Board of Trustees of the Teamsters Joint Council 32 - Employers Health and…

Background

The Fund sued H. Brooks and Company LLC and Jason Jaynes, identified as H. Brooks’s manager, over alleged failures to make contributions required by a collective bargaining agreement. The Fund also sought access to H. Brooks’s books and records so it could audit the business and determine the amount of unpaid contributions.

The defendants did not answer or otherwise respond. On November 9, 2021, Judge John R. Tunheim entered a default judgment. Among other things, that order required H. Brooks to provide payroll books and records covering January 2021 through the date of the order, or until it could show that it no longer employed workers covered by the agreement. The records had to be provided to the Fund’s third-party administrator within 10 days after service of the default judgment order.

The Fund later moved for contempt, asserting that H. Brooks had not provided the required records. After the court ordered H. Brooks to explain why it should not be held in contempt, a sheriff personally served Jaynes with the relevant documents. H. Brooks did not appear through a representative or counsel at the September 14, 2022, hearing, and Jaynes did not appear. The court noted that neither defendant had participated in the proceeding or indicated that it had taken steps to comply.

Legal standard

Under Federal Rule of Civil Procedure 70, a party’s failure to perform a specific act required by a judgment may result in a contempt finding. The party seeking contempt must prove by clear and convincing evidence that a valid and sufficiently specific order existed, the alleged contemnor knew about it, and the alleged contemnor disobeyed it. The burden then shifts to the alleged contemnor to show, in detail, that it could not comply, that the inability was not self-created, and that it made reasonable good-faith efforts to comply.

Civil contempt sanctions may be designed to encourage compliance, compensate the opposing party, or both. They may not be punitive. In deciding whether to impose a coercive fine, the court considered the harm caused by noncompliance, the likely effectiveness of the fine, the contemnor’s financial resources and the burden of the fine, and the willfulness of the disregard of the order.

Court’s analysis

The court found that the default judgment order was valid because the Fund had properly served the original summons and complaint on H. Brooks through Jaynes, and neither defendant responded. The court also found by clear and convincing evidence that H. Brooks had actual notice of the default judgment order after the sheriff personally served Jaynes.

The court concluded that the order clearly and specifically required H. Brooks to provide payroll records and that H. Brooks had not provided them. Because H. Brooks did not appear or offer evidence of an inability to comply, it failed to meet its burden to show that it could not produce the records or had made reasonable efforts to do so. The court therefore held H. Brooks in contempt. The opinion explains that, although the Fund’s motion referred to the defendants, the Fund’s supporting papers and proposed order focused on contempt findings and sanctions against H. Brooks.

The court found that a daily fine was appropriate because H. Brooks’s failure to provide the records prevented the Fund from completing its audit and determining the amount owed. Although the record raised questions about whether a fine would be effective and provided no information about H. Brooks’s finances, the court concluded that the relevant factors supported the sanction. It also found that H. Brooks’s disregard was willful because it had notice of the order and had taken no steps toward compliance.

Order and disposition

The court granted the Fund’s Motion for Contempt. It held H. Brooks in contempt for failing to comply with the November 9, 2021, default judgment order. H. Brooks must pay the Clerk of Court $200 per day, beginning 14 days after the December 1, 2022, order, and continuing until H. Brooks satisfies the court in writing that it is no longer in contempt.

The court also ordered H. Brooks to pay the Fund’s reasonable attorney’s fees and costs incurred in bringing the contempt motion. The Fund’s counsel could submit a declaration stating the claimed amount within 10 days of the order’s date. Finally, the Fund was required to serve the order on the defendants by a method reasonably likely to inform them of its existence.