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Teamsters Local 639-Employers Health Trust v. Boiler and Furnace Cleaners

August 13, 2008

TEAMSTERS LOCAL 639-EMPLOYERS HEALTH TRUST, ET AL, PLAINTIFFS,
v.
BOILER AND FURNACE CLEANERS, INC., DEFENDANT,



The opinion of the court was delivered by: Reggie B. Walton United States District Judge

MEMORANDUM OPINION

The plaintiffs*fn1 filed this action on May 22, 2007, pursuant to the Employment Retirement Income Security Act of 1974, as amended, ("ERISA"), 29 U.S.C. §§ 1001-1461 (2000), seeking to collect delinquent and unpaid contributions, interest on the delinquent and unpaid contributions, and liquidated damages owed to two of the plaintiffs' employee benefit plans resulting from the defendant's violation of the parties collective bargaining agreements and several trust agreements. Complaint ("Compl") ¶ 21. They also seek any other applicable legal and equitable relief, along with an award of reasonable attorney fees. Id. The plaintiffs allege that the "defendant failed to remit contributions and/or timely remit contributions owed to the Health and Pension Trusts during a period beginning in November 2003 and ending in June 2005." Id. ¶ 21. The plaintiffs further allege that "[a]s a result of the [d]efendant's failure to remit contributions and/or timely remit contributions from November 2003 to June 2005, [the] [d]efendant, as of April 26, 2007, owes to the Health and Pension Trusts $6,261.86 in interest on late payments and liquidated damages." Id. ¶ 21. The plaintiffs represent that the Pension and Health Trusts engaged Regardie, Brooks, & Lewis to conduct a payroll audit of the defendant. Id. ¶ 27. "The payroll audit revealed under payments to the Health and Pension Trusts for the work periods of January 1, 2003 to December 31, 2005." Id. ¶ 28. Thus, the plaintiff alleges that "[a]s a result of the under payments, the [d]efendant owes the Health and Pension Trusts $10, 110.37 in under payments[,] which includes liquidated damages of $919.13." Id.

Currently before this Court is the Plaintiffs' Motion for a Default Judgment. For the reasons set forth below, the Court finds that the plaintiffs' motion must be GRANTED.

I. BACKGROUND

The defendant is required to make periodic contributions to the Health and Pension Trusts pursuant to the collective bargaining agreements ("Agreements") entered into between the defendant and Teamsters Local Union No. 639. Compl. ¶¶ 12-14.*fn2 Article XXVII of the 2001 Agreement, effective October 16, 2001, required the defendant to make contributions to the Health Trust in the amount of $3.02 per hour "or portion thereof" for each employee that had performed work. Compl. ¶14 & Ex. D (Collective Bargaining Agreement By and Between Boiler and Furnace Cleaners, Inc. and Drivers, Chauffeurs and Helpers Local Unioin #639 Affiliated with the International Brotherhood of Teamsters) ("Agreement for October 16, 2001 to October 15, 2004"), Article ("Art.") 27(a) & 34. Effective October 16, 2002, the defendant was required to make contributions in the same amount as required the previous year. Id. Effective October 16, 2003, the defendant was required to make contributions to the Health Trust in the amount of $3.17 per hour "or portion thereof" for work performed by each employee. Id. Pursuant to Article XXVII of a new agreement that took effect on October 16, 2004, the defendant was required to make contributions to the Health Trust in the amount of $3.32 per hour "or portion thereof." Id. & Ex. C (Collective Bargaining Agreement By and Between Boiler and Furnace Cleaners, Inc. and Drivers, Chauffeurs and Helpers Local Unioin #639 Affiliated with the International Brotherhood of Teamsters) ("Agreement for October 16, 2004 to October 15, 2007"), Art. 27(a). Effective October 16, 2005, the defendant was required to make contributions to the Health Trust in the amount of $3.52 per hour "or portion thereof" for work performed by each employee. Id. Effective October 16, 2006, the parties were to implement a new, but yet undetermined, Health Trust contribution rate. Id.

Pursuant to Article XXVIII of the 2001 Agreement, the defendant was required to make contributions to the Pension Trust in the amount of $1.50 per hour "or portion thereof" for work performed by each employee. Compl. ¶ 15 & Ex. D (Agreement for October 16, 2001 to October 15, 2004), Art. 28(a). Effective October 16, 2002, the defendant was required to make contributions to the Pension Trust in the amount of $1.95 per hour "or portion thereof" for work performed by each employee. Id. Effective October 16, 2003, the defendant was required to make contributions to the Pension Trust in the amount of $2.41 per hour "or portion thereof" for work performed by each employee. Id. Pursuant to Article XXVIII of the 2004 Agreement, the defendant was required to make contributions to the Pension Trust in the amount of $3.46 per hour "or portion thereof" for work performed by each employee. Id. & Ex. C (Agreement for October 16, 2004 to October 15, 2007), Art. 27(b).

The plaintiffs have submitted the affidavit of Helen Assefa, Assistant Accounting Manager for the Trusts, which declares that the defendant failed to timely remit contributions owed to the Pension and Health Trusts beginning in November 2003 and ending in June 2005. Plaintiffs' Memorandum in Support of Motion for Default Judgment ("Pls.' Mem."), Affidavit of Helen Assefa ("Assefa Aff.") ¶¶ 1,4. As a result of the defendant's failure to timely remit these contributions, Ms. Assefa represents that the defendant owes the Health Trust $687.89 in interest for late payments, $3,292.18 in liquidated damages and $61.84 for amounts paid at the incorrect rate.*fn3 Id. ¶5. She further contends that due to the defendant's failure to timely remit these contributions, the defendant owes the Pension Trust $353.81 in interest for late payments, $1,714.42 in liquidated damages and $151.72 for amounts paid at the incorrect rate. Id.

On or about January 31, 2005, the Pension and Health Trusts had a payroll audit of the defendant conducted by the accounting firm of Regardie, Brooks & Lewis. Pls.' Mem., Affidavit of Nathan Rosen ("Rosen Aff.") ¶¶ 2-5. The payroll audit revealed that there had been "under payments and non-payments to the Funds for the work periods January 1, 2003 to December 31, 2005." Id. ¶ 6. The audit also disclosed that the defendant had "failed to report 1,592 hours to the Health Trust and failed to report 1,199.50 hours to the Pension Trust." Id. Further, the payroll audit uncovered that the defendant "reported 4,367.25 hours to the Health Trust at an incorrect contribution rate and reported 4,033 hours to the Pension Trust at the incorrect contribution rate." Id. Mr. Rosen concludes that "[b]ased on these unreported hours and hours reported at the wrong rate, [the defendant] owes the Health Trust $4,825.40 for unreported hours, [and] $655.09 for contributions made at an incorrect rate." Id. In addition, Mr. Rosen found that "[a]s a result of the under payments, [the defendant] owes the Pension Trust $2,299.20 for unreported hours and $1,411.55 for contributions made at an incorrect rate." Id.

Regarding efforts to recover the defendant's delinquent contributions, the plaintiffs' attorneys represent that the plaintiffs have incurred attorneys' fees and court costs totaling approximately $7,275. Pls' Mem., Ex. D (Declaration of Michael L. Artz in Support of Motion for Default Judgment) ("Artz Decl.") ¶¶ 3,8. The fees are for preparing, reviewing and revising documents, drafting the complaint and other legal pleadings, in addition to various additional efforts to collect the contributions. Id. ¶ 3. Overall, the plaintiffs seek awards of $10,070.45 for the Teamsters Local 639-Employers Health Trust and $6,301.78 for the Teamsters Local 639- Employers Pension Trust,*fn4 Pls.' Mem., Assefa Aff. ¶¶ 5, 8, in addition to the attorneys' fees and court costs noted above. Accordingly, the plaintiffs seek a total award of $24,262.23.

The plaintiff filed this action on May 22, 2007 and the defendant was served with the complaint and summons on May 30, 2007 and June 6, 2007. Pls.' Mem., Ex. A (Affidavits of Process Servers). Thereafter, the defendant failed to respond to the filing of this action within twenty (20) days as required by Federal Rules of Civil Procedure 12(a)(1)(A). The plaintiff then filed a motion for entry of a default against the defendant and the Clerk of Court entered the default on July 20, 2007. The defendant has not challenged the entry of the default, or the plaintiffs' motion for the default judgment.

II. STANDARD OF REVIEW

When a defendant fails to defend against a case or otherwise engages in dilatory tactics, the plaintiff may invoke the court's power to enter a default judgment by first seeking the entry of a default. See Fed.R.Civ.P. 55(a); Peak v. District of Columbia, 236 F.R.D. 13, 14-15 (D.D.C. 2006) (citing Keegel v. Key W. & Caribbean Trading Co., 627 F.2d 372, 375 n. 5 (D.C.Cir. 1980)); see also, Jackson v. Beech, 636 F.2d 831, 836 (D.C.Cir. 1980) ("The default judgment must normally be viewed as available only when the adversary process has been halted because of an essentially unresponsive party."). The Federal Rules of Civil Procedure provide for the entry of a default judgment "[w]hen a party against whom a judgment for affirmative relief is sought has failed to plead or otherwise defend as provided by these rules." Fed.R.Civ.P. 55(a). Rule 55 sets forth a two-step process for a party seeking default judgment: entry of a default, followed by entry of a default judgment. Fed.R.Civ.P. 55; Eitel v. McCool, 782 F.2d 1470, 1471 (9th Cir. 1986); Meehan v. Snow, 652 F.2d 274, 276 (2d Cir.1981); see also 10A Charles Alan Wright & Arthur R. Miller, Fed. Prac. & Proc. Civ. § 2682 (3d ed 2008) (stating that "[p]rior to obtaining a default judgment under either Rule 55(b)(1) or Rule 55(b)(2), there must be an entry of default as provided by Rule 55(a)"). When a defendant has failed to plead or otherwise defend against an action, the plaintiff may request that the clerk of the court enter a default against that defendant. Fed.R.Civ.P. 55(a). Once the clerk enters the default pursuant to Rule 55(a), Rule 55(b) authorizes either the clerk or the court to enter a default judgment against a defendant. Id. at 55(b).

Despite a plaintiff's ability to acquire a judgment by default, "[c]ases should be decided upon their merits whenever reasonably possible." Eitel, 782 F.2d at 1472; see Peak, 236 F.R.D. at 15 (acknowledging the inherent unfairness of awarding judgment against a party for mere filing delays rather than deciding the case on its merits). However, while courts do not favor default judgments and will only resolve cases in this manner "when the adversary process has been halted because of an essentially unresponsive party[,] the diligent party must be protected lest he be faced ...


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