Schrunk v. J & T Services, LLC

Background

David Schrunk and Steven Sauer sued as trustees for several multi-employer fringe benefit plans under the Employee Retirement Income Security Act of 1974. They sought unpaid fringe-benefit contributions from J & T Services under a collective bargaining agreement. J & T Services did not respond to the complaint, and the plaintiffs obtained a default judgment for $203,798.11 in August 2019.

The plaintiffs then served post-judgment discovery seeking financial and employment information. They said the information was needed to enforce the judgment. After J & T Services did not respond, the plaintiffs moved to compel discovery. Magistrate Judge David T. Schultz granted that motion on April 30, 2020, ordered J & T Services to respond, and found that the plaintiffs were entitled to reasonable attorney’s fees for bringing the motion.

J & T Services still did not provide the discovery or appear at scheduled hearings. In a November 5, 2020 order and report and recommendation, Magistrate Judge Schultz ordered J & T Services to pay $911.40 in attorney’s fees and costs, directed the company to retain counsel and produce the discovery, and recommended that the district court find the company in civil contempt. He also recommended a $100-per-day fine and a bench warrant for Jason Kadoun, the company’s owner, subject to a stay if Kadoun appeared and complied with the court’s requirements.

Court’s analysis

The district court explained that civil contempt is a court’s enforcement process for violations of its orders. The party seeking contempt must prove by clear and convincing evidence that a valid order existed, the alleged violator knew about it, and the order was disobeyed. If that showing is made, the other side must show that it could not comply.

The court found that J & T Services had not responded to the post-judgment discovery despite repeated efforts by the plaintiffs and repeated court orders. It also found that Kadoun had been served with valid orders dated April 30, May 27, and September 21, 2020, and that J & T Services and Kadoun failed to respond or appear at hearings. The court noted that the record did not show that the July 30 order had been served. It nevertheless found clear and convincing evidence that Kadoun, acting for J & T Services, violated the April 30, May 27, and September 21 orders. The court also found that J & T Services had not shown an inability to comply.

The court reviewed the magistrate judge’s recommendation even though no objections had been filed because it was unclear whether J & T Services had received the November 5 order and because time had passed.

Disposition

Judge Susan Richard Nelson adopted the November 5 Order and Report and Recommendation as modified. The court:

- Ordered J & T Services to immediately pay the previously ordered $911.40 in attorney’s fees and costs if it had not already done so. - Found J & T Services, through Kadoun, in civil contempt for violating the April 30, May 27, and September 21, 2020 orders. - Granted the plaintiffs’ motion for an order to show cause. - Determined that a bench warrant for Kadoun would be an appropriate enforcement sanction but stayed the warrant because the record did not show that Kadoun had been served with the November 5 order. - Required J & T Services to attempt to obtain counsel or free legal services by April 7, 2021; required the parties to meet and confer by April 14; required Kadoun to produce the materials by April 21; and required the plaintiffs to report on progress by April 28. - Scheduled a video show-cause hearing for May 3, 2021. - Provided that the stay could be lifted and the warrant automatically issued if Kadoun failed to cooperate and negotiate in good faith. - Imposed a $50-per-day fine for each day Kadoun failed to meet the listed deadlines, payable immediately to the Clerk of the U.S. District Court for the District of Minnesota. - Ordered the U.S. Marshals Service to personally serve the order on J & T Services and Kadoun by March 24, 2021.