United States District Court, District of Columbia
BRICKLAYERS & TROWEL TRADES INTERNATIONAL PENSION FUND et al., Plaintiffs,
v.
KEL-TECH CONSTRUCTION, INC., Defendant.
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been effectively superseded by the Second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 ...