Neufville v. Metro Community Health Centers, Inc.

Background

Sherie Neufville sued Metro Community Health Centers, Inc. (MCHC), alleging a violation of Section 510 of the Employee Retirement Income Security Act (ERISA), 29 U.S.C. § 1140. The complaint alleged that Neufville worked for MCHC as a podiatrist from December 2016 until February 2022. It also alleged that she applied for paid family leave to give birth and care for a child, that MCHC approved the request, and that MCHC told her during the leave that she would not have a job when she returned.

MCHC was served on July 19, 2022, but did not answer. The Clerk entered a certificate of default, and Neufville moved for default judgment. After the court issued an order requiring MCHC to explain why default judgment should not be entered, MCHC still did not respond or otherwise participate.

Legal standard

Under Federal Rule of Civil Procedure 55, default judgment involves two steps: the Clerk enters a certificate of default after a defendant fails to plead or otherwise defend, and the court may then enter judgment on the plaintiff’s motion. A defaulting defendant generally admits the complaint’s factual allegations, except allegations about the amount of damages. The court must still determine whether those allegations establish legal liability.

The court also explained that damages are not automatically established by default. The court must determine the proper method for calculating damages and evaluate the plaintiff’s supporting evidence.

ERISA liability

Section 510 of ERISA prohibits an employer from discriminating against a participant or beneficiary to interfere with the exercise or attainment of rights under an employee benefit plan. For an ERISA retaliation claim, the plaintiff must show protected activity, the employer’s awareness of that activity, an adverse employment action, and a causal connection between the protected activity and the adverse action.

The court concluded that Neufville’s alleged attempt to exercise her right to paid leave under an employee benefit plan was protected activity. Her formal leave application showed that MCHC knew about that activity. The alleged discharge was an adverse employment action. Because the complaint alleged that MCHC told Neufville during her leave that she would not have a job when she returned, the court found that a causal connection could exist. The court noted that the complaint did not allege direct evidence of retaliatory intent, but found that the timing—approximately three months between the leave application and termination—could support the required inference. Because MCHC defaulted, it did not offer a legitimate, nondiscriminatory reason for the termination. The court therefore held MCHC liable for violating Section 510 of ERISA.

Damages and order

The court did not determine the damages award. Neufville’s counsel referred to a request for $31,040 in lost backpay, while a statement of damages listed a principal amount of $35,040. The submission also requested $3,582 in attorney’s fees and costs. The court noted that the referenced affidavit supporting damages was not attached and that another proposed judgment referred to $40,051.09, including interest, attorney’s fees, and costs.

The court ordered Neufville to file supplemental materials by June 2, 2023, explaining the basis for the requested amount and the discrepancy. It also ordered MCHC, if it wished to contest damages, to show cause by June 9, 2023, through an affidavit and memorandum of law, why the requested damages should not be awarded. The court ordered that judgment be entered in Neufville’s favor against MCHC as to liability.