Opinion
Case No. 1:12-cv-00298 (LO/IDD)
11-20-2012
TRUSTEES OF THE PLUMBERS AND PIPEFITTERS NATIONAL PENSION FUND, Plaintiff, v. LAKE SIDE PLUMBING & HEATING, INC., Defendant.
REPORT AND RECOMMENDATION
This matter is before the Court on the Trustees of the Plumbers and Pipefitters National Pension Fund's ("Plaintiff") Motion for Default Judgment against Lake Side Plumbing & Heating, Inc. ("Defendant") pursuant to Federal Rule of Civil Procedure 55(b)(2). (Dkt. No. 9.) After a licensed attorney for Defendant failed to appear at the hearing on September 14, 2012, the undersigned Magistrate Judge took this matter under advisement. Upon consideration of the Complaint, Plaintiff's Motion for Default Judgment, and the supporting affidavits, the undersigned Magistrate Judge makes the following findings and recommends that default judgment be entered against Defendant.
I. INTRODUCTION
On March 19, 2012, Plaintiff filed this action under Sections 4301(b), 502, and 515 of the Employee Retirement Income Security Act of 1974 ("ERISA"), as amended, 29 U.S.C. §§ 1132, 1145, and 1451. (Compl. ¶ 3; Pl. Mot. Default J. at 1.) These acts allow parties to enforce provisions of their collective bargaining agreements. In filing its Complaint, Plaintiff seeks total outstanding withdrawal liability, interest on the amount of withdrawal liability, liquidated damages, and attorney's fees and costs. (Compl. ¶¶ A-E; Mem. Supp. Def. J. at 6.)
29 U.S.C. § 1451(b) states that an employer's failure to make a withdrawal liability payment within the time period prescribed by law "shall be treated in the same manner as a delinquent contribution" within the meaning of 29 U.S.C. § 1145.
A. Jurisdiction and Venue
This Court has subject matter jurisdiction over this action pursuant to 29 U.S.C. §§ 1132 and 1145 because the funds are administered from Plaintiff's principal place of business in Alexandria, Virginia. (Compl. ¶¶ 1, 3.) Where an action is brought in a district court of the United States under Sections 502 and 515 of ERISA, it may be brought in the district where the plan is administered, where the breach took place, or where a defendant resides or may be found. 29 U.S.C. § 1132(e)(2). Moreover, "a suit for violation of a contract between an employer and a labor organization representing employees in an industry affecting commerce, may be brought in any district court having jurisdiction over the parties, without respect to the amount in controversy or without regard to the citizenship of the parties." 29 U.S.C. § 185(a).
This Court has personal jurisdiction over Defendant under the decision in Board of Trustees, Sheet Metal Workers Nat'l Pens. Fund v. McD Metals, Inc., 964 F. Supp. 1040, 1045 (E.D. Va. 1997). Additionally, this Court has personal jurisdiction over Defendant pursuant to Section 502 of ERISA, 29 U.S.C. § 1132(e)(2). (Compl. ¶ 3.) Venue is also properly situated in this District under 29 U.S.C. § 1451(d) because the Fund is administered in this district. (Compl. ¶¶ 4.)
The Court held that the Eastern District of Virginia had personal jurisdiction over defendant, a New York corporation, because ERISA provided for nationwide service of process, and thus, the Fifth Amendment "national" contacts theory is applicable, and the Virginia long-arm statute under Virginia Code § 8.01-328.1 is inapplicable.
B. Service of Process
Under 29 U.S.C. § 1132(e)(2), service of process is proper in any district where a defendant resides or may be found. When a plaintiff fails to serve the defendant properly under federal or state law, a court lacks personal jurisdiction over the defendant and may not enter default judgment against him. Omni Capital Int'l, Ltd. v. Wolff & Co., 484 U.S. 97, 104 (1987), superseded by statute on other grounds, Fed. R. Civ. P. 4(k), (stating that "[s]ervice of summons is the procedure by which a court having venue and jurisdiction of the subject matter of the suit asserts jurisdiction over the person of the party served" (quoting Miss. Publ'g Corp. v. Murphee, 326 U.S. 438, 444-45 (1946))); Cent. Operating Co. v. Util. Workers of Am., 491 F.2d 245, 249 (4th Cir. 1974) (reversing lower court's decision to enter default judgment against a non-resident defendant union because the court lacked personal jurisdiction where the plaintiff failed to effectively serve the union with the summons and complaint).
Although § 1132(e) states where a defendant may be served, the Federal Rules of Civil Procedure provide the manner in which service must occur. Under Rule 4(h), service upon a corporation, partnership, or other unincorporated association shall be effectuated "in the manner prescribed for individuals by subdivision (e)(1), or by delivering a copy of the summons and of the complaint to an officer, a managing or general agent, or to any other agent authorized by appointment or by law to receive service of process." Fed. R. Civ. P. 4(h). Individuals are properly served under subsection (e)(2) by delivering to the person a copy of the summons and the complaint. Id. at 4(e)(2).
On April 13, 2012, Duane Reimer, Officer of Defendant company, was served with a copy of the Summons and Complaint by private process server. (Dkt. No. 4.) Therefore, Plaintiff properly served Defendant pursuant to 29 U.S.C. § 1132(e)(2) and Rule 4(h).
C. Grounds for Default
Plaintiff filed its Complaint on March 19, 2012. (Dkt. No. 1.) Defendant has failed to appear, answer, or file any other responsive pleadings in this matter. On June 19, 2012, Plaintiff filed a Request for Entry of Default with the Clerk. (Dkt. No. 5.) On June 20, 2012, the Clerk entered default against Defendant. (Dkt. No. 6.) On September 7, 2012, Plaintiff filed a Motion for Default Judgment and the Court held a hearing on September 14, 2012. (Dkt. Nos. 9, 11.) After Defendant failed to appear at the hearing, the undersigned Magistrate Judge took this matter under advisement to issue this Report and Recommendation.
II. FACTUAL FINDINGS
Fed. R. Civ. P. 8(b)(6) ("An allegation - other than one relating to the amount of damages - is admitted if a responsive pleading is required and the allegation is not denied."); see also GlobalSantaFe Corp. v. Globalsantafe.com, 250 F. Supp. 2d 610, 612 n.3 (E.D. Va. 2003) ("Upon default, facts alleged in the complaint are deemed admitted and the appropriate inquiry is whether the facts as alleged state a claim.").
The undersigned Magistrate Judge makes the following findings of fact based on the Complaint; the Motion for Default Judgment and memorandum in support thereof; the Affidavit by William T. Sweeney, Jr., the Administrator of the National Pension Fund ("Sweeney Aff."); the Declaration of John R. Harney, Plaintiff's counsel ("Harney Decl."); and the documents submitted in proof of damages.
Plaintiff is the trustee of a multiemployer employee pension benefit plan administered from an office located in Alexandria, Virginia. (Compl. ¶ 1.) Plaintiff is established and maintained by a Restated Agreement and Declaration of Trust and by a Collective Bargaining Agreement executed by the affiliated local unions of the United Association of Journeymen and Apprentices of the Plumbing and Pipefitting Industry of the United States and Canada and Defendant. (Compl. ¶ 1.)
Such plans are defined by ERISA, 29 U.S.C. §§ 1002(3) and 1002(37).
Defendant is a Minnesota corporation organized under the laws of Minnesota, transacting business as a contractor or subcontractor in the plumbing and pipefitting industry. (Compl. ¶ 2.) Defendant is an "employer in an industry affecting commerce," as defined by 29 U.S.C. §§ 1002(5), (9), (11), (12), and (14); 29 U.S.C. §§ 142(1), (3), and 152(2); and 29 U.S.C. § 1001(a). (Id.)
Defendant is a signatory to the Collective Bargaining Agreement with United Association Plumbers Local Union No. 15 ("Local 15"). (Compl. ¶ 5.) Pursuant to that agreement, Defendant agreed to pay Plaintiff certain sums of money for each hour worked by employees of Defendant covered by the Collective Bargaining Agreement. (Compl. ¶ 6.) On May 1, 2011, after Defendant's employees voted to decertify Local 15 as their collective bargaining representative, Defendant ceased to be bound to the Collective Bargaining Agreement. (Compl. ¶ 7.) However, Defendant continued to perform work of the type it was previously obligated to make contributions for in the jurisdiction of the Local 15 Collective Bargaining Agreement. (Compl. ¶ 8.)
Defendant experienced a complete withdrawal from the Fund as of May 1, 2011 pursuant to 29 U.S.C. § 1383(b)(2), because Defendant ceased to have an obligation to contribute to the Fund as of May 1 and continued to perform work—of the type for which contributions were previously required—in the jurisdiction of Local 15. (Compl. ¶¶ 8, 9.) Pursuant to this withdrawal, Plaintiff notified Defendant that it was subject to withdrawal liability in the amount of $239,244.00 in a letter including payment options, notice of a right to appeal, and the due date of the first monthly payment—November 1, 2011. (Compl. ¶ 10.) Defendant signed the certified receipt for the letter on October 3, 2011. (Compl. ¶ 10.) Defendant did not request a review of the withdrawal liability determination or arbitration within 90 days pursuant to 29 U.S.C. §1399(b)(2)(A) and thus, Plaintiff alleges Defendant waived any defense or objection to the Fund's determination of withdrawal liability. (Compl. ¶ 11.)
On November 7, 2011, the Fund notified Defendant by letter that it had not received the initial payment due November 1, 2011. (Compl. ¶ 12.) Defendant signed the certified receipt for the letter on November 14, 2011. (Id.) After receiving no response to the first late notification, Plaintiff sent a second letter to Defendant on December 8, 2011 regarding the payments that were past due from November 1, 2011 and December 1, 2011. (Compl. ¶¶ 12, 13.) On February 16, 2011, the Fund notified Defendant by letter that it was in default pursuant to 29 U.S.C. § 1399(c)(5) because it had not made any required payments and failed to cure its late payments in 60 days after the Fund's November 7, 2011 late payment notice. (Compl. ¶ 14.) The letter informed Defendant that the entire withdrawal amount of $239,244.00 plus interest was due within ten days or legal action would follow. (Id.) Plaintiff received no response from Defendant. (Id.)
The Fund determined through a withdrawal liability calculation worksheet that Defendant's withdrawal liability amounted to $239,244.00. (Compl. ¶ 10; Sweeney Aff. Appx. 1.)
Under Section 12.05 of the Plan, if Plaintiff is awarded judgment to collect withdrawal liability, Defendant also has to pay liquidated damages "equal to the greater of: (i) the amount of interest charged on the unpaid balance, or (ii) 20 percent of the unpaid amount awarded." (Compl. ¶ 21.) Pursuant to this provision and 29 U.S.C. § 1132(g)(2), Defendant owes Plaintiff liquidated damages in the amount of $47,848.80, which is 20% of the total withdrawal liability owed pursuant to the Fund's assessment. (Compl. ¶¶ 22, C.)
In addition, Sections 12.05(c)(i) and (d)(ii) of the Plan provide that unpaid withdrawal liability shall be charged interest from the date the payment was due until it is paid at an annual rate equal to the prime rate charged by Chase Manhattan Bank on the first day of the calendar quarter preceding the due date of the payment. (Compl. ¶ 18.) The prime rate charged by JP Morgan Chase—the successor to Chase Manhattan Bank—on October 1, 2011, the first day of the calendar quarter preceding the payment deadline of November 1, 2011, was 3.25%. (Compl. ¶ 19.) Therefore, under the Plan and 29 U.S.C. § 1132(g)(B), Defendant also owes Plaintiff interest in the amount of $6,774.21 assessed at the rate of 3.25% per annum from November 1, 2011 through September 14, 2012. (Compl. ¶ B; Sweeney Aff. ¶ 19.)
Therefore, Defendant owes Plaintiff a total of $293,867.01 in the following amounts: $239,244.00 for withdrawal liability; $47,848.80 in liquidated damages; and $6,774.21 in interest accruing from the date due through September 14, 2012. (Mem. Supp. Def. J. at 6; Sweeney Aff. ¶ 19.)
Pursuant to the Collective Bargaining Agreement and Section 502(g)(2) of ERISA, Plaintiff is entitled to recover: (1) the full amount of withdrawal liability; (2) interest on the entire amount of withdrawal liability; (3) liquidated damages; and (4) reasonable attorneys' fees and the costs of this action. The amounts due in unpaid withdrawal liability, liquidated damages, and accrued interest on the withdrawal liability calculated through September 14, 2012, are summarized as follows:
29 U.S.C. § 1451 instructs that a failure to make a withdrawal liability payment be treated in the same manner as delinquent contributions. Section 515, 29 U.S.C. §1145, and Section 502(g)(2), 29 U.S.C. § 1132(g)(2), specifies the remedies available for delinquent contributions.
| Plaintiff | WithdrawalLiability | LiquidatedDamages | Interest through9/14/12 | Total |
|---|---|---|---|---|
| National Pension Fund | $239,244.00 | $47,848.80 | $6,774.21 | $293,867.01 |
In addition, Plaintiff seeks $1,950.00 in attorney's fees and $751.29 in costs pursuant to 29 U.S.C. § 1132(g)(2)(C)(ii). (Mem. Supp. Def. J. at 6.) In support of this request, Plaintiff submitted the Declaration of John R. Harney and a report of attorney's fees and costs through September 7, 2012. (Harney Decl. ¶ 7; Harney Decl. Appx.) The undersigned Magistrate Judge has examined the record and finds the following costs and attorneys' fees to be reasonable.
| Attorneys' Fees | Costs |
|---|---|
| $1,950.00 | $751.29 |
III. RECOMMENDATION
The undersigned Magistrate Judge recommends entry of default judgment in favor of the Trustees of the Plumbers and Pipefitters National Pension Fund against Lake Side Plumbing and Heating, Inc.
The National Pension Fund is entitled to recover damages in the following amounts: $239,244.00 for withdrawal liability; $47,848.80 in liquidated damages; and $6,774.21 in interest accruing from the date due through September 14, 2012. Thus, the recommended total damages award for the National Pension Fund is $293,867.01.
Plaintiff also is entitled to recover its attorney's fees and costs in the amount of $2,701.29 ($1,950.00 in attorney's fees and $751.29 in costs).
If further action is required to enforce and collect this judgment, Plaintiff may apply to this Court or to the court in which enforcement is sought for further appropriate injunctive relief in addition to the relief set out in this Report and Recommendation. Pursuant to the findings set forth above, the undersigned Magistrate Judge recommends an entry of judgment in favor of the National Pension Fund in the amount of $296,568.30.
IV. NOTICE
By mailing copies of this report and recommendation, the parties are notified that objections to this report and recommendation, pursuant to 28 U.S.C. § 636 and Rule 72(b) of the Federal Rules of Civil Procedure , must be filed within fourteen (14) days of service on you of this report and recommendation. A failure to file timely objections to this report and recommendation waives appellate review of the substance of the report and recommendation and waives appellate review of a judgment based on this report and recommendation.
The Clerk is directed to send a copy of this Report and Recommendation to all counsel of record and to Defendant at the following address:
Lake Side Plumbing & Heating, Inc.
12469 Zinran Ave.
Savage, MN 55378-1082
/s/_________
Ivan D. Davis
United States Magistrate Judge November 20, 2012
Alexandria, Virginia