Bricklayers & Trowel Trades International Pension Fund v. Kel-Tech Construction, Inc.

          MEMORANDUM OPINION AND ORDER

          TIMOTHY J. KELLY UNITED STATES DISTRICT JUDGE.

         Plaintiffs Bricklayers & Trowel Trades International Pension Fund and International Masonry Institute (together, the “Plans”) are multiemployer employee benefit plans within the meaning of the Employee Retirement Income Security Act of 1974 (“ERISA”), Pub. L. No. 93-406, 88 Stat. 829. They have filed suit against Defendant Kel-Tech Construction, Inc. (“Kel-Tech”) for failure to pay contributions to the Plans in violation of certain agreements and ERISA. ECF No. 1 (“Compl.”). To date, Kel-Tech has failed to answer or otherwise defend this action. The Plans filed a Motion for Entry of Judgment by Default (the “First Motion”), ECF No. 9, asking the Court to enter judgment in the amount of $59, 600.82^[1] against Kel-Tech and to order certain equitable relief. See ECF No. 9; see also ECF No. 9-1 (“Pls.' Br.”); ECF No. 9-2 (“Pls.' First Summary”); ECF No. 9-3 (“Pls.' App'x”). Seven months later, the Plans filed a Supplemental Motion for Entry of Judgment by Default (the “Second Motion”), ECF No. 10, increasing the amount of the requested judgment to $77, 179.10. ECF No. 10; see also ECF No. 10-1 (“Pls.' Second Decl.”); ECF No. 10-2 (“Pls.' Second Summary”).

         The Court will deny the First Motion as moot, given that it has been effectively superseded by the Second Motion.^[2] As explained below, the Court concludes that the record supports granting the Second Motion only in part. The Court will give the Plans an opportunity to address the deficiencies identified in this Opinion by August 31, 2018. If the Plans choose not to do so, the Court will enter a judgment consistent with this Opinion.

         I. Factual and Procedural Background

         The Plans filed their complaint on July 7, 2017, Compl., and served Kel-Tech on July 24, 2017, see ECF No. 3. When Kel-Tech failed to respond within 21 days as required by Federal Rule of Civil Procedure 12(a)(1)(A)(i), the Clerk entered default against Kel-Tech at the Plans' request. ECF No. 5. The Plans then filed the instant motions for default judgment.

         The Plans provide benefits to employees pursuant to agreements negotiated between local unions and employers. Pls.' App'x at 3. As described in the Plans' complaint, Kel-Tech has entered into collective bargaining agreements (“CBAs”) with a local union, International Union of Bricklayers and Allied Craftworkers Local Union No. 1, New York (“Local 1”). Compl. ¶ 7. The Plans' declarations, but not their complaint, also reference a CBA between Kel-Tech and another local union, International Union of Bricklayers and Allied Craftworkers Local Union No. 84, New York (“Local 84”). Pls.' App'x at 3. The CBAs obligate Kel-Tech to make monthly reports to the Plans of the hours worked by covered employees, and to pay monthly contributions to the Plans. Id.

         The Plans are governed by trust agreements. Compl. ¶¶ 1-2. Although they never allege as much, the Plans appear to assume that, by virtue of the CBAs, Kel-Tech became bound by the terms of the trust agreements as well. See Id. ¶¶ 10-11. The trust agreements provide that, if Kel-Tech fails to make the required contributions, the Plans may require Kel-Tech to pay: (i) the amount of unpaid contributions; (ii) 15% interest on delinquent contributions; (iii) an additional award equal to the greater of 15% interest on delinquent contributions or liquidated damages of 20% of the amount of the delinquent contributions; and (iv) attorney's fees and costs incurred in pursuing the delinquency. Pl.'s App'x at 3, 16-17. The Plans' “General Collection Procedures” contain similar provisions, although the Plans never explain how the Procedures are binding on Kel-Tech. See Compl. ¶¶ 12-13; Pls.' App'x at 9-12. The Procedures explain that the contributions and reports required by the CBAs become due on the 15th day of each month. See Pls.' App'x at 9.

         The Plans' complaint and motion papers refer to different “cover groups” within each local union. See, e.g., Compl. ¶¶ 16-17. While the Plans do not explain exactly what these groups are, the Court infers that each consists of a sub-group of local union employees. The Plans have identified four cover groups for which Kel-Tech allegedly owes contributions: three within Local 1 (cover group 1 (“1-NY-1”), cover group 64 (“1-NY-64”), and cover group 66 (“1-NY-66”)) and one within Local 84 (cover group 19 (“84-NY-19”)). See Pls.' Second Summary. Cover group 1-NY-64 was not mentioned in the Plans' complaint or the First Motion; rather, the Plans first sought damages associated with group 1-NY-64 in the Second Motion.

         In their complaint, the Plans bring three counts against Kel-Tech. Count I seeks to recover required contributions to the Plans that Kel-Tech had not made as of the filing of the complaint, allegedly in violation of ERISA, the CBAs, the trust agreements, and the General Collection Procedures. Compl. ¶¶ 15-21. Count II seeks to recover interest, liquidated damages and attorney's fees on contributions that Kel-Tech made late, but before the filing of the complaint, under the trust agreements and the General Collection Procedures. Id. ¶¶ 22-26. Count III seeks injunctive relief requiring Kel-Tech to make reports and pay contributions in a timely manner going forward. Id. ¶¶ 27-31. The Plans also seek “contributions, interest, liquidated damages, and reasonable attorneys' fees and costs that may accrue and/or are found to be due and owing to the Plaintiffs subsequent to the filing of this Complaint, during the pendency of this action, and up to the date of judgment.” Id. at 10.

         In support of the First Motion, the Plans submitted a declaration detailing their damages for each cover group (excluding 1-NY-64), as well as a document summarizing the amounts set forth in the declaration. See Pls.' App'x at 2-7; Pls.' First Summary. With their Second Motion, the Plans submitted a revised declaration and summary with new damages amounts. See Pls.' Second Decl.; Pls.' Second Summary. The revisions reflect damages for contributions due to cover group 1-NY-64, additional accrued interest, as well as the Plans' allegation that Kel-Tech has, since the filing of the First Motion, paid some contributions it owed but failed to make other contributions as they came due. Table 1, below, summarizes the damages requested in the First Motion by cover group and category; Table 2 summarizes the damages requested in the Second Motion in the same format.

         In both the First and Second Motions, the Plans also request an award of $3, 599.00 in attorney's fees and $590.00 in costs. Pls.' First Summary; Pls.' Second Summary. Their counsel has provided an affidavit supporting this award, along with a spreadsheet detailing the legal work underlying the fee request. See Pls.' App'x at 18-26.

         Table 1: Summary of Damages Requested in First Motion

Local 1					Local 84
1-NY-1			1-NY-64	1-NY-66	84-NY-19
Count I	Unpaid Contributions	$13,485.04	___	$14,188.21	$1,806.12
	Interest on Unpaid Contributions	$287.33	___	$330.70	$2,264.40
	Liquidated Damages or Additional Interest on Unpaid Contributions	$2,697.02	___	$2,837.66	$2,264.40
Count II	Interest on Late Contributions	$1,524.51	___	$1,125.32	___
	Liquidated Damages or Additional Interest on Late Contributions	$7,693.95	___	$4,907.16	___

         Table 2: Summary of Damages Requested in Second Motion

Local 1					Local 84
1-NY-1			1-NY-64	1-NY-66	84-NY-19
Count I	Unpaid Contributions	$11,460.80	$1,076.04	$16,211.97	$1,806.12
	Interest on Unpaid Contributions	$372.07	$41.69	$521.29	$2,400.95
	Liquidated Damages or Additional Interest on Unpaid Contributions	$2,292.16	$215.21	$3,242.39	$2,400.95
Count II	Interest on Late Contributions	$2,938.27	$21.91	$2,735.94	___
	Liquidated Damages or Additional Interest on Late Contributions	$14,569.90	$75.26	$10,607.48	___

         II. Legal Standard

         “A court has the power to enter default judgment when a defendant fails to defend its case appropriately or otherwise engages in dilatory tactics.” Boland v. Elite Terrazzo Flooring, Inc., 763 F.Supp.2d 64, 66-67 (D.D.C. 2011) (citing Keegel v. Key W. & Caribbean Trading Co., 627 F.2d 372, 375 n.5 (D.C. Cir. 1980)). However, “[b]ecause courts strongly favor resolution of disputes on their merits, ” a default judgment “usually is available ‘only when the adversary process has been halted because of an essentially unresponsive party.'” Id. at 67 (quoting Jackson v. Beech, 636 F.2d 831, 836 (D.C. Cir. 1980)). “The determination of whether default judgment is appropriate is committed to the discretion of the trial court.” SEC v. E-Smart Techs., Inc., 139 F.Supp.3d 170, 176-77 (D.D.C. 2015) (quoting Int'l Painters & Allied Trades Indus. Pension Fund v. Auxier Drywall, LLC, 531 F.Supp.2d 56, 57 (D.D.C. 2008)). “Before entering judgment against an absent defendant, . . . ‘a court should satisfy itself that it has personal jurisdiction' over that defendant.” Trudel v. Suntrust Bank, 302 F.Supp.3d 140, 142 (D.D.C. 2018) (quoting Mwani v. bin Laden, 417 F.3d 1, 6 (D.C. Cir. 2005)).

         Under Federal Rule of Civil Procedure 55, there is a “two-step procedure” for obtaining a default judgment. Ventura v. L.A. Howard Constr. Co., 134 F.Supp.3d 99, 102 (D.D.C. 2015). First, after a defendant “has failed to plead or otherwise defend, ” the plaintiff may request that the Clerk of the Court enter default against that defendant. Fed.R.Civ.P. 55(a). Second, after default is entered, the plaintiff may move for a default judgment. Fed.R.Civ.P. 55(b)(2). “By providing for a two-step process, Rule 55 allows the defendant the opportunity to move the court to set aside the default before the court enters default judgment.” Int'l Painters & Allied Trades Indus. Pension Fund v. Zak Architectural Metal & Glass LLC, 635 F.Supp.2d 21, 23 n.1 (D.D.C. 2009); see Fed. R. Civ. P. 55(c).

         An entry of default “establishes the defaulting party's liability for the well-pleaded allegations of the complaint.” Elite Terrazzo Flooring, 763 F.Supp.2d at 67 (collecting cases). However, this “does not automatically establish liability in the amount claimed by the plaintiff.” Carazani v. Zegarra, 972 F.Supp.2d 1, 12 (D.D.C. 2013). Rather, the Court “is required to make an independent determination of the sum to be awarded, ” Int'l Painters & Allied Trades Indus. Pension Fund v. R. W. Amrine Drywall Co., 239 F.Supp.2d 26, 30 (D.D.C. 2002), and is afforded “considerable latitude” in making its determination, Elite Terrazzo Flooring, 763 F.Supp.2d at 67. In his motion for default judgment, the plaintiff must prove to the Court his requested damages “to a reasonable certainty.” Id. at 68. In support, the plaintiff may offer “detailed affidavits or documentary evidence” on which the Court may rely, and is “entitled to all reasonable inferences from the evidence [he] offer[s].” Amrine Drywall, 239 F.Supp.2d at 30. The Court may conduct a hearing to determine damages, Fed.R.Civ.P. 55(b)(2), but is not required to do so “as long as it ensure[s] that there [is] a basis for the damages specified in the default judgment, ” Elite Terrazzo Flooring, 763 F.Supp.2d at 67 (alterations in original) (internal quotation marks omitted).

         III. Analysis

         As explained below, the Court determines that it may exercise personal jurisdiction over Kel-Tech. The Court then concludes that the facts alleged in the Plans' complaint establish Kel-Tech's liability with respect to Count I, but not Count II. In addition, the Plans have not established Kel-Tech's liability for claims based on Kel-Tech's purported obligations to Local 84. With respect to damages, the Plans have not established interest and liquidated damages to a reasonable certainty. Nor have the Plans demonstrated their entitlement to a permanent injunction, as requested in Count III. Accordingly, the Court concludes that the record supports a judgment awarding only some of the damages that the Plans have requested.

         A. Personal Jurisdiction

         In most cases, a district court may exercise personal jurisdiction only to the extent that a state court of general jurisdiction in that district could. See Fed. R. Civ. P. 4(k)(1)(A); Walden v. Fiore, 134 S.Ct. 1115, 1121 (2014). Thus, jurisdiction must typically be proper under the state's long-arm statute and the Fourteenth Amendment, which requires “certain minimum contacts with [the State] such that the maintenance of the suit does not offend ‘traditional notions of fair play and substantial justice.'” BNSF Ry. Co. v. Tyrrell, 137 S.Ct. 1549, 1558 (2017) (alteration in original) (quoting Int'l Shoe Co. v. Washington, 326 U.S. 310, 316 (1945)). But where Congress has provided for nationwide service of process, it is the federal government, not the state, that is the touchpoint for the jurisdictional analysis. See Fed. R. Civ. P. 4(k)(1)(C); SEC v. Bilzerian, 378 F.3d 1100, 1106 n.8 (D.C. Cir. 2004). In those cases, jurisdiction requires ...