Directors of the Ohio Conference of Plasterers & Cement Masons Combined Funds, Inc. v. Akron Insulation and Supply, Inc.

Filing 14

Memorandum Opinion and Order: For all of the foregoing reasons, the Court's order denying plaintiff's motion for default judgment is vacated. (Doc. No. 12 .) Plaintiff's motion for default judgment as to liability is granted, as is plaintiff's motion on the issue of requiring defendant to submit to an audit as described herein. (Doc. No. 10 .) Defendant is ordered to cooperate with plaintiff in order to complete the audit by June 29, 2018. The motion is denied with respect to damages and attorney fees and costs. Plaintiff shall submit any evidentiary support of damages and attorney fees and costs by July 27, 2018. If such support is not submitted by July 27, 2018, the Court will schedule an evidentiary hearing. (Related Doc. No. 13 ). Judge Sara Lioi on 5/8/2018. (P,J)

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF OHIO
EASTERN DIVISION

DIRECTORS OF THE OHIO
CONFERENCE OF PLASTERERS &
CEMENT MASONS COMBINED
FUNDS, INC.,
PLAINTIFF,
vs.

AKRON INSULATION AND
SUPPLY, INC.,
DEFENDANT.

)
)
)
)
)
)
)
)
)
)
)
)
)
)

CASE NO. 5:16-cv-1674

JUDGE SARA LIOI

MEMORANDUM OPINION AND
ORDER

The Court previously denied the motion of plaintiff Directors of the Ohio
Conference of Plasterers & Cement Masons Combined Funds, Inc. (“plaintiff”) for
default judgment against defendant Akron Insulation and Supply, Inc. (“defendant”), and
ordered plaintiff to show cause why this case should not be dismissed. (See Doc. No. 12
(Memorandum Opinion and Order [“MOO”]).) Now before the Court is plaintiff’s
response to the Court’s show cause order. (Doc. No. 13 [“Resp.”].)
A. Background
The background of this case is detailed in the Court’s ruling denying the motion
for default judgment, and familiarity therewith is assumed. But in order to provide
context, that background is briefly summarized here.
On June 30, 2016, plaintiff filed suit against defendant pursuant to the Employee
Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1001, et seq., and

Section 301(a) of the Labor Management Relations Act of 1947 (“LMRA”), 29 U.S.C. §
185(a), for violating a collective bargaining agreement by failing to make fringe benefit
contributions. (Doc. No. 1 [“Compl.”] ¶ 1.) Plaintiff asserts six claims for relief. (Id. ¶¶ 544.) A collective bargaining agreement signed by defendant is attached as Exhibit A to
the complaint. (Doc. No. 1-2 [“CBA”].) The time period covered by the CBA is June 1,
2007 to May 31, 2010. (See CBA at 13.1) Defendant did not answer or otherwise respond
to the complaint, and default was entered. (Doc. No. 9.)
Plaintiff argues in the motion for default judgment that defendant failed to file
reports and make timely contributions under the CBA for the months of “October 2014,
December 2014, January 2015, March 2015 through May 2015, August 2015, September
2015, November 2015, and December 2015[,]” and seeks an order requiring defendant to
submit to an audit from January 1, 2014 to present, as well as attorney fees and costs in
the amount of $5,142.00. (See Doc. No. 10 [“Mot.”] at 110-113.) Defendant did not
oppose the motion.
The Court construed defendant’s admission to the facts alleged in the complaint
as a result of its default to pertain to the CBA attached to the complaint, which did not on
its face cover time periods in 2014, 2015, and beyond. Thus, the Court denied the motion
because plaintiff failed to show it is entitled to default judgment against defendant for
breach of a collective bargaining agreement in 2014 and 2015, or entitled to an audit from

All page number references are to the page identification numbers generated by the Court’s electronic
filing system.
1

2

January 1, 2014 to present. Plaintiff was granted leave to show cause why this case
should not be dismissed. (MOO at 128.)
B. Plaintiff’s Response to the Show Cause Order
In response to the show cause order, plaintiff argues that the allegations in the
complaint support the default judgment sought from 2014 to present even though the
CBA attached to the complaint covers the time period 2007-2010. Plaintiff advances four
points in support.
First, plaintiff maintains that it “pleaded that Defendant was bound by a CBA at
‘all times relevant herein,’ plainly referring to the dates of contractual breaches, which
included dates in 2014 and 2015.” (Resp. at 131.) As an initial matter, defendant’s default
does not establish as true conclusory allegations. Thirty Eight St., Inc. v. Chatur Corp.,
No. 1:08CV716, 2009 WL 10689657, at *4 (N.D. Ohio Aug. 10, 2009) (“[A] default
does not establish as true any conclusory allegations in the complaint.”) (citing Flagstar
Bank, FSB v. Caribbean Mort. Corp., No. CV08-2108, 2009 WL 910835, at *3
(E.D.N.Y. Mar. 12, 2009)). The complaint does not contain factual allegations that, if
admitted by defendant because of default, result in the conclusion that defendant was
bound by the CBA during the period of time for which plaintiff seeks default judgment.
Moreover, the complaint alleges that defendant was bound by a specific collective
bargaining agreement—the CBA attached to the complaint as Exhibit A. All six counts
begin with the allegation: “For all times relevant herein, Defendant was a party to and
agreed to abide by the terms of a Collective Bargaining Agreement (“CBA”) (Exhibit
A).” (Compl. ¶¶ 6, 13, 20, 25, 30, 38 (emphasis in original).) The CBA attached to the
complaint as Exhibit A covers the time period from June 1, 2007 to May 31, 2010, and

3

shows that defendant is a signatory to that agreement. (CBA at 13, 30.) There are no
factual allegations in the complaint that defendant was bound by a collective bargaining
agreement other than the agreement attached to the complaint, or that the CBA remained
in effect for the time periods at issue. The only reference to 2014 and 2015 in the
complaint appears in counts V and VI, alleging that “[f]or the periods of October 2014,
December 2014, January 2015, March 2015 through May 2015, August 2015, September
2015, November 2015, and December 2015, Defendant failed to timely pay
contributions.” (See Compl. ¶¶ 33, 41.)
With respect to those allegations in counts V and VI, plaintiff argues that “[a]s
noted in [the] Complaint, Defendant continued to make its monthly contributions after
June 1, 2010. In the Complaint, it is alleged that for the months of October 2014,
December 2014, January 2015, March 2015 through May 2015, August 2015, September
2015, November 2015, and December 2015, Defendant did not timely remit their fringe
benefit contributions that provide earned benefits for employees of Defendant.” (Resp. at
134, citing Compl. at ¶ 33.) According to plaintiff, “[i]t is implicit in that allegation and
the related request for relief that the Defendant did eventually remit the actual
contributions, but Defendant did so after the contributions’ due date, causing liquidated
damages to accrue. This means that at a minimum, Defendant remitted contributions
through December 2015, four and a half years after the June 1, 2010 date in the CBA.
Defendant’s course of performance indicates that it was Defendant’s understanding that
its obligations from the CBA continued to be in effect well after the June 1, 2010 date.”
(Id. at 135 (emphasis added).) But plaintiff’s argument that defendant eventually remitted
the contributions for the 2014 through December 2015 time period appears to be

4

contradicted by the affidavit of Tim Myers, administrator for plaintiff Funds. (Doc. No.
10-1 [“Myers Aff.”].) According to Myers, defendant has not paid the contributions for
this period. (See id. ¶¶ 3-6.) Myers does aver, however, that defendant paid liquidated
damages in the amount of $2,654.12 for the months of October 2014, December 2014,
January 2015, March 2015 through May 2015, August 2015, September 2015, November
2015, and December 2015. (Id.)
Next, plaintiff contends that even though the CBA is dated June 1, 2007 to May
31, 2010, it contains an evergreen clause in Article XIII, which states that
This Agreement represents a complete and final understanding on all
bargain able (sic) issues between the Employer and the Union, and it shall
be effective as of June 1, 2007, and remain in full force and effect, with
any modifications and/or amendments, until June 1, 2010, and thereafter
from year to year unless sixty (60) days prior to said expiration date, or
any anniversary date thereof, either party gives timely written notice to the
other of an intent to terminate or modify any or all provisions.
(Resp. at 132, quoting Doc. 1-2 at 29 (emphasis added in Response).)
Plaintiff argues that the evergreen clause is valid and, “[a]bsent any notice of
termination, Defendant’s obligations under the CBA continue in full effect. Defendant
has provided no notice of termination. Plaintiffs relied on the evergreen clause in their
Complaint and Motion for Default Judgment, when they requested that an audit be
conducted for the period of January 1, 2014 through current.” (Id. at 133.) While plaintiff
makes this argument, the complaint contains no allegations regarding the evergreen
clause, or any allegation that defendant has not terminated or modified its participation in
the CBA up until the present time.
Finally, plaintiff maintains that defendant signed a Memorandum of
Understanding (“MOU”) obligating itself to the CBA, and the MOU does not limit the

5

term of the CBA. The MOU provides that defendant agrees to be bound by the current
terms of the CBA (dated June 1, 2002 to June 1, 2007) and the new CBA “effective June
1st, 2007 and remaining in effect until May 31st, 2010.” (Doc. No. 1-2 at 31 ¶¶ 1, 2.)
Plaintiff contends that the language in the MOU “is merely descriptive of the CBA to
which the Memorandum assents, rather than providing temporal limitations on the
duration of the agreement. Moreover, the Memorandum goes on to state, in reference to
the 2007-2010 CBA, that ‘[t]here will be no language changes.’ . . . This provision
signals the Parties’ intent to be bound by the language of the CBA, unless otherwise
directly and specifically changed via the Memorandum. As there is no specific stated
desire to limit the term of the CBA in the Memorandum, the [evergreen] language in the
CBA should control.” (Resp. at 133-34.) As discussed above, however, the complaint
contains no allegations concerning the evergreen clause or defendant’s actions
thereunder.
C. Analysis
1. Plaintiff has satisfied the show cause order—default judgment granted as
to liability
As a consequence of default, defendant is deemed to have admitted all of the
well-pleaded allegations in the complaint pertaining to liability. (See MOO at 127-28
(citations omitted).); Kwik-Sew Pattern Co. v. Gendron, No. 1:08-CV-309, 2008 WL
4960159, at *1 (W.D. Mich. Nov. 19, 2008) (citing, inter alia, Antoine v. Atlas Turner,
Inc., 66 F.3d 105, 110-11 (6th Cir. 1995)). But defendant’s default does not automatically
entitle plaintiff to relief. The Court must consider whether the admitted allegations in the
complaint, and reasonable inferences derived therefrom, are sufficient to satisfy the
elements of plaintiff’s claims for breach of contract and ERISA and LMRA violations.

6

See Zinganything, LLC v. Imp. Store, 158 F. Supp. 3d 668, 672 (N.D. Ohio 2016) (Even
though defendant has defaulted, the Court must determine whether factual allegations
accepted as true state a claim for relief with respect to plaintiff’s intellectual property
claims for which the plaintiff seeks default judgment.) (citation omitted); Kwik-Sew
Pattern Co., 2008 WL 4960159, at *1 (“[A] court may not enter default judgment upon a
legally insufficient claim.”) (citations omitted); see also Flanagan v. Marco Martelli
Assocs., Inc., No. 13-CV-6023 (ADS) (AKT), 2015 WL 1042279, at *4 (E.D.N.Y. Mar.
9, 2015) (“The fact that a complaint remains unanswered will not suffice to establish
liability on its claims since a default does not establish conclusory allegations, nor does it
excuse any defects in the plaintiff’s pleading.”) (internal quotation marks and citation
omitted).
In order to be entitled to default judgment, the complaint must contain either
direct or reasonable inferential factual allegations deemed admitted by defendant’s
default that are sufficient for each claim for relief. See Kwik-Sew Pattern Co,, 2008 WL
4960159, at *1 (citing DIRECTV, Inc. v. Huynh, 318 F. Supp. 2d 1122, 1127 (M.D. Ala.
2004)); see also K.N.J., Inc. v. Ames-Granite, No. 15-CV-02009-PAB-KMT, 2017 WL
1133431, at *2 (D. Colo. Mar. 27, 2017) (analogizing the requirements a complaint must
satisfy on default judgment to a motion to dismiss) (quoting Bryson v. Gonzales, 534
F.3d 1282, 1286 (10th Cir. 2008)). Whether to grant default judgment is left to the sound
discretion of the court. Hollis v. Howard, No. 16-5115, 2016 WL 9804159, at *2 (6th Cir.
Dec. 21, 2016) (“‘The district court’s decision not to grant a default judgment is reviewed
for an abuse of discretion.’”) (quoting Lincoln v. Comm’r of Soc. Sec., 62 F. App’x 93, 94
(6th Cir. 2003)).

7

In order for plaintiff to succeed on its motion for default judgment, the complaint
must make either direct or inferential allegations that defendant agreed to be bound by a
collective bargaining agreement requiring fringe benefit contributions for the time
periods for which plaintiff seeks default judgment. Plaintiff’s primary argument in
response to the show cause order is that defendant is bound by the CBA from January
2014 through present by operation of the CBA’s evergreen clause.
It is true that, absent the required notice by defendant regarding modification or
termination of the CBA, the CBA’s evergreen clause automatically continues to obligate
defendant to the terms of that agreement. Orrand v. Scassa Asphalt, Inc., 794 F.3d 556,
565 (6th Cir. 2015) (“‘When a contract is renewed via the operation of an evergreen
clause, all of the attendant contractual obligations naturally continue for the period of
renewal.’”) (quoting Trustees of the B.A.C. Local 32 Ins. Fund v. Fantin Enters., Inc.,
163 F.3d 965, 968-69 (6th Cir. 1998)). But the complaint contains no allegations
concerning the evergreen clause from which the Court could infer that the CBA remains
binding upon defendant. It is not the Court’s responsibility to search the record or to
make arguments for plaintiff in order to satisfy all of the elements necessary for recovery
of default judgment on its claims. See Bricklayers & Trowel Trades Int’l Pension Fund v.
Denver Marble Co., No. 16-CV-02065-RM, 2017 WL 4278493, at *2 (D. Colo. Sept. 27,
2017) (“[I]it is not the obligation of the Court to piece together the parties’ arguments.”)
(citing Mitchell v. City of Moore, 218 F.3d 1190, 1199 (10th Cir. 2000) (“The district
court was not obligated to comb the record in order to make [plaintiff’s] arguments for
him.”)). Plaintiffs could have, and should have, made proper factual allegations in the
complaint concerning the existence of the CBA’s evergreen clause and whether the

8

defendant remained bound by the CBA for the time periods for which plaintiff seeks
default judgment.
That said, although not mentioned in the complaint, plaintiff’s response to the
show cause order directed the Court to the evergreen clause in the CBA (which is
attached to the complaint) and, in light of the Myers’ affidavit that defendant paid
plaintiff liquidated damages in the amount of $2,654.12 for the months of October 2014,
December 2014, January 2015, March 2015 through May 2015, August 2015, September
2015, November 2015, and December 2015 (Myers Aff. ¶¶ 3-6), the Court can infer from
the complaint and attachments thereto that defendant was bound by the CBA through
December 2015. Similarly, considering the evergreen clause and Myers’ affidavit
averring that defendant failed to submit to a required audit from January 1, 2014 to
present despite repeated requests (Myers Aff. ¶ 7), the Court can also infer that it appears
defendant continues to be bound by the CBA at the present time.
The Court’s order denying plaintiff’s motion for default judgment as to
defendant’s liability is VACATED. Federal Rule of Civil Procedure 55(b) governs the
entry of default judgment. Rule 55(b) provides that default judgment may be entered
against a defendant who is neither a minor nor an incompetent person. According to the
complaint, defendant has at all relevant times represented itself to be a corporation
licensed to conduct business in Ohio with its principal place of business in Akron Ohio,
and is an employer as defined by ERISA. (Compl. ¶ 4.) As a business entity, defendant is
not a minor, incompetent person, or subject to the Soldiers and Sailors Relief Act of
1940. Zinganything, LLC v. Tmart UK Ltd., No. 5:14-CV-629, 2016 WL 362359, at *2
(N.D. Ohio Jan. 29, 2016) (citation omitted). For all of the foregoing reasons, the Court

9

exercises its discretion under Fed. R. Civ. P. 55(b) to grant default judgment as to
liability in favor of plaintiff and against defendant. See 10A Charles Alan Wright, Arthur
R. Miller & Mary Kay Kane, Federal Practice and Procedure § 2685 (3d ed.1998)
(footnotes omitted).
2. Damages
The well-pleaded allegations in a complaint are taken as true as to liability when a
defendant is in default, but not as to damages. Ford Motor Co. v. Cross, 441 F. Supp. 2d
837, 848 (E.D. Mich. 2006) (citing Thomson v. Wooster, 114 U.S. 104, 5 S. Ct. 788, 29
L. Ed. 105 (1885); Antoine v. Atlas Turner, Inc., 66 F.3d 105, 110-11 (6th Cir. 1995)).
Rule 55(b)(2) permits, but does not require, the district court to conduct an evidentiary
hearing to determine damages. Arthur v. Robert James & Assoc. Asset Mgmt., Inc., No.
3:11-cv-460, 2012 WL 1122892, at *1 (S.D. Ohio Apr. 3, 2012) (quoting Vesligaj v.
Peterson, 331 F. App’x 351, 354-55 (6th Cir. 2009)). The Court may rely on affidavits
submitted by plaintiff in support of damages without the need for a hearing. Id. at *2
(citations omitted).
Plaintiff submitted the affidavit of Myers in support of damages. According to
Myers’ affidavit, a payroll audit is required in order to determine the amount of fringe
benefit contributions owed by defendant pursuant to the CBA for the time period from
January 1, 2014 to present. Because of the need for an audit, plaintiff does not seek
default judgment with respect to a specific amount of damages, but an order requiring
defendant to submit to an audit so that plaintiff may determine the amount due and owing
in unpaid contributions under the CBA. The Court will grant plaintiff’s motion requiring
defendant to submit to an audit of its books and records in order to determine its

10

obligations under the CBA from January 1, 2014 to present. Any such audit must be
completed by June 29, 2018, and defendant is ordered to timely cooperate with plaintiff
therewith.
Plaintiff also requests default judgment for an unknown amount of damages that
is determined to be due and owing from the audit, including liquidated damages, interest,
and the cost of the audit. (Mot. at 113.) The Court will not grant judgment to plaintiff for
indeterminate damages. Bell v. Zurich Am. Ins. Co., 156 F. Supp. 3d 884, 889 (N.D. Ohio
2015) (“When the amount of damages to be awarded pursuant to a default judgment is
uncertain, the court must make further inquiry. Fed. R. Civ. P. 55(b)(2). It may do so
through oral testimony at an evidentiary hearing, or through the submission of affidavits
and other materials.”). If as a consequence of the audit plaintiff determines the sum of
damages owed, plaintiff may file a properly supported supplemental motion for damages
no later than July 27, 2018.
3. Attorney fees and costs
Plaintiff is entitled to reasonable attorney fees and costs pursuant to the CBA and
29 U.S.C. § 1132(g)(2)(D). Attorney fees are calculated using the “lodestar” method,
which is determined by multiplying the number of hours reasonably expended on this
litigation by a reasonable hourly rate. See Hensley v. Eckerhart, 461 U.S. 424, 433, 103
S. Ct. 1933, 76 L. Ed. 2d 40 (1983); Building Serv. Local 47 Cleaning Contractors
Pension Plan v. Grandview Raceway, 46 F.3d 1392, 1401 (6th Cir. 1995). The lodestar

11

calculaion can be adjusted by consideration of a number of factors. 2 Hensley, 461 U.S. at
430, n.3.
Plaintiff seeks attorney fees in the amount of $4,532.50 and costs in the amount of
$609.50. In support, plaintiff submits the affidavit of Attorney Joshua Hippenmeyer
(“Hippenmeyer”), one of plaintiff’s attorneys. (Doc. No. 10-2 [Hippenmeyer Aff.”].)
Hippenmeyer avers that the amount of attorney fees and costs requested have been
incurred by the firm. (Id. ¶ 2.) The affidavit includes no information or documentation
regarding the costs, counsel’s hourly rate, or counsel’s billing records containing the
number of hours expended for this case.
In the absence of any documentation that would allow the Court to determine the
reasonableness of plaintiff’s request for fees and costs, the motion in that respect is
denied at this time. Plaintiff may resubmit its request for attorney fees and costs, with
proper documentation and a lodestar analysis, at the same time plaintiff submits
supplemental documentation of damages by July 27, 2018.
C. Conclusion
For all of the foregoing reasons, the Court’s order denying plaintiff’s motion for
default judgment is vacated. Plaintiff’s motion for default judgment as to liability is
granted, as is plaintiff’s motion on the issue of requiring defendant to submit to an audit
as described herein. Defendant is ordered to cooperate with plaintiff in order to complete
the audit by June 29, 2018.

2

These factors include: (1) time and labor; (2) difficulty of the case; (3) skill necessary; (4) the extent the
attorney is precluded from working on other matters; (5) the customary fee; (6) whether the fee is fixed or
contingent; (7) the time limitations; (8) the amount involved and the results obtained; (9) the attorney's
experience, reputation and ability; (10) the undesirability of the case; (11) the nature and length of the
attorney-client relationship; and (12) awards in similar cases.

12

The motion is denied with respect to damages and attorney fees and costs.
Plaintiff shall submit any evidentiary support of damages and attorney fees and costs by
July 27, 2018. If such support is not submitted by July 27, 2018, the Court will schedule
an evidentiary hearing.
IT IS SO ORDERED.

Dated: May 8, 2018
HONORABLE SARA LIOI
UNITED STATES DISTRICT JUDGE

13