. Jonathan Rose, an attorney admitted

to the bar for eighteen years, billed Plaintiffs for 2.1 hours of work reviewing court filings at $390.00 per hour. Id. ~ 5. I find that $819.00 for 2.1 hours ofMr. Rose's work is reasonable under the Local Rules Guidelines. See Local Rules App'x B, at 3.d. Richard Siegel, an attorney admitted to the bar for three years, billed Plaintiffs for 17.6 hours of work drafting the court filings at $300.00 per hour. Amend. Siegel Aff. ~ 6. I find that 17.6 hours is a reasonable

amount of time. However, although the Local Rules Guidelines are "solely to provide practical

8

---l

guidance to lawyers and judges when requesting, challenging App'x B, $300.00 per hour greatly exceeds the recommended for a new attorney. See id. at 3.a.

and awarding fees," Local Rules range of reasonable hourly rates rate, but

I find that $300.00 per hour is not a reasonable rate for Mr. Siegel's time. See id.

$200.00 per hour would be a reasonable

Also, Plaintiffs

"incurred costs of $350.00 in the filing of the Complaint in this matter, and $75.00 in personally serving Defendant with a copy of the Complaint and summons." Amend. Siegel Aff. ~ 7.

Therefore, I recommend

that the Court grant $3,520.00 in attorney's

fees for 17.6 hours of Mr.

Siegel's time at $200.00 per hour; $819.00 in attorney's

fees for 2.1 hours ofMr. Rose's time at

$390.00 per hour; and $425 in costs for filing the Complaint and serving Defendant, for a total award of $4,764.00. D. Injunctive Relief In conjunction Flynn, plaintiffs obligations contributions, Agreement," with a default judgment, the Court also may order injunctive relief. after reviewing plaintiffs submissions, See that

480 F. Supp. 2d at 221 (concluding, requested injunctive

relief, i.e., that "defendants

be 'directed

to comply with its reports,

to report and to contribute and dues checkoff was appropriate);

to [specific unions and funds J all additional due and owing' under the Collective

money

Bargaining 2008 WL

Wine v. SCH Elec., LLC, No. CV- 08-0874-PHX-LOA,

4073853, at *4 (D. Ariz. Aug. 28, 2008) (concluding, an order requiring contributions appropriate'" defendant employer "'other

after an evidentiary hearing, that entry of forms and to timely pay as the Court deem[edJ 29 V.S.c.

to file timely contribution legal or equitable
III

constituted and

such

relief

therefore

was

appropriate

an ERISA

action)

(quoting

S

1132(g)(2)(E)); Disney Enters., 446 F. Supp. 2d at 405-06 (granting a permanent injunction on

9

default judgment); judgment).

DirecTV,

2005 WL 3435030,

at *4 (granting

injunctive

relief on default

Flynn, 480 F. Supp. 2d at 219-20, is informative.

There, the defendant/employer

was at

bound by collective agreements formed pursuant to ERISA to provide financial contributions

set times and amounts to the union and its members' funds. The District Court for the District of Columbia granted Plaintiffs request for future injunctive relief requiring the defendant to

comply with its obligations, reasoning that "among the powers that Congress delegated to district courts in ERISA actions involving delinquent contributions plan, inter alia, unpaid contributions, reasonable attorney's is not only the power to award the liquidated damages, but the

interest on unpaid contributions,

fees, and/or litigation costs, see 29 US.C.

S

1132(g)(2)(A)-(D),

broad discretionary power to award fiduciary plaintiffs 'such other legal or equitable relief as the court deems appropriate,' 29 US.c.

S

1132(g)(2)(E)."

Id. at 221.

Notably, the court did not

hold a hearing on the matter. Id. Similarly, in Wine, 2008 WL 4073853, the defendant was an employer who was bound to contribution funds under the Taft-Hartley Act and ERISA. Id. at *1. There, after holding an

evidentiary hearing on damages, the Court stated that injunctive relief in the form of requiring the defendant to fill out contribution appropriate. Id. at *4. It reasoned, id.: forms and pay the contributions in a timely manner was

As Defendant Employer has not filed contribution reporting forms for the months of February, 2008 through July, 2008, Plaintiffs cannot calculate the amount due. Accordingly, given the Court's authority under, ERISA S 502(g)(2)(E), 29 US.C. S 1132(g) (2)(E), to grant such "other legal or equitable relief as the Court deems appropriate," the Court concludes that it is fair and just to enter an order that Defendant Employer shall file, within 10-days of service of certified copies of these Finding of Fact and Conclusions of Law and Default Judgment upon its authorized agent, accurate delinquent contribution reporting forms for the months of February, 2008 through July 2008 and shall pay all

10

contributions shown to be due for such reported work for the months of February, 2008 through July, 2008. Here, obligations Plaintiffs have asked for similar injunctive relief pursuant to Defendant's

under ERISA.

Although Plaintiffs have not provided the Court with copies of the

collective bargaining agreement and Trust Agreements, they have provided the Court with copies of the Amendments to the Trust Fund Agreements, which establish the schedule for Defendant to Parenti Aff. Ex. 1. Therefore, I recommend that the

submit reports and make contributions.

Court order Defendant to file all outstanding contribution reports within fourteen (14) days of the date of this order and to pay all outstanding recommend contribute contributions upon filing its reports. Further, I to

that the Court order that Defendant to Plaintiffs' Trust Funds

comply in the future with its obligation required by its collective

in the manner

bargaining

agreement and Trust Agreement.

III.

Conclusion
In sum, I recommend that: (1) the Court grant Plaintiffs' Motion for Default Judgment; (2) the Court award Plaintiffs damages of $35,422.92; and $4,764.00 in attorney's costs; and (3) the Court grant Plaintiffs injunctive relief, namely by ordering Defendant (a) to file all outstanding contribution reports within fourteen (14) days of the date of this order; (b) to pay all outstanding contributions upon filing its reports; and (c) to comply in the future with its obligation to contribute to Plaintiffs' Trust Funds in fees and

the manner required by its collective bargaining agreement and Trust Agreement.

11

The parties have fourteen Recommendation

(14) days in which to file objections

to this Report and

pursuant to Fed. R. Civ. P. n(b) and Local Rule 301.S.bQ

Dated: ~ lmy/jr

A(

if

flV

lsi

.

Paul W. Grimm United States Magistrate Judge

12