Operating Engineers Health and Welfare Trust Fund v. Eagle Environmental &…

Background

The plaintiffs sued Eagle Environmental & Construction and Ronald Batiste under the Employee Retirement Income Security Act of 1974 (ERISA) and related agreements. The plaintiffs alleged that Eagle entered into an independent construction agreement that incorporated a master agreement and trust agreements. Those agreements required covered employers to make contributions to the plaintiffs’ trust funds based on employee work hours, provide contribution reports, and allow audits of payroll records. The opinion states that the independent agreement also allegedly made Batiste, identified as the company’s principal shareholder, personally responsible for specified payment obligations.

The trust funds requested an audit of payroll records for January 1, 2017, through December 31, 2021. They also alleged that the defendants failed to report and pay contributions for employee hours worked from May 2016 through January 2025. The defendants did not respond to the audit requests, demand letter, complaint, or motion for default judgment. They were personally served, and the clerk entered default on May 6, 2025.

Jurisdiction, Service, and Default Judgment Standard

The court concluded that it had subject-matter jurisdiction under ERISA and the Labor Management Relations Act. It also concluded that ERISA supplied personal jurisdiction and venue because the trust funds were administered in this district. The defendants had been personally served and had not answered.

For a default judgment, the court applied the seven factors commonly called the Eitel factors: prejudice to the plaintiff, the merits of the claims, the sufficiency of the complaint, the amount at stake, the likelihood of a factual dispute, whether the default resulted from excusable neglect, and the federal preference for decisions on the merits. The court stated that well-pleaded liability allegations are treated as true after default, but damages still must be supported by evidence.

Analysis

The court found that denying relief would prejudice the plaintiffs because ERISA claims are within federal courts’ exclusive jurisdiction. It also found that the complaint adequately alleged that the defendants were bound by the governing agreements, were required to contribute and comply with audits, and failed to do so. The court determined that an audit was authorized by the trust documents and was an appropriate part of plan administration.

The court found no meaningful possibility of a factual dispute because the defendants had not participated or challenged the allegations. It also found no indication that the default resulted from excusable neglect because the defendants had been served with the case papers and the motion. The first six Eitel factors outweighed the preference for resolving cases on their merits.

Relief Recommended

The court recommended an order requiring the defendants to immediately comply with the audit request and provide contribution reports for May 2016 through the present. It recommended allowing the plaintiffs to seek an amendment to the judgment after the audit if the audit showed that contributions remained unpaid. The court did not award unpaid-contribution damages at this stage because the audit had not yet established that such contributions were owed.

The plaintiffs requested $3,020.50 in attorney’s fees and $1,421.42 in costs. The court concluded that an award of fees was appropriate under ERISA’s discretionary fee provision. It rejected reliance on the provision requiring fees in successful actions to recover established unpaid contributions because the audit’s purpose was to determine whether unpaid contributions existed. The court deducted $164 for clerical work and recommended an attorney’s-fee award of $2,856.50. It recommended awarding the full $1,421.42 in costs, for a total of $4,277.92.

Procedural Status

Because the defendants had not consented to magistrate-judge jurisdiction, the court reassigned the case to a district judge and issued a report and recommendation. The opinion’s title describes the recommendation as granting in part and denying in part the motion for default judgment, while the conclusion recommends that the motion be granted and specifies the audit, fee, cost, and later-amendment relief. The opinion does not separately identify which portion is denied in the conclusion. Parties were allowed to object within 14 days after being served, and the plaintiffs were instructed to serve the defendants with the recommendation within three days.