Smith v. Jacon LLC

Background

The plaintiffs are several multi-employer benefit plans and the plans’ trustees. The plans were created and maintained under federal labor law, and the trustees administer them under the Employee Retirement Income Security Act (ERISA). Jacon LLC is a Minnesota limited liability corporation.

In February 2021, Jacon agreed to a collective bargaining agreement that remained in effect through April 2023. The agreement required Jacon to make monthly contributions to the plans, maintain records, calculate and report the contributions, and submit monthly remittance reports. The agreement also provided remedies for delinquency, including missing payments, liquidated damages, interest, and attorneys’ fees for collecting amounts due.

The plaintiffs alleged that Jacon failed to make required contributions and submit remittance reports from August 2021 through May 2022. After the lawsuit began and Jacon was served, Jacon submitted payments and reports for August 2021 through March 2022, and later submitted reports, contributions, and liquidated damages for April and May 2022. The plaintiffs then represented that Jacon remained delinquent for June and July 2022 because it had not submitted the required reports or payments for those months. Jacon did not answer or otherwise respond to the complaint. The Clerk of Court entered default against Jacon on February 1, 2022.

Default Judgment

A default judgment requires two steps: the Clerk of Court must first enter default, and the party seeking judgment must then apply to the court. The court found that Jacon had been properly served and had failed to respond, supporting the Clerk’s entry of default.

The court explained that default generally treats the complaint’s factual allegations as admitted, except for allegations about the amount of damages. The court still had to determine whether those facts established a valid legal claim. Under Minnesota law, a breach-of-contract claim requires a contract, the plaintiff’s performance of required conditions, and a breach by the defendant.

The court accepted the plaintiffs’ allegations that the parties entered into the collective bargaining agreement, covered employees performed work for Jacon, and Jacon failed to submit required contributions and reports from August 2021 through July 2022. The court concluded that these allegations established a legitimate breach-of-contract claim and ordered default judgment against Jacon in favor of the plaintiffs.

Injunctive Relief and Order

The plaintiffs also sought monetary relief under ERISA, including past-due contributions, interest, liquidated damages, and attorneys’ fees and costs. The plaintiffs did not allege or prove a fixed amount of damages. They sought an injunction requiring Jacon to submit the missing reports so the amount owed could be calculated and proved.

The court concluded that ERISA permits equitable relief, including an order requiring an employer to submit missing remittance reports. The court determined that the requested injunction would allow the plaintiffs to assess and prove Jacon’s monetary delinquency under the collective bargaining agreement.

The court therefore granted the plaintiffs’ motion for default judgment and granted their motion for injunctive relief. Jacon LLC must submit the outstanding monthly remittance reports for June 2022 and July 2022 and pay the plaintiffs all amounts due under the collective bargaining agreement for those months. The order did not state a specific dollar amount.