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Service Employees International Union National Industry Pension Fund v. LTP Generations, LLC

United States District Court, District of Columbia

March 29, 2019

SERVICE EMPLOYEES INTERNATIONAL UNION NATIONAL INDUSTRY PENSION FUND, et al., Plaintiffs,
v.
LTP GENERATIONS, LLC, et al., Defendants.

          MEMORANDUM OPINION REGARDING REPORT AND RECOMMENDATION OF MAGISTRATE JUDGE

          ROBIN M. MERIWEATHER UNITED STATES MAGISTRATE JUDGE

         On May 18, 2017, Plaintiffs Service Employees International Union National Industry Pension Fund and its trustees (collectively “SEIU Fund”) commenced this action against Defendants LTP Generations, LLC, d/b/a Oakgrove Springs Care Center and LTP Heritage, LLC, d/b/a Oakhill Springs Care Center seeking, among other things, delinquent benefit fund contributions, interest, and damages, pursuant to sections 502(a)(3) and 515 of the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1001, et seq. (See Compl., ECF No. 1, at ¶¶ 5-10, 30, 40.) Defendants did not answer SEIU Fund's complaint or defend this action in any way. (See generally Docket, Case No. 17-cv-942.) Accordingly, on August 22, 2017, the Clerk of the Court entered default. (See Clerk's Entry of Default, ECF No. 8.)

         Currently pending before this Court is SEIU Fund's motion for default judgment. (See Pls.' Mot. for Default Judgment (“Pls.' Mot.”), ECF No. 8.) On June 4, 2018, this Court referred the case for full case management to a Magistrate Judge, and the Clerk's Office randomly assigned the case to Magistrate Judge Robin M. Meriweather. (See Min. Order of June 4, 2018; Min. Entry of June 4, 2018.) On March 14, 2019, Magistrate Judge Meriweather published a 24-page Report and Recommendation (“R&R”) recommending that this Court grant in part SEIU Fund's motion. (See R&R, ECF No. 9.)[1]

         In the R&R, Magistrate Judge Meriweather engaged in a comprehensive analysis of SEIU Fund's motion. (See generally id.) The R&R first recommends the entry of a default judgment as to Defendants' liability, explaining that such a judgment is proper because “[SEIU Fund] ha[s] pleaded a viable ERISA claim, and [Defendants] have not opposed the entry of default or default judgment motion.” (Id. at 9.)[2] It further recommends a finding that Defendants are jointly and severally liable. (See Id. at 22- 23.)

         Next, Magistrate Judge Meriweather conducted an extensive review of the damages that SEIU Fund alleged as a result of Defendants' failure to comply with their obligations to contribute to the benefit fund. Relying on a lengthy declaration of Kisha Smith, SEIU Fund's Contribution Compliance Manager, as well as spreadsheets from payroll audits of Defendants, the R&R concludes that SEIU Fund has proven to a “reasonable certainty” damages totaling $132, 860.95 in unpaid contributions, interest, liquidated damages, testing fees, and supplemental contributions for the 2012 and 2013 calendar years. (See Id. at 12 (Table 1); see also Id. at 11-15.) The R&R further finds that SEIU Fund has similarly proven damages totaling $283, 755.34 for the Defendants' failure to submit required reports and contributions from February 2013 through April 2018-a recommendation that is $5, 877.13 less than the amount requested due to SEIU Fund's apparent double counting of the time period from February 2013 to May 2013. (See Id. at 17 (Table 2); see also Id. at 15-18.) Magistrate Judge Meriweather also considered SEIU Fund's request for $6, 550.50 in attorney's fees and costs and found that amount reasonable, recommending the full request be awarded in this case. (See Id. at 18-21.)

         Magistrate Judge Meriweather also considered SEIU Fund's request for injunctive relief, which included a request for a court order requiring Defendants to submit outstanding reports for the period of January 2014 through April 2017, and to pay “‘any additional amounts found due and owing following the production of the reports.'” (Id. at 21 (quoting Pls.' Mot. at 1); see also Id. at 21-22.) She concluded that such relief is permissible under ERISA section 1132(g)(2)(E) and is consistent with the relief granted in similar ERISA cases in this district. (See Id. at 21-22.) Accordingly, the R&R recommends that this Court grant such relief. (See id.)

         Magistrate Judge Meriweather's R&R specifically alerts the parties to the requirement that any objections must be filed in writing within 14 days. (See Id. at 24.) It further informs the parties that any objections must “specifically identify the portion of the report and/or recommendation to which objection is made, and the basis for such objections.” (Id.) It also advises “that failure to file timely objections to the findings and recommendations set forth in this report may waive [the parties'] right of appeal from an order of the District Court that adopts such findings and recommendation.” (Id.) To date, no such objections have been filed.

         This Court concludes that Magistrate Judge Meriweather has thoroughly considered the issues raised in this action, and, given that neither party has filed an objection, this Court hereby ADOPTS the attached Report and Recommendation's findings and conclusions.

         Thus, as set forth in the accompanying Order, SEIU's motion for default judgment will be GRANTED IN PART, and SEIU will be awarded: (1) $416, 616.29 in unpaid contributions, interest, liquidated damages, and testing fees, and (2) $6, 550.50 in attorney's fees and costs. In addition, the Court will grant the requested injunctive relief and order Defendants to: (1) submit the outstanding remittance reports for the period from January 2014 through April 2017; and (2) remit any additional outstanding contributions that are found as a result of these reports, consistent with the analysis set forth in the R&R.

          KETANJI BROWN JACKSON UNITED STATES DISTRICT JUDGE

         REPORT AND RECOMMENDATION

         Plaintiffs Service Employees International Union National Industry Pension Fund ("the Fund") and its trustees (collectively "Plaintiffs") filed this action on May 18, 2017, alleging that Defendants LTP Generations, LLC d/b/a Oakgrove Springs Care Center ("LTP Generations") and LTP Heritage, LLC d/b/a Oakhill Springs Care Center ("LTP Heritage") (collectively "Employers" or "Defendants") failed to comply with pension plan contributions as required by collective bargaining agreements executed with United Healthcare Workers-West, Service Employees International Union ("SEIU"), CTW, CLC ("the Union"). See Compl. ¶¶ 29-48, ECF No. 1. Specifically, Plaintiffs seek delinquent benefit fund contributions, interest, and damages, pursuant to Sections 502(a)(3) and 515 of the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. §§ 1001, et seq. See Compl. ¶¶ 30, 40. To date, the Employers have failed to answer or otherwise defend this action. The Clerk of the Court entered default on August 22, 2017, and Plaintiffs now seek default judgment. See Pls.' Mot. Default J. ("Pls. 'Mot"), ECF No. 8.

         This matter was referred to the undersigned for full case management. See 6/4/2018 Min. Order Referring Case. Having considered Plaintiffs' motion, Complaint, and the accompanying exhibits, and for the reasons discussed below, the undersigned recommends that the Court GRANT-IN-PART and DENY-IN-PART Plaintiffs' Motion for Default Judgment, ECF No. 8.

         BACKGROUND

         I. FACTUAL BACKGROUND

         The Employers entered into two collective bargaining agreements ("CBAs") - one that was effective from April 5, 2012 through April 2, 2014 ("2012 CBA") and another effective from April 3, 2014 through April 2, 2017 ("2014 CBA"). See Compl. ¶ 15; id, Ex. 1 ("2012 CBA"), ECF No. 1-1 (collective bargaining agreement covering April 5, 2012 to April 2, 2014); id, Ex. 2 ("2014 CBA"), ECF No. 1-2 (collective bargaining agreement covering April 3, 2014 to April 2, 2017). The 2014 CBA provides that the agreement remains "in full force and effect through April 2, 2017, and from year to year thereafter," but allows either party to "serve written notice" of an intent to cancel or amend the agreement at least ninety days in advance of the agreement's renewal. 2014 CBA § 39. The 2014 CBA remains the currently operative agreement because neither party has served such notice. See Compl. ¶ 15. Tony Perez, the owner of LTP Generations and LTP Heritage, signed each agreement on behalf of both entities. See Id. ¶ l2.b; 2012 CBA at 30; 2014 CBA at 30.[1]

         Under the CBAs, the Employers agreed to become participating employers in the Fund and to be bound by the provisions of the SEIU Pension Fund's Trust Agreement ("Trust Agreement") and Collections Policy. See Pls.' Mot., Decl. of Kisha Smith ("Smith Decl.") ¶¶ 5, 8, ECF No. 8-2; see also Compl. ¶¶ 16, 18; 2012 CBA § 16.D; 2014 § 16.D. Each CBA requires the Employers to make monthly pension contributions of $0.35 per hour for certain covered employees. Compl. ¶ 17; 2012 CBA § 16.C; 2014 CBA § 16.C. The CBAs require that such contributions be made on or before the fifteenth day of the month following the month for which the contributions were being made. Id. In addition, the CBAs require the Employers to submit a remittance report, including certain information required by the Fund, with their contributions each month. See Compl. ¶ 17; 2012 CBA § 16.C.5; 2014 CBA § 16.C.5.

         A. Critical Status and the Rehabilitation Plan

         From January 1, 2009, the Fund was certified as being in "critical status" under the Pension Protection Act of 2006. Compl., Ex. 6, SEIU National Industry Pension Fund Rehabilitation Plan ("Rehabilitation Plan") at 1, ECF No. 1-6; see also Compl. ¶ 23. The Fund remained in critical status for subsequent plan years beginning on January 1, from 2010 through 2017. See Smith Decl. ¶ 9; Compl. ¶ 23. The Fund notified participating employers of this status by letters sent in April of each year.[2] See id.; see also Compl., Ex. 5, ECF No. 1-5.

         As required by the Pension Protection Act, the Fund implemented a Rehabilitation Plan that requires participating employers to pay certain surcharges and supplemental contributions. See Smith Decl. ¶¶ 10-11; see also 29 U.S.C. § 1085(a)(2). See generally Rehabilitation Plan. The Rehabilitation Plan includes two schedules for supplemental contributions - a Default Schedule and a Preferred Schedule - and requires that one must be implemented for collective bargaining agreements "entered into or renewed after January 1, 2010." Rehabilitation Plan at 1; see also Smith Decl. ¶ 11. Defendants were placed in the Default Schedule in May 2012. Compl. ¶ 25; Smith Decl. ¶ 12. The Default Schedule requires the Employers to make: (1) from May 2012 through April 2013, supplemental contributions of 47.4% of all owed contributions; and (2) from May 2013, supplemental contributions of 62.5% of all owed contributions. Id.

         B. Audit of 2012-2013 Payroll Records

          The Fund's Collections Policy also authorizes the Fund to conduct an audit of any participating employer, as participating employers self-report monthly contribution obligations. See Smith Decl. ¶¶ 14-15; Compl., Ex. 4 ("Collections Policy") § 1.3-4, ECF No. 1-4. The Collections Policy further provides that if the audit reveals underpayment, then the employer must remit the underpaid contribution amount, in addition to "interest at a rate of 10% per annum on the contribution underpayment, and liquidated damages at the rate of 5% of the contribution underpayment (or 20% after the initiation of litigation)." Smith Decl. ¶ 16; Collections Policy § 4.10(b)-(c). In addition, the Collections Policy requires the employer to pay a testing fee. Smith Decl. ¶ 16. In March 2016, the Fund conducted a payroll audit of the Employers for 2012 and 2013. See Compl. ¶ 27; Smith Decl., Exs. B & C. The audits revealed discrepancies in the Employers' payroll records, resulting in underpaid contributions. See Compl. ¶ 27; Smith Decl. ¶19.

         II. PROCEDURAL BACKGROUND

         The Fund and its Trustees initiated this action against the Employers on May 18, 2017, alleging violations of ERISA and seeking damages of unpaid collectively bargained contributions, interest, liquidated damages, and supplemental contributions. See Compl. ¶ 1. Per proof of service filed with the court on August 11, 2017, Plaintiffs served each Employer on July 14, 2017. See Return of Service, ECF Nos. 4 & 5. As neither Defendant filed an answer, the Clerk of the Court entered default on August 22, 2017. See Entry Default, ECF No. 7. Plaintiffs filed a motion for default judgment on June 1, 2018, seeking $422, 493.42 in unpaid contributions, liquidated damages, interest, and audit fees, as well as the production of outstanding reports, in addition to $6, 550.50 in attorney's fees and costs. See Pls.' Mot. at 1. Judge Ketanji Brown Jackson referred this matter to the undersigned for full case management. See 6/4/2018 Min. Order Referring Case.

         LEGAL STANDARD

         A court may "enter default judgment [under Federal Rule of Civil Procedure 55] when a defendant fails to defend its case appropriately or otherwise engages in dilatory tactics." Peak v. District of Columbia, 236 F.R.D. 13, 15 (D.D.C. 2006) (citing Keegel v. Key West & Caribbean Trading Co., 627 F.2d 372, 375 n.5 (D.C. Cir. 1980)). Although courts strongly prefer to resolve claims on the merits, default judgment is appropriate where "the adversary process has been halted because of an essentially unresponsive party." J.D. Holdings, LLC v. BD Ventures, LLC, 766 F.Supp.2d 109, 113 (D.D.C. 2011) (quoting Cumis Ins. Soc'y, Inc. v. Billups, No. 10-1478 (ESH), 2010 WL 4384228, at *2 (D.D.C. Nov. 4, 2010)) (internal quotation marks omitted); see Darby v. McDonald, 307 F.R.D. 254, 257 (D.D.C. 2014) (noting courts disfavor default judgments and will resolve disputes based on their merits when possible). Rule 55 establishes a two-step procedure that a plaintiff must follow to obtain default judgment. First, the plaintiff must ask the Clerk of the Court to enter default based on a party's failure "to plead or otherwise defend" in response to the complaint. Fed.R.Civ.P. 55(a). Second, after the Clerk has entered default, the plaintiff must file a motion for default judgment. Id. 55(b)(2).

         Once a plaintiff has satisfied Rule 55's procedural requirements, "[t]he determination of whether default judgment is appropriate is committed to the discretion of the trial court." Int'l Painters & Allied Trades Indus. Pension Fund v. Auxier Drywall, LLC, 531 F.Supp.2d 56, 57 (D.D.C. 2008) (citing Jackson v. Beech,636 F.2d 831, 836 (D.C. Cir. 1980)). Upon entry of default, "the defaulting defendant is deemed to admit every well-pleaded allegation in the complaint." Robinson v. Ergo Sols., LLC,4 F.Supp.3d 171, 178 (D.D.C. 2014) (quoting Int'l Painters & Allied Trades Indus. Pension Fund v. R. W. Amrine Drywall Co., 239 F.Supp.2d 26, 30 (D.D.C. 2002) (internal quotation marks omitted); see also Adkins v. Teseo, 180 F.Supp.2d 15, 17 (D.D.C. 2001). Default judgment is appropriate only if those admitted allegations are legally sufficient to state a claim. See Saint-Jean v. D.C. Pub. Sch. Div. of Transp.,815 F.Supp.2d 1, 4 (D.D.C. 2011); Harris v. U.S. Dep't of Justice,600 F.Supp.2d 129, 136-37 (D.D.C. 2009) ("[U]nless the complaint states a claim upon which relief may be granted as to the defendants who have defaulted, default judgment is not justified."). Finally, default judgment is appropriate when the defendant is "considered a 'totally unresponsive' party whose failure to 'respond to the summons and ...


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