Division 1181 Amalgamated Transit Union-New York Employees Pension Fund v. R & C Transit, Inc.

321 F.R.D. 60, 2017 WL 1450599
CourtDistrict Court, E.D. New York
DecidedApril 22, 2017
Docket16-cv-2481 (ADS)(ARL)
StatusPublished

This text of 321 F.R.D. 60 (Division 1181 Amalgamated Transit Union-New York Employees Pension Fund v. R & C Transit, Inc.) is published on Counsel Stack Legal Research, covering District Court, E.D. New York primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

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Division 1181 Amalgamated Transit Union-New York Employees Pension Fund v. R & C Transit, Inc., 321 F.R.D. 60, 2017 WL 1450599 (E.D.N.Y. 2017).

Opinion

MEMORANDUM OF DECISION & ORDER

SPATT, District Judge:

This action was brought by the Plaintiffs Division 1181 Amalgamated Transit Union— New York Employees Pension Fund (the “Fund”) and its Trustees (collectively, the “Plaintiffs”) against the Defendant R and C Transit, Inc. (the “Defendant”) for monies owed pursuant to the Employee Retirement Income Security Act of 1974 (“ERISA”), as amended by the Multiemployer Pension Plan Amendments Act of 1980, 29 U.S.C. §§ 1001 et seq.

Presently before the Court is a motion by the Defendant pursuant to Federal Rule of Civil Procedure (“Fed. R. Civ. P.” or “Rule”) 55(c) to vacate a certificate of default entered by the Clerk of the Court on July 14, 2016, For the following reasons, the Defendant’s motion is granted.

I. BACKGROUND

A. The Relevant Facts

The Fund is a multiemployer pension plan that provides retirement benefits to its participants. The Trustees are fiduciaries of the Fund.

The Defendant is a school bus company that has a contract with the New York City Department of Education (the “DOE”). Until June 30, 2014, when the Defendant withdrew from the Fund, the Defendant employed individuals who were represented for the purposes of collective bargaining by Amalgamated Transit Union Local 1181 (“Local 1181”). The Plaintiff alleges that during the relevant period, the Defendant was a signatory to the collective bargaining agreement (the “CBA”) with Local 1181 and was bound by the CBA’s terms, including the requirement that the Defendant contribute to the Fund on behalf of its covered employees.

On June 30, 2014, the Defendant withdrew from the Fund. The Plaintiffs allege that the Defendant owes the Fund delinquent contributions, and withdrawal liability,

The Defendant states that pursuant to its contract with the DOE, the DOE was required to pay “a sum of money to the defendant each month to cover the wages, welfare benefits, and pension contributions to be forwarded to the plaintiff on behalf of [the defendant’s employees]. If the defendant failed to pay a monthly contribution to the [ ] [ ] Fund, the plaintiffs had the right to notify the DOE of this delinquency, and the DOE would then pay the [] Fund contribution directly to the plaintiff.” (Deck of Rene Sain-vil at ¶ 7). The Defendant claims that pursuant to its contract with the DOE, the DOE is responsible for the Defendant’s withdrawal liability.

B. Relevant Procedural History

The Plaintiffs commenced this action by filing a complaint on May 16, 2016. The Defendant was served with the summons and complaint on June 20, 2016. The Defendant’s answer was due on July 11,2016.

On July 13, 2016, the Plaintiffs requested a certificate of default from the Clerk of the Court. The next day, July 14, 2016, the Clerk of the Court noted the Defendant’s default.

Counsel for the Defendant filed a notice of appearance on July 20, 2016.

On September 19, 2016, the Plaintiffs filed a motion for default judgment, and provided proof that the motion was served on the Defendant.

On September 20, 2016, the Defendant moved for an extension of time to respond to the complaint. The Court denied that request, informing the Defendant that he first [62]*62had to file a motion to vacate the certificate of default.

On October 10, 2016, the Defendant filed the instant motion.

II. DISCUSSION

A. The Legal Standard

Rule 55 states that “[t]he court may set aside an entry of default for good cause ....” Fed. R. Civ. P. 55(c).

In deciding whether to vacate a certificate of default, a court must consider “(1) whether the default was willful, (2) whether the defendant demonstrates the existence of a meritorious defense, and (3) whether, and to what extent, vacating the default will cause the nondefaulting party prejudice.” United States v. Chesir, 526 Fed.Appx. 60, 61 (2d Cir. 2013) (quoting SEC v. McNulty, 137 F.3d 732, 738 (2d Cir. 1998)); see also State St. Bank & Trust Co. v. Inversiones Errazuriz Limitada, 374 F.3d 158, 168 (2d Cir. 2004) (stating that these criteria “should be construed generously5’ in favor of party seeking relief from judgment (internal quotation marks omitted)).

B. Application to the Facts

1. As to whether the Defendant’s Default Was Willful

The Defendant contends that its default was not willful. On the other hand, the Plaintiff argues that the Defendant’s willfulness is exhibited by not retaining an attorney for one month after being served; and by not responding to the complaint or attempting to respond to the complaint until two months after retaining counsel. The Court finds that the Defendant’s default was not willful.

The Second Circuit has stated that willfulness is “more than merely negligent or careless” conduct, McNulty, 137 F.3d at 738, but will be found “where the conduct of counsel or the litigant was egregious and was not satisfactorily explained,” id. For example, “[a] default is deemed willful where a defendant simply ignores the complaint without action.” Circuito Cerrado, Inc. v. LV Foods, Inc., 296 F.R.D. 122, 126 (E.D.N.Y. 2013) (internal citations and quotation marks omitted). “Thus, ‘where a party is notified that he is in default and he apparently makes no effort to appeal’ pro se or to explain his situation to the court, such neglect is inexcusable.’” Arista Records, Inc. v. Musemeci, No. 03CV4465(DGT)(RML), 2007 WL 3124545, at *4 (E.D.N.Y. Sept. 18, 2007), report and recommendation adopted, No. CIV.A. CV-03-4465 (DG), 2007 WL 3145861 (E.D.N.Y. Oct. 25, 2007) (quoting Yan v. Bocar, No. 04 Civ. 4194, 2005 WL 3005338, at *13 (S.D.N.Y. Sept. 8, 2005)); cf. Kauhsen v. Aventura Motors, Inc., No. 09-cv-4114, 2010 U.S. Dist. LEXIS 55554 at *13, 2010 WL 2301289 at *4 (E.D.N.Y. June 7, 2010) (noting that “[wjillfulness includes conduct that is ‘not satisfactorily explained’” (internal citations and quotation marks omitted); Domond v. Great Am. Rec., Inc., 116 F.Supp.2d 368, 374 (E.D.N.Y 2000) (Spatt, J.) (noting that “willfulness may be inferred where a party’s conduct was egregious and not adequately explained”); Frost Belt Int’l Recording Enters., Inc. v. Cold Chillin’ Records, 758 F.Supp. 131, 136 (S.D.NY. 1990) (“[U]tter failure to explain the default effectively precludes a finding of excusable neglect”).

Here, counsel for the Defendant represents that he had been in contact with counsel for the Plaintiffs since he was retained on July 18, 2016; and was busy doing research into whether the DOE should be interplead as a third party defendant.

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321 F.R.D. 60, 2017 WL 1450599, Counsel Stack Legal Research, https://law.counselstack.com/opinion/division-1181-amalgamated-transit-union-new-york-employees-pension-fund-v-nyed-2017.