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Board of Trustees v. JTL Air Conditioning & Refrigeration, Inc.

United States District Court, E.D. Virginia, Alexandria Division

June 4, 2019

BOARD OF TRUSTEES, SHEET METAL WORKERS' NATIONAL PENSION FUND, et al., Plaintiffs,
v.
JTL AIR CONDITIONING & REFRIGERATION, INC., et al., Defendants.

          REPORT & RECOMMENDATION

          MICHAEL S. NACHMANOFF UNITED STATES MAGISTRATE JUDGE.

         This matter comes before the Court on plaintiffs' Motion for Default Judgment Pursuant to Fed.R.Civ.P. 55(b) (Dkt. No. 7).[1] Having reviewed the record and the pleadings, the undersigned Magistrate Judge recommends entering default judgment in the Funds' favor for the reasons that follow.

         I. Procedural Background

         On February 12, 2019, the Funds filed the instant action against defendants JTL Air Conditioning & Refrigeration, Inc. (“JTL Air”) and JTL Mechanical Services, Inc. (“JTL Mechanical”) to collect delinquent contributions, liquidated damages, audit testing fees, interest, late fees, and attorney's fees and costs. Compl. (Dkt. No. 1) ¶¶ 38-57. On February 14, 2019, a summons was executed on Shari Vance, who was designated by law to accept service of process on JTL Mechanical, and on March 13, 2019, a summons was served on Jeff Lane, who was designated by law to accept service of process on behalf of JTL Air (Dkt. No. 3). Under Fed.R.Civ.P. 12(a), a responsive pleading was due twenty-one (21) days after delivery of the pleadings; however, defendants failed to file a responsive pleading in a timely manner. On April 9, 2019, the Funds filed a Request for Clerk's Entry of Default (Dkt. No. 4), which the Clerk of Court filed on April 11, 2019 (Dkt. No. 5).

         Accordingly, on April 23, 2019, the Funds filed a Motion for Default Judgment Pursuant to Fed.R.Civ.P. 55(b) (Dkt. No. 7), along with a Brief in Support of Plaintiffs' Motion for Default Judgment (Dkt. No. 8) and a Notice of Hearing on Plaintiffs' Motion for Default Judgment (Dkt. No. 9). The Funds' motion was supported with three declarations from Kenneth Anderson, Jr., Marcus Braswell, and Diana M. Bardes (Dkt. Nos. 8-1 through 8-3). On May 17, 2019, counsel for the Funds appeared at the hearing on their motion for default judgment and no one appeared on behalf of defendants (Dkt. No. 11).

         II. Factual Background

         The following facts are established by the Complaint and the memorandum in support of the Funds' motion for default judgment, as well as by the supporting declarations.

         NPF and ITI are employee benefit plans within the meaning of Sections 3(1)-(3) of the Employee Retirement Income Security Act of 1974, as amended, (“ERISA”), 29 U.S.C. § 1002(1)-(3), as well as multiemployer plans within the meaning of Section 3(37)(A) of ERISA, Id. at § 1002(37)(A). Compl. (Dkt. No. 1) ¶¶ 5-6. They are also jointly administered trust funds established pursuant to Section 302(c)(5), (6) of the Labor Management Relations Act of 1947, as amended, (“LMRA”), 29 U.S.C. § 186(c)(5), (6). Id. SMOHIT is a joint labor-management health and safety organization within the meaning of 29 U.S.C. § 186(c)(9). Id. at ¶ 7. Lastly, NEMIC is a labor management committee within the meaning of the LMRA, 29 U.S.C. § 186(c)(9). Id. at ¶ 8. The Funds are administered in Fairfax, Virginia. Id. at ¶¶ 5-8. At all relevant times, defendants have been employers “engaged in an industry affecting commerce.” Id. at ¶¶ 10-11. Defendants are incorporated in Florida. Id.

         JTL Air employed at least one employee represented for the purposes of collective bargaining by the Local Union 32 of the Sheet Metal Workers' International Association, a labor organization representing employees in an industry affecting commerce. Id. at ¶ 12. JTL Air is a signatory to a collective bargaining agreement with Local 32 (the “Agreement”), which requires JTL Air to submit monthly remittance reports and fringe benefit contributions to the Funds for all hours worked or paid on behalf of its covered employees. Id. at ¶ 13. Pursuant to the Agreement, JTL Air is further obligated to abide by the terms and conditions of the Trust Agreements establishing the Funds (“Trust Documents”). Id. at ¶ 20.

         Although JTL Mechanical is not a signatory to the Agreement, “JTL Mechanical is an alter ego of JTL Air[] and/or constitutes a single employer with JTL Air[] and thus is obligated to contribute to the Funds for covered employees.” Id. at ¶ 14. Specifically, defendants were incorporated in Florida and share “an interrelation of operations, common management, centralized control of labor relations, business purpose, equipment, customers, and common ownership.” Id. at ¶¶ 15-17. JTL Mechanical was specifically established to evade JTL Air's obligations under the Agreement. Id. at ¶ 18. Accordingly, as an alter ego, JTL Mechanical is bound to the Agreement and is jointly and severally liable for JTL Air's obligations arising from the Agreement. Id. at ¶ 19.

         Payments owed to the Funds are based on separate remittance reports, which is a self-reporting system that relies on the honesty and accuracy of employers in reporting hours worked and paid as well as in reporting owed contributions. Id. at ¶ 21. Without such reports, the Funds are unable to determine the entire amount of monthly contributions due to the Funds or the employees' eligibility for benefits. Id. at ¶ 22. Pursuant to the Trust Documents, the Funds may audit a contributing employer for the purpose of assuring the accuracy of the reports and that the employer remitted the appropriate amount of contributions to the Funds. Id. at ¶ 24.

         Pursuant to Sections 502 and 515 of ERISA, 29 U.S.C. §§ 1132 and 1145, the Agreement, the Trust Documents, and Section 301 of the LMRA, 29 U.S.C. § 185, if JTL Air fails to timely submit the contractually required remittance reports and contribution payments, and the Funds file a lawsuit to recover the unpaid contributions, JTL Air is required to pay the following amounts:

a. Interest on the delinquent contributions at a rate of .0233% per day, compounded daily;
b. Liquidated damages equal to the greater of: fifty dollars ($50.00) or ten percent (10%) of the contributions due for each month of contributions that the Company fails to pay within 30 days after the due date, but pays before any lawsuit is filed;
c. Liquidated damages equal to the greater of interest on the delinquent contributions at the above rate or liquidated damages equal to twenty percent (20%) of the delinquent contributions owed upon commencement of litigation; and
d. The attorneys' fees and costs incurred by the Funds in pursuing the delinquent amounts, including the attorneys' fees and costs in this action.

Id. at ¶ 25.

         The Funds bring this action under Sections 502(a)(3), (d)(1), (g)(2) and 515 of ERISA, 29 U.S.C. §§ 1132(a)(3), (d)(1), (g)(2) and 1145, and under Section 301(a) of LMRA, 29 U.S.C. § 185. Id. at ΒΆ 1. The Funds allege three counts against defendants seeking owed payments pursuant to an audit conducted from October 2014 through December 2015 (Count I), payments based on estimated remittance reports for January 2016 ...


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