Trustees of the Building Service 32BJ Health Fund v. Vanguard General Services…

Background

The plaintiffs—the trustees of several jointly administered, multi-employer labor-management trust funds—alleged that Vanguard General Services Corporation failed to make required benefit contributions under collective bargaining agreements with Service Employees International Union, Local 32BJ. An arbitrator awarded the Funds $409,811.62, and the Funds later filed this federal action asserting claims under the Employee Retirement Income Security Act of 1974 and state contract law.

The Funds alleged that Vanguard Parking Services, Inc., Long Bay Services, Inc., and Ernest E. Washington, Jr. were jointly responsible for Vanguard General’s obligations. Their theories included direct liability, alter-ego liability, and liability based on the companies being a single integrated employer. The Funds also sought relief requiring payroll audits and payment of amounts discovered through those audits.

All four defendants failed to file a responsive pleading. The Clerk issued certificates of default, and the Court entered a default judgment on June 17, 2025. Vanguard Parking, Long Bay, and Washington—the “Moving Defendants”—later asked the Court to vacate that judgment under Federal Rule of Civil Procedure 60(b). Vanguard General was not a moving defendant.

Legal standard

To decide whether to remove a default judgment, the Court considered whether the default was willful, whether removing it would prejudice the opposing party, and whether the defendants presented a meritorious defense. A meritorious defense did not have to be proven at this stage; the defendants needed to provide evidence that, if proven at trial, could completely defeat the Funds’ claims.

Willfulness

The Court found that the Moving Defendants’ failure to respond was not willful. Washington stated that he mistakenly believed the papers he received concerned related litigation and arbitration involving Vanguard General. Long Bay’s officer and director, Lisa Guscott, similarly stated that she confused the papers with another legal matter. Although the Court identified inconsistencies and weaknesses in these explanations, it found that the defendants’ prompt efforts to contest the case after learning of the default judgment supported a finding of good-faith mistake rather than deliberate failure to respond.

The Court also found that the roughly four-month delay before filing the motion was adequately explained by settlement discussions. It therefore did not treat the delay as evidence of willfulness.

Prejudice

The Funds argued that removing the default judgment would delay their ability to collect the contributions at issue. The Court held that delay alone was not enough to establish prejudice. The Funds did not identify other prejudice, such as lost evidence, greater difficulty conducting discovery, or an increased risk of fraud or collusion. This factor therefore favored removing the default judgment.

Potential defenses

The Moving Defendants argued that Vanguard General—not Vanguard Parking or Long Bay—signed the relevant collective bargaining agreements. They also disputed the Funds’ alter-ego and single-employer theories and argued that Vanguard General was defunct and had no employees.

The Court held that these arguments, supported by declarations, were sufficient at this stage. The declarations stated that the entities had separate tax identification numbers, tax filings, bank accounts, operations, and business purposes. The Court found that these facts created issues for possible trial concerning whether Long Bay/Vanguard was a separate entity, whether Vanguard Parking or Long Bay could be directly liable, whether the companies were alter egos, and whether they operated as a single employer.

The Court also noted a factual dispute over whether Vanguard General was defunct or still active and operating. It did not resolve that dispute in the motion to vacate.

Ruling

Judge Ronnie Abrams concluded that all three factors favored relief from the default judgment. The Court granted the Moving Defendants’ motion under Rule 60(b), vacated the default judgment previously entered at Docket Number 78 as to the Moving Defendants, and directed the Clerk of Court to terminate the motion at Docket Number 82.