Case 1:13-cv-01350-KBJ-DAR Document 12 Filed 06/13/14 Page 1 of 11
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
SERVICE EMPLOYEES INTERNATIONAL
UNION NATIONAL INDUSTRY PENSION
FUND, et al.,
Civil Action No. 13-1350
Plaintiffs, KBJ/DAR
v.
CRYSTAL CLEANING SYSTEMS, INC.,
Defendant.
REPORT AND RECOMMENDATION
Plaintiffs, an employee pension benefit plan administered in the District of Columbia and
the individual Trustees of that plan, bring this action under the Employee Retirement Income
Security Act (“ERISA”) and the Labor Management Relations Act (“LMRA”) “to collect
contractually required remittance reports, unpaid collectively bargained contributions, and
interest owed by the Defendant.” Complaint (Document No. 1) ¶ 1. This action was referred to
the undersigned United States Magistrate Judge for full case management, see 02/04/2014
Minute Order, following the Clerk’s entry of default as to Defendant, see Default (Document No.
6); see also 11/25/2013 Minute Order (directing Plaintiffs either to move for default judgment or
to file a stipulation of dismissal).
Pending for consideration by the undersigned is Plaintiffs’ Motion for Default Judgment
(Document No. 7). The undersigned conducted a hearing on Plaintiffs’ motion on February 27,
2014, at which Plaintiffs introduced evidence of the damages claimed, see Hearing Exhibit 1.1
1
The undersigned has provided the exhibit to the assigned United States District Judge.
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Service Employees International Union National Industry Pension Fund, et al. v. Crystal Cleaning Systems, Inc. 2
Following the hearing, Plaintiffs, in accordance with the undersigned’s order, filed a
supplemental memorandum addressing their request for attorneys’ fees. See Plaintiffs’
Supplemental Brief in Support of Motion for Default Judgment (“Supplemental Memorandum”)
(Document No. 11). Upon consideration of Plaintiffs’ motion, the memoranda in support
thereof, the evidence presented, and the entire record herein, the undersigned will recommend
that the court grant Plaintiffs’ motion and enter default judgment against Defendant.
BACKGROUND
Plaintiff Service Employees International Union National Industry Pension Fund
(“Fund”) is an “employee pension benefit plan” and “multiemployer plan” as defined by ERISA,
and “a jointly administered trust fund established pursuant to” the LMRA, which is administered
in the District of Columbia. Complaint ¶ 4. The Fund provides pension benefits to eligible
employees. Id. The individual Plaintiffs are authorized Trustees of the Fund, and fiduciaries as
defined by ERISA, who administer the Fund for its beneficiaries. Id. ¶ 5. Defendant Crystal
Cleaning Systems, Inc. is an employer which was a party to collective bargaining agreements
with the Service Employees International Union, Local 1877 (“Union”) for its employees at
certain work sites at which it provided janitorial services. Id. ¶¶ 8-9; Declaration of Kenneth J.
Anderson, Jr. (“Declaration”) (Document No. 7-1) ¶ 4.
Defendant and the Union entered into a collective bargaining agreement on November 6,
2006, under which Defendant was required to make monthly contributions to the Fund for
covered employees. See Declaration ¶¶ 4, 6; Declaration, Exhibit A at 10. Initially, Defendant
was required to contribute $0.15 an hour “for each hour worked by employees to the [Fund].”
Declaration, Exhibit A at 10. The rate increased to $0.25 an hour effective July 1, 2007. Id.
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Service Employees International Union National Industry Pension Fund, et al. v. Crystal Cleaning Systems, Inc. 3
Beginning July 1, 2008, the rates were established based on the employees’ “length of service”;
Defendant was required to contribute $0.30 an hour for employees of one year, $0.40 an hour for
employees of two years, and $0.50 an hour for employees of three years. Id. at 10-11. The
parties renewed their collective bargaining agreement through three agreements – titled “Janitor I
Agreement,” “Janitor II Agreement,” and “Janitor III Agreement” – effective November 1, 2009.
Declaration ¶ 4; see also Complaint, Exhibit 1. Each of the three agreements established the rate
at which Defendant was required to contribute to the Fund for covered employees – $0.30 an
hour under the Janitor I Agreement, $0.40 an hour under the Janitor II Agreement, and $0.50 an
hour under the Janitor III Agreement. Complaint, Exhibit 1 at 3, 10, 17.
Each agreement included an appendix, setting forth the terms of Defendant’s participation
in the Fund. The appendices provided, in pertinent part, that Defendant’s “[c]ontributions shall
be transmitted together with a remittance report containing such information, in such manner,
and on such form as may be required by the Fund or their designee.” Declaration, Exhibit A at
23; Complaint, Exhibit 1 at 6, 13, 20. The terms further provided that Defendant “agrees to be
bound by the provisions of the Agreement and Declaration of Trust establishing the Fund . . . and
by all resolutions and rules adopted by the Trustees pursuant to the powers delegated to them by
that agreement, including collection policies . . . .” Declaration, Exhibit A at 23; Complaint,
Exhibit 1 at 7, 14, 21.
The Agreement and Declaration of Trust (“Fund Agreement”) reiterates the requirement
that employers submit reports and contributions to the Fund, and sets forth the authority of the
Fund’s Trustees to develop rules and regulations governing the Fund’s operation. Complaint,
Exhibit 2 at 2, 5. In accordance with the terms of the collective bargaining agreements and the
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Service Employees International Union National Industry Pension Fund, et al. v. Crystal Cleaning Systems, Inc. 4
Fund Agreement, Trustees of the Fund promulgated policies concerning collection of delinquent
contributions. Declaration ¶ 9; Complaint, Exhibit 3. The Fund’s Statement of Policy for
Collection of Delinquent Contributions stipulates that an employer that is delinquent in its Fund
contributions shall be liable for interest, calculated from the date the contributions were due until
the payment is received, at a rate of 10 percent per annum; liquidated damages, after a legal
action is commenced, at 20 percent of the delinquent contributions; reasonable attorneys’ fees
and costs incurred.2 Declaration ¶¶ 10-11; Complaint, Exhibit 3 at 8-9 (Section 5).
In addition to the required contributions and the charges for late-paid contributions,
employers were required to pay surcharges to the Fund as a result of the Fund’s “critical status”
in 2009 through 2013. Declaration ¶ 12. Because of its critical status, the Fund established a
Rehabilitation Plan, in accordance with the Pension Protection Act of 2006, which imposed
surcharge payments equal to five percent of an employer’s contributions in November 2009, and
10 percent of its contributions for each month beginning in December 2009. Declaration ¶ 13;
Complaint, Exhibit 4; see generally 29 U.S.C. § 1085. Under the statute, failures to pay these
surcharges are treated as delinquent contributions. § 1085(e)(7)(B). Defendant was notified of
the Fund’s critical status, as well as the Rehabilitation Plan and required surcharges, through
annual letters. Declaration ¶¶ 12-13; Complaint, Exhibit 4; Complaint, Exhibit 5.
2
The Fund’s policy stipulates that “[t]he obligations to pay interest, liquidated damages and fees chargeable
under this policy are contractual in nature and independent of the provisions of ERISA Section 502(g).” Complaint,
Exhibit 3 at 9. Section 502(g) provides, in pertinent part, that “in any action under this subchapter by a fiduciary for
or on behalf of a plan to enforce section 1145 of this title in which a judgment in favor of the plan is awarded, the
court shall award the plan (A) the unpaid contributions, (B) interest on the unpaid contributions, (C) an amount equal
to the greater of (i) interest on the unpaid contributions, or (ii) liquidated damages provided for under the plan in an
amount not in excess of 20 percent (or such higher percentage as may be permitted under Federal or State law) of the
amount determined by the court under subparagraph (A), (D) reasonable attorney’s fees and costs of the action, to be
paid by the defendant, and (E) such other legal or equitable relief as the court deems appropriate.” 29 U.S.C. §
1132(g)(2).
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Service Employees International Union National Industry Pension Fund, et al. v. Crystal Cleaning Systems, Inc. 5
Plaintiffs contend that beginning in 2007, in contravention of the parties’ agreements,
Defendant failed to submit required remittance reports, failed to pay required contributions and
surcharges, and failed to pay interest and liquidated damages that it had accrued on late-paid
contributions. Declaration ¶ 14; see also Hearing Exhibit 1. Defendant “became inactive” in the
Fund effective March 1, 2013. Declaration ¶ 4.
After unsuccessfully attempting to collect the outstanding amounts from Defendant,
Complaint ¶ 27, Plaintiffs initiated this matter. In October 2013, the court observed that
Defendant’s responsive pleading was overdue, and ordered that it be filed by a date certain.
10/17/2013 Minute Order. Defendant failed to respond, and Plaintiffs sought entry of default.
The Clerk of Court entered default (Document No. 6) on November 15, 2013. In accordance
with an order of the court, see 11/25/2013 Minute Order, Plaintiffs then moved for default
judgment pursuant to Federal Rule of Civil Procedure 55(b)(2).
APPLICABLE STANDARD
Rule 55 of the Federal Rules of Civil Procedure provides that “[w]hen a party against
whom a judgment for affirmative relief is sought has failed to plead or otherwise defend . . . the
clerk must enter the party’s default.” Fed. R. Civ. P. 55(a). After the Clerk’s entry of default, the
party may then move for entry of default judgment by the court. Fed. R. Civ. P. 55(b)(2). “The
determination of whether default judgment is appropriate is committed to the discretion of the
trial court.” Fanning v. C & L Serv. Corp., 297 F.R.D. 162, 166 (D.D.C. 2013) (quoting Int’l
Painters & Allied Trades Indus. Pension Fund v. Auxier Drywall, LLC, 531 F. Supp. 2d 56, 57
(D.D.C. 2008)) (internal quotation marks omitted). The defendant “must be considered a totally
unresponsive party and its default plainly wilful, reflected by its failure to respond to the
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Service Employees International Union National Industry Pension Fund, et al. v. Crystal Cleaning Systems, Inc. 6
summons and complaint, the entry of default, or the motion for default judgment.” ITPE Pension
Fund v. Stronghold Sec., LLC, No. 13-0025, 2014 WL 702580, at *1 (D.D.C. Feb. 25, 2014)
(citations omitted) (quoting another source) (internal quotation marks omitted). “The standard
for default judgment is satisfied where the defendant makes no request to set aside the default
and no suggestion that it has a meritorious defense.” Id. (citations omitted) (quoting another
source); see also C & L Serv. Corp., 297 F.R.D. at 166.
“Entry of default by the Clerk of Court establishes the defaulting party’s liability for the
well-pleaded allegations of the complaint.” C & L Serv. Corp., 297 F.R.D. at 166 (citation
omitted). Unless the amount of damages is a sum certain, the court must make an “independent
determination” and has “considerable latitude” in awarding a sum of damages. Id.; see also ITPE
Pension Fund, 2014 WL 702580, at *1. The party moving for default judgment “must prove its
entitlement to the amount of monetary damages requested using detailed affidavits or
documentary evidence on which the court may rely.” C & L Serv. Corp., 297 F.R.D. at 166
(citation omitted). The court may also conduct a hearing in order to determine the appropriate
amount of damages. See id. (citing Fed. R. Civ. P. 55(b)(2)).
DISCUSSION
Plaintiffs aver that “[j]urisdiction is conferred upon this Court” by 29 U.S.C. §§ 185(c),
1132(e), (f); 28 U.S.C. § 1331, and that “[v]enue is proper under” 29 U.S.C. § 1132(e)(2)
because the Fund is administered in the District of Columbia. Complaint ¶¶ 2, 3. Plaintiffs filed
Proof of Service (Document No. 4) indicating that the individual designated to accept service on
behalf of the corporate Defendant was served with the summons in this matter on September 18,
2013. Defendant has not filed an answer to Plaintiffs’ complaint, no appearance has been entered
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Service Employees International Union National Industry Pension Fund, et al. v. Crystal Cleaning Systems, Inc. 7
on Defendant’s behalf, and the Clerk of Court has entered default. Accordingly, the undersigned
“adopts the well-pleaded allegations in the complaint as findings of fact regarding this matter.”
See C & L Serv. Corp., 297 F.R.D. at 167. Plaintiffs are thus entitled to default judgment for
Defendant’s failure to remit certain monthly reports, required contributions, interest charges,
liquidated damages, and surcharges. See Complaint ¶ 22.
With respect to damages, Plaintiffs seek monetary relief for damages that they are able to
calculate, and equitable relief for the damages that they are unable to calculate. See Plaintiffs’
Memorandum in Support of Motion for Default Judgment (“Memorandum”) (Document No. 7)
at 9. In support of their request, Plaintiffs have provided the declaration of Kenneth J. Anderson,
Jr., the Fund’s Contribution Compliance Manager, who “maintain[s] the Fund’s records,
determine[s] whether participating employers have satisfied their obligations to make timely
contributions to the Fund, and assist[s] in efforts to collect delinquent contributions from
participating employers . . . .” Declaration ¶ 2. Plaintiffs also submitted documentary exhibits in
the form of copies of the parties’ agreements and tables detailing the amounts owed, paid, and
outstanding. The undersigned thus finds that Plaintiffs have established their entitlement to the
requested relief, as outlined below.
Monetary damages for unpaid contributions, surcharges, interest, and liquidated
damages
Under the Janitor I Agreement, Defendant owes $647.89 in contribution payments,
$2,362.37 in surcharges, $1,039.03 in interest on late paid contributions, $2,528.12 in liquidated
damages for late paid contributions, and additional interest that continues to accrue at a rate of 10
percent until payments have been made. Declaration ¶¶ 19-24; see also Hearing Exhibit 1.
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Under the Janitor II Agreement, Defendant owes $1,813.78 in surcharges, $864.06 in interest on
late paid contributions, $1,901.28 in liquidated damages for late paid contributions, and
additional interest that continues to accrue until payments have been made. Declaration ¶¶ 27-
31; see also Hearing Exhibit 1. Under the Janitor III Agreement, Defendant owes $7,163.52 in
surcharges, $2,595.03 in interest on late paid contributions, $6,933.05 in liquidated damages for
late paid contributions, and additional interest that continues to accrue until payments have been
made. Declaration ¶¶ 34-38; see also Hearing Exhibit 1.3
Attorneys’ fees and costs
Plaintiffs are also entitled to $3,216 in attorneys’ fees and $450 in costs that they incurred
in this matter. See Supplemental Memorandum at 2. The undersigned finds that Plaintiffs have
demonstrated the reasonableness of their requested attorneys’ fees through a declaration of their
counsel, in which they set forth the rates of their counsel, and through invoices in which they
outline the hours billed by their counsel. See Declaration of Diana M. Bardes in Support of
Motion for Default Judgment and Attorneys’ Fees and Costs (Document No. 11-1); id., Exhibit
A. In support of their request for costs, Plaintiffs provide an invoice documenting the court’s
filing fee and a process server fee that they incurred while litigating this matter. See id., Exhibit
A.
Equitable relief
Plaintiffs aver that they are unable to calculate the amount due and owing for the months
3
There appears to be a typographical error with respect to Plaintiffs’ request for interest on late paid
contributions under the Janitor III Agreement. Compare Declaration ¶ 35, with Hearing Exhibit 1. The undersigned
relies on the calculation illustrated in Hearing Exhibit 1.
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in which Defendant failed to submit a remittance report, and thus seek an order requiring
Defendant to conduct an accounting of past-due contributions, submit the outstanding remittance
reports, and pay the due and owing amounts. Memorandum at 5. Plaintiffs request that the court
retain jurisdiction over this matter pending Defendant’s compliance with the court’s order. Id. at
9. The undersigned finds that Plaintiffs are entitled to their requested relief. “ERISA authorizes
the court to provide for other legal or equitable relief as the court deems appropriate.” Int’l
Painters & Allied Trades Indus. Pension Fund v. R.W. Amrine Drywall Co., 239 F. Supp. 2d 26,
31 (D.D.C. 2002) (citing 29 U.S.C. § 1132(g)(2)(E)); see also Serv. Emps. Int’l Nat’l Indus.
Pension Fund v. Delta Window Cleaning Co., No. 12-00847, 2012 WL 3322368, at *2 (D.D.C.
Aug. 14, 2012) (granting the plaintiffs’ “request to enter a permanent injunction ordering
defendant to submit its delinquent remittance reports, conduct an accounting on all past-due
contributions, and pay all amounts due and owing to the Fund in accordance with its Agreement
with the Fund and the Fund’s governing documents”).
Under the 2006 agreement, “Defendant failed to provide any reports or contributions for
the entire effective period . . . from April 2007 through October 2009.” Declaration ¶ 15.
Defendant failed to submit reports and contributions under the Janitor I Agreement for October
2012, December 2012, January 2013, and February 2013. Declaration ¶ 18; see also Hearing
Exhibit 1. Defendant failed to submit reports and contributions for August 2012, October 2012,
December 2012, January 2013, and February 2013 under the Janitor II Agreement. Declaration ¶
26; see also Hearing Exhibit 1. Finally, Defendant failed to submit reports and contributions
under the Janitor III Agreement for October 2012, December 2012, January 2013, and February
2013. Declaration ¶ 33; see also Hearing Exhibit 1. For these months, Defendant owes
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contributions, interest, liquidated damages, and surcharges, in accordance with the rates set forth
in the respective agreements. See Declaration ¶¶ 16, 18, 26, 33.
CONCLUSION
For all of the foregoing reasons, it is, this 13th day of June, 2014,
RECOMMENDED that Plaintiffs’ Motion for Default Judgment (Document No. 7) be
GRANTED, and that judgment be entered against Defendant in the amount of $28,913.47, plus
additional interest at a rate of 10 percent that continues to accrue until payment is received, to
account for:4
(1) $647.89 in delinquent contributions;
(2) $4,498.12 in interest on late-paid contributions;
(3) $11,362.45 in liquidated damages;
(4) $11,339.67 in surcharges;
(5) $3,666 in attorneys’ fees and costs; and it is
FURTHER RECOMMENDED that the court order Defendant to conduct an accounting
of unpaid contributions, submit outstanding remittance reports, and pay the corresponding
contributions and related charges that are due and owing to the Fund.
/s/
DEBORAH A. ROBINSON
United States Magistrate Judge
4
The total amount also accounts for previous overpayments of contributions by Defendant in the amount of
$101.80 and $2,498.86. Declaration ¶¶ 31, 38. In addition, the undersigned has not added the additional interest to
date into the total amount, as it continues to accrue.
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Within fourteen days, any party may file written objections to this report and
recommendation. The objections shall specifically identify the portions of the findings and
recommendations to which objection is made and the basis of each such objection. In the
absence of timely objections, further review of issues addressed herein may be deemed
waived.