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, doing business as Edward Village Hotel; Edward Chicago Management, LLC, doing business as Edward Chicago Hotel; 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. The defendants were served but did not answer or otherwise respond, so the plaintiffs obtained certificates of default and moved for default judgment.

The claims involved several categories of alleged unpaid obligations. Edward Village had allegedly failed to make settlement payments after agreeing to pay the Fund $42,500 in installments and to provide a signed affidavit for confession of judgment. Edward Chicago had allegedly failed to pay retirement-plan contributions, had incurred withdrawal liability after its hotel closed and contributions stopped, and had failed to pay discharged employees for accrued vacation and sick time.

Default-Judgment Standard

The court explained that default judgment is a two-step process: entry of default recognizes that a defendant failed to defend, while default judgment converts the defendant’s admitted, properly stated factual allegations into a final judgment awarding relief supported by law and evidence. A defaulting defendant admits well-pleaded facts, but not legal conclusions. Damages also must be supported by evidence.

ERISA Withdrawal Liability

The court held that the allegations and exhibits established Edward Chicago’s liability for withdrawal liability. The Fund had notified Edward Chicago that the relevant control group had completely withdrawn from the Fund, demanded $4,045,418 in withdrawal liability, and provided a payment schedule. Edward Chicago did not pay, request review of the calculation, or initiate arbitration to challenge the determination. The court therefore found Edward Chicago liable for $4,045,418, interest at 3.25% per year from December 1, 2020, liquidated damages equal to 20% of that amount, and reasonable attorney’s fees and costs.

The court did not enter withdrawal-liability judgment against Edward Village. Although the plaintiffs alleged that Edward Village and Edward Chicago were members of the same ERISA control group, they pleaded no supporting facts about ownership or control. Because the plaintiffs also had not shown independent notice to Edward Village, the court concluded that the allegations did not establish Edward Village’s withdrawal-liability responsibility as a matter of law. The court stated that Edward Village might be held liable if the plaintiffs pleaded facts showing that it belonged to the same control group as Edward Chicago.

Settlement Agreement

The court found that Edward Village breached its settlement agreement with the Fund by failing to make the required $42,500 in payments and failing to provide the required affidavit. The Fund had given written notice of default as required by the agreement. The court awarded the Fund $42,500, with interest at 1% per month calculated according to the installment amounts and dates specified in the order.

The court denied liquidated damages on this claim. It reasoned that the current claim enforced the settlement agreement itself, not directly the statutory obligation to make contributions to the Fund, and the settlement agreement did not provide for liquidated damages after a default.

Edward Chicago’s Delinquent Contributions

The court found Edward Chicago liable for unpaid contributions for September through December 2019. The plaintiffs requested $23,934, but the remittance reports incorporated into the complaint showed $5,572.30 per month, or $22,289.20 total, for the relevant full-time employees. Because the reports contradicted the higher amount alleged in the complaint, the court awarded only the amount supported by those reports: $22,289.20, plus non-compounded interest at 1% per month, liquidated damages equal to 20% of the delinquent contributions, and reasonable attorney’s fees and costs.

Accrued Vacation and Sick Time

The court found Edward Chicago liable for unpaid accrued vacation and sick time owed under the Chicago collective-bargaining agreement. The allegations established that at least seven employees were discharged without just cause when the hotel closed, that they were entitled to payment for unused or prorated vacation time, and that two also had unused sick time. After correcting one employee’s vacation calculation, the court awarded UNITE HERE Local 450 $34,436.74.

Attorney’s Fees and Costs

The court awarded attorney’s fees and costs under ERISA and the settlement agreement. It accepted $268 in costs and reduced the partner’s requested hourly rate from $525 to $425. It awarded $4,080 in attorney’s fees, consisting of 11.9 hours for attorney Jeremy E. Meyer at $325 per hour and 0.5 hours of partner time at $425 per hour. The combined award for attorney’s fees and costs was $4,348 against Edward Chicago Management, LLC and Edward Village Group, LLC together.

Disposition

The court stated: “The motion for default judgment is GRANTED in part and DENIED in part.” It directed the clerk to prepare judgment against Edward Chicago Management, LLC for $4,045,418 in withdrawal liability, specified interest and liquidated damages; $22,289.20 in delinquent contributions, specified interest and liquidated damages; and $34,436.74 in unpaid accrued vacation and sick time.

As to Edward Village Group, LLC, the plaintiffs’ motion was also GRANTED in part and DENIED in part. The court awarded the Fund $42,500 plus specified interest under the settlement agreement. The denial of withdrawal-liability relief was without prejudice to filing an amended complaint stating a factual basis for Edward Village’s withdrawal-liability responsibility and making a renewed default-judgment motion upon notice to Edward Village. If no amended complaint was filed within 30 days, the court stated that it would enter judgment against Edward Village for the settlement amount and specified interest.