Raines v. Phoenix Corp.
- Wilhelmina Wright
- 0:19-cv-02552
- U.S. District Court · District of Minnesota
- 7
In Raines v. Phoenix Corp., Judge Wright granted in part and denied in part the plaintiffs’ request for a default order and required an audit.
The plaintiffs, who are trustees and fiduciaries of the identified employee benefit funds, received an order requiring Phoenix Corp. and Brian R. Connell to produce necessary records and cooperate with an audit. The order did not determine the total damages owed.
What happened
John Raines and Tim McGough, trustees and fiduciaries of several employee benefit funds, sued Phoenix Corp. and Brian R. Connell over allegedly unpaid contributions and missing employment records required by a collective bargaining agreement. The court had already entered default against the defendants.
The court granted in part and denied in part the plaintiffs’ motion for an entry of default order. It ordered the defendants to produce necessary employment and payroll records from January 2019 through the date of the order and to provide other relevant information needed to administer the funds. The court did not grant the plaintiffs’ requests for additional findings about all relief sought, undetermined damages, or a later default judgment.
Judge Wilhelmina M. Wright ruled that the plaintiffs were entitled to an audit-related injunction under the Employee Retirement Income Security Act, but that the requested broader relief was not supported at that time. The order did not determine the total amount of damages.
The detailed version
- Raines v. Phoenix Corp. · No. 0:19-cv-02552
- Wilhelmina Wright
- Feb. 19, 2020
Background
John Raines and Tim McGough are trustees and fiduciaries of the Carpenters & Joiners Welfare Fund, Twin City Carpenters Pension Plan, Carpenters and Joiners Defined Contribution Plan, and Carpenters and Joiners Apprenticeship and Journeymen Training Trust Fund. The opinion notes that McGough is not listed as a trustee of the apprenticeship and training trust fund. The funds are administered under the Employee Retirement Income Security Act (ERISA).
Phoenix Corp. agreed to be bound by a collective bargaining agreement with the North Central States Regional Council of Carpenters and the Associated General Contractors of Minnesota. Brian R. Connell agreed to be personally bound by the agreement’s obligations. The agreement requires covered employers to make fringe-benefit contributions and to make employment and payroll records available for examination and audit when necessary to administer the funds or determine compliance.
The plaintiffs’ earlier audit found unpaid contributions and related amounts. The funds determined that the defendants owed $17,359.45 for the period from May 2018 through April 2019, including $15,781.32 in contributions and $1,578.13 in liquidated damages and interest for the audit period from May 2018 through December 2018. After the lawsuit was filed, the defendants made a partial payment of $13,682.61. The plaintiffs alleged that $3,676.84 in contributions and liquidated damages remained due for the period from March 2018 through April 2019.
The plaintiffs also requested records for January 2019 through September 2019 so they could audit the defendants’ current compliance. The defendants had not produced those documents. The plaintiffs sued on September 18, 2019, and personally served the defendants. The Clerk of Court entered default against the defendants on October 31, 2019.
Analysis
The plaintiffs’ motion sought two main forms of relief: a finding that the defendants owed $3,676.84 in contributions and liquidated damages, with six percent interest, and an order requiring the defendants to produce records and cooperate with an audit covering January 2019 through the present. The plaintiffs said they would seek a later money judgment after the audit established the total amount owed.
The court explained that default established the defendants’ liability, but that the plaintiffs still had to prove damages by a preponderance of the evidence, meaning that the evidence had to show that the claimed amount was more likely than not correct. Because the extent of the defendants’ alleged delinquency after April 2019 was unknown, the plaintiffs could not accurately calculate all damages without the requested records.
The court held that ERISA permits an injunction requiring an employer to produce records and cooperate with an audit when necessary to determine compliance with ERISA or a plan governed by it. The court concluded that the plaintiffs were entitled to all documents necessary to determine the defendants’ compliance with the collective bargaining agreement, along with other relevant information concerning administration of the funds.
The court did not order production of every specific document requested without limitation. It stated that the record did not allow it to determine item by item which requested business records, bank statements, and other documents were necessary at that time. Instead, it ordered the defendants to cooperate with an audit as required by the collective bargaining agreement.
The court denied the plaintiffs’ requests for findings that they were entitled to all relief demanded in the complaint, that the defendants were liable for damages not yet determined, and that the plaintiffs could seek a default judgment later. The court described those requests as advisory and unsupported by legal authority.
Order
The court granted in part and denied in part the plaintiffs’ motion for an entry of default order. It ordered the defendants to produce all necessary employment and payroll records for the period from January 2019 through February 19, 2020, relating to employees covered by the collective bargaining agreement, including other relevant information required to administer the funds. The order did not set a final damages amount.
Read the full 7-page opinion on CourtListener, the free public archive maintained by the Free Law Project.