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Trustees of Electrical Welfare Trust Fund v. Technology Service Group, LLC

United States District Court, D. Maryland, Southern Division

September 27, 2016

TRUSTEES OF THE ELECTRICAL WELFARE TRUST FUND, et al., Plaintiffs,
v.
TECHNOLOGY SERVICE GROUP, LLC, Defendant.

          MEMORANDUM OPINION

          GEORGE J. HAZEL, United States District Judge.

         Pursuant to Fed.R.Civ.P. 55(b), Trustees of the Electrical Welfare Trust Fund ("Welfare Fund"); Trustees of the Electrical Workers Local No. 26 Pension Trust Fund ("Pension Fund"); Trustees of the Local No. 26 Joint Apprenticeship and Training Trust Fund ("Apprenticeship Fund"); Trustees of the Local No. 26 Individual Account Fund ("Account Fund"); Trustees of the Labor Management Corporation Committee[1]; Collection Agent for the National Electrical Benefit Funds ("NEBF") and Collection Agent for the Local No. 26, International Brotherhood of Electrical Workers (collectively, "Plaintiffs") have filed a Motion for Default Judgment, with supporting declarations and exhibits, against Defendant Technology Service Group, LLC ("TSG" or "Defendant"), ECF No. 10, which they have twice supplemented. ECF Nos. 11 and 13. No hearing is necessary to resolve the Motion. See Loc. R. 105.6 (D. Md. 2016). For the reasons that follow, Plaintiffs' Motion is granted.

         I. BACKGROUND

         Four of the Plaintiffs bring this action in their capacity as Trustees of the following funds: Electrical Welfare Trust Fund ("Welfare Fund"); Electrical Workers Local No. 26 Pension Trust Fund ("Pension Fund"); Local No. 26 Joint Apprenticeship and Training Trust Fund ("Apprenticeship Fund"); Local No. 26 Individual Account Fund ("Account Fund") and Labor Management Corporation Committee. ECF No. 6 ¶ 1. The remaining two Plaintiffs bring this action in their capacity as Collection Agents for the National Electrical Benefit Funds ("NEBF") and Local No. 26, International Brotherhood of Electrical Workers ("Local 26"/ Id. Hereinafter, the Plaintiffs will be referred to collectively as the "Trustees" of their respective "Funds".

         The above referenced Funds were established and are maintained as a result of a Collective Bargaining Agreement pursuant to the Labor-Management Relations Act ("LMRA"), 29 U.S.C. § 186(c)(5), (6). ECF No. 6 ¶ 2. The plans of which the Funds are a part are "multiemployer plans" as those terms are defined in the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. §§ 1002(3). Id. ¶ 4. Furthermore, the Trustees are "fiduciaries" of the plans, as defined under ERISA, 29 U.S.C. §1002(21). Id. ¶ 5.

         Defendant TSG is a Maryland Limited Liability Company that made contributions to the Funds. Id. ¶ 8. TSG's "Resident Agent" is located in Fort Washington, Maryland. Id. ¶ 7. Venue in this Court is proper as federal courts have jurisdiction over ERISA and LMRA claims pursuant to 29 U.S.C. § 1132(e) and 29 U.S.C. § 185, the alleged breach occurred in this district and Defendant's agent is located within the district.

         Plaintiffs allege that during the relevant time period, Defendant entered into two Collective Bargaining Agreements ("CBAs") with Local 26, which also bound it to the agreements and declarations of trust establishing the Funds at issue in the present suit. ECF No. 6 ¶¶ 10-11; ECF No. 13 at 2.[2] Pursuant to said agreements, Defendant is required to submit contribution reports to the Plaintiffs. ECF No. 6 ¶ 12. The reports must list the name of each person employed pursuant to the CBAs and the number of compensable hours of wages paid to each such person, and are due within 30 days after the contribution liability was incurred. Id. Defendant is then required to submit contributions to the Funds in the amounts due pursuant to the CBAs. Id.

         Pursuant to the above referenced agreements, if contributions are paid after the due date, the Defendant must pay interest on the untimely and unpaid contributions at an annual rate of 7% and pay liquidated damages of 20% of the monthly contribution balance due. ECF No. 11-2 ¶ 4.[3] In addition, Defendant is required to pay attorneys' fees and costs incurred by the Trustees in collecting the amounts due the Funds. ECF No. 6 ¶ 12.

         Plaintiffs bring this action pursuant to both ERISA and the LMRA to enforce Defendant's obligation to contribute to the Funds and to enforce their rights ''arising out of [Defendant's violation of the [CBAs]". Id. ¶ 8. Plaintiffs allege that Defendant has failed to file contribution reports and make payments in a timely manner from February 2014 through August 2014, and thus owes Plaintiffs liquidated damages and interest for these months. ECF No. 6 ¶ 13. In addition, they allege that Defendant has failed to make contributions to the Funds for work completed between September 1, 2014 through April 1, 2015. Id. Defendant thus owes Plaintiffs their unpaid contributions, along with liquidated damages and interest, for these periods. Id.

         Plaintiffs further allege that they have demanded payment of these delinquent amounts but Defendant has "failed and refused to pay." Id. ¶ 14.

         Plaintiffs initiated the present action on September 24, 2014. ECF No. 1. Subsequently, Plaintiffs filed an Amended Complaint on March 17, 2015, ECF No. 5, and a Second Amended Complaint on April 1, 2015, ECF No. 6. In their Second Amended Complaint, Plaintiffs alleged failures to make contributions and submit reports from September 1, 2014, failures to make timely payments or submit timely contributions report from February 2014 through August 2014 and stated that their requested relief included amounts flowing from failures to pay contributions accruing during this litigation. ECF No. 6 ¶¶ 13, 15. Plaintiffs also request attorneys' fees and costs pursuant to ERISA, 29 USC § 1132(g)(2), their CBAs and the terms of the underlying trust agreements. Id. ¶ 16.

         In Count II, Plaintiffs request that the Court (1) enforce the terms of the CBAs and trust agreements by ordering Defendant to permit a complete audit from January 1, 2014 through the date of the audit and (2) enter, upon Affidavit of the Plaintiffs, judgment against the Defendant for the full amount determined in the audit, plus liquidated damages and interest from the date of delinquency to the date of payment; and any expenses, including accountant's fees, incurred during the audit. ECF Nos. 6 ¶ 20 andl 1-1 ¶ 10.

         On April 28, 2015, Plaintiffs filed a Motion for Clerk's Entry of Default, ECF No. 7, and an Order of Default was entered by the Clerk of the Court against Defendant on May 22, 2015. ECF No. 8. Plaintiffs filed a Motion for Default Judgment on December 21, 2015, ECF No. 10, and a Supplemental Motion for Default Judgment on January 6, 2016. ECF No. 11. Defendant's response to Plaintiffs Motion for Default Judgment was due on January 25, 2016. ECF No. 11. At the request of the Court. Plaintiffs provided an additional supplement to the Motion for Default on September 20, 2016. ECF Nos. 12 and 13. To date, Defendant has failed to submit any pleadings to this Court regarding the claims at issue.

         In Plaintiffs' initial Supplemental Motion for Default Judgment, Plaintiffs indicate that, since the initiation of the present action, Defendant has continued to fail to submit reports and make contributions to the Funds as required under its CBAs. See ECF No. 11-1 at 2.

         II. STANDARD OF REVIEW

         "A defendant's default does not automatically entitle the plaintiff to entry of a default judgment: rather, that decision is left to the discretion of the court." Choice Hotels Intern., Inc. v. Savannah Shakti Carp., No. DKC-11-0438, 2011 WL 5118328 at * 2 (D. Md. Oct. 25, 2011) (citing Dow v. Jones, 232 F.Supp.2d 491, 494 (D. Md. 2002)). Although "[t]he Fourth Circuit has a 'strong policy' that 'cases be decided on their merits, '" id. (citing United States v. Shaffer Equip. Co.,11 F.3d 450, 453 (4th Cir. 1993)), "default judgment may be appropriate when the adversary ...


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