Building Service 32BJ Health Fund v. Facilities Source Corporation

Background

The court had entered default judgment for the plaintiffs on April 22, 2020. The judgment required Facilities Source Corporation (FSC) to make certain payroll records available for inspection within 30 days. It also required FSC to upload specified employee information—including payroll, tax, and employment-date records—to the plaintiffs’ Employer Self-Service System.

The plaintiffs moved for a finding of civil contempt and sanctions. They submitted statements from Tom Ormsby, the billing and employer-services director for the plaintiff funds, and Michael Fox, an auditor retained by the plaintiffs. Both stated that FSC had not provided the required information. The plaintiffs also submitted correspondence warning FSC that they would seek sanctions if it did not comply. According to Ormsby, the lack of information left the plaintiffs unable to provide benefits to employees covered by the funds’ plans.

FSC did not respond to the contempt motion and had not appeared in the action.

Legal standard

The court explained that civil contempt for violating a court order requires: (1) a clear and unambiguous order; (2) clear and convincing proof of noncompliance; and (3) a failure by the alleged contemnor to make a diligent, reasonable attempt to comply. Civil-contempt sanctions primarily seek to encourage future compliance and remedy past noncompliance rather than punish the noncomplying party. Courts have broad discretion to choose an appropriate coercive remedy.

Ruling

Judge Castel found that the plaintiffs’ unopposed motion established by clear and convincing evidence that FSC had not complied with the judgment’s clear and unambiguous requirements. The court also found that FSC had not diligently attempted to comply in a reasonable manner.

The court found that a $100-per-day sanction was reasonable and appropriately tailored to encourage compliance. The fine begins on the date of the order and continues until FSC complies with the judgment. The court denied the plaintiffs’ request for attorneys’ fees because they did not specify the requested amount or document fees incurred in connection with the motion or other compliance efforts.

The conclusion states that the plaintiffs’ motion was GRANTED, that FSC was in civil contempt, and that the plaintiffs’ attorneys’ fees application was denied. The Clerk was directed to terminate the motion.