Trustees of the National Automatic Sprinkler Industry Welfare Fund et al v. Sprinkler Contractors, LLC
REPORT AND RECOMMENDATIONS re 11 MOTION for Default Judgment as to Defendant filed by Trustees of the National Automatic Sprinkler Industry Welfare Fund, Trustees of the National Automatic Sprinkler Industry Pension Fund, Trustees of the National Automatic Sprinkler Local 669 UA Education Fund, Trustees of the International Training Fund, Trustees of the Sprinkler Industry Supplemental Pension Fund Signed by: Judge Magistrate Judge Charles B. Day. Signed by Magistrate Judge Charles B. Day on 3/31/2017. (Attachments: # 1 Letter re Report and Recommendation)(aos, Deputy Clerk)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
TRUSTEES OF NAT'L AUTO.
SPRINKLER INDUS. FUND, et al.,
SPRINKLER CONTRACTORS, LLC,
Civil Action No.: TDC-16-2639
REPORT AND RECOMMENDATION
This Report and Recommendation addresses the Motion for Entry of Default Judgment
(the “Motion”) (ECF No. 11) filed by Trustees of the National Automatic Sprinkler Industry
Welfare Fund; Trustees of the National Automatic Sprinkler Local 669 UA Education Fund;
Trustees of the National Automatic Sprinkler Industry Pension Fund; Trustees of the Sprinkler
Industry Supplemental Pension Fund; and Trustees of the International Training Fund
(collectively “Plaintiffs” or the “Collective Funds”). Plaintiffs brought this action against
Sprinkler Contractors, LLC (“Defendant”) under Sections 502 and 515 of the Employee
Retirement Income Security Act (“ERISA”), 29 U.S.C. §§ 1132 and 1145, and under Section
301 of the Labor-Management Relations Act, 29 U.S.C. § 185(a). ECF No. 1, p. 1. Plaintiffs
allege Defendant breached the Collective Bargaining Agreement (“the Agreement”) between
Defendant and the National Automatic Sprinkler Local 669 (“the Union”) and seek to recover
contributions due to employee benefit plans under the terms of the Agreement. Id. The Clerk
entered default against Defendant on October 19, 2016. ECF No. 10. Defendant has not filed a
response and the time for doing so has passed. See Local Rule 105.2(a) (D. Md.).
Pursuant to 28 U.S.C. § 636 and Local Rules 301 and 302, the Honorable Theodore D.
Chuang referred this matter to the undersigned for the making of a Report and Recommendation
concerning default judgment and/or damages. For the reasons stated herein, I recommend the
Court DENY the Motion without prejudice.
Factual and Procedural Background
The Collective Funds are multiemployer employee benefit plans as defined in ERISA, 29
U.S.C. § 1002(3). ECF No. 1, p. 2. The Collective Funds are established and maintained
according to provisions of the Restated Agreements and Declarations of Trust establishing the
Collective Funds and the Agreement between the Union and Defendant. Id. The Agreement
established the terms and conditions of employment for journeymen and apprentice sprinkler
fitters employed by Defendant. Id.
Pursuant to the Agreement, Defendant agreed to pay the Collective Funds certain sums of
money for each hour worked by Defendant’s employees. Id. at 3. However, Defendant failed to
make the required contributions to the Collective Funds for the period of April 2013 through
March 2016 in the amount of $518,064.00. Id.
Plaintiffs filed a Complaint on July 20, 2016, under ERISA, 29 U.S.C. § 1132 and 1145,
seeking to recover the required contributions and liquidated damages due to Plaintiffs. ECF No.
1, p. 1. Plaintiffs sought to collect the $518,064.00 of owed contributions, $103,612.80 in
liquidated damages, costs, and attorneys’ fees. Defendant was served with a copy of the
summons and Complaint on August 21, 2016. ECF No. 11-1, p.1. Defendant’s time to respond
expired, without reply, on September 12, 2016. Id. The Court entered a default judgment
against Defendant on October 19, 2016. ECF No. 10.
Standard of Review
Rule 55 of the Federal Rules of Civil Procedure governs entries of default and default
judgments. Rule 55(a) provides that “[w]hen a party . . . has failed to plead or otherwise defend,
and that failure is shown by affidavit or otherwise, the clerk must enter the party’s default.” Fed.
R. Civ. P. 55(a). If, after entry of default, the plaintiff’s complaint does not specify a “sum
certain” amount of damages, the Court may enter a default judgment against the defendant
pursuant to Rule 55(b)(2). In considering a motion for default judgment, the Court accepts as
true the well-pleaded factual allegations in the complaint as to liability. See Ryan v.
Homecomings Fin. Network, 253 F.3d 778, 780 (4th Cir. 2001) (citation omitted). However, “[a]
default does not establish liability,” but the Court must instead “make an independent
determination of the sum to be awarded.” 10A Charles Alan Wright & Arthur Miller, Federal
Practice and Procedure § 2688, n. 6 (4th ed. 2001); see also Ryan, 253 F.3d at 780–81 (holding
that acceptance of facts pled by the non-defaulting party “does not necessarily entitle the [party]
to the relief sought”).
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), but finds that default judgment
“may be appropriate 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).
If the plaintiff establishes liability, the Court then turns to the determination of damages.
Fed. Prac. & Proc. Civ. § 2688, n.6 (4th ed.). In determining damages, the Court cannot accept
Plaintiffs’ factual allegations as true and must make an independent determination. See
Lawbaugh, 359 F. Supp. 2d at 422. Rule 54(c) of the Federal Rules of Civil Procedure limits the
type and amount of damages that may be entered as a result of a party’s default, stating that a
“default judgment must not differ in kind from, or exceed in amount, what is demanded in the
pleadings.” Fed. R. Civ. P. 54(c). While the Court may conduct an evidentiary hearing to
determine damages, it is not required to do so. Monge v. Portofino Ristorante, 751 F. Supp. 2d
789, 795 (D. Md. 2010); see also Pentech Fin. Servs., Inc. v. Old Dominion Saw Works, Inc., No.
6:09cv00004, 2009 WL 1872535, at *2 (W.D. Va. June 30, 2009) (concluding that there was “no
need to convene a formal evidentiary hearing on the issue of damages” after default judgment
was entered against defendant because plaintiff submitted affidavits and printouts of electronic
records establishing the amount of damages it sought); DirecTV, Inc. v. Yancey, No. Civ. A.
404CV00011, 2005 WL 3435030, at *2 (W.D. Va. Dec. 12, 2005) (concluding that a hearing
was “not required to enter default judgment” because plaintiff “presented sufficient evidence to
support its claim for damages, costs and fees by way of uncontradicted affidavits”). The Court
may rely instead on affidavits or documentary evidence of record to determine the appropriate
sum. See, e.g., Monge, 751 F. Supp. 2d at 794–95 (citing cases in which damages were awarded
after a default judgment, and without a hearing, based on affidavits, printouts, invoices, or other
Plaintiffs served their Complaint on Defendant over nine months ago, yet Defendant has
failed to plead or otherwise assert a defense. Therefore, the Court deems all of Plaintiffs’ factual
allegations in the Complaint not pertaining to damages admitted. See Fed. R. Civ. P. 8(b)(6);
Ryan, 253 F.3d at 780. Plaintiffs’ Motion was filed on November 28, 2016, and Defendant still
did not respond. It is within the Court’s discretion to grant default judgment when a defendant is
unresponsive. See Fed. R. Civ. P. 55(a)–(b); see also, Park Co. v. Lexington Ins. Co., 812 F.2d
894, 895-97 (4th Cir. 1987) (upholding a default judgment when the defendant did not respond
to the plaintiff’s complaint, even though the defendant would have had a valid defense had it
responded); Disney Enterprises, Inc. v. Delane, 446 F. Supp. 2d 402, 405–06 (D. Md. 2006)
(holding that entry of default judgment was proper because the defendant had been properly
served with the complaint and did not respond, even after the plaintiffs tried repeatedly to contact
him); see also, Lawbaugh, 359 F. Supp. 2d 418, 422 (D. Md. 2005) (concluding that default
judgment was appropriate because the defendant was “unresponsive for more than a year” after
denial of his motion to dismiss, despite being served with the plaintiff’s motions for entry of
default and default judgment).
For the reasons stated below, it is my recommendation that Plaintiffs be denied default
judgment without prejudice. However, if Plaintiffs appropriately cure the deficiencies in the
Motion, it is my recommendation that Plaintiffs be granted default judgment. In determining
damages, I find that no evidentiary hearing is necessary and instead rely on the declarations and
other evidence of record, such as a delinquency calculation analysis and itemization of legal fees
and costs, to determine the appropriate sum.
A. Deficient Documents
I recommend that the Motion be denied without prejudice because the Court does not
have reliable documents on which to base its analysis. Plaintiffs have submitted unsigned copies
of the Agreement and the Guidelines for Participation in the Sprinkler Industry Trust Funds (“the
Guidelines”). ECF Nos. 11-5 and 11-11. Plaintiffs rely heavily on these documents as the basis
for the terms Defendant agreed to and has subsequently broken, thus giving rise to this suit.
Without the dated signatures of Defendant and Plaintiffs on these documents, the Agreement and
the Guidelines are not acceptable evidence that the parties have agreed to be bound to the terms
within each document. The Court cannot appropriately deem Defendant to have “agreed” to any
of the terms in those documents as discussed in this opinion. Without proof of Defendant’s
assent to the terms, Plaintiffs’ case has no foundation.
I recommend that the Court give Plaintiffs time to cure these deficiencies and provide
fully executed copies of the Agreement and the Guidelines. If done, I recommend the granting
of the Motion for the reasons discussed below.
B. Default Judgment
In considering a motion for default judgment, the Court accepts as true the well-pleaded
factual allegations in the Complaint as to liability. See Ryan, 253 F.3d at 780–81. Nevertheless,
the Court must determine “whether the well-pleaded allegations . . . support the relief sought in
this action.” Id. at 780. Plaintiffs’ allegation of unpaid contributions supports their cause of
action under ERISA, which states:
Every employer who is obligated to make contributions to a multiemployer plan
under the terms of the plan or under the terms of a collectively bargained
agreement shall, to the extent not inconsistent with law, make such contributions
in accordance with the terms and conditions of such plan or such agreement.
29 U.S.C. § 1145. Moreover, where a pension plan prevails in an ERISA action, a court shall
award: (1) unpaid contributions; (2) interest on the unpaid contributions; (3) liquidated damages
(4) reasonable attorneys’ fees and costs; and (5) “such other legal and equitable relief as the court
deems appropriate.” 29 U.S.C. § 1132(g)(2).
The Supreme Court has found that these sections of ERISA are intended to “provide
trustees of multiemployer benefit plans with an effective federal remedy to collect delinquent
contributions.” Laborers’ Health & Welfare Trust Fund for N. Cal. v. Advanced Lightweight
Concrete Co., 484 U.S. 539, 541 (1988). The Fourth Circuit has likewise found that in an action
based on § 515 of ERISA, “a multiemployer plan can enforce, as written, the contribution
requirements found in the controlling documents.” Bakery & Confectionery Union & Indus. Int’l
Pension Fund v. Ralph’s Grocery Co., 118 F.3d 1018, 1021 (4th Cir. 1997).
Under the Agreement, Defendant agreed to pay certain sums for each hour worked by
Defendant’s employees and covered by the Agreement. ECF No.11-5, p. 30-37. In the event of
missed payments, the Guidelines dictate that Defendant must pay liquidated damages as follows:
If payment is not received in the Funds Office by the 15th of the month, 10%
of the amount is assessed.
An additional 5% is added if payment is not received in the Funds Office by
the last working day of the month in which payment was due.
An additional 5% is added if payment is not received by the 15th of the month
following the month in which payment was due.
ECF No. 11-11, p. 7. The Guidelines also state that “[w]hen the attorneys become involved in
the collection process, the amount owed the Fund will include not only contributions and
liquidated damages, but also the Fund’s attorneys[’] fees, court costs, and interest at the greater
of 12% or the highest rate permitted by law.” Id.
Based on the content found within the Agreement and the Guidelines, it would appear
that Plaintiffs’ well-pleaded factual allegations support the relief requested. Upon Plaintiffs’
submission of appropriately executed copies of the two documents, the Court may rely on the
Agreement and the Guidelines as supporting Plaintiffs’ allegations.
Plaintiffs’ Motion asserts that Defendant owes:
a) $518,064.00 past-due contributions to the Collective Funds;
b) $132,466.42 in interest assessed at 12% per annum;
c) $103,612.80 in liquidated damages; and
c) $750.00 in costs and $795.50 in attorneys’ fees.
ECF No. 11-12.
In support of their request for delinquent contributions, Plaintiffs submit the declaration
of John P. Eger, Assistant Fund Administrator for the Collective Funds. ECF No. 11-3. In
support of their request for reasonable attorneys’ fees and costs, Plaintiffs’ counsel Charles W.
Gilligan submits a declaration. ECF No. 11-13. The representations of both Mr. Eger and Mr.
Gilligan appear to be adequate as to the contributions and attorneys’ fees and costs owed by
Defendant so as to make a hearing unnecessary. See Monge, 751 F. Supp. 2d at 795. For the
reasons enumerated below and as of the date of the Motion, I recommend the Court award
judgment in favor of Plaintiffs in the total amount of $755,688.72 when they have remedied the
deficiencies in the Motion.
a) Subsequent Past-Due Contributions
Plaintiffs claim Defendant owes $518,064.00 for past due contributions to the Collective
Funds for the months of April 2013 through March 2016. ECF No. 1, p. 3. Mr. Eger confirms
Defendant owes this amount for those months. ECF No. 11-1, p.2. The claimed amount appears
a fair estimate of the amount Defendant owes in past-due contributions, and I therefore
recommend the Court award Plaintiffs $518,064.00 as claimed.
b) Accrued Interest
Plaintiffs allege that Defendant owes $132,466.42 in interest assessed April 2013 through
March 2016. Under the Guidelines, Plaintiffs are entitled to interest on any unpaid contributions
at 12% per annum. ECF No. 11-11, p. 5. In addition, ERISA provides for an award of interest
on unpaid contributions “determined by using the rate provided under the plan.” 29 U.S.C. §
1132(g)(2). Thus, after reviewing the evidence of record, I recommend the Court award
Plaintiffs their requested amount of $132,466.42 in interest.
c) Liquidated Damages
Plaintiffs allege Defendant owes $103,612.80 in liquidated damages. Under ERISA, a
prevailing plaintiff is entitled to “liquidated damages provided for under the plan in an amount
not in excess of 20 percent . . . of the amount [of unpaid contributions] determined by the court.”
29 U.S.C. § 1132(g)(2)(C)(ii). Under the collective bargaining agreements:
If an Employer does not pay the amounts due to the Fund by the due date, that Employer
is delinquent and the following, in the discretion of the Trustees, will be added to and
become part of the amount due from the Employer: (1) liquidated damages in the amount
of ten percent (10%) of the amount due for the month if payment is not received by the
due date; an additional five percent (5%) liquidated damages if payment is not received
by the first (1st) of the month following the calendar month in which payment was due
and an additional five percent (5%) liquidated damages if payment is not received by the
fifteenth (15th) day of the month following the calendar month in which payment is due
plus interest from the due date to the date of payment at the rate determined by the
Trustees which may not exceed the rate provided under Section 6621 of the Internal
ECF No. 11-6, p.24; ECF No. 11-7, p. 21; ECF No. 11-8, p. 23. Based on these provisions, Eger
confirms that Defendant owes Plaintiffs $103,612.80 in liquidated damages. ECF No. 11-1, p. 2.
The claimed liquidated damages amount to exactly 20% of the total amount of unpaid
contributions, and thus do not violate the 20% cap under ERISA. 29 U.S.C. § 1132(g)(2)(C)(ii).
After reviewing the evidence of record, I recommend the Court award Plaintiffs $103,612.80 in
liquidated damages as claimed.
d) Attorneys’ Fees and Costs
Plaintiffs allege Defendant owes $750.00 in costs and $795.50 in attorneys’ fees. In an
ERISA action, a district court may award costs and reasonable attorneys’ fees to either party
under 29 U.S.C. § 1132(g)(1), so long as that party has achieved “some degree of success on the
merits.” Williams v. Metro. Life Ins. Co., 609 F.3d 622, 634 (4th Cir. 2010) (citing Hardt v.
Reliance Std. Life Ins. Co., 560 U.S. 242, 245 (2010) (citation omitted)).
The Supreme Court has established a method, commonly called the “lodestar,” for
determining a reasonable fee. The starting point in the lodestar calculation is multiplying the
number of reasonable hours expended by a reasonable rate. Robinson v. Equifax Info. Servs.,
LLC, 560 F.3d 235, 243 (4th Cir. 2009). The Court has endorsed a list of twelve factors, which
aid a court in determining a reasonable fee. These factors are:
(1) the time and labor required; (2) the novelty and difficulty of the questions;
(3) the skill requisite to perform the legal service properly; (4) the preclusion of
employment by the attorney due to acceptance of the case; (5) the customary fee;
(6) whether the fee is fixed or contingent; (7) time limitations imposed by the
client or the circumstances; (8) the amount involved and the results obtained;
(9) the experience, reputation, and ability of the attorneys; (10) the
“undesirability” of the case; (11) the nature and length of the professional
relationship with the client; and (12) awards in similar cases.
Id. at 243–44 (adopting the twelve factors articulated by the Fifth Circuit in Johnson v. Georgia
Highway Express, Inc., 488 F.2d 714 (5th Cir. 1974)).
A party seeking a fee award “must produce satisfactory specific evidence of the
prevailing market rates in the relevant community for the type of work for which she seeks an
award. See id. at 244 (citing Plyer v. Evatt, 902 F.2d 273, 277 (4th Cir. 1990) (citation omitted)).
However, failing to provide affidavits from independent counsel is not fatal, for the court may
rely on its own knowledge of the market in determining reasonable fees for that community.
While Plaintiffs have not provided information regarding the local market rate, the Local Rules
provide guidelines for determining an attorney’s reasonably hourly rate in Maryland:
Lawyers admitted to the bar for less than five (5) years: $150–225.
Lawyers admitted to the bar for five (5) to eight (8) years: $165–300.
Lawyers admitted to the bar for nine (9) to fourteen (14) years: $225–350.
Lawyers admitted to the bar for fifteen (15) years or more: $300–475.
Paralegals and law clerks: $95–150.
Local Rules App. B, 3 (D. Md.). Plaintiffs’ counsel, a partner at the law firm of O’Donoghue &
O’Donoghue, filed a declaration to support his contention that Plaintiffs have incurred $795.50
in attorneys’ fees. ECF No. 11-13. In the instant case, Johnson factors one and nine are most
persuasive in evaluating Plaintiffs’ request for attorneys’ fees. Factor one looks at the time and
effort Plaintiffs’ attorney spent preparing the Motion. Factor nine asks us to evaluate the fees
based on the experience of counsel because a more experienced attorney is expected to perform
more efficiently. Plaintiff’s counsel billed at an hourly rate of $310.00 and the paralegal billed at
an hourly rate of $122.00. ECF No. 11-13, p. 2. Mr. Gilligan has been a member of the Bar of
the United States District Court since 1986 and a partner at O’Donoghue & O’Donoghue since
1993. Id. at 1. The Local Rules advise that a reasonable hourly rate for an attorney admitted to
the bar for fifteen or more years is $300.00 to $475.00. Local Rule App. B, 3(d). Mr. Gilligan’s
rate of $310.00 per hour falls in that reasonable range. Ms. Teresa Butler, the paralegal,
graduated from college in 1983 with a degree in paralegal studies and has been employed by
O’Donoghue & O’Donoghue as a paralegal since 1985. ECF No. 11-13, p. 1. The Local Rules
advise that a reasonable hourly rate for a paralegal is somewhere between $95.00 and
$150.00. Id. at 3(e). Ms. Butler’s hourly rate of $122.00 also appears reasonable.
Plaintiffs’ counsel provided a detailed itemization of legal fees and costs. ECF No. 1114. The records show that Mr. Gilligan billed 0.50 hours and that the paralegal billed 5 hours in
the case. These hours are reasonable considering the amount of labor required to initiate the
case, take the necessary procedural steps in moving for default judgment, and prepare sufficient
evidence in support of the damages requested. Moreover, the requested legal costs in the amount
of $400.00 for filing and $350.00 for server fees are appropriate. Applying the lodestar method
and the Local Rules to Plaintiffs’ request, I recommend that the Court award Plaintiffs $750.00
in costs and $795.50 in attorneys’ fees.
Based on the foregoing, it is my recommendation that the Court DENY without prejudice
Plaintiffs’ Renewed Motion for Default Judgment Against Defendant. I recommend that
Plaintiffs be given fourteen (14) days to correct the deficiency in their motion by providing the
Court copies of the Collective Agreement and the Guidelines signed and dated by both parties.
If the documents are provided, I recommend the Court grant Plaintiffs’ motion and enter
judgment against Defendant for the awards enumerated above in the total amount of
March 31, 2017
Charles B. Day
United States Magistrate Judge
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