Fanning v. Seneca One Realty LLC

• Court: District Court, District of Columbia
• Decided: July 14, 2017
• Docket: Civil Action No. 2017-0126
• Status: Published

Opinion

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

MICHAEL R. FANNING,

Plaintiff,

v. Case No. 17-cv-00126 (CRC)

SENECA ONE REALTY LLC,

Defendant.

MEMORANDUM OPINION

Plaintiff Michael R. Fanning is the Chief Executive Officer of the Central Pension Fund

of the International Union of Operating Engineers and Participating Employers. He brought this

ERISA action seeking to recover unpaid contributions to the fund along with prejudgment

interest, liquidated damages, audit and attorneys’ fees, and litigation costs from Seneca One

Realty, LLC (“Seneca One”). Despite being properly served, Seneca One has failed to respond

to the complaint, the Clerk’s entry of default, and the Court’s Order to Show Cause why

judgment should not be entered against it. Fanning now moves for default judgment. Finding

that Seneca One is liable, the Court will grant the motion and enter judgment against the

company in the amount of $8,343.87.

I. Background

Seneca One entered a binding collective bargaining agreement with Local No. 17 of the

International Union of Operating Engineers (“Local 17”) for the work performed at One HSBC

Center in Buffalo, NY. Compl. ¶¶ 2, 6; see also Pl.’s Mot. Entry Default J., Ex. B (Agreement

between Seneca One and International Union of Operating Engineers). Fanning sues in his

capacity as the Chief Executive Officer of the Central Pension Fund of the International Union of

Operating Engineers and Participating Employers (“Central Pension Fund”). Id. at ¶ 1. The collective bargaining agreement between Seneca One and Local 17 requires the company to pay

contributions to the Central Pension Fund for hours worked by employees covered by the

agreement. Id. at ¶ 7.

The Central Pension Fund is an “employee benefit plan” and a “multiemployer plan” as

those terms are defined under the Employee Retirement Income Security Act of 1974, 29 U.S.C.

§ 1002 (“ERISA”). With these designations come certain obligations. Under ERISA and the

Central Pension Fund’s Restated Agreement and Declaration of Trust (“Declaration”), Seneca

One was obligated to self-report the number of hours worked by covered employees and make

monthly contribution payments to the Central Pension Fund, which are calculated based on these

hours. See Pl.’s Mot. Entry Default J. 3, 4. Specifically, the collective bargaining agreement

requires Seneca One to pay the Central Pension Fund $2.15 per hour for every hour worked by a

covered employee, effective as of January 1, 2012. See Pl.’s Mot. Entry Default J., Ex. B art. 16

Fanning alleges that from January 2013 to December 2015, Seneca One employed

covered employees but failed to pay the corresponding, agreed-upon contributions to the Central

Pension Fund. Compl. ¶¶ 7–9. The Declaration provides that an employer failing to make such

payments is liable for the unpaid amount, liquidated damages of up to 20% of the unpaid

amount, and interest at the annual rate of 9%, along with attorneys’ fees, audit fees, and

applicable litigation costs. Compl. ¶¶ 10, 12, 19; see also Pl.’s Mot. Entry Default J., Ex. A at §

4.5 (Declaration). Fanning is entitled as a third-party beneficiary of the collective bargaining

agreement to enforce these terms. See Pl.’s Mot. Entry Default J. 3.

Seneca One was properly served on January 24, 2017. See Feb. 16, 2017 Return of

Service, ECF No. 3. It did not respond to the complaint, and the Clerk of the Court entered

default on February 17, 2017. See Feb. 17, 2017 Clerk’s Entry of Default, ECF No. 5. Fanning

2 now seeks a monetary default judgment against Seneca One, comprised of unpaid contributions,

accrued interest, liquidated damages, audit fees, attorneys’ fees, and costs.

Section 502(e)(2) of ERISA provides for federal jurisdiction “in the district where the

plan is administered.” 28 U.S.C. § 1332(e)(2). Because the Central Pension Fund is

administered in the District of Columbia, see Compl. ¶ 1, the Court may properly exercise

jurisdiction over this case.

II. Standard of Review

The two-step procedure for requesting a default judgment has been set forth by this Court

on multiple occasions. See, e.g., Boland v. Cacper Construction Corp., 130 F. Supp. 3d 379, 382

(D.D.C. 2015). A plaintiff first must request that the Clerk of the Court enter default against a

party who has “failed to plead or otherwise defend.” Fed. R. Civ. P. 55(a). The Court then

decides whether an entry of default judgment is warranted. Fed. R. Civ. P. 55(b). Default

judgment is available when “the adversary process has been halted because of an essentially

unresponsive party.” Boland v. Elite Terrazzo Flooring, Inc., 763 F. Supp. 2d 64, 67 (D.D.C.

2011). “Default establishes the defaulting party’s liability for the well-pleaded allegations of the

complaint.” Id. After establishing liability, the Court makes an independent evaluation of the

damages award, which it has “considerable latitude” to determine. Id. The Court may hold a

hearing if necessary or can rely on “detailed affidavits or documentary evidence” submitted by

plaintiffs in support of their claims. Boland v. Providence Constr. Corp., 304 F.R.D. 31, 36

(D.D.C. 2014) (quoting Fanning v. Permanent Sol. Indus., Inc., 257 F.R.D. 4, 7 (D.D.C. 2009)).

3 III. Analysis

A. Liability

Plaintiffs filed this suit on January 19, 2017 to recover the damages prescribed by

ERISA, the collective bargaining agreement, and the Declaration. See Pl.’s Mot Entry Default J.

1. Seneca One was timely served with a summons and the complaint on January 24, 2017, and

the Clerk of the Court declared Seneca One to be in default on February 17, 2017. Id. On April

27, 2017, the Court issued an Order to Show Cause why judgment should not be entered for

Plaintiff and set May 12, 2017 as the deadline for Seneca One to respond. Seneca One has failed

to respond to the complaint, the Clerk’s entry of default, or the Court’s Show-Cause Order.

Because the Clerk of the Court has entered default and Seneca One has failed to respond,

the Court accepts Fanning’s well-pleaded allegations and holds that Seneca One is liable and that

entry of default judgment is appropriate. See Elite Terrazzo Flooring, 763 F. Supp. 2d at 67.

ERISA requires employers to make contributions to multiemployer plans “in accordance with the

terms and conditions of” the relevant collective-bargaining agreements. 29 U.S.C. § 1145. The

Declaration specifies that contributions are due by the last day of the month following the month

in which the work was done. See Pl.’s Mot Entry Default J. 3; Decl. of Michael R. Fanning

(“Fanning Decl.”) ¶ 10. It also provides that the Central Pension Fund’s “Trustees may, by their

respective representatives, audit and examine the pertinent employment and payroll records of

each Employer . . . whenever such examination is deemed necessary or advisable by the Trustees

. . . .” Pl.’s Mot Entry Default J., Ex. A at 1 (Declaration). Plaintiff has submitted a payroll audit

summary that shows Seneca One underpayed the Central Pension Fund by $3,097.44 between

January 2013 and December 2015. See Fanning Decl. ¶ 11, Ex. C (Payroll Audit Summary). By

failing to make the payments required by the Declaration, Seneca One is liable for damages.

4 The Court may enter default judgment when a defendant makes no request “to set aside

the default” and gives no indication of a “meritorious defense.” Fanning, 257 F.R.D. at 7.

Seneca One, as noted above, has not responded to the complaint since being served in January

2017. An entry of default judgment is therefore warranted against it.

B. Damages

Fanning must prove the damages to which he is entitled “to a reasonable certainty.” Elite

Terrazzo Flooring, 763 F. Supp. 2d at 68. Under ERISA, employers are required to pay any

delinquent contributions, interest on unpaid contributions at a rate determined under the plan,

liquidated damages at a rate of up to 20 percent or an additional interest assessment at the rate

provided under the plan (whichever is higher), and legal fees. 29 U.S.C. § 1132(g)(2). The

Declaration entitles the Central Pension Fund to both liquidated damages and interest in the

event that an employer fails to make the required contributions. See Pl.’s Mot. Entry Default J.,

Ex. A § 4.5(b–c). The Declaration also obligates employers to pay all costs and audit expenses

incurred in enforcing its provisions. Id. at § 4.5(e). When a defendant has failed to respond, the

Court must make an independent determination—by relying on affidavits, documentation, or an

evidentiary hearing—of the sum to be awarded as damages.

As support for the requested damages, Fanning has submitted a sworn declaration in

support of his complaint, a payroll audit summary provided by the auditing firm Calibre CPA

Group, PLLC, and a declaration from his attorney, R. Richard Hopp. The audit summary

provides sufficient detail regarding the alleged underpayments: it classifies them by month and

by employee, and includes a summary of the auditor’s findings regarding the underpayment. See

Pl.’s Mot. Entry Default J., Ex. C. The auditor’s findings included instances of the employer

failing to report new employees from date of hire, “omit[ing] hours last week worked,” omitting

5 overtime hours, and failing to report vacation paid upon termination. Id. at 1. According to the

report, the underpayments from January 2013 to December 2015 total $3,097.44. Id. Central

Pension Fund paid the auditing firm $2,200 to conduct the audit in September 2016. Fanning

Decl. ¶ 10.

The auditor’s report also calculates the total interest, accruing at 9% per annum, at

$367.55. See Compl. ¶ 11; Pl.’s Mot. Entry Default J., Ex. D (Summary of Interest

Calculations). This figure was calculated as of November 18, 2016, and the auditor indicates

that additional interest accrues at the rate of $0.77 per day. Id. Therefore, because 238 days

have passed since the November 18, 2016 calculation, an additional $183.26 is due in interest,

for a total of $550.81.

Seneca One is also liable for liquidated damages up to 20% of the delinquent amount. See

Pl.’s Mot. Entry Default J.; Ex. C § 4.5(b). For the purposes of this motion, Fanning asks the

Court to award liquidated damages equal to 15% of the unpaid contributions. See Pl.’s Mot.

Entry Default J. 6. 15% of $3,097.44 (the delinquent amount) equals $464.62. Id., Ex. D (15%

LD line item in summary table). The $2,200 cost of the audit is also covered by the Declaration

and therefore owed to the fund. See id.; Fanning Decl. ¶ 10. Collectively, the unpaid

contributions, $3,097.44; interest owed, $550.81; liquidated damages, $464.62; and audit

expenses, $2,200, equal $6,312.87 in total damages. See Fanning v. Warner Center, 999 F.

Supp. 2d 263, 266–67 (D.D.C. 2013) (finding that plaintiff was entitled to audit fee, interest, and

liquidated damages by relying on declarations from CEO and attorney of record).

C. Attorney’s Fees

ERISA also requires defendants to pay a plaintiff’s reasonable attorney’s fees. See 29

U.S.C. § 1132(g)(2)(D). In support of the requested attorney’s fees, Fanning provides the

6 declaration of R. Richard Hopp, a partner at the law firm O’Donoghue & O’Donoghue LLP and

Fanning’s counsel of record. See Pl.’s Mot. Entry Default J., Decl. of R. Richard Hopp (“Hopp

Decl.”). Mr. Hopp states that he has extensive experience in labor and employee benefits law,

having practiced in this field since joining this firm in 1991. Hopp Decl. ¶ 1. He notes that the

firm worked 5.2 hours on this case, a standard amount for a case of this nature, at an hourly

billing rate of $280, which is well below the usual rate for this work. Id. at ¶¶ 2–4. Given that

the firm charged well below the market rates approved by courts in similar cases, the Court finds

the rate to be reasonable. See, e.g., Boland v. Smith & Rogers Constr. Ltd., 201 F. Supp. 3d 144,

149 (D.D.C. 2016) (approving market rates of $590 and $615); Providence Constr. Corp., 304

F.R.D. at 37; Flynn v. Pulaski Constr. Co., 2006 WL 3755218, at *2 (D.D.C. Dec. 19, 2006).

Hopp also includes a spreadsheet documenting the preparation and work included in the 5.2

billable hours. See Hopp Decl, Ex. A. Fanning is therefore entitled to receive a total of $1,456

in attorney’s fees. In addition, the litigation costs included a $400 filing fee and a $175 charge

for service of process on Seneca One. See Hopp Decl., Exs. B–C (invoices documenting the

expenses). Because this constitutes the type of “detailed . . . documentary evidence” on which

courts may rely, the Court concludes that Fanning have justified the litigation hours and costs

expended in this case. Accordingly, the Court holds that Fanning is entitled to $2,031 in

attorney’s fees and costs.

7 IV. Conclusion

For the foregoing reasons, the Court will grant Fanning’s Motion for Entry of Default

Judgment. The Court will issue an Order consistent with this opinion.

CHRISTOPHER R. COOPER United States District Judge Date: July 14, 2017