ALCATEL-LUCENT USA INC. et al v. BORLABI et al
Filing
208
OPINION. Signed by Judge Madeline C. Arleo on 6/16/2016. (ld, )
NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
ALCATEL-LUCENT USA INC., et al.
Plaintiffs,
Civil Action No. 13-4543
v.
OPINION
SAMUEL BORLABI, et al.,
Defendants.
ARLEO, UNITED STATES DISTRICT JUDGE
This matter comes before the Court by way of Alcatel-Lucent USA Inc. (“ALU”), AlcatelLucent Retirement Income Plan (“ALRIP”), and Lucent Technologies Inc. Pension Plan’s
(“LTPP”) (collectively, “Plaintiffs”) Motion for Default Judgment pursuant to Federal Rule of
Civil Procedure 55(b) against Defendant Pamela Neeley (“Defendant”), Dkt. No. 195. For the
reasons stated below, the motion is GRANTED.
I.
BACKGROUND
ALU is a Delaware corporation with its principal place of business in Murray Hill, New
Jersey. Compl. ¶ 1, Dkt. No. 1. ALU is the named Plan Administrator for the LTPP, an
employee benefit plan as defined by the Employee Retirement Income Security Act of 1974
(“ERISA”). Id. ¶¶ 4-5. As the Plan Administrator, ALU is a fiduciary of the LTPP as defined
by ERISA. Id. ¶ 5.
Defendant was a participant in the LTPP and had vested benefits with the LTPP. Id. ¶ 55.
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Prior to 2012, Defendant received payment from the LTPP in satisfaction of the benefits to which
Defendant was entitled from the LTPP. Id. ¶ 56; Cert. of Susan Lear (“Lear Cert.”) ¶ 5, Dkt. No.
195-3.
In November 2012, the LTPP mistakenly paid Defendant an additional amount of
$233,691.92 that she was not entitled to. Compl. ¶ 57; Lear Cert. ¶¶ 8-13. The LTPP notified
Defendant of the error and demanded return of the overpayment by written letters sent on January
16, 2013 and February 15, 2013. Compl. ¶ 58; Lear Cert. Exs. H-I. Defendant has not returned
the overpayment. Compl. ¶ 59; Lear Cert. ¶ 17.
Plaintiffs filed this lawsuit on July 26, 2013, seeking to recover the overpayment of LTPP
assets from Defendant for breach of fiduciary duty under 29 U.S.C. 1109(a).
Dkt. No. 1.
Defendant answered on October 21, 2013, Dkt No. 7, and was appointed pro bono counsel on May
19, 2014, Dkt. Nos. 79-80. Defendant filed a motion to dismiss on August 15, 2014, which was
denied. Dkt. Nos. 96, 119. Defendant filed an amended answer on April 3, 2015. Am. Answer,
Dkt. No. 124. On October 27, 2015, Defendant failed to appear for a court-ordered settlement
conference. Dkt. No. 175. Three days later, Defendant’s appointed counsel filed a motion to
withdraw due to “an irretrievable breakdown in the attorney-client relationship” and an inability
to communicate with Defendant for the past three months. Mot. to Withdraw ¶ 6, Dkt. No. 177.
Counsel’s motion to withdraw was granted on December 18, 2015 and Defendant was ordered to
either file a letter of intent to appear pro se or to obtain new counsel by January 15, 2016. Order
Granting Mot. to Withdraw, Dkt. No. 188. Defendant disregarded the order and has failed to
appear or otherwise defend against this action since. On February 4, 2016, the Court ordered that
Defendant be found in default pursuant to Fed. R. Civ. P. 55(a). Dkt. No. 192. The Clerk of the
Court entered default against Defendant the next day. Id. On March 22, 2016, Plaintiffs moved
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for entry of default judgment. Dkt. No. 195.
II.
STANDARD OF REVIEW
“The district court has the discretion to enter default judgment, although entry of default
judgments is disfavored as decisions on the merits are preferred.” Animal Sci. Prods., Inc. v.
China Nat’l Metals & Minerals Imp. & Exp. Corp., 596 F. Supp. 2d 842, 847 (D.N.J. 2008).
Before entering default judgment the court must: (1) determine it has jurisdiction both over the
subject matter and parties; (2) determine whether defendant have been properly served; (3) analyze
the Complaint to determine whether it sufficiently pleads a cause of action; and (4) determine
whether the plaintiff has proved damages. See Chanel, Inc. v. Gordashevsky, 558 F. Supp. 2d
532, 535-36 (D.N.J. 2008); Wilmington Savings Fund Soc., FSB v. Left Field Props., LLC, No.
10-4061, 2011 WL 2470672, at *1 (D.N.J. June 20, 2011). Although the facts pled in the
Complaint are accepted as true for the purpose of determining liability, the plaintiff must prove
damages. See Comdyne I, Inc. v. Corbin, 908 F.2d 1142, 1149 (3d Cir. 1990).
Additionally, prior to granting default judgment, the Court must make explicit factual
findings as to: (1) whether the party subject to the default has a meritorious defense; (2) the
prejudice suffered by the party seeking default judgment; and (3) the culpability of the party
subject to default. Doug Brady, Inc. v. N.J. Bldg. Laborers Statewide Funds, 250 F.R.D. 171, 177
(D.N.J. 2008) (citing Emcasco Ins. Co. v. Sambrick, 834 F.2d 71, 74 (3d Cir. 1987)).
III.
ANALYSIS
A. Jurisdiction & Service
The Court has both subject matter jurisdiction over this dispute and personal jurisdiction
over Defendant. Subject matter jurisdiction here is present pursuant to 28 U.S.C. § 1331 as this
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suit arises under the Employee Retirement Income Security Act of 1974.
The statutory and constitutional dimensions of personal jurisdiction have also been
satisfied. See Max Daetwyler Corp. v. R. Meyer, 762 F.2d 290, 293 (3rd Cir. 1985) (“Because
personal jurisdiction necessarily addresses both the power of the court to create or affect legal
interests and the rules of competence whereby adjudicatory authority is asserted, it is tested against
both constitutional and statutory standards.”). As to the statutory dimension, Fed. R. Civ. P. 4(e)
provides that a Court has jurisdiction over a defendant if he is served “pursuant to the law of the
state in which the district is located . . . [u]nless otherwise provided by federal law.” In this case,
ERISA provides for the Court’s nationwide exercise of personal jurisdiction by permitting the
service of process “in any other district where a defendant resides or may be found.” 29 U.S.C.
§ 1132(e)(2). Because Defendant was served with process within the United States, the statutory
component of personal jurisdiction is satisfied.
The Court must also determine whether exercising jurisdiction over the defendant satisfies
the due process clause of the Fifth Amendment. In doing so, the Court ascertains whether
“‘certain minimum contacts’ exist between the non-resident defendant and the forum such ‘such
that maintenance of the suit does not offend traditional notions of fair play and substantial justice.’”
Max Daetwyler, 762 F.2d at 293 (quoting Int’l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)).
In this case, the relevant forum with which to assess Defendant’s minimum contacts is the United
States as a whole. Pinker v. Roche Holdings Ltd., 292 F.3d 361, 369 (3d Cir. 2002). Where
Congress “authoriz[es] nationwide service of process . . . the jurisdiction of a federal court need
not be confined by the defendant’s contacts with the state in which the federal court sits.” Pinker,
292 F.3d at 369; see also In re Fruehauf Trailer Corp., 250 B.R. 168, 199 (D. Del. 2000). Instead,
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“a federal court’s personal jurisdiction may be assessed on the basis of the defendant’s national
contacts . . . .” Pinker, 292 F.3d at 369. Here, because all the acts underlying the alleged ERISA
violations occurred within the United States, Defendant has sufficient minimum contacts with the
United States to support personal jurisdiction in this Court.
The Court next assesses whether exercising personal jurisdiction would offend traditional
notions of fair play and substantial justice. Burger King Corp. v. Rudzewicz, 471 U.S. 462, 478
(1985).1 In this case, this Court’s exercise of personal jurisdiction over Defendant is fair and just.
She participated in and received benefits from an employee benefit plan administered by a
corporation operating in New Jersey. She also appeared in this case, answered, was appointed
pro bono counsel, moved to dismiss, filed an amended answer with counterclaims, and opposed
Plaintiffs’ motions to compel discovery. The Court is satisfied that it can exercise personal
jurisdiction over Defendant.
Finally, the Court finds that service was proper as Plaintiffs provided proof of service on
Defendant at her dwelling in Whitwell, Tennessee. See Aff. of Service, Dkt. No. 14.
B. Liability
“A consequence of the entry of a default judgment is that the factual allegations of the
complaint, except those relating to the amount of damages, will be taken as true.” Comdyne I,
908 F.2d at 1149. The Complaint pleads facts which, taken as true, establish Defendant’s liability
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The Third Circuit has not yet addressed whether a fairness analysis is required under ERISA’s
nationwide service provision, but it has stated in dicta that such an analysis “would be appropriate.”
Pinker, 292 F.3d at 370 n.2; cf. Peay v. Bell South Med. Assistance Plan, 205 F.3d 1206, 1212
(10th Cir. 2000) (requiring a fairness analysis beyond a pure national contacts test). In an
abundance of caution, the Court assumes a fairness analysis is required.
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for breach of fiduciary duty under ERISA.2 To plead breach of fiduciary duty under ERISA, a
plaintiff must allege that (1) the defendant is a plan fiduciary, (2) the defendant breached its
fiduciary duty, and (3) the breach resulted in losses to the plan. See 29 U.S.C. § 1109; In re
Schering-Plough Corp. ERISA Litigation, 420 F.3d 231, 235 (3d Cir. 2005); Kenseth v. Dean
Health Plan, Inc., 610 F.3d 452, 464 (7th Cir. 2010).
First, Plaintiffs have pled facts that Defendant was a plan fiduciary. A plan fiduciary is
anyone who “exercises any authority or control respecting management or disposition of [plan]
assets.” 29 U.S.C. § 1002(21)(A). “ERISA ‘defines fiduciary not in terms of formal trusteeship,
but in functional terms of control and authority over the plan . . . .’” Srein v. Frankford Trust Co.,
323 F.3d 214, 220-21 (3d Cir. 2003) (quoting Mertens v. Hewitt Assocs., 508 U.S. 248, 262
(1993)). “The plain language of this statute encompasses those who knowingly and unlawfully
retain plan assets to which they are not entitled . . . .” Carpenters Sav. Fund v. Kuloszewski, 2011
U.S. Dist. LEXIS 136014, at *2 (D.N.J. Nov. 28, 2011); see also Chao v. Day, 436 F.3d 234 (D.C.
Cir. 2006) (holding that an insurance agent who misappropriated plan assets for himself was a
fiduciary because he exercised control over plan assets); Int’l Painters & Allied Trades Indus.
Pension Fund v. Aragones, 643 F. Supp. 2d 1329, 1336-37 (M.D. Fla. 2008) (finding that
defendant was a fiduciary where she refused to return ERISA funds upon notice of overpayment).
In this case, Defendant became a plan fiduciary because she retained control over Plan
assets she was not entitled to. The LTPP mistakenly transferred $233,691.92 of its assets to
Defendant’s personal money market account, and she refused to return the assets after the LTPP
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Plaintiffs’ other causes of action—including unjust enrichment—would not alter the damages in
this case, so the Court does not analyze the sufficiency of those pleadings.
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informed her of the erroneous transfer and requested repayment of the funds. Compl. ¶¶ 57-59,
106-08; Lear Cert. ¶¶ 8-17. In withholding the funds, Defendant continues to obstruct the LTPP’s
access to and use of the funds it overpaid to her.
Accordingly, Plaintiffs have pled facts
establishing that Defendant was a plan fiduciary.
Plaintiffs have also sufficiently pled the second and third prongs; that Defendant breached
her fiduciary duty owed to the LTPP under 29 U.S.C. § 1104 by failing to return the erroneous
overpayment and instead using it for her own benefit, Compl. ¶ 109, and that the breach resulted
in losses to the plan in the amount of $233,691.92, Lear Cert. Exs. F-G. Therefore, Plaintiffs have
sufficiently alleged a cause of action for breach of fiduciary duty under ERISA.
C. Appropriateness of Default Judgment
Next, the Court must consider (1) whether the party subject to the default has a meritorious
defense; (2) the prejudice suffered by the party seeking default judgment; and (3) the culpability
of the party subject to default. Doug Brady, 250 F.R.D. at 177. First, the Court concludes that
Defendant lacks any meritorious defense. The showing of a meritorious defense is accomplished
when “allegations of a defendant’s answer, if established at trial, would constitute a complete
defense to the action.” United States v. $55,518.05 in U.S. Currency, 728 F.2d 192, 195 (3d Cir.
1984) (citations omitted). To fulfill this requirement, Defendant’s answer must have “alleged
specific facts beyond simple denials or conclusory statements.” Id. (citations omitted).
In this case, Defendant has failed to articulate any facts supporting a defense that would
warrant the Court’s abstention from entering default judgment.
Defendant advanced ten
affirmative defenses, including that “Plaintiffs’ Complaint fails to state a legally cognizable cause
of action,” “Plaintiffs have failed to join a necessary party,” and that Plaintiffs’ claims are barred
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by “the equitable doctrine of estoppel,” “unclean hands,” and “unconscionability.” See Am.
Answer at 16-17.
None of these boilerplate defenses are supported by factual allegations.
Accordingly, this factor weighs in favor of granting default judgment. See e.g., U.S. Bank Nat.
Ass’n v. Smith, No. 14-4324, 2015 WL 437572, at *3 (E.D. Pa. February 3, 2015) (finding no
meritorious defenses where the answer only “contains conclusory denials and boilerplate
affirmative defenses”).
Second, the Court finds that Plaintiffs will suffer prejudice absent entry of default judgment
as it would have no other means of obtaining relief.
Third, Defendant acted culpably as she has been served with the Complaint, exhibited a
history of dilatory behavior, and has failed to participate in this litigation since July 2015 in
violation of multiple Court orders. See Nationwide Mut. Ins. Co. v. Starlight Ballroom Dance
Club, Inc., 175 F. App’x 519, 523 (3d Cir. 2006) (holding that a defendant’s failure to respond to
communications from the plaintiff and the court can constitute culpability); Hritz v. Woma Corp.,
732 F.2d 1178, 1184 (3d Cir. 1984) (“[A] trial judge [may] enter a default judgment to sanction a
party who has callously disregarded repeated notices of a judicial proceeding.”).
D. Monetary Damages
Although the facts pled in the Complaint are accepted as true for the purpose of determining
liability, Plaintiffs must prove damages. See Comdyne I, 908 F.2d at 1149. If the damages are
for a sum which can be made certain by computation, inquiry into extrinsic evidence is
unnecessary. See id. Plaintiffs seek restitution in the amount of $207,645.17, measured by the
amount of overpaid benefits that Defendant still had in her money market account after this lawsuit
commenced.
Plaintiffs prove this amount by providing documentation that a $233,691.92
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pension commencement package was sent to Defendant in November 2012, Lear Cert. Exs. F-G,
and that its transfer was erroneous because Defendant had already been paid all pension benefits
to which she was entitled, id. Exs. B-D. Plaintiffs also prove that letters were sent to Defendant
on January 16, 2013 and February 15, 2013 requesting return of the erroneous overpayment, id.
Exs. H-I, and that Defendant still possessed $207,645.17 of the overpayment as of October 1, 2013,
more than two months after the Complaint was filed, Cert. of Peter Knob, Esq. Ex. A at 70:1971:4, Dep. of Pamela Neeley; Ex. B., Dkt. No. 195-2.
Because Defendant is a fiduciary of the plan, as discussed above, she is personally liable
and must “make good to such plan any losses to the plan resulting from each such breach.” 29
U.S.C. § 1109(a). After reviewing the affidavits of Peter Knob, Esq. and Susan Lear, the Court
is satisfied that the sum of the overpayment remaining in Defendant’s money market account after
Plaintiffs filed the Complaint is accurately calculated. Because the sum can be made certain by
computation, “[n]o further evidence is required to substantiate this amount.”
Days Inns
Worldwide, Inc. v. Mayu & Roshan, LLC, No. 06-1581, 2007 WL 1674485, at *6 (D.N.J. June 8,
2007). Therefore, Plaintiffs are entitled to default judgment in the total amount of $207,645.17.
E. Dismissal of Counterclaims
Finally, the Court dismisses Defendant’s five counterclaims for failure to prosecute the
action under Fed. R. Civ. P. 41(b). See, e.g., Link v. Wabash R. Co., 370 U.S. 626, 631 (1962)
(“The authority of a court to dismiss sua sponte for lack of prosecution has generally been
considered an ‘inherent power.’”). When determining whether to dismiss a complaint pursuant
to Rule 41(b), the Court must weigh six factors: (1) the extent of the party’s personal responsibility,
(2) prejudice to the adversary, (3) history of dilatoriness, (4) willful or bad faith conduct of an
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attorney, (5) alternative sanctions, and (6) meritoriousness of a claim or defense. Poulis v. State
Farm Fire and Cas. Co., 747 F.2d 863, 868 (3d Cir. 1984). However, where a Plaintiff has
“indicated a desire to abandon her case,” as has happened here, the district court need not engage
in a detailed examination of the Poulis factors. Porten v. Auto Zone, No. 10-2629, 2011 WL
2038742, *2 (D.N.J. May 24, 2011) (citing Spain v. Gallegos, 26 F.3d 439, 455 (3d Cir. 1994)).
The first factor supports dismissal. Defendant’s disregard of multiple Court orders and
subsequent refusal to participate in this case in any capacity culminated in her default more than
four months ago. The Court recognizes that as a pro se litigant, Plaintiff is not represented by
counsel and may encounter challenges that a represented party would not face. However, at the
same time Plaintiff cannot contend that her failure to prosecute this matter is the fault of her
counsel. See, e.g., Clarke v. Nicholson, 153 Fed. App’x 69, 73 (3d Cir. 2005), cert. denied, 548
U.S. 907 (2006) (“[U]nlike a situation in which a dismissal is predicated upon an attorney’s error,
the plaintiff here was pro se and directly responsible for her actions and inaction in the litigation.”).
The second, third, and fourth factors also support dismissal. Defendant’s inactivity,
failure to comply with the Court’s orders, and apparent abandonment of her claims has prejudiced
Plaintiffs. Plaintiffs have been unable to prepare a defense of this matter because Defendant has
failed to appear for scheduled conferences designed to move this case forward and has failed to
contact the Court to reschedule. Moreover, her history of dilatoriness and bad faith are reflected
in the fact that her counsel withdrew in December of last year due to her “resist[ing] participation
in this matter since the outset,” Mot. to Withdraw ¶ 6, and Defendant has since failed to retain new
counsel or proceed pro se. See Ingris v. Borugh of Caldwell, No. 14-855, 2016 WL 241400, at
*2 (D.N.J. Jan. 5, 2016), adopted by No. 14-855, 2016 WL 237097 (D.N.J. Jan. 20, 2016).
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Finally, the fifth and sixth factors also favor dismissal. Dismissal is warranted because
alternative sanctions such as fines are often inappropriate or impractical when a party is proceeding
pro se; there is no plausible reason to believe that such a sanction would spur Defendant to resume
litigating this case. See Emerson v. Thiel College, 296 F.3d 184, 191 (3d Cir. 2002). Nor do
Defendant’s claims appear to be meritorious.
However, in light of Defendant’s complete
withdrawal from the case, the Court cannot adequately assess their validity. Therefore, the
meritoriousness factor is neutral. See Porten, 2011 WL 2038742, *3.
On balance, the Poulis factors weigh in favor of dismissal. Accordingly, Defendant’s
counterclaims are dismissed with prejudice for failure to prosecute pursuant to Fed. R. Civ. P.
41(b).
IV.
CONCLUSION
For the foregoing reasons, Plaintiffs’ Motion for Default Judgment, Dkt. No. 195, is
GRANTED, and Defendant’s counterclaims are dismissed with prejudice for failure to prosecute
pursuant to Fed. R. Civ. P. 41(b). An appropriate order accompanies this opinion.
Dated: June 16, 2016
/s Madeline Cox Arleo
MADELINE COX ARLEO
United States District Judge
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