GCIU-EMPLOYER RETIREMENT FUND et al v. HARVARD PRESS, INC. et al

Filing 9

OPINION. Signed by Judge Madeline C. Arleo on 12/20/16. (DD, )

NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY
GCIU-EMPLOYER RETIREMENT FUND, et
al.,
Civil Action No. 16-1074
Plaintiffs,
OPINION
v.
HARVARD PRESS, INC., et al.,
Defendants.

ARLEO, UNITED STATES DISTRICT JUDGE
THIS MATTER comes before the Court on Plaintiffs GCIU-Employer Retirement Fund
(the “Pension Fund”) and Board of Trustees of the GCIU-Employer Retirement Fund’s (“Board
of Trustees”) (together, “Plaintiffs”) motion for default judgment against Defendants Harvard
Press, Inc. (“Harvard Press”), Harvard Printing Co. (“Harvard Printing”), and Wilrick, LLC
(together, “Defendants”) pursuant to Federal Rule of Civil Procedure 55(b). Dkt. No. 7. For the
reasons set forth herein, the motion is GRANTED in part and DENIED in part.
I.

BACKGROUND
This matter arises from Plaintiffs’ claim for withdrawal liability pursuant to the Employee

Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1381.
The Pension Fund is a “multi-employer pension plan” within the meaning of ERISA, 29
U.S.C. §§ 1002(37) and 1301(a)(3). Compl. ¶ 3, Dkt. No. 1. Plaintiff Board of Trustees is the
named fiduciary of the Pension Fund within the meaning of ERISA, 29 U.S.C. § 1102(a), and is
the plan sponsor of the Pension Fund within the meaning of ERISA, 29 U.S.C. §§ 1002(16)(B)(iii)

1

and 1301(a)(10). Id. ¶ 4. The Board of Trustees administers the Pension Fund from City of
Industry, California. Id.
Defendants are New Jersey corporations. Id. ¶¶ 6-8. Defendants are under common control
and constitute a single “employer” within the meaning of ERISA. Id. ¶ 9. Defendant Harvard
Press was bound by a collective bargaining agreement with Graphic Communications International
Union Local 612M (“GCIU Local”), effective June 1, 2006 through May 31, 2009. Id. ¶¶ 12-15;
Exs. B and E, Dkt. No. 1-1. Defendant Harvard Press was also a party to a “Pension Subscription
Agreement” that required it to contribute to the Pension Fund through at least June 1, 2008. Id.
Ex. C., Dkt. No. 1-1.
On December 1, 2009, defendant Harvard Printing “permanently ceased operations,”
resulting in a complete withdrawal from the Pension Fund pursuant to 29 U.S.C. § 1383(a). Id. ¶
16. On February 25, 2010, Plaintiffs issued Defendants a Notice of Complete Withdrawal Liability
and Demand for Payment (the “Notice and Demand”), requesting a sum of $1,079,200. Id. ¶ 17,
Ex. D, Dkt. No. 1-1. Defendants did not respond within the ninety-day statutory period to dispute
the accounting provided by the Notice and Demand. Id. ¶ 19. On August 6, 2010, Plaintiffs then
issued a Notice of Failure to Pay Withdrawal Liability and Demand for Cure (“Demand for Cure”).
Id. ¶ 20. The Demand for Cure required payment within 60 days of Defendants’ receipt of the
letter. Id., Ex. E, Dkt. No. 1-1. Defendants failed to subsequently initiate arbitration as provided
by ERISA, or make any withdrawal liability payments to Plaintiffs. Id. ¶¶ 21-22.
Plaintiffs commenced this action on February 25, 2016. An Entry of Default was issued
on April 8, 2016. Dkt. entry dated April 8, 2016. Plaintiffs subsequently filed this motion for
default judgment on May 12, 2016.

2

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 defendants 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 Sav. 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).
III.

ANALYSIS
A. Jurisdiction & Service
The Court concludes it has both subject matter jurisdiction over this dispute and personal

jurisdiction over Defendants. The ERISA statute grants this Court exclusive subject-matter
jurisdiction over the claims. 29 U.S.C. § 1132(e)(1). The Court also has diversity jurisdiction
pursuant to 28 U.S.C. § 1331. The Court has personal jurisdiction over Defendants, which are all

3

corporations established under the laws of New Jersey. Plaintiff also provided the Court with
proof of personal service of Defendants by leaving a copy of the Summons and Complaint with
their attorney and authorized agent to accept service. Dkt. No. 4.
B. Liability
Plaintiffs have pled an ERISA claim against Defendants. Under ERISA, “if an employer
withdraws from a multiemployer pension plan . . . then the employer is liable to the plan in the
amount determined . . . to be the withdrawal liability.” 29 U.S.C. § 1381. The fund has an
obligation to: (1) determine Defendants’ withdrawal liability; (2) notify Defendants of the amount
of withdrawal liability; and (3) collect the amount of withdrawal liability from the employer
Defendants. Trucking Employees of North Jersey Welfare Fund, Inc. – Pension Fund v. Caliber
Auto Transfer, Inc., No. 08-2782, 2009 WL 3584358, at *1 (D.N.J. Oct. 27, 2009) (citing 29 U.S.C.
§ 1382).
The Pension Fund has complied with all the requirements of ERISA here. Plaintiffs issued
a Notice and Demand letter, dated February 25, 2010, that notified Defendants of their liability.
In addition, the letter provided a payment schedule of $4,922.08 a month over the course of 240
months commencing on January 1, 2010. Compl. Ex. D, Dkt. No. 1-1. The Pension Fund informed
Harvard Press of its right to make a “request for review or objection to the assessment” within 90
days of receipt of the letter. Id. Plaintiffs subsequently issued a Demand for Cure to Harvard
Press, dated August 6, 2010. The Demand for Cure informed Harvard Press that “if payment in
accordance with the schedule is not made in full within 60 days . . . [it] will be in default of its
withdrawal liability assessment.” Compl. Ex. E, Dkt. No. 1-1. At that time, “the entire assessment
and interest rate shall be immediately due.” Id. Harvard Press has failed to seek a review of the
assessment, initiate arbitration proceedings against Plaintiffs, or make any payments pursuant to

4

the schedule. Compl. ¶¶ 19-22. Therefore, Plaintiffs have stated a sufficient cause of action for
withdrawal liability 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. The Court concludes that in the
absence of any responsive pleading and based upon the facts alleged in the Complaint, Defendants
do not have a meritorious defense. 1 See Ramada Worldwide Inc. v. Courtney Hotels USA, LLC,
No. 11-896, 2012 WL 924385, at *5 (D.N.J. Mar. 19, 2012). Second, the Court finds that Plaintiffs
will suffer prejudice absent entry of default judgment as Plaintiffs will have no other means of
obtaining relief. Finally, the Court finds the Defendants acted culpably as they have been served
with the Complaint and Defendants are not infants, otherwise incompetent, or presently engaged
in military service. See Affidavits of Service, Dkt. No. 4; Super 8 Worldwide, Inc. v. Sairam
Corp., No. 13-6161, 2014 WL 4388697, at *2 (D.N.J. Sept. 4, 2014); see also 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).

1

The only filing made in this case from a party other than Plaintiffs is a letter from Brian W. Fahey
to Plaintiffs’ counsel, dated April 15, 2016, which copied the Clerk’s Office of this Court. Fahey
Letter, Dkt. No. 6. The letter was filed following the Clerk’s entry of default. In the letter, Mr.
Fahey asserts that he “represented [Defendants] in a prior litigation against a local GCIU affiliate,”
and asks Plaintiffs to stipulate to suspend the instant matter to verify whether they are estopped by
the prior litigation. Id. at 1. This is not a sufficient responsive pleading. Neither Mr. Fahey or
any other representative has entered an appearance on behalf of Defendants. Moreover, the letter
does not seek to vacate the Clerk’s entry of default or otherwise answer the Complaint. To the
extent that Defendants wish to raise a res judicata defense, the proper mechanism would be to enter
an appearance and file a motion or other responsive pleading.
5

D. Monetary Damages
First, Plaintiffs request $1,079,200 as the sum of the withdrawal liability owed. Compl. ¶
22. Under ERISA, an employer is liable to the plan for the entirety of the “withdrawal liability.”
See 29 U.S.C. §§ 1381, 1391. Here, Plaintiffs support their finding of withdrawal liability with
calculation details consistent with the statutory framework. Compl. Ex. C. Pursuant to statute,
Plaintiffs’ calculations sum the employer’s proportional share of the unamortized amount of the
change in the Pension Fund’s unfunded vested benefits for plan years and the employer’s
proportional share of the unamortized amounts of the reallocated unfunded vested benefits. Id.;
see 29 U.S.C. § 1391(b). The Court therefore finds that Plaintiff has sufficiently proved the amount
of withdrawal liability.
Plaintiffs also request “interest at the prevailing market rate” along with “reasonable
attorneys’ fees and costs of the action.” Compl. ¶ 22. ERISA provides for the recovery of interest
on unpaid contributions and reasonable attorney’s fees and costs. 29 U.S.C. § 1132(g)(2).
However, Plaintiffs have not provided adequate support for interest or attorney’s fees and costs.
Plaintiffs’ motion for default judgment does not specify an interest rate, 2 or list any specific
attorney’s fees and costs. Thus, the Court finds that there is an insufficient basis upon which to
enter default judgment regarding interest or attorneys’ fees and costs at this time. See Eastern
Const. & Elec., Inc. v. Universe Technologies, Inc., No. 10-1238, 2011 WL 53185, at *5 (D.N.J.
Jan. 6, 2011) (denying motion for default judgment as to prejudgment interest because plaintiff
did not provide a proposed rate or any rate calculations).

2

Plaintiffs’ submissions contain inconsistent interest rates that may apply to this action. For
instance, the Fund’s Trust Agreement provides that “delinquent contributions shall bear interest at
the rate of ten percent” a year. Compl. Ex. A at 26. But Plaintiffs’ own calculations as used in
their Notice and Demand letter applied an eight percent interest rate. Compl. Ex. D. It is unclear
whether either of these interest rates is the “prevailing market rate” that Plaintiffs request.
6

IV.

CONCLUSION
For the reasons set forth above, Plaintiffs’ motion for final judgment by default against

Defendants Harvard Press, Inc., Harvard Printing Co. and Wilrick, LLC is GRANTED in part and
DENIED in part without prejudice. An appropriate order accompanies this opinion.
Dated: December 20, 2016
/s Madeline Cox Arleo
MADELINE COX ARLEO
United States District Judge

7