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Service Employees International Union National Pension Fund v. Bayville Healthcare, LLC

United States District Court, District of Columbia

December 23, 2019

SERVICE EMPLOYEES INTERNATIONAL UNION NATIONAL PENSION FUND, et al., Plaintiffs,
v.
BAYVILLE HEALTHCARE, LLC d/b/a CRYSTAL LAKE REHABILITATION AND HEALTHCARE CENTER d/b/a CRYSTAL LAKE, Defendant.

          MEMORANDUM OPINION

          CHRISTOPHER R. COOPER JUDEG

         Plaintiffs in this ERISA action-the Service Employees International Union National Pension Fund and its trustees (collectively, “the Fund”)-seek to recover unpaid contributions and associated damages from a New Jersey-based healthcare company. Despite having been properly served, the company has not responded to the Complaint or the Clerk's entry of default. Plaintiffs now request a default judgment, monetary damages, attorney's fees, and court costs. Because Plaintiffs have adequately established that the Defendant is liable and that they are entitled to all the requested relief, the Court will grant their motion and enter judgment against the company.

         I. Background

         The Service Employees International Union National Pension Fund is an “employee pension benefit plan” and a “multiemployer plan” under the Employee Retirement Income Security Act of 1974, 29 U.S.C. § 1002 et seq. (“ERISA”). The Fund is financed by contributions made by employers who are signatories to collective bargaining agreements. New Jersey-based Defendant Bayville Healthcare, LLC is one such employer.

         Bayville is required under its collection bargaining agreement-as amended by an arbitration award and two memoranda of agreement-and the Fund's policy governing the collection of employer contributions (“SEIU's Collection Policy”) to submit monthly reports and payments to the plan based on the number of hours worked by its covered employees. Toussaint Decl. ¶ 11. If Bayville fails to make the required contributions, the Fund is entitled to file suit to recover the unpaid contributions; interest on the unpaid contributions; either an additional assessment of interest on the unpaid contributions or liquidated damages provided for under the plan not in excess of 20 percent, whichever is higher; reasonable attorney's fees and costs; and other legal or equitable relief as the court deems appropriate. 29 U.S.C. § 1132(g)(2).

         Bayville is also obligated to contribute “supplemental contributions” to the Fund under the Pension Protection Act of 2006 (“PPA”) because the Fund has been in critical status since 2009. See 29 U.S.C. § 1085(a)(1)-(2); Toussaint Decl. ¶ 15-16. The collective bargaining agreement required Bayville to follow the Preferred Schedule of the Rehabilitation Plan, which sets the supplemental contributions due each month at a rate that is a percentage of the base contribution due. The rate increases yearly. Toussaint Decl. ¶ 17. For example, from July 1, 2016 through June 30, 2017, Bayville owed a supplemental contribution that equaled 72.1% of its base contribution each month. From July 1, 2017 through June 30, 2018, the supplemental rate was 85.5% of the contributions owed. From July 1, 2018 through June 30, 2019, the rate increased to 99.9%. And effective July 1, 2019, Bayville is required to supplement its contribution at a rate of 115.4% of what it owes each month. Toussaint Decl. 17; 2019 Memorandum of Agreement ¶ 4, Am. Compl. Ex. 4. Any failure to make a supplemental contribution payment under the PPA is treated as a delinquent contribution under ERISA, 29 U.S.C. §§ 1085(c)(7), (e)(3), (e)(7), which means the Fund can recover the unpaid supplemental contributions, interest, liquidated damages, and reasonable attorney's fees and costs.

         Additionally, the Fund is permitted under its agreements with employers to conduct an audit of its payroll records to ensure that the remittance reports were accurate and to ensure that the employer made the appropriate contributions during the audit period. SEIU's Collection Policy § 4, Am. Compl. Exh. 6. If the audit reveals that the employer owes additional contributions, it is entitled to collect them, plus interest, liquidated damages, attorney's fees and-in some instances-the cost of the audit itself. Id. § 4(10), 5(3). The underreported and unpaid contributions discovered in an audit are owed in addition to any delinquent contributions calculated based on the remittance reports themselves.

         In the original Complaint, the Fund alleged that Bayville “failed to remit certain reports, contributions, and resulting interest and liquidated damages due for the period of July 2016 through February 2019.” Compl. ¶ 30. Bayville was properly served on April 3, 2019. It did not respond to the Complaint, however, and the Clerk of the Court entered default on April 30, 2019. The Fund then moved to amend its Complaint, which the Court granted, to add a count related to damages owed pursuant to an audit of Bayville's payroll for the years 2016 and 2017 conducted by the Fund detailing underreporting by Bayville. The Fund filed the Amended Complaint on July 23, 2019. Via email, without entering an appearance, Bayville requested an extension of the deadline to respond to the Amended Complaint. The Court granted the extension, but Bayville still failed to respond. With the Court's prompting, the Fund again sought entry of default. The Clerk obliged on September 16, 2019.

         The Fund then petitioned the Court to enter a default judgment, seeking a monetary judgment against Bayville in the amount of $263, 176.78 (plus additional interest), which includes delinquent contributions for the period of July 2016 through September 2019, interest, liquidated damages, and audit testing fees, as well as $11, 980.79 in attorney's fees and court costs. Mot. Default J. 18. Bayville-again without entering an appearance-sought an extension of time to respond to the Fund's Motion for Default Judgment. The Court granted the extension, but Bayville again failed to respond. The Court now holds that entry of default judgment in favor of the Fund is appropriate.

         II. Standard of Review

         Default judgment is a two-step procedure. See, e.g., Boland v. Cacper Constr. Corp., 130 F.Supp.3d 379, 382 (D.D.C. 2015). First, a plaintiff requests that the Clerk of the Court enter default against a party who has “failed to plead or otherwise defend.” Fed.R.Civ.P. 55(a). Then, the plaintiff must move for entry of default judgment. Fed.R.Civ.P. 55(b). Default judgment is available when “the adversary process has been halted because of an essentially unresponsive party.” Boland v. Elite Terrazzo Flooring, Inc., 763 F.Supp.2d 64, 67 (D.D.C. 2011) (internal citation omitted). “Default establishes a defaulting party's liability for the well-pleaded allegations of the complaint.” Id. After establishing liability, the court must make an independent evaluation of the damages to be awarded and has “considerable latitude in determining the amount of damages.” Id. The court may rely on “detailed affidavits or documentary evidence” submitted by plaintiffs in support of their claims. Boland v. Providence Constr. Corp., 304 F.R.D. 31, 36 (D.D.C. 2014) (quoting Fanning v. Permanent Sol. Indus., Inc., 257 F.R.D. 4, 7 (D.D.C. 2009)).

         III. Analysis

         The Court must determine whether a default judgment is appropriate and, if Bayville is liable, whether Plaintiffs are entitled to the manner and amount of relief they request. The Court concludes that the company breached its duties under ERISA and the SEIU Collection ...


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