ITPEU PENSION FUND et al v. FRONTLINE SECURITY SERVICES

Filing 7

OPINION. Signed by Judge Kevin McNulty on 6/15/16. (cm )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY
ITPEU PENSION FUND, ITPEU
HEATH AND WELFARE FUND, and
ITPEU ANNUAL BENEFIT FUND,

Civ. No. 15-cv-6512 (KM)

Plaintiffs,

OPINION

V.

FRONTLINE SECURITY SERVICES,
Defendant.

KEVIN MCNULTY, U.S.D.J.:
This matter comes before the Court on the unopposed motion of Plaintiffs
ITPFU Pension Fund, ITPEU Health & Welfare Fund, and ITPEU Annual Benefit
Funi (collectively, “JTPEU”) for default judgment against Defendant Frontline
Security Services (“Frontline”). For the reasons set forth below, I will enter
default judgment against Frontline. ITPEU is awarded $43,823.65, comprising
(i) $41,434.65 in liquidated damages; and (ii) $2,389 in attorneys’ fees and
costs. Post-judgment interest will accrue from this date at the appropriate rate
pursuant to 28 U.S.C.

§ 1961.

BACKGROUND
Plaintiffs ITPEU Pension Fund, ITPEU Health & Welfare Fund, and ITPEU
Annual Benefit Fund are trust funds established pursuant to the National
Labcr Relations Act and Employment Retirement Income Security Act
(“ERISA”). (Compl.’

¶ 4)

Defendant Frontline is a government contractor which employs security
personnel represented by ITPEU, AFL-CIO (the “Union”). On August 27, 2014,
“Compl.” refers to the Complaint filed August 31, 2015. (Dkt. No. 1)
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Frontline signed a Memorandum of Acceptance agreeing to be bound be the
colleotive bargaining agreement (“Labor Contract”) entered into between the
Union and Frontline’s predecessor contractor. (Compi. Ex. 1) Frontline also
agreed to be bound by the Declarations of Trust for the various funds (“Trust
Agreements”). (Id.; Dkt. Nos. 6-10—6-12)
Under the Labor Contract, the employer is required to make monthly
payments into welfare, pension, and annuity funds, among others. The
employer was required to contribute certain amounts per hour worked by each
empoyee covered by the Labor Contract, up to forty hours per week: $0.05 to
the Pension Fund, $3.65 to the Annual Benefit Fund, and $3.81 to the Health
& Welfare Fund. (Ex. 1 (Dkt. No. 6-3) pp. 2—4) The contributions were to be
submitted monthly, and were due by the fifteenth day of the next calendar
mon :h. (See, e.g., Agreement and Deci. of Trust Establishing the ITPE Health &
Welfare Fund (Dkt. No. 6-10) p. 14) If an employer fails to make the required
payments, the Trust Agreements authorize the trustees to bring an action on
behalf of the plan pursuant to Sections 502(g)(2) and 515 of ERISA. (Id. p. 1415) Delinquent payments are subject to an interest rate of 1.5% per month and
liquidated damages of 20% of the amount of the delinquent contributions. (Id.
p. 15)
Frontline failed to make required payments to the Funds for the months
of April, May, June and July of 2015, in the amount of $230,508.46. (Compi.
¶j 1 —12) In August 13, 2015, ITPEU demanded payment from Frontline, and
notiied Frontline that the Welfare Fund had suspended the employees’
heal hcare benefits due to lack of payment. (Id.

¶

9; Ex. 2 (Dkt. No. 6-4))

Frortline failed to remit payment within the ten-day time period.
On August 31, 2015, ITPEU filed its complaint in this action. (Dkt. No. 1)
On October 6 and 7, 2015, Frontline confirmed via email that payments to
satisfy the unpaid obligations had been sent. (Exs. 2—4 (Dkt. Nos. 6-4—6-6))
Frontline has not, however, made any other payments against the liquidated
damages ITPEU claims are owed on the delinquent contributions.

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Frontline, though duly served, has not answered the complaint. (Dkt. No.
13) On October 13, 2015, the clerk entered default against Frontline. On
February 26, 2016, ITPEU filed this motion for a default judgment. ITPEU
seeks (i) liquidated damages in the amount of $41,434.65; (ii) $1,824 in
attorney’s fees; and (v) $565 in costs, for a requested award of $43,823.65.

LEGAL STANDARD AND DISCUSSION

“[Tihe entry of a default judgment is left primarily to the discretion of the
district court.” Hritz v. Woma Corp., 732 F.2d 1178, 1180 (3d Cir. 1984) (citing
Toze’-v. CharlesA. Krause Milling Co., 189 F.2d 242, 244 (3d Cir. 1951)).
Because the entry of a default judgment prevents the resolution of claims on
the rierits, “this court does not favor entry of defaults and default judgments.”
United States v. $55,518.05 in U.S. Currency, 728 F.2d 192, 194 (3d Cir. 1984).
Thus, before entering default judgment, the Court must determine whether the
“unciallenged facts constitute a legitimate cause of action” so that default
judgnent would be permissible. DirecTV, Inc. v. Asher, 2006 WL 680533, at *1
(D.N.J. Mar. 14, 2006) (citing Wright, Miller, Kane, 1OA Fed. Prac. & P. Civil 3d

§ 2688, at 58—59, 63).
“[Djefendants are deemed to have admitted the factual allegations of the
Complaint by virtue of their default, except those factual allegations related to
the amount of damages.” Doe v. Simone, 2013 WL 3772532, at *2 (D.N.J. July
17, 2013). While “courts must accept the plaintiff’s well-pleaded factual
alleg3tions as true,” they “need not accept the plaintiff’s factual allegations
regarding damages as true.” Id. (citing Chanel, Inc. v. Gordashevsky, 558 F.
Sup. 2d 532, 536 (D.N.J. 2008)). Moreover, if a court finds evidentiary
supr. ort to be lacking, it may order or permit a plaintiff seeking default
judgment to provide additional evidence in support of the allegations. Doe,
2013 WL 3772532, at *2.

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I.

Prerequisites for Entry of Default Judgment

Before a court may enter default judgment against a defendant, the
plair.tiff must have properly served the summons and complaint, and the
defedant must have failed to file an answer or otherwise respond to the
corn laint within the time provided by the Federal Rules, which is twenty-one
days. See Gold Kist, Inc. v. Laurinburg Oil Co., Inc., 756 F.2d 14, 18—19 (3d Cir.
198); Fed. R. Civ. p. 12(a).
V

Service of a corporate entity, such as Frontline, may be made by

delivring a copy of the summons and complaint to “an officer, a managing or
gencal agent, or any other agent authorized by appointment or by law to
recee service of process” or by following state law for serving a summons in
an ation brought in courts of general jurisdiction where the district court is
loca d or where service is made. Fed. R. Civ. P. 4(h)(1). New Jersey law states

in rc evant part that service on a corporation may be made
on any
by serving a copy of the summons and complaint
officer, director, trustee or managing or general agent, or any
person authorized by appointment or by law to receive service of
process on behalf of the corporation, or on a person at the
registered office of the corporation in charge thereof, or, if service
cannot be made on any of those persons, then on a person at the
principal place of business of the corporation in this State in
charge thereof, or if there is no place of business in this State, then
on any employee of the corporation within this State acting in the
discharge of his or her duties.
.

.

.

N.J. Dt. R. 4:4-4(a)(6).
If, despite diligent efforts, personal service cannot be made in accordance
witlN.J. Ct. R. 4:4-4(a)(1), inpersonam jurisdiction may nevertheless be
obtaned over any defendant by substituted or constructive service, in
accc.dance with N.J. Ct. R. 4:44(b)(1)(C), by
mailing a copy of the summons and complaint by registered or
certified mail, return receipt requested, and, simultaneously, by
ordinary mail to: (1) a competent individual of the age of 14 or
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over, addressed to the individual’s dwelling house or usual place of
abode; (2) a minor under the age of 14 or a mentally incapacitated
person, addressed to the person or persons on whom service is
authorized by paragraphs (a)(2) and (a)(3) of this rule; (3) a
corporation, partnership or unincorporated association that is
subject to suit under a recognized name, addressed to a registered
agent for service, or to its principal place of business, or to its
principal place of business, or to its registered office.
N.J. Dt. R. 4:4-4(b)(3).
Here, the prerequisites for default judgment have been met. The
Complaint was filed on August 31, 2015. (Dkt. No. 1) Frontline’s Office
Maniger, Judith Welch, was served with the Summons and a copy of the
Corn Dlaint on September 11, 2015. (Dkt. No. 3) Defendant had twenty-one days
(unti October 2, 2015) to file an answer or otherwise respond to the Complaint
pure iant to Fed. R. Civ. p. 12(a). The clerk entered default against Frontline
on Cotober 13, 2015. (Dkt. Entry following Dkt. No. 4) Accordingly, I am
sati Ied that the prerequisites to filing a default judgment are met. See Gold
Kist, 756 F.2d at 18—19.
H.

Three Factor Analysis

After the prerequisites have been satisfied, a court must evaluate the
follc.ring three factors: “(1) whether the party subject to default has a
merorious defense, (2) the prejudice suffered by the party seeking default, and
(3) tze culpability of the party subject to default.” Doug Brady, Inc. v. N.J. Bldg.
Labcrers Statewide Funds, 250 F.R.D. 171, 177 (D.N.J. 2008) (citing Emcasco
Ins. ¶‘o. v. Sambrick, 834 F.2d 71, 74 (3d Cir. 1987)). Those factors, considered
in li;ht of the record of this case, weigh in favor of entry of a default judgment.
a. Factor 1
The evaluation of the first factor is complicated, of course, by Frontline’s
failtie to answer or Lo oppose this motion. My independent review of the
recozd, however, does not suggest that the claims asserted by ITPEU against
FrorJine are legally flawed or that Frontline could mount a meritorious

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defense. See Doe, 2013 WL 3772532, at *5 Accepting the allegations in the
Complaint as true, Comdyne I, Inc. v. Corbin, 908 F.2d 1142, 1149 (3d Cir.
1990), I find that ITPEU has successfully stated claims for relief as against
Frontline.
The complaint alleges that Frontline violated ERISA and the Labor
Management Relations Act of 1947 (“LMRA”). ERISA requires employers who
make contributions under a collective bargaining agreement to do so in
accordance with the terms of that agreement. See 29 U.S.C

§ 1145. The LMRA

allows a court to hear “suits for violation of contracts between an employer and
a labor organization.” 20 U.S.C.

§ 185(a). ITPEU alleges that Frontline was

bound by the Labor Contract with the Union and related trust agreements and
was required to make monthly contributions to various benefits funds based
upon the number of hours worked per employee. (Compi. ¶j 6, 7; see also Ex.
1 pp. 2-4) ITPEU has provided documentation that Frontline was bound by the
Labor Contract pursuant to a Memorandum of Acceptance signed by Frontline
on August 27, 2015. (Compi. Ex. 1 (Dkt. No. 1-1)) ITPEU has also submitted
the related Trust Agreements, pursuant to which Frontline was obligated to
make the alleged payments. (Dkt. Nos. 6-10—12) ITPEU alleges that Frontline
failed to make those required payments between April and July, 2015. (Compi.
¶j 9, 10) In accordance with the Labor Contract and Trust Agreements, ITPEU
made a demand for payment from Frontline for the delinquent contributions,
but payment was not received. (Id.

¶ 9, Ex. 2 (Dkt. No. 1-2)). Nothing in the

documents before the Court suggests that Frontline possesses a meritorious
defense.
b. Factors 2 and 3
The second and third factors weigh in favor of default. Frontline was
properly served on September 11, 2015, but failed to appear and defend itself
in any manner. It is clear that ITPEU has been prejudiced by this dereliction
because it has been “prevented from prosecuting [its] case, engaging in
discovery, and seeking relief in the normal fashion.” See Teamsters Pension

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Fun.. of Philadelphia & Vicinity v. Am. Helper, Inc., 2011 WL 4729023, at *4
(D.N J. Oct. 5, 2011) (find that a defendant’s failure to answer prejudices the
plaiitiff); see also Gowan v. Cont’l Airlines, Inc., 2012 WL 2838924, at *2
(D.N.J. Jul. 9, 2012) (“[Plaintiffs] will suffer prejudice if the Court does not
ente,: default judgment as Plaintiff[sj [have] no other means of seeking damages
for te harm caused by Defendant.”). Absent any evidence to the contrary, “the
Defe adant’s failure to answer evinces the Defendant’s culpability in [the]
defpilt. Teamsters Pension Fund of Philadelphia & Vicinity, 2011 WL 4729023
at

‘.

In this case, “there is nothing before the Court to show that the

Defeidant[s’] failure to file an answer was not willfully negligent.” Id. (citing
Pruc ntial Ins. Co. of America v. Taylor, 2009 WL 536043, at *1 (D.N.J. Feb. 27,
200) (finding that when there is no evidence that the defendant’s failure to
ans: er the complaint was due to something other than its own willful
neglence, the defendant’s conduct is culpable and default judgment is
warnted).
Overall, then, the three factors support the entry of default judgment
agai st Frontline, and I will grant the motion for default judgment.
III.

Remedies

ITPEU seeks two types of compensation, totaling $43,823.65. (See Br. in
Sup.ort of Motion for Judgment by Default (Dkt. No. 6-1) (“Br.”) at pp. 7—9)
Speifically, ITPEU seeks (1) $41,434.65 in liquidated damages; and (2)
$2,39.00 for attorneys’ fees and costs. (See ici.)
ITPEU has submitted documentary evidence in support of its demands,
whih Frontline has submitted nothing and has failed to appear or respond in
any aanner. An ex parte hearing would thus serve little additional purpose, so
I ru’i based on the record before me.
ITPEU has documented the delinquent payments made to the Funds
after filing of the complaint in this case. (Exs. 2—4 (Dkt. Nos. 6-4—6-6) (noting
wire paid to funds in October, 2015)) As of October 20, 2015, there were no

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cont:ibutions remaining outstanding. (Ex. 5 (Dkt. No. 6-7)) However, because
there were unpaid contributions outstanding at the time ITPEU filed the
cornilaint, ITPEU has requested liquidated damages in the amount of 20% of
the unpaid contributions pursuant to 29 U.S.C. 1 132(g)(2). (See Br. pp. 7—9)
Specifically, ITPEU seeks $12,975.40 in liquidated damages for the Welfare
1
Funt (representing 20% of $64,877), $28,100.25 for the Annual Benefit Fund
(repsenting 20% of $140,504.77), and $359 for the Pension Fund
(representing 20% of $1,799.46, for a total liquidated damages figure of
$41,434.65. (Ex. 5 (Dkt. No. 6-7)) ERISA provides that a court shall award “an
amount equal to the greater of

—

(i) interest on the unpaid contributions, or (ii)

liqui’iated damages provided for under the plan in an amount not in excess of
20 prcent.” 29 U.S.C. §1 132(g)(2)(C). The Declaration of Trust here provides
for “iiquidated damages equal to 20% of the unpaid contributions.” (Ex. 8 (Dkt.
No. ;..-10) p. 15) It is not documented whether interest was paid on the
deli: .quent contributions, but because there are no more delinquent
contibutions outstanding, there is no further interest. At any rate, I would
find, within my discretion, that an award of liquidated damages is warranted.
That liquidated damages figure—20% of $207,181.23—equals $41,434.65. I
will :ward ITPEU liquidated damages of $41,434.65.
As to attorneys’ fees and costs, I adopt ITPEU’s analysis. ITPEU has
adeçuately documented its attorneys’ fees, which do not seem unreasonable or
disp:oportionate. (See Trust Agreements

§ 7.02(d) (giving prevailing party the

righ to recover “reasonable attorneys’ fees and costs”); Decl. of Susan A.
Muray, dated Feb. 25, 2016 (Dkt. No. 6-8)

¶ 4; Ex. 7 (Dkt. No. 6-9) (billing

statcment)) I will enter a judgment that includes $1,824 in attorneys’ fees and
$56E in costs, for a total of $2,389.
The total judgment awarded is, therefore, $43,823.65. Post-judgment
per iem interest will accrue from this date at the appropriate rate pursuant to
28 I.S.C.

§ 1961.

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CONCLUSION

For the foregoing reasons, the motion is granted as to defendant
Frontline, and a default judgment will be entered against defendant Frontline
and n favor of plaintiff ITPEU in the total amount of $43,823.65, with postjudgment interest from this date at the appropriate rate pursuant to 28 U.s.c.

§ 1951.
An appropriate order and judgment will issue.

KE IN MCNULTY, U.S.D.J.

Datei: June 15, 2016

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