Goods v. Handbags
Leather Goods, Plastics, Handbags and Novelty Workers' Union Local 1, Joint Retirement Fund v. Sibeau Handbags, Inc.
- Andrew Carter
- 1:23-cv-06423
- U.S. District Court · Southern District of New York
- 5
In Leather Goods Union v. Sibeau Handbags, Judge Carter granted default judgment on liability for withdrawal from an employee pension fund.
The ruling establishes Sibeau Handbags, Inc.’s liability to the Leather Goods, Plastics, Handbags and Novelty Workers’ Union Local 1, Joint Retirement Fund for withdrawal liability based on the company’s default. It also dismisses the claims against the unidentified corporations and individuals without prejudice. The order does not award a stated amount of damages.
What happened
In Leather Goods, Plastics, Handbags and Novelty Workers’ Union Local 1, Joint Retirement Fund v. Sibeau Handbags, Inc., the court granted the Fund’s motion for default judgment as to Sibeau’s liability. Sibeau did not answer the lawsuit or respond to the court’s order explaining why judgment should not be entered.
The Fund alleged that Sibeau stopped covered operations and stopped contributing under its collective bargaining agreement, which amounted to a complete withdrawal from the pension fund. The Fund alleged that Sibeau’s withdrawal liability was $545,303.80, but the court did not enter a damages award in this order.
Judge Andrew L. Carter, Jr. also granted the request to dismiss the claims against the fictitious corporations and individuals without prejudice. The order did not determine liability for those unidentified parties.
The detailed version
- Goods v. Handbags · No. 1:23-cv-06423
- Andrew Carter
- Nov. 7, 2023
Background
The plaintiff, the Leather Goods, Plastics, Handbags and Novelty Workers’ Union Local 1, Joint Retirement Fund, is an employee pension benefit plan covered by the Employee Retirement Income Security Act (ERISA). The Fund alleged that Sibeau Handbags, Inc. was required by a collective bargaining agreement to contribute to the Fund.
The Fund alleged that it became insolvent after all contributing employers withdrew on December 13, 2013. It further alleged that Sibeau withdrew by ending all covered operations and permanently ending its obligation to contribute. The Fund notified Sibeau that its withdrawal liability had been calculated and that it should make quarterly payments of $6.70. After Sibeau failed to cure missed payments, the Fund notified it on August 23, 2019, that the entire alleged withdrawal liability—$545,303.80—had been accelerated.
Procedural history
The Fund filed the action on June 25, 2023, and served Sibeau on August 23, 2023. Sibeau’s answer was due September 8, 2023, but it did not answer or otherwise defend. The Clerk entered a certificate of default on September 22, 2023, and the Fund moved for default judgment on September 27, 2023.
The court later ordered the Fund to serve Sibeau with an order requiring it to explain why default judgment should not be entered. The Fund served the order and related papers, but Sibeau did not respond.
Court’s analysis
Under Federal Rule of Civil Procedure 55, a court may enter default judgment after the Clerk enters a certificate of default and the defendant fails to defend. A default generally admits well-pleaded allegations concerning liability, but it does not admit the amount of damages. Before entering judgment, the court must still determine whether the allegations establish legal liability.
The court accepted the complaint’s well-pleaded liability allegations as true because of Sibeau’s default. It concluded that Sibeau’s cessation of covered operations and its simultaneous cessation of contribution obligations constituted a complete withdrawal under 29 U.S.C. § 1383(a). The court therefore concluded that Sibeau became liable to the Fund for withdrawal liability under 29 U.S.C. § 1381. The opinion did not make a separate damages determination.
Disposition
Judge Andrew L. Carter, Jr. granted the Fund’s motion for default judgment as to liability. He also granted the Fund’s request to dismiss the action against the fictitious entities identified as XYZ Corporations 1–10 and the fictitious individuals identified as John and Jane Does 1–10, without prejudice.
Read the full 5-page opinion on CourtListener, the free public archive maintained by the Free Law Project.