Cummings v. Quick Start Day Care Center Inc.

CourtDistrict Court, S.D. New York
DecidedJanuary 5, 2024
Docket1:23-cv-05244
StatusUnknown

This text of Cummings v. Quick Start Day Care Center Inc. (Cummings v. Quick Start Day Care Center Inc.) is published on Counsel Stack Legal Research, covering District Court, S.D. New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Cummings v. Quick Start Day Care Center Inc., (S.D.N.Y. 2024).

Opinion

USDC SDNY DOCUMENT SOUTHERN DISTRICT OF NEW YORK DOC #: Sone □□□ DR DATE FILED:_01/05/2024 CYNTHIA CUMMINGS, ANDRE LAKE, BARBARA - : EDMONDS, LINDA MCPHERSON, JAHMILA : EDWARDS, CYNTHIA MCCRIGHT, and BEVERLY : PERES, as Trustees of DISTRICT COUNCIL 37, : 23-cv-5244 (LJL) LOCAL 95 HEAD START EMPLOYEES WELFARE : FUND, : MEMORANDUM AND : ORDER Plaintiffs, : -V- : QUICK START DAY CARE CENTER INC. and JANE: DOES (the foregoing names being fictitious and unknown : to Plaintiffs at the present time, all of whom are : responsible officers, directors and/or representatives of □ □ the corporate Defendant named above), : Defendants. :

eee eee KX LEWIS J. LIMAN, United States District Judge: Cynthia Cummings, Andre Lake, Barbara Edmonds, Linda McPherson, Jahmila Edwards, Cynthia McCright, and Beverly Peres (collectively the “Plaintiffs”) as Trustees of the District Council 37, Local 95 Head Start Employees Welfare Fund (the “Fund” bring an action against Quick Start Day Care Center Inc. (“Quick Start”), and Jane Doe(s), as officers, directors, and representatives of Quick Start (together with Quick Start, the “Defendants”), to recover unpaid fringe benefits allegedly owed to the Fund. Plaintiffs claim that Defendants violated the Labor Management Relations Act of 1947 (the “LMRA”), 29 U.S.C. § 185, the Employee Retirement Income Security Act of 1974 (“ERISA”), 29 U.S.C. § 1001 et seq., and the applicable Collective Bargaining Agreement (the “CBA”) and Trust Agreement (the “Trust Agreement”) between

Quick Start and the District Council 37, Head Start Local 95, Community and Social Agency Employees Union, AFSCME, AFL-CIO (the “Union”). See Dkt. No. 1 (the “Complaint”). Plaintiffs served Quick Start with copies of the summons and Complaint on July 6, 2023. See Dkt. No. 6. When Quick Start failed to answer or otherwise respond to the Complaint, Plaintiffs sought and obtained a Certificate of Default as to Quick Start. See Dkt. No. 11.

Plaintiffs then moved for default judgment against Quick Start. Dkt. No. 14. For the reasons that follow, the motion is granted in part. BACKGROUND The well-pleaded allegations of the Complaint are taken as true for the purposes of a motion for default judgment. See City of New York v. Mickalis Pawn Shop, LLC, 645 F.3d 114, 137 (2d Cir. 2011) (“It is an ancient common law axiom that a defendant who defaults thereby admits all well-pleaded factual allegations contained in the complaint.” (internal quotation marks omitted)). Quick Start is a not-for-profit corporation organized and existing under the laws of the State of New York. Dkt. No. 1 ¶ 7. The Fund is an employee benefit welfare plan—operated in

accordance with the Trust Agreement—the purpose of which is, in part, to receive and collect required employee benefit contributions from Quick Start, and to provide health care benefits for eligible employees pursuant to the CBA. Id. ¶¶ 4, 6. Plaintiffs are fiduciaries of the Fund. Id. ¶ 4. Plaintiffs assert that pursuant to the CBA, which governs rates of pay, wages, hours, and other conditions of employment for the members of the Union, Quick Start was obligated to contribute agreed-upon amounts to the Fund so that covered employees could receive health care benefits through the Fund. Id. ¶ 13. The Trust Agreement states if Quick Start does not make the required fringe benefit contributions it “shall be liable to the Fund for all contributions owed, together with liquidated damages, interest, attorneys’ fees, court costs, and audit fees, all in accordance with ERISA.” Id. ¶ 14. The Complaint states four claims for relief. First, Plaintiffs allege that Quick Start violated the CBA and the Trust Agreement by failing to pay the Fund required fringe benefit contributions for the months of March and April 2022. Id. ¶¶ 11–18. Second, Plaintiffs allege that Quick Start’s failure to make the required fringe benefit contributions constitutes a violation

of ERISA and the LMRA. Id. ¶¶ 19–25. Third, Plaintiffs allege that Quick Start and the Jane Doe(s) who are its responsible officers, directors, and/or representatives, violated ERISA’s dictate that fiduciaries “discharge their duties with respect to ERISA covered plans ‘solely in the interest of the participants and beneficiaries’ and ‘for the exclusive purpose of providing benefits’ and ‘defraying reasonable administrative expenses,’” id. ¶ 27 (quoting ERISA, 29 U.S.C. §1104(a)(1)(A)), by wrongly diverting plan assets for their own use and benefit, id. ¶¶ 26–33. Finally, Plaintiffs allege that Quick Start and the Jane Doe(s), as parties in interest with respect to the Fund, violated ERISA by using plan assets in certain transactions for their own benefit. Id. ¶¶ 34–38.

LEGAL STANDARD Federal Rule of Civil Procedure 55 sets forth a two-step procedure to be followed for the entry of judgment against a party who fails to defend: the entry of a default and the entry of a default judgment. See New York v. Green, 420 F.3d 99, 104 (2d Cir. 2005). The first step, entry of a default, simply “formalizes a judicial recognition that a defendant has, through its failure to defend the action, admitted liability to the plaintiff.” Mickalis Pawn Shop, 645 F.3d at 128; see Fed. R. Civ. P. 55(a). The second step, entry of a default judgment, “converts the defendant’s admission of liability into a final judgment that terminates the litigation and awards the plaintiff any relief to which the court decides it is entitled, to the extent permitted” by the pleadings. Mickalis Pawn Shop, 645 F.3d at 128; see also Fed. R. Civ. P. 55(b). Whether entry of default judgment at the second step is appropriate depends upon whether the well-pleaded allegations against the defaulting party establish liability as a matter of law. See Mickalis Pawn Shop, 645 F.3d at 137. While a defendant who defaults admits the well-pleaded factual allegations in a complaint, because a party in default does not admit conclusions of law, “a district court need not

agree that the alleged facts constitute a valid cause of action.” Id. (citation omitted). “The essence of Fed. R. Civ. P. 55 is that a plaintiff can obtain from a default judgment relief equivalent to but not greater than it would obtain in a contested proceeding assuming it prevailed on all of its factual allegations.” Spin Master Ltd. v. 158, 463 F. Supp. 3d 348, 367 (S.D.N.Y. 2020). Therefore, this Court is “required to determine whether the [plaintiff’s] allegations are sufficient to establish the [defendant’s] liability as a matter of law.” Finkel v. Romanowicz, 577 F.3d 79, 85 (2d Cir. 2009). A party later challenging the entry of a default judgment must satisfy the “good cause shown” standard in Federal Rule of Civil Procedure 55(c), which “requires a court to weigh (1) the willfulness of default, (2) the existence of any meritorious defenses, and

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Bluebook (online)
Cummings v. Quick Start Day Care Center Inc., Counsel Stack Legal Research, https://law.counselstack.com/opinion/cummings-v-quick-start-day-care-center-inc-nysd-2024.