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Laborers'district Council Pension and Disability Trust Fund No. 2 v. Parkinson Construction Company, Inc.

United States District Court, D. Maryland

April 3, 2014

Laborers' District Council Pension and Disability Trust Fund No. 2, et al., Plaintiffs,
v.
Parkinson Construction Company, Inc., Defendants.

REPORT AND RECOMMENDATION

TIMOTHY J. SULLIVAN, Magistrate Judge.

This Report and Recommendation addresses the Motion for Default Judgment (ECF No. 13) filed by Plaintiffs, the Baltimore-Washington Construction and Public Employees, Laborers' District Council Defined Contribution Retirement Plan; Laborers' District Council Pension and Disability Trust Fund No. 2; the Laborers' District Council Health and Welfare Trust Fund No. 2 (the "Welfare Fund"); the Laborers' Joint Training Fund of Washington, D.C. and Vicinity (the "Training Fund") (collectively, the "Funds"); Justin Meighan, Trustee; and George Maloney, Trustee (collectively, the "Plaintiffs"), against Defendant Parkinson Construction Company, Inc. ("Parkinson"), along with Plaintiffs' supplemental filings in support to the Motion. (ECF Nos. 17 & 19). Parkinson has not filed a response, and the time for doing so has passed. See Loc. R. 105.2.a. On December 20, 2013, in accordance with 28 U.S.C. § 636 and Local Rule 301, Judge Quarles referred this case to me (ECF No. 15) for a report and recommendation on Plaintiffs' Motion for Default Judgment. I find that a hearing is unnecessary in this case. See Loc. R. 105.6. For the reasons set forth below, I respectfully recommend that Plaintiffs' Motion for Default Judgment be GRANTED.

I. FACTUAL AND PROCEDURAL HISTORY

On February 4, 2013, Plaintiffs filed an Amended Complaint[1] (ECF No. 4) against Parkinson under the Labor Management Relations Act ("LMRA"), 29 U.S.C. § 185, and the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. §§ 1132(g)(2) and 1145. Plaintiffs allege that Parkinson refused to comply with the Funds' payroll audit and "failed to submit other contributions owed to the Funds." (ECF Nos. 4 at 4 & 13 at 2). Plaintiffs claim that these failures violate the collective bargaining agreement ("CBA") to which Parkinson was a party. (ECF No. 4 at 3). On February 26, 2013, the Court entered an order (ECF No. 8) granting Plaintiffs' Consent Motion to Stay, permitting the parties to conduct the audit at issue, and allowing Parkinson to file an answer or other responsive pleading to the Amended Complaint within 21 days of the stay being lifted. On October 24, 2013, the Court entered an order (ECF No. 10) lifting the stay and directing Parkinson to file an answer or responsive pleading within 21 days. Parkinson did not file an answer or responsive pleading to the Amended Complaint. Upon Plaintiffs' request, the Clerk of the Court entered an Order of Default (ECF No. 14) on December 19, 2013. Plaintiffs filed the Motion for Default Judgment on December 18, 2013 and, consistent with the Court's Orders (ECF Nos. 16 & 18), Plaintiffs filed supplements to the Motion on January 2, 2014 (ECF No. 17) and March 31, 2014 (ECF No. 19). Parkinson still has not filed any response.

Plaintiffs contend that Parkinson was a party to a CBA and certain trust agreements that required Parkinson "to file timely monthly Employer Contribution Reports of hours worked by covered employees and to make timely contributions to the Funds for each employee covered" by the CBA. (ECF No. 4 at 3). The CBA and trust agreements also required Parkinson to "permit the Funds to conduct audits of its records to ensure that all hours worked by covered employees are properly reported to the Funds." (ECF No. 4 at 3). Parkinson was selected for a payroll audit by the Funds but "failed, neglected, omitted, and refused to schedule an audit." (ECF No. 4 at 4). After Plaintiffs filed their Amended Complaint, Parkinson ultimately agreed to comply with the audit. (ECF No. 13 at 2). The audit revealed that Parkinson "had underreported its contributions to the Funds by $31.73." (ECF No. 13-1 at 2). Thereafter, Parkinson "paid the amounts found due by the audit, [but] failed and refused to pay all other amounts owed to the Funds." (ECF No. 13-1 at 3). Plaintiffs seek a default judgment against Parkinson, as well as damages for the costs of the audit, liquidated damages and interest for Parkinson's delinquent contributions, attorney's fees and costs, and post-judgment interest.

II. DISCUSSION

A. Standard for Entry of Default Judgment

In determining whether to award a default judgment, the court accepts as true the wellpleaded factual allegations in the complaint as to liability. See Ryan v. Homecomings Fin. Network, 253 F.3d 778, 780-81 (4th Cir. 2001); United States ex rel. Durrett-Sheppard Steel Co. v. SEF Stainless Steel, Inc., No. RDB-11-2410, 2012 WL 2446151, at *1 (D. Md. June 26, 2012). Nonetheless, the court must consider whether the unchallenged facts constitute a legitimate cause of action, since a party in default does not admit mere conclusions of law. United States v. Redden, No. WDQ-09-2688, 2010 WL 2651607, at *2 (D. Md. June 30, 2012) (citing Ryan, 253 F.3d at 790). Although the Fourth Circuit has a "strong policy that cases be decided on the merits, " United States v. Shaffer Equip. Co., 11 F.3d 450, 453 (4th Cir. 1993), default judgment "is appropriate when the adversary process has been halted because of an essentially unresponsive party." S.E.C. v. Lawbaugh, 359 F.Supp.2d 418, 421 (D. Md. 2005). If the court determines that liability is established, the court must then determine the appropriate amount of damages. CGI Finance, Inc., v. Johnson, No. ELH-12-1985, 2013 WL 1192353, at *1 (D. Md. March 21, 2013). The court does not accept factual allegations regarding damages as true, but rather must make an independent determination regarding such allegations. Durrett-Sheppard Steel Co., 2012 WL 2446151, at *1.

Rule 55 of the Federal Rules of Civil Procedure governs the entry of default judgment and the determination of damages. "If, after entry of default, the Plaintiff's Complaint does not specify a sum certain' amount of damages, the court may enter a default judgment against the defendant pursuant to Fed.R.Civ.P. 55(b)(2)." Sheppard Steel Co., 2012 WL 2446151, at *1. A plaintiff's assertion of a sum in a complaint does not make the sum "certain" unless the plaintiff claims liquidated damages; otherwise, the complaint must be supported by affidavit or documentary evidence. United States v. Redden, No. WDQ-09-2688, 2010 WL 2651607, at *2 (D. Md. June 30, 2012). Rule 55(b)(2) provides that "the court may conduct hearings or make referrals... when, to enter or effectuate judgment, it needs to... determine the amount of damages." The court is not required to conduct an evidentiary hearing to determine damages, and may rely instead on affidavits or documentary evidence in the record to determine the appropriate sum. See Mongue v. Portofino Ristorante, 751 F.Supp.2d 789, 795 (D. Md. 2010).

B. Liability

Section 301 of the LMRA, 29 U.S.C. § 185, provides that suits alleging violations of a contract between an employer and a labor organization "may be brought in any district court of the United States having jurisdiction of the parties, without respect to the amount in controversy or without regard to the citizenship of the parties." Section 515 of ERISA, 29 U.S.C. § 1145, mandates that employers subject a multi-employer plan or collective bargaining agreement "shall, to the extent not inconsistent with law, make such contributions in accordance with the terms and conditions of such plan or such agreement."

According to the factual allegations contained in Plaintiffs' Amended Complaint, Parkinson was bound by the terms of a CBA and certain trust agreements. (ECF No. 4 at 3). Parkinson refused to permit Plaintiffs to audit its records to "ensure that all hours worked by covered employees are properly reported to the Funds, " as the trust agreements required. (ECF No. 4 at 3-4). Such audits were expressly authorized by the Supreme Court in Central States, Southeast & Southwest Areas Pension Fund v. Central Transport, Inc., 472 U.S. 559 (1985). In addition, Parkinson failed "to file Reports with the Funds for any work month since August 2012, and... failed to make the required contributions to the Funds on behalf of its covered employees and to pay the required liquidated damages and interest for work performed by its covered employees during those months, " as required by the trust agreements. (ECF No. 4 at 4-5). Accepting these factual allegations as true, I conclude that Plaintiffs have established that they are entitled to relief on their claims. Because Plaintiffs have stated a legitimate cause of action, I find that Plaintiffs are entitled to a default judgment against Parkinson. I recommend that the Court grant Plaintiff's Motion for Default Judgment with respect to Parkinson's liability.

C. Damages

Having established Parkinson's liability, ERISA allows Plaintiffs to recover liquidated damages and interest owed to the Funds, as well as the attorney's fees and costs incurred in this litigation. See 29 U.S.C. § 1132(g)(2)(B)-(D). The Funds' trust agreements require delinquent contributing employers to pay liquidated damages and interest in the event that contributions are not timely paid. (ECF Nos. 17-3 at 5, 17-4 at 11 & 19-1 at 2). The trust agreements also permit the Funds to conduct audits ( see ECF No. 17 at 4), and require an employer who is not compliant with the Funds' request for an audit ...


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