Unite Here Retirement Fund and Trustees of the Unite Here Retirement Fund v…

Background

The UNITE HERE Retirement Fund, its trustees and fiduciaries, and UNITE HERE Local 450 sued Edward Village Group, LLC, Edward Chicago Management, LLC, and other defendants identified as Does One through Ten. The plaintiffs alleged violations of the Employee Retirement Income Security Act (ERISA), collective-bargaining agreements, and a settlement agreement. They sought unpaid contributions to the Fund, withdrawal liability, unpaid vacation and sick time, interest, liquidated damages, attorney’s fees, and costs.

The defendants were served but did not answer or otherwise respond. The plaintiffs obtained certificates of default and moved for default judgment. On such a motion, the court treats well-pleaded factual allegations as admitted, but it still must decide whether those allegations establish legal liability and must require evidence supporting the amount of damages.

Rulings on the claims

Edward Chicago’s withdrawal liability

The court found that the allegations and attached documents established Edward Chicago’s liability for withdrawal liability under ERISA. The Fund had determined that the relevant control group completely withdrew from the Fund and demanded $4,045,418, payable in quarterly installments. Edward Chicago did not pay, request review of the calculation, or begin arbitration to challenge the determination. The court therefore directed entry of judgment against Edward Chicago for:

- $4,045,418 in withdrawal liability; - interest at 3.25% per year from December 1, 2020; and - liquidated damages equal to 20% of $4,045,418.

Edward Village’s withdrawal-liability claim

The court did not enter withdrawal-liability judgment against Edward Village. The plaintiffs alleged that Edward Village and Edward Chicago were under common control, which could make them jointly responsible under ERISA, but the complaint offered no supporting facts about their ownership or relationship. Because the plaintiffs also did not show that Edward Village independently received the required withdrawal-liability notice, the allegations were insufficient for judgment against it on this claim.

The denial of this part of the motion was without prejudice. The court permitted the plaintiffs to file an amended complaint supplying a factual basis for Edward Village’s withdrawal-liability responsibility and to make a renewed default-judgment motion upon notice to Edward Village. If no amended complaint was filed within thirty days, the court stated that it would enter judgment against Edward Village only for the amount awarded under the settlement agreement.

Edward Village’s settlement agreement

The court found that Edward Village breached its settlement agreement with the Fund. The agreement required four monthly payments totaling $42,500 and a signed affidavit for confession of judgment. Edward Village made none of the payments and did not cure its default after receiving written notice.

The court awarded the Fund $42,500, with interest at 1% per month calculated on the unpaid installment balances according to the schedule stated in the agreement. It denied liquidated damages because this lawsuit enforced the settlement agreement itself, not directly the underlying statutory obligation to make contributions, and the settlement agreement did not provide for liquidated damages upon default.

Edward Chicago’s unpaid contributions

The court found that Edward Chicago failed to pay contributions reported as due for September through December 2019. The plaintiffs requested $23,934, but the remittance reports incorporated into the complaint supported $22,289.20. The court used the lower amount because the incorporated documents contradicted the higher allegation.

The court awarded $22,289.20, interest at 1% per month without compounding, and liquidated damages equal to 20% of the unpaid contributions.

Edward Chicago’s unpaid accrued leave

The court found that at least seven employees were discharged without just cause when Edward Chicago’s hotel closed and were entitled under the collective-bargaining agreement to payment for accrued vacation time. Two of those employees also had unused sick time for which payment was due. After correcting one vacation-time calculation, the court awarded $34,436.74 to UNITE HERE Local 450 for unpaid accrued vacation and sick time.

Attorney’s fees and costs

The court awarded $4,348 in attorney’s fees and costs. It accepted $268 in filing costs and approved 12.4 hours of work on the ERISA-related issues, but reduced the partner’s requested hourly rate from $525 to $425. The resulting fee award was $4,080, plus the $268 in costs.

Disposition

Judge Lewis J. Liman’s conclusion states that the motion for default judgment was granted in part and denied in part. The Clerk was directed to prepare judgment against Edward Chicago for the withdrawal liability, unpaid contributions, and accrued leave awards. As to Edward Village, the motion was granted in part and denied in part: judgment was awarded for the settlement-agreement debt and interest, while withdrawal-liability judgment was denied without prejudice. The court directed the Clerk to close the default-judgment motion.