BOARD OF TRUSTEES, LOCAL 888 PENSION FUND v. FIXTURE HARDWARE MFG. CORP.

Filing 15

OPINION. Signed by Judge John Michael Vazquez on 8/22/2017. (JB, )

NOT FOR PUBLICATION
UNITED STATES DISTRICT COURT
DISTRICT OF NEW JERSEY

BOARD Of TRUSTEES, LOCAL 88$
PENSION FUI’JD,

Plaintiff

Civil Action No. 16-8629
OPINION

V.

FIXTURE HARDWARE MFG. CORP.,

Defendant.

John Michael Vazguez. U.S.D.J.
I.

INTRODUCTION
This matter comes before the Court on Plaintiff Board of Trustees, Local 888 Pension

fund’s (the “Fund” or “Plaintiff’) unopposed motion for default judgment against Defendant
fixture Hardware Manufacturing Group under Fed. R. Civ. P. 55(b). D.E. 14. The Court reviewed
all submissions made in support of the motion, and considered the motion without oral argument
pursuant to L. Civ. R. 78.1(b). For the reasons that follow, Plaintiffs motion is granted in part
and denied in part.

II.

FACTS1 AND PROCEDURAL HISTORY

The Fund brings this action against Defendant alleging violations of the Employee
Retirement Income Security Act of 1974 (“ERISA”), as amended by the Multiemployer Pension
Plan Amendments Act of 1980 (“MPPAA”), 29 U.S.C. 1001, et seq. Compl.

¶ 1 (D.E. 1). The

Fund seeks to recover amounts due for withdrawal liability, interest, liquidated damages,
attorneys’ fees, and costs, as well as injunctive relief compelling Defendant to respond to the
Fund’s request for a complete itemization of each trade or business under common control with
Defendant. Id.
Prior to October 30, 2015, Defendant employed members of Local $88, UFCW (“Local
88$”). Id.

¶ 10. Local 88$ and Defendant were part of a collective bargaining agreement that

required Defendant to contribute to the Fund on behalf of its covered employees. Id.

¶J 11-12.

On October 30, 2015, the Fund determined that Defendant effected a “complete
withdrawal” from the Fund. Id.

¶ 14 (citing 29 U.S.C. § 1383). The Fund determined that the

complete withdrawal caused Defendant to incur liability to the Fund in the amount of
$1,699,833.00. Id.

¶ 15. On April 5, 2015, the Fund sent Defendant a notice and demand for

payment of the withdrawal liability through eighty quarterly payments of $5,975.92. Id.

¶J 16-17.

The notice and demand stated that the first payment was due to the Fund by June 1, 2016, with
subsequent payments made quarterly thereafler. Id.

¶ 17. The notice and demand also requested

that Defendant furnish to the Fund, within thirty days, a complete list of each trade or business
under “common control” with Defendant, as defined by 29 U.S.C.

§ 1391(b) of ERISA.

Id.

¶ 1$.

‘The facts of this matter derive from the Complaint as well as the affidavits and exhibits submitted
in conjunction with Plaintiffs motion for default judgment.
2

Defendant did not respond to the Fund’s request for this information nor did it make the first
scheduled payment, or any payment thereafter. Id.

¶ 19.

On July 11, 2016, the Fund’s counsel sent Defendant a letter by certified mail stating that
Defendant was delinquent in making its first quarterly withdrawal liability payment and that it
would be in default if it fails to cure the delinquency within sixty days from receipt of the letter.
Id.

¶ 20. The letter was returned and marked as “refused.”

counsel re-sent the letter by regular mail. Id.

Id. On August 12, 2016, the Fund’s

¶ 21. The letter was not returned as undeliverable.

Id. To date, Defendant has not paid any of the withdrawal liability or initiated arbitration to dispute

the amount owed. Id.

¶J 22-23.

The Fund filed a two-count Complaint against Defendant alleging damages for withdrawal
liability and seeking injunctive relief. Defendant did not respond to the Complaint and default was
entered. The fund then filed this motion for default judgment.
III. LAW AND ANALYSIS
A. Standard of Review

“Once a party has defaulted, the consequence is that ‘the factual allegations of the
complaint, except those relating to the amount of damages, will be taken as true.” Teamsters
Pension fund ofPhi/a. & Vicinity v. Am. Helper, Inc., No.11-624,2011 WL 4729023, at *2 (D.N.J.
Oct. 5,2011) (quotingDIRECTV, Inc. v. Pepe, 431 F.3d 162, 165 n.6 (3d Cir. 2005)). “The entry
of a default judgment is largely a matter of judicial discretion, although the Third Circuit has
emphasized that such ‘discretion is not without limits, however, and [has] repeatedly state[d] [its]
preference that cases be disposed of on the merits whenever practicable.”

Chanel, Inc. v.

Gordashevsk-v, 558 F. Supp. 2d 532, 535 (D.N.J. 2008) (quoting Hritz v. Woma Corp., 732 F.2d
117$, 1181 (3dCir. 1984)).

3

Prior to entering a default judgment, the court is required to: “(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.” Moroccanoit, Inc. v. JMG
Freight Grp. LLC, No. 14-5608, 2015 WI 6673839, at *1 (D.N.J. Oct. 30, 2015). Additionally,
the Court must consider the following three factors: “(1) prejudice to the plaintiff if default is
denied, (2) whether the defendant appears to have a litigable defense, and (3) whether defendant’s
delay is due to culpable conduct.” Chamberlain v. Giampapa, 210 F.3d 154, 164 (3d Cir. 2000);
see also Nationwide lint. Ins. Co. v. Starlight Ballroom Dance Club, Inc., 175 F. App’x 519, 522

(3d Cir. 2006).
B. Jurisdiction and Service

“Before entering a default judgment as to a party ‘that has not filed responsive pleadings,
the district court has an affirmative duty to look into its jurisdiction both over the subject matter
and the parties.” HICA Ethic. Loan Corp. v. Sttrikoe, No. 14-1045, 2015 WI 273656, at *2
(D.N.J. Jan. 22, 2015) (quoting Ramada Worldwide, Inc. v. Benton Harbor Han Ohm, L.L.C., No.

08—3452, 2008 WI 2967067, at *9 (D.N.J. July 31, 2008)).
i. Subject Matter Jurisdiction

“federal courts have subject matter jurisdiction over a case if it satisfies federal question
jurisdiction under 28 U.S.C.
387 (D.N.J. 1996).

§ 1331

.

.

.

.“

Hines v. Irvington Counseling Ctr., 933 F. Supp. 382,

Pursuant to 28 U.S.C.

§ 1331, “[t]he district courts shall have original

jurisdiction of all civil actions arising under the Constitution, laws, or treaties of the United States.”
“[A] claim arises under federal law if federal law creates the cause of action.”

4

Empire

Healthchoice Assitr., Inc. v. McVeigh, 547 U.S. 677, 706 (2006) (quoting Merrell Dow Pharm.
Inc. v. Thompson, 478 U.S. $04, 80$ (1986)).
Here, the Court has subject matter jurisdiction pursuant to 28 U.S.C.

§ 1331 because this

matter concerns a federal question arising under ERISA. In particular, Plaintiff seeks to recover

delinquent withdrawal liability payments pursuant to 29 U.S.C.
under 29 U.S.C.

§ 1145 and seeks equitable relief

§ 1 132(a)(3)(A) and 29 U.S.C. § 1399(a).
ii. Personal Jurisdiction and Proof of Service

Section 4301(d) of ERISA provides the method for establishing personal jurisdiction and
serving a defendant. It states that an action “may be brought in the district where the plan is
administered or where a defendant resides or does business, and process may be served in any
district where a defendant resides, does business, or maybe found.” 29 U.S.C.

§ 145 1(d). Here,

the Court has personal jurisdiction over Defendant because the fund’s plan is administered in New
Jersey. Compi.

¶ 3.

Additionally, service was properly effected upon Defendant.

Federal Rule of Civil

Procedure 4(h)(1)(B) provides that a corporation may be served by delivering a copy of the
summons and complaint to an “agent authorized by appointment or by law to receive service of
process.” The New York Secretary of State is an authorized agent to receive service on behalf of

§ 306. Defendant is registered as a New York

New York corporations. N.Y. Bus. Corp. Law
corporation. Compl.

¶ 8. Plaintiffs process server delivered the Summons and Complaint to the

New York Secretary of State. D.E. 12. Therefore, Defendant was properly served.
C. Sufficiency of Causes of Action

Next, the Court must determine whether Plaintiffs allegations plausibly plead valid causes
of action under ERISA and the MPPAA.

Plaintiff alleges a cause of action for complete

5

withdrawal liability and that Defendant is obligated to respond to the Fund’s request for a complete
list of each trade or business under common control.
29 U.S.C.

§ 1145 provides that all employers who are “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.” “An action to recover withdrawal
liability is treated in the same matter as a delinquent contribution matter under 29 U.S.C.

§ 1145.”

Tritcking Emps. of N. Jersey Welfare fttnd, Inc. v. Bellezza Co., 57 F. App’x 972, 975 (3d

cir.

2003).

A complete withdrawal takes place when an employer “(1) permanently ceases to have an
obligation to contribute under the plan, or (2) permanently ceases all covered operations under the
plan.” Einhorn v. J & S, Inc., 577 F. Supp. 2d 752, 760 (D.N.J. 200$) (quoting 29 U.S.C.

§

13 83(a)). When an employer withdraws from a plan, the trustee “is to notify the employer of the
amount of the liability and schedule for liability payments and demand payment in accordance
with such schedule.” Id. (citing 29 U.S.C.

§ 1399(b)(1)). “Thereafier, the employer may within

90 days ask the trustees to conduct a reasonable ‘review’ of the computed liability.” flying Tiger
Linev. Teamsters Pension Tr. fund ofF/il/a., $30F.2d 1241, 1244(3dCir. 1987) (citing29U.S.C.

§ 1399(b)(2)(A)(i)). If the parties cannot agree on the amount owed, “either party may initiate
arbitration proceedings.” Id. If arbitration is not commenced within the specified statutory period,
“then the amounts demanded by the plan sponsor shall be due and owing pursuant to the plan’s
schedule, and the plan sponsor may bring an action to collect payment in state or federal court.”
Einhorn, 577 F. Supp. 2d at 760; see also Teamsters Pension Tr. fund of Phi/a. & Vicinity v.
Domenic Cristinzio, Inc., 994 F. Supp. 617, 621 (E.D. Pa. 1998) (“When an employer ignores its

6

arbitration rights, [the] MPPAA unambiguously provides that the liability is fixed and the
employer’s right to dispute the assessment is waived.”). “A fund’s subsequent suit to compel
payment will succeed if the plan sponsor demonstrates that the plan made a demand for interim
payments under 29 U.S.C.

§ 1382 and that payments were ngt made.”

Einhorn v. Klayman

Prodttce Co., No. 13-1720, 2013 WL 6632521, at *3 (E.D. Pa. Dec. 17, 2013) (internal quotation
marks omitted). The purpose of this procedure is to facilitate the MPPAA’s goal of”bring[ing]
about fast and efficient resolution to disputes over withdrawal liability.” Einhorn, 577 F. Supp.
2d at 760.
Here, Plaintiff plausibly pleads a cause of action for withdrawal liability. Plaintiff alleges
that on October 30, 2015, Defendant effected a complete withdrawal resulting in withdrawal
liability of $1,699,833.00 owed to the Fund. The Fund’s counsel provided a notice and demand
to Defendant for payment of the withdrawal liability in eighty quarterly payments of $5,975.92.
After Defendant did not make any payments to the Fund, the Fund’s counsel notified Defendant
that it would soon be in default. Still, Defendant made no payments and did not request to arbitrate
the amount owed. Defendant’s failure to contest the withdrawal liability renders the amount “due
and owing on the schedule set forth by the plan sponsor.” 29 U.S.C.

§ 1401(b)(1). Therefore,

Plaintiff states a valid cause of action against Defendant.
Plaintiff also pleads a plausible cause of action for equitable relief for Defendant’s failure
to comply with 29 U.S.C.

§ 1 132(a)(3)(A). This provision provides that a fiduciary of a plan may

“enjoin any act or practice which violates any provision of this subchapter or the terms of the
plan.” Additionally, 29 U.S.C.

§ 1399(a) states that “[a]n employer shall, within 30 days after a

written request from the plan sponsor, furnish such infonTlation as the plan sponsor reasonably
determines to be necessary to enable the plan sponsor to comply with the requirements of this

7

part.” Here, Plaintiffs notice and demand requested that Defendant provide to the Fund, within
thirty days, “a complete list of each trade or business under ‘common control” as defined by 29
U.S.C.

§ 1399(a). This information is necessary to determine whether any other entities are jointly

and severally liable for Defendant’s withdrawal liability. See 29 U.S.C.

§ 130 l(b)(1). Defendant

failed to provide Plaintiff with this information. Therefore, Plaintiff plausibly pleads a cause of
action under 29 U.S.C.

§ 1 132(a)(3)(A) and 29 u.s.c. § 1399(a).

D. Damages

Plaintiff seeks four types of damages totaling $2,136,165.15. These damages include (1)
$1,699,833.00 in principal withdrawal liability, (2) $79,124.74 in interest on the withdrawal
liability, (3) $339,966.60 in liquidated damages, and (4) $17,240.81 in attorneys’ fees and costs.
D.E. 14-1 at 4-5. The Court finds that Plaintiff has submitted adequate proof of damages for
withdrawal liability, interest on withdrawal liability, liquidated damages, and costs, but not as to
attorneys’ fees.
The Fund sent a notice and demand to Defendant stating that $1,699,833.00 was owed in
withdrawal liability. Declaration of Rosalba Perez-Pena2 (“Perez-Pena Deci.)
Defendant did not contest or respond to this demand.

¶ 8 (D.E. 14-5).

Pursuant to 29 U.S.C.

§ 1401(b)(1),

Defendant’s failure to contest the amount owed or request arbitration renders the amount to “be
due and owing on the schedule set forth by the plan sponsor.” See also 3d. of Trustees ofTrucking
Emps. of N. Jersey Welfare fund, Inc.-Fension Fttnd v. Kero Leasing Corp., 377 F.3d 288, 313

n.5 (3d Cir. 2004) (“An employer will waive its statutory rights to dispute aspects of the Fund’s
liability determination where arbitration is not demanded within the time period prescribed by the

2

Rosalba Perez-Pena is the Director of the Fund and responsible for overseeing its administration.
$

statute.”). Therefore, Plaintiff has provided adequate proof that Defendant owes $1,699,833.00 in
withdrawal liability.
Plaintiff has also demonstrated that Defendant owes $79,124.74 in interest and
$339,966.60 in liquidated damages. Pursuant to 29 U.SC.

§ 1132(g), a plaintiff recovering for

withdrawal liability is entitled to interest on the unpaid contributions, in addition to liquidated
damages. Liquidated damages may be recovered in an amount up to 20% of the principal of the
withdrawal liability due. Id. When there is ajudgment entered in favor of the plan, these remedies
are mandatory. Id.; see also Klayman Produce, 2013 WL 6632521, at *5• Here, the Fund’s
collection policy indicates that there is a 6% interest rate on delinquent contributions not paid
within 30 days of the due date. Perez-Pena Decl.

¶ 18. According to the Fund administrator’s

calculations, $79,124.74 is due in accrued interest as of the date this motion was filed. Id.

¶ 21.

Thereafier. $277.63 continues to accrue until the date of a judgment. Id. Additionally, the Fund
administrator certified that $339,966.60

--

20% of the principal withdrawal liability

--

is due in

liquidated damages. Id. The Court finds that Plaintiff has submitted adequate proof of damages
for interest and liquidated damages. See Riccelli Premium Prodttce, 2011 WL 1114175, at *4
(“Unpaid contributions, interest, and liquidated damages generally are considered ‘sums certain’
pursuant to the calculations mandated in ERISA and the parties’ contractual agreements.”).
Finally, the Court addresses Plaintiffs request for attorneys’ fees and costs.

ERISA

provides that a judgment in favor of the plan requires the defendant to pay the plan’s “reasonable
attorneys’ fees and costs of the action.” 29 U.S.C.

§ 1 132(g)(2)(D). Here, Plaintiff submitted the

declaration of counsel in support of its request for fees and costs. The declaration provides the
names of the attorneys who performed work on this matter, their position in the firm, hours billed,
and their rates. Critically, however, the declaration does not specify any of the tasks completed

9

by the attorneys. This flaw requires the Court to deny Plaintiffs request for attorneys’ fees. See
United Auto. Workers Local 259 Soc. Sec. Dep’t v. Metro Aitto Ctr., 501 F.3d 283, 291 (3d Cir.

2007) (“A request for fees must be accompanied by ‘fairly definite information as to hours devoted
to various general activities, e.g., partial discovery, settlement negotiations, and the hours spent by
various classes of attorneys.” (quoting Evans v. Port Attth.. 273 f.3d 346, 361 (3d Cir. 2001))).
Within fourteen days of this Opinion, Plaintiff may supplement the record by submitting an
affidavit adequately describing the tasks performed by each attorney on this matter.
As to costs, Plaintiff provides a breakdown of the amount that was spent on each item. The
Fund incurred $1,132.81 total in costs. The Court finds this amount reasonable and awards costs
in favor of Plaintiff
E. Default Judgment

“Before imposing the extreme sanction of default judgment, district courts must make
explicit factual findings as to (1) whether the party subject to default has a meritorious defense,
(2) the prejudice suffered by the party seeking default, and (3) the culpability of the party subject
to default.” Teamsters Pension fund of Phila., 2011 WL 4729023, at *4 (quoting Doug Brady,
Inc. v. N.J Bldg. Laborers Statewide fitnds, 250 F.R.D. 171, 177 (D.N.J. 2008)).

Here, all three factors weigh in favor of entering default judgment. First, considering that
Defendant has not responded in this matter, “Defendant has put forth no evidence or facts
containing any information that could provide the basis for a meritorious defense.” HICA Educ.
Loan Corp., 2015 WL 273656, at *3 Additionally, there is nothing on the face of the Complaint
indicating that a meritorious defense is available. Defendant ceased making contributions to the
Fund without providing any reason whatsoever.

Second, Plaintiff has been prejudiced by

Defendant’s failure to answer. Without a default judgment, “Plaintiff has no other means of

10

seeking damages for the harm allegedly caused by Defendant.” Gowan v. Cont ‘1 Airlines, Inc.,
No. 10-1858, 2012 WL 2838924, at *2 (D.N.J. July 9, 2012). Lastly, Defendant’s failure to
answer, without providing any reasonable explanation, demonstrates its culpability in the default.
See Days Inns Worldwide, Inc. v. MangiirLLC, No. 15-2027, 2016 WL 845141, at *4 (D.N.J. Mar.

4,2016).
For those reasons, the Court finds that default judgment is warranted.
IV.

CONCLUSION

For the reasons set forth above, Plaintiffs motion for default judgment is granted in part
and denied in part. Plaintiff is awarded damages for withdrawal liability, interest, liquidated
damages, and costs, but not attorneys’ fees. The total award is $2,120,057.15, plus $277.63 per
day from March 14, 2017 until the date of entry ofjudgment. Plaintiff is entitled to post-judgment
interest accruing from the date of this Opinion at the appropriate rate pursuant to 28 U.S.C.

§ 1961.

Additionally, within thirty days, Defendant shall provide to Plaintiff a complete list of each trade
or business under “common control” with Defendant, as defined by 29 U.S.C.

§ 1399(a). Finally,

within fourteen days, Plaintiff may submit a supplemental declaration sufficiently describing the
tasks performed to substantiate the $16,108.00 requested in attorneys’ fees. An appropriate Order
accompanies this Opinion.

Dated: August 22, 2017.

John Michael Vazquj, U4)).J.

11