Trustees of the Drywall Tapers and Pointers Local Union No. 1974 Benefit Funds…

Background

The plaintiffs were the Trustees of the Drywall Tapers and Pointers Local Union No. 1974 Benefit Funds and the District Council No. 9, Drywall Tapers and Pointers of Greater New York Local Union 1974, affiliated with the International Union of Painters and Allied Trades, AFL-CIO. The Trustees sued as fiduciaries of jointly administered multiemployer trust funds. The case arose under the Employee Retirement Income Security Act of 1974 (ERISA) and the Labor Management Relations Act (LMRA).

Plus K Construction entered into a labor agreement with the Union. The agreement required the company to submit reports showing covered employees’ hours and required contributions, and to pay the contributions required by the agreement and related fund policies. The plaintiffs alleged that Plus K Construction failed to submit required reports and failed to pay fringe-benefit contributions for the period from September 23, 2016, through September 30, 2018.

The plaintiffs filed the action on February 25, 2020, and served the summons and complaint. Plus K Construction never appeared. The Clerk entered the company’s default, and the plaintiffs moved for default judgment.

Legal standard and liability

Under Federal Rule of Civil Procedure 55, default judgment is a two-step process: entry of default followed by judgment. A default admits well-pleaded factual allegations, but it does not automatically admit legal conclusions. The court therefore examined whether the allegations were legally sufficient to establish liability and separately reviewed the evidence supporting damages.

The court held that the plaintiffs adequately established liability under ERISA section 515, 29 U.S.C. § 1145. It found that Plus K Construction was an employer, that the Funds were multiemployer plans, that Plus K Construction and the Union had a collective bargaining agreement, and that the agreement required Plus K Construction to make contributions and submit reports. The allegations also established that the company failed to make the required payments.

The court reached the same result under section 301 of the LMRA, 29 U.S.C. § 185, because Plus K Construction breached the labor agreement by failing to make the required contributions.

The plaintiffs also asserted common-law breach-of-contract claims. The court concluded that those claims were displaced by ERISA and the LMRA and stated that the plaintiffs had not provided authority showing otherwise. It therefore concluded that the plaintiffs were not entitled to default judgment on the common-law claims, while finding sufficient liability under ERISA and the LMRA.

Damages and relief

The court awarded $4,533.78 in principal unpaid fringe-benefit contributions for September 23, 2016, through September 30, 2018. Although the plaintiffs’ supporting documents used inconsistent descriptions of the relevant periods, the court found that the audit materials supported the requested amount and date range.

The court awarded $59.50 in interest through December 31, 2018, and additional prejudgment interest at 5.25% per year through entry of judgment. It also awarded $700 for audit costs, attorney’s fees based on 12.9 hours at $250 per hour, and $470 in court costs and disbursements.

The court did not determine the liquidated-damages amount. The plaintiffs’ submissions variously referred to 10%, 20%, and 30% rates, and the court found the inconsistencies prevented it from determining the amount with reasonable certainty. The plaintiffs were ordered to file a supplemental affidavit by April 15, 2021, stating the applicable percentage and total amount, and to file a proposed final judgment consistent with the order.

Disposition

Judge Alison J. Nathan granted the motion for default judgment. The order granted judgment for the specified unpaid contributions, interest, audit costs, attorney’s fees, and court costs, required further submission concerning liquidated damages, and stated that the order resolved docket entry 13.