International Union of Operating Engineers of Eastern Pennsylvania & Delaware Benefit Pension Fund v. N. Abbonizio Contractors
Docket: CIVIL ACTION No. 15-599
Court: District Court, E.D. Pennsylvania; November 17, 2015; Federal District Court
Plaintiffs initiated legal action on February 9, 2015, seeking damages under the Employee Retirement Income Security Act (ERISA) and the Labor Management Relations Act (LMRA). The Complaint asserts that Plaintiffs and Defendant have been bound by multiple Collective Bargaining Agreements (CBA), obligating Defendant to make contributions to the Funds based on hours worked and wages paid to employees under the CBA. A payroll audit indicated that Defendant failed to pay $4,735.28 in required contributions from January 1, 2009, to December 31, 2011. Additionally, the CBA establishes a monthly payment deadline and allows for interest charges on late contributions, resulting in $10,078.09 in assessed interest due to late payments between January 2010 and August 2014.
The Trust Agreements permit Plaintiffs to audit the employer’s payroll records to verify contributions, but Defendant allegedly denied several requests for access to these records. Defendant was served with the Complaint and Summons on February 18, 2015, but did not respond, prompting Plaintiffs to request a Default on April 6, 2015, which was granted the same day. Plaintiffs filed a Motion for Default Judgment, seeking payment of all unpaid contributions, interest on late payments, liquidated damages, and attorneys’ fees. They also requested court orders compelling Defendant to cooperate with a payroll audit and maintaining jurisdiction for additional contributions that may be identified later. Defendant has yet to respond to the Complaint or the Motion for Default Judgment.
Rule 55 of the Federal Rules of Civil Procedure allows for the entry of default when a party fails to respond to a legal action, with the clerk entering the default upon appropriate proof. Following this, a default judgment may be entered by the clerk if the claim is for a specific sum; otherwise, the plaintiff must seek court approval. The court has discretion in granting a default judgment, which is guided by three considerations: potential prejudice to the plaintiff if the default is lifted, the existence of a meritorious defense from the defendant, and whether the defendant's default was due to culpable misconduct. Under ERISA, plans must pay benefits regardless of employer contributions, meaning delinquent contributions can affect plan operations and beneficiary payments. The court finds that the plaintiffs would be prejudiced if a default judgment is not granted, and since the defendant has not filed any response, the court cannot assess the presence of a meritorious defense or misconduct. The defendant was properly served, allowing the court to proceed with a default judgment.
When assessing liability and damages, the court must accept the factual allegations in the complaint as true, excluding those pertaining to damages. The court must also evaluate if the unchallenged facts support a legitimate cause of action, as mere legal conclusions are not admitted by a party in default. The court will individually review each count of the complaint to determine the legitimacy of the claims and the appropriate damages.
Count I of Plaintiffs’ Complaint seeks statutory damages for unpaid contributions identified in a payroll audit, asserting that under ERISA, employers must comply with contribution requirements outlined in a collective bargaining agreement (CBA). Plaintiffs claim that Defendant owes $4,735.28 in unpaid contributions and is entitled to interest at ten percent per annum, as specified in the CBA. Additionally, Plaintiffs seek $2,922.50 in reasonable attorney’s fees and costs, which have been substantiated.
While Plaintiffs argue for liquidated damages of twenty percent of the unpaid contributions, this claim is denied because the CBA stipulates a ten percent penalty, and the initial complaint only requested liquidated damages at that rate, adhering to Federal Rule of Civil Procedure 54(c), which limits recovery to what is demanded in the pleadings.
Plaintiffs also seek judgment for interest on late contributions made from January 2010 to August 2014. They clarify that this claim is distinct from Count I, as it pertains to late payments rather than unpaid contributions. They provide evidence of 130 demand letters for $14,286.84 in interest on late payments, of which $4,953.23 was paid by Defendant. An additional late payment incurred $744.48 in interest, resulting in a total outstanding interest charge of $10,078.09. Plaintiffs assert their entitlement to this interest under ERISA, emphasizing the difference between unpaid and late contributions.
The Third Circuit has clarified that the interest remedy under ERISA, specifically 29 U.S.C. 1132(g)(2), is applicable only to unpaid contributions at the time a lawsuit is filed. If contributions are paid in full before litigation begins, statutory damages do not apply. The determination of relief is contingent upon the Collective Bargaining Agreement (CBA) terms regarding interest on delinquent contributions. The relevant CBA states that if a contribution is unpaid by the end of the month due, interest accrues at 10% per annum from the following month.
The Plaintiffs submitted an affidavit detailing their process for notifying employers about interest due on late payments. Based on this evidence, it was concluded that the Defendant was appropriately informed of late payments, and thus, the Plaintiffs are entitled to $10,078.09 in interest on these delinquent contributions.
Additionally, Plaintiffs requested a court order for the Defendant to undergo another payroll audit. ERISA allows for such equitable relief, provided that the Trust Agreements grant trustees the authority to examine employer records. The evidence demonstrated that access to the Defendant's records is necessary to verify unpaid contributions, and the Defendant's lack of response to audit requests justified the court's order for compliance.
The court authorized the audit covering the period from January 1, 2012, to the present, following the last payroll audit. Judgment was entered in favor of the Plaintiffs for specific amounts: $4,735.28 in unpaid contributions, $1,310.31 in pre-judgment interest, $473.53 in liquidated damages, $2,922.50 in attorneys’ fees, and $10,078.09 in interest penalties. The Defendant is required to comply with the CBA and Trust Agreements, allowing access to their records for the audit, and any additional amounts determined to be owed must be promptly paid. Post-judgment interest will accrue at 10% until the judgment is satisfied, along with any reasonable attorneys' fees incurred for enforcement.
