Serv. Emps. Int'l Union Local 32 BJ v. ShamrockClean, Inc.

• Decision Date: 07 September 2018
• Docket Number: CIVIL ACTION NO. 18-2180
• Citation: 325 F.Supp.3d 631
• Parties: SERVICE EMPLOYEES INTERNATIONAL UNION LOCAL 32 BJ, DISTRICT 36, et al., Plaintiffs, v. SHAMROCKCLEAN, INC., Defendant.
• Court: U.S. District Court — Eastern District of Pennsylvania

325 F.Supp.3d 631

SERVICE EMPLOYEES INTERNATIONAL UNION LOCAL 32 BJ, DISTRICT 36, et al., Plaintiffs,

v.SHAMROCKCLEAN, INC., Defendant.

CIVIL ACTION NO. 18-2180

United States District Court, E.D. Pennsylvania.

Signed September 7, 2018

Nicholas J. Botta, Spear Wilderman PC, Philadelphia, PA, for Plaintiffs.

MEMORANDUM

EDUARDO C. ROBRENO, District Judge.

In this action, a labor union, the union's pension trust fund, and the trustee for the fund have brought claims against a commercial cleaning company under the Employee Retirement Income Security Act of 1974, alleging that the company failed to make contributions to the pension fund, as required by the collective bargaining agreement between the company and the union. Plaintiffs seek either the unpaid installment amounts or a single-sum liability amount. After Defendant failed to appear, plead, or defend against Plaintiffs' complaint, the clerk entered default. Plaintiffs now move for entry of judgment by default. The Court held a hearing, at which Defendant did not appear. For the reasons that follow, the Court will grant Plaintiffs' motion, enter judgment, and close the case.

I. BACKGROUND

Plaintiffs are the Service Employees International Union Local 32BJ District 36 ("the Union"), the Service Employees International Union Local 32BJ District 36 Building Operators Pension Fund ("the Fund"), and Wayne MacManiman, Jr., the trustee for the Fund ("the Trustee," and together with the Union and the Fund, "Plaintiffs"). Compl. ¶¶ 1-5, ECF No. 1. Defendant ShamrockClean, Inc. ("Defendant") is Florida corporation that provides commercial cleaning services and that does business in Pennsylvanian and Delaware. Id. ¶ 8.

The Fund is a joint labor-management trust plan established pursuant to Section 302(c)(5) of the Labor Management Relations Act, 29 U.S.C. § 186(c)(5), which was created and is maintained to collect and receive contributions from various employers having collective bargaining agreements with the Union, and to provide pension benefits to eligible participants and beneficiaries. Id. ¶ 2. Plaintiffs allege that the Fund is an "employee benefit plan" within the meaning of Section 3(2)(A) of ERISA, as well as a "multiemployer plan" within the meaning of Section 3(37) of ERISA, and Section 4001(a)(3) of ERISA. Id. ¶ 3.

Plaintiffs allege that Defendant was a party to a collective bargaining agreement ("the CBA") with the Union that obligated Defendant to make prompt monthly contributions to the Fund on behalf of employees represented by the Union and covered by the CBA. Id. ¶ 11. According to Plaintiffs, during the 2015 plan year, Defendant effected a complete withdrawal from the Fund, as defined by Section 4203(a)(1) of ERISA, by permanently ceasing its obligation to contribute under the plan while continuing to perform the same type of work, within the same jurisdiction, for which it previously had a contribution obligation. See id. ¶ 12.

As a result, on December 15, 2017, the Fund sent Defendant a letter advising it that the Fund had calculated Defendant's withdrawal liability in the amount of $152,836.00, payable in 61 quarterly installments of $4,701.90, plus a final payment of $3,127.83. Id. ¶ 13; Ex. A. The letter advised Defendant that it had the right, within 90 days, to demand certain information from the Fund in order to verify, request review, and/or contest Defendant's withdrawal liability and to demand arbitration of any unresolved dispute. Id. ¶ 14.

Plaintiffs allege that, despite the notice provided to Defendant, including subsequent correspondence repeating Defendant's obligation, Defendant failed to make quarterly installment payments that were due beginning on October 23, 2017, and January 3, 2018. Id. ¶ 16. Accordingly, the Fund sent another letter to Defendant notifying Defendant that it was delinquent, and demanding payment immediately. Id. ¶ 17. Defendant continued to fail to make payment, and also failed to make quarterly installment payments for the period ending April 3, 2018. Id. ¶¶ 19, 20.

On May 23, 2018, Plaintiffs filed this action against Defendant, bringing (1) one claim for unpaid withdrawal liability installments in the amount of $12,512.70 (Count I), and, in the alternative, (2) one claim for accelerated single sum liability in the amount of $152,836.00 (Count II). Id. ¶¶ 21-34. Plaintiffs also seek pre-judgment interest, liquidated damages, and attorneys' fees and costs. Id.

The summons and complaint were served on Defendant on June 14, 2018. ECF No. 2. On July 9, 2018, Defendant having failed to respond to the complaint, Plaintiffs filed a request for entry of default. ECF No. 4. The Clerk of Court entered default the same day. On July 17, 2018, Plaintiffs filed a motion for default judgment. ECF No. 5.

The Court scheduled a hearing on Plaintiffs' motion for default judgment for August 13, 2018. ECF No. 6. The Court also ordered Plaintiffs' counsel to serve a copy of the order setting the hearing on Defendant. See id. On August 9, 2018, Plaintiffs filed a certificate of service establishing that service was made on August 4, 2018. ECF No. 7.

On August 13, 2018, the Court held a hearing on the motion for default judgment. Neither Defendant nor any counsel for Defendant appeared at the hearing. The Court is now ready to rule on the motion.

II. LEGAL STANDARD

After a clerk enters default pursuant to Federal Rule of Civil Procedure 55(a) against a party that has "failed to plead or otherwise defend" an action, the party may be subject to entry of a default judgment. Fed. R. Civ. P. 55. If "the plaintiff's claim is for a sum certain or a sum that can be made certain by computation," the clerk may enter a default judgment in favor of the plaintiff. Fed. R. Civ. P. 55(b)(1). If those circumstances do not apply, "the party must apply to the court for a default judgment." Fed. R. Civ. P. 55(b)(2) ; see also, e.g., Eastern Elec. Corp. of N.J. v. Shoemaker Constr. Co., 657 F.Supp.2d 545, 552 (E.D. Pa. 2009) (granting motion for entry of default judgment pursuant to Rule 55(b)(2) ).

Whether or not to grant a party's motion for entry of default judgment "is left primarily to the discretion of the district court." United States v. $55,518.85 in U.S. Currency, 728 F.2d 192, 194 (3d Cir 1984) ). However, because a party is not entitled to default judgment as of right, and because the entry of default judgment precludes consideration of a case on its merits, "[m]atters involving large sums should not be determined by default judgments if it can reasonably be avoided." Tozer v. Charles A. Krause Milling Co., 189 F.2d 242, 245 (3d Cir. 1951).

The Third Circuit has held that a district court evaluating a motion for entry of default judgment should consider three factors: "(1) prejudice to the plaintiff if default is denied, (2) whether the defendant appears to have a litigable defense, and (3) whether defendant's delay is due to culpable conduct." Chamberlain v. Giampapa, 210 F.3d 154, 164 (3d Cir. 2000) (citing $55,518.85 in U.S. Currency, 728 F.2d at 195 ).¹ A court accepts as true any factual allegations, other than those as to damages, contained in the complaint. DIRECTV, Inc. v. Pepe, 431 F.3d 162, 165 n.6 (3d Cir. 2005).

III. DISCUSSION

Plaintiffs argue that default judgment is appropriate because Defendant defaulted on its obligation to pay withdrawal liability and failed to cure the default. See Mem. Law Support Mot. Default J. ("Pls.' Mem."), ECF No. 5-1.

"[B]efore granting a default judgment, the Court must first ascertain whether ‘the unchallenged facts constitute a legitimate cause of action, since a party in default does not admit mere conclusions of law.’ " Chanel, Inc. v. Gordashevsky, 558 F.Supp.2d 532, 536 (D.N.J. 2008) (quoting Directv, Inc. v. Asher, No. 03-1969, 2006 WL 680533, at *1 (D.N.J. Mar. 14, 2006) ). The Court will first address whether Defendant is liable to Plaintiffs for withdrawal liability, and whether Plaintiffs have submitted sufficient information to justify the relief sought. The Court will then analyze whether the Chamberlain factors indicate that the Court should grant Plaintiffs' motion. Finally, the Court will determine the appropriate amount of damages.

A. Plaintiffs' Right to Recover Withdrawal Liability

Plaintiffs allege that Defendant failed to pay "withdrawal liability," as required under the CBA, ERISA, and the the Multiemployer Pension Plan Amendments Act ("MPAAA"), 29 U.S.C. § 1381 - 1461. See Compl. ¶¶ 12-16.

Under ERISA and the MPAAA, when an employer who is a signatory to a multiemployer defined-benefit pension plan withdraws from the plan, the employer must pay its fair share of a plan's "unfunded vested benefit" ("UVB") prior to the withdrawal. 29 U.S.C. § 1381(a). This statutory requirement is known as "withdrawal liability."

The requirements for the notice and collection of withdrawal liability are specified in Section 1399 of ERISA. Upon an employer's failure to pay withdrawal liability, a plan sponsor may make a demand for withdrawal liability, which is payable beginning no later than 60 days after the date of the demand. 29 U.S.C. § 1399(c)(2). If an employer fails to make a withdrawal liability payment that is due, and does not cure that failure within 60 days after the employer receives written notification from the plan sponsor, the employer is in "default" under Section 1399. In the event of a default, a plan sponsor may require immediate payment of the outstanding amount of the employer's withdrawal liability. 29 U.S.C. § 1399(c)(5).

Any dispute between an employer and the plan sponsor is generally resolved through arbitration. Either party may initiate an arbitration proceeding within a 60 day period after the earlier of the date of notification or 120 days after the date of the employer's request for review. 29 U.S.C. § 1401. If no arbitration proceeding has been initiated by either party within the statutory time period, the amounts demanded by the plan sponsor become due and owing as a matter...