United States District Court, District of Columbia
Service Employees International Union National Industry Pension Fund, et al. Plaintiffs,
Liberty House Nursing Home of Jersey City, Inc., Defendant.
P. MEHTA UNITED STATES DISTRICT JUDGE.
Service Employees International Union National Industry
Pension Fund (the “Pension Fund”) is a
multiemployer pension plan within the meaning of the Employee
Retirement Income Security Act (“ERISA”), 29
U.S.C. § 1001 et seq. Defendant Liberty House
Nursing Home of Jersey City, Inc., which formerly operated a
nursing home in Jersey City, New Jersey, is a participating
employer in the Pension Fund. The Pension Fund and its
Trustees (collectively, “Plaintiffs”) brought
this action under ERISA, alleging that Defendant made
deficient and late payments under the pension plan,
underreported employees' salaries in monthly reports used
to calculate employer contributions, and neglected to make
withdrawal liability payments, which are assessed when an
employer prematurely withdraws from a plan. Plaintiffs sought
deficient and late contributions, withdrawal liability,
liquidated damages, surcharges owed under the Pension
Protection Act of 2006, Pub. L. No. 109-280, 120 Stat. 780
(2006), interest, and attorney's fees and costs.
properly served, Defendant failed to respond to the
Complaint, and the Clerk of the Court entered default on
August 23, 2016. Plaintiffs then moved for default judgment,
seeking the relief requested in the Complaint. For the
reasons discussed below, the court grants Plaintiffs'
Motion for Default Judgment.
times relative to this action, Service Employees
International Union Healthcare 1199 New Jersey (the
“Union”) was the collective bargaining
representative for full-time and part-time caregiver and
healthcare employees at Defendant's nursing home in
Jersey City, New Jersey. Compl., ECF No. 1 [hereinafter
Compl.], at 3-4. In March 2008, the Union entered into a
collective bargaining agreement (the “2008
Agreement”) with Defendant and several other nursing
homes that governed the period from March 13, 2008, through
February 28, 2013. Id.; Compl., Ex. 1, ECF No. 1-3
[hereinafter 2008 Agreement]; Pls.' Mot. for Default J.,
ECF No. 7 [hereinafter Pls.' Mot.], Decl. of Kenneth J.
Anderson, Jr., ECF No. 7-3 [hereinafter Anderson Decl.],
¶ 4. In 2012, the Union reopened negotiations with the
employers over the terms of the agreement for its final year,
which it was authorized to do under the agreement, but after
both sides failed to reach a resolution, the parties
submitted the matter to arbitration. Compl., Ex. 2, ECF No.
1-4 [hereinafter 2012 Agreement], at 2. In November 2012, an
arbitrator who was authorized by the agreement to issue a
final and binding resolution imposed a collective bargaining
agreement on the parties, effective from March 1, 2012,
through June 30, 2016 (the “2012 Agreement”).
Anderson Decl. ¶ 4; 2008 Agreement art. 34, § 1;
2012 Agreement at 13.
the 2008 Agreement, Defendant agreed to contribute 1.5
percent of each covered employee's gross monthly wages to
the Pension Fund starting in 2008. Compl. at 4; 2008
Agreement, art. 30, § 3. That contribution amount
subsequently increased in 2010 and 2011 to 2.5 percent and
2.75 percent, respectively. 2008 Agreement, art. 30, §
3. The 2012 Agreement provides that Defendant would make
contributions at a rate of 2.75 percent of employees'
gross earnings for the duration of the contract. 2012
Agreement at 22.
2008 and 2012 Agreements state that participating employers
are bound by the Pension Fund's Agreement and Declaration
of Trust (“Trust Agreement”) as well as its
Statement of Policy for Collection of Delinquent
Contributions (“Collections Policy”). 2008
Agreement; 2012 Agreement; Compl., Ex. 3, ECF No. 1-5
[hereinafter Trust Agreement]; Compl., Ex. 4, ECF No. 1-6
[hereinafter Collections Policy].
result of investment losses in 2008, the Pension Fund was
deemed to be in “critical status each year from 2009
through 2016. Anderson Decl. ¶¶ 6-8;
Anderson Decl., Ex. A, ECF No. 7-3, at 13-82 [hereinafter
Annual Funding Notices], at 79. In response, the Pension
Fund's trustees adopted a Rehabilitation Plan in November
2009, designed to improve the fund's fiscal situation.
Under the Rehabilitation Plan, participating employers, such
as Defendant, were required to pay surcharges and
supplemental contributions under one of two schedules-either
a “Default” or “Preferred” Schedule.
Anderson Decl. ¶¶ 6-8; Annual Funding Notices at
79. The Pension Fund communicated these changes to
participating employers each year from 2009 through 2016,
notifying them by letter of the Pension Fund's critical
status and the Rehabilitation Plan. See Annual
Funding Notices. These letters also listed the applicable
surcharges. Id. Defendant, as part of the 2012
Agreement, agreed to pay supplemental contributions effective
July 1, 2010, under the Preferred Schedule. 2012 Agreement at
19; Anderson Decl. ¶ 10.
The Pension Fund's Assessment of Withdrawal
30, 2015, the Pension Fund sent a notice and demand for
payment to Defendant based on its determination that
Defendant had completely withdrawn from the plan as of
February 28, 2015, thereby triggering withdrawal liability
under 29 U.S.C. §§ 1382 and 1383(a). Anderson
Decl., Ex. E, ECF No. 7-3 [hereinafter Withdrawal Liability
Assessment]; Anderson Decl. ¶ 23. The Pension Fund
assessed $844, 789.39 in provisional withdrawal liability.
See Withdrawal Liability Assessment.
August 17, 2015, Defendant requested review of the Pension
Fund's determination under Section 4219(b)(2)(A) of
ERISA, 29 U.S.C. § 1399(b)(2)(A). Compl., Ex. 9, ECF No.
1-11 [hereinafter Request for Review], at 1; Anderson Decl.
¶ 26. Defendant argued that there was “no
permanent cessation of [its] obligation to contribute”
because its withdrawal from the plan fell under ERISA Section
4218(1)(A), which exempts from withdrawal liability employers
who withdraw solely because of a change in business form that
“causes no interruption in employer contributions or
obligations to contribute under the plan.” See
29 U.S.C. § 1398; Request for Review at 1-2.
The Pension Fund responded to Defendant's request for
review and rejected its objection. Compl., Ex. 10, ECF No.
1-12 [hereinafter Letter to Liberty House].
November 16, 2016, Plaintiffs filed in this case a
supplemental memorandum calculating Defendant's final
withdrawal liability to be $1, 187, 325.97. See
Pls.' Supp. Mem. in Support of Mot. for Default J., ECF
No. 8 [hereinafter Pls.' Supp. Mem.]; Pls.' Supp.
Mem., Decl. of Kisha Smith, ECF No. 8-1 [hereinafter Smith
Decl.], ¶¶ 2-3.
to the Pension Fund's Collections Policy, the Pension
Fund conducted an audit of Defendant for the calendar years
2012 and 2013. The audit aimed to verify that the hours and
salaries reported by Defendant to calculate monthly
contributions were the same as those reflected in
Defendant's payroll documents and federal tax filings.
See Pls.' Mot., Decl. of Andre Joseph, ECF No.
7-4 [hereinafter Joseph Decl.], ¶ 10. The audit revealed
that Defendant underreported employee salaries in 2012 and
2013. Id. ¶¶ 10-12. In letters dated
November 20, 2015, and January 14, 2016, the Pension Fund
notified Defendant of the findings of the audit and
Defendant's obligation to pay the missing contributions.
Id. ¶ 13; Joseph Decl., Ex. A, ECF No. 7-4, at
9-10. According to Andre Joseph, Payroll Review Manager for
the Union, as of October 21, 2016, Defendant had
“failed or refused to remit the amounts owed to the
Pension Fund under the audit.” Joseph Decl. ¶ 13.
29, 2016, Plaintiffs filed a Complaint alleging that
Defendant breached the 2008 and 2012 Agreements and violated
ERISA by failing to make timely and complete contributions to
the plan between October 2012 and February 2015;
underreporting employee salaries in 2012 and 2013, and,
thereby, underpaying contributions during that time period;
and defaulting on withdrawal liability payments after
Defendant withdrew from the plan. See Compl. at
12-13. Plaintiffs sought various forms of relief, including:
(1) a declaration that Defendant defaulted on withdrawal
liability payments to the Pension Fund; and (2) a judgment
requiring Defendants to pay withdrawal liability, delinquent
contributions, liquidated damages, surcharges owed under the
Pension Protection Act, interest, and attorney's fees and
costs. Id. at 14-15.
failed to respond to the Complaint within 21 days, and the
Clerk filed an entry of default on August 23, 2016.
See Clerk's Entry of Default, ECF No. 5. On
October 21, 2016, Plaintiffs then filed the Motion for
Default Judgment presently before the court. See