Graphic Arts Industry Joint Pension Trust v. Hatcher Press, Inc.

• Court: District Court, District of Columbia
• Decided: October 28, 2011
• Docket: Civil Action No. 2010-1028
• Status: Published

Opinion

UNITED STATES DISTRICT COURT FOR THE DISTRICT OF COLUMBIA

) ) ) ) GRAPHIC ARTS INDUSTRY JOINT ) PENSION TRUST; JOSEPH M. ) O’CONNOR, TRUSTEE; and DONALD J. ) TREIS, TRUSTEE, ) ) Civil Action No. 1:10-CV-1028 Plaintiffs, ) (ABJ) (AK) ) v. ) ) HATCHER PRESS, INC. ) ) Defendant. ) ) )

MEMORANDUM OPINION

I. BACKGROUND

Pending before the Court is a Motion for Default Judgment [9] by Plaintiff, Graphic Arts

Industry Joint Pension Trust (“Graphic Arts”) for delinquent contributions and employer

withdrawal liability under the Employee Retirement Investment Securities Act (“ERISA”). On

May 2, 2011, the Clerk of Court made an Entry of Default as to Defendant Hatcher Press, Inc.

(“Hatcher”) [7]. Plaintiff filed a Motion for Entry of Default Judgment on May 16, 2011. The

Motion was referred to a United States Magistrate Judge for determination pursuant to LCvR

72.2(a) [10]. An evidentiary hearing was held on October 7, 2011, at which Defendant did not

appear. II. DISCUSSION

A. Standard for Default Judgment

The clerk of court must enter a default “[w]hen a party against whom a judgment for

affirmative relief is sought has failed to plead or otherwise defend, and that failure is shown by

affidavit or otherwise.” Fed. R. Civ. P. 55(a). Where the plaintiff’s claim is not for a sum

certain, the party must apply to the court for a default judgment. Fed. R. Civ. P. 55(b). “The

determination of whether default judgment is appropriate is committed to the discretion of the

trial court.” Int’l Painters & Allied Trades Indus. Pension Fund v. Auxier Drywall, LLC, 531 F.

Supp. 2d 56, 57 (D.D.C. 2008) (citing Jackson v. Beech, 636 F.2d 831, 836 (D.C. Cir. 1980)).

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. J.D. Holdings, LLC v. BD

Ventures, LLC, 766 F. Supp. 2d 109, 113 (D.D.C. 2011).

Upon entry of default by the clerk of the court, the “defaulting defendant is deemed to

admit every well-pleaded allegation in the complaint.” U.S. v. Bentley, 756 F. Supp. 2d 1, 3

(D.D.C. 2010). The court must then make a determination of the sum to be awarded. Id. “The

court may rely on detailed affidavits or documentary evidence to determine the appropriate sum

for the default judgment.” Id. Defendant offered no evidence prior to or at the evidentiary

hearing disputing the requested sum.

B. Analysis

a. Delinquent Contributions

Graphic Arts is a pension trust that runs a multi-employer pension plan under ERISA.

Hatcher is a commercial printing company that entered into a collective bargaining agreement

2 with Teamsters Local 853. The collective bargaining agreement required Hatcher to make

monthly contributions to Graphic Arts of 7% of each employee’s wages. (Pl.’s Ex. 1 at 15.) In

January 2009, Hatcher stopped paying contributions on its employees’ wages. In September

2009, Hatcher went out of business. (Pl.’s Ex. 2.) At that time, Graphic Press hired an

independent auditor to determine the amount of delinquent contributions. The auditor found that

in addition to the unpaid contributions between January and September 2009, Hatcher paid one

employee above scale during 2008, but contributed to Graphic Arts as if the employee’s wages

were at scale, resulting in a deficiency. (Id.) The deficiency in 2008 was $853.08 and the unpaid

contributions for January through September 2009 were $15,229.24, for a delinquent

contributions total of $16,082.32. (Id.)

Graphic Arts is allowed to collect interest on the unpaid contributions as well as

“liquidated damages provided for under the plan in an amount not in excess of 20 percent.”

ERISA Section 502(g), 29 U.S.C. § 1132(g). Graphic Arts’ Trust Agreement gives its trustees

discretion to establish reasonable liquidated damages. (Pl.’s Ex. 4 at VII-2.) Although not a

signatory to the Trust Agreement, Hatcher is bound by the Trust Agreement’s terms because

Hatcher expects the Fund to pay benefits to its employees. See Plumbers and Steamfitters Local

No. 150 Pension Fund v. Vertex Construction Company, Inc., 932 F.2d 1443, 1451 (11th Cir.

1991) (an employer cannot “avail itself of the benefits of [a fund] without also being subject to

the rules that govern [it]”). The trustees have created a Delinquency Policy that obligates the

employer to pay liquidated damages of 5% for the first month and increasing 5% each month to

reach a maximum of 20%, the applicable rate in this case. (Pl.’s Ex. 5 at ¶ 3.) The Policy also

provides for interest at the actuarial assumed rate of return of 8% annually. (Id. at ¶ 4.)

3 Graphic Arts requests and is granted delinquent contributions of $16,082.32 owed for the

period between January 2008 and September 2009, along with $3,216.46 in liquidated damages

and $2,770.80 in interest.

b. Employer Withdrawal Liability

Withdrawal liability requires an employer who withdraws from a multiemployer pension

plan to contribute its proportionate share of the plan’s unfunded vested liabilities. 29 U.S.C. §

1381. The purpose of withdrawal liability is to protect the remaining employers in a pension

plan from having to cover for a withdrawn employer or risk not being able to pay the full amount

of benefits promised to employees. See Milwaukee Brewery Workers’ Pension Plan v. Joseph

Schlitz Brewing Co., 513 U.S. 414, 416-17 (1995). A company that “permanently ceases all

covered operations under the plan” completely withdraws from the plan. ERISA Section 4201

(b)(2), 29 U.S.C. § 1383(a)(2).

Hatcher ceased business operations in September 2009, creating a complete withdrawal.

(Pl.’s Post-Hearing Brief at 3.) Graphic Arts computed withdrawal liability under ERISA

Section 4211(c)(5), 29 U.S.C. § 1391(c). It followed the statutorily mandated procedures for

notifying Hatcher of its liability and affording it an opportunity to review and pay the amount

owed. ERISA Section 4219, 29 U.S.C. § 1399; Pl.’s Post-Hearing Brief at 4-5. When Hatcher

made no payment or response of any sort, Graphic Arts brought this default judgment action.

The Court grants withdrawal liability in the requested amount of $1,216,587.00.

As with delinquent contributions, withdrawal liability is subject to interest and liquidated

damages. ERISA Section 4301(b), 29 U.S.C. § 1451(b); ERISA Section 502(g), 29 U.S.C. §

1132(g). Again, the Delinquency Policy assesses 8% annual interest and 20% liquidated

4 damages. (Pl.’s Ex. 5 at ¶¶ 3-4.) As such, Graphic Arts requests $1,536.00 in interest and

$243,317.40 in liquidated damages, which the Court grants.

d. Attorney Fees and Costs

ERISA 502(g), 29 U.S.C. § 1132(g) allows a fund bringing a default judgment claim

against an employer to receive attorney fees and costs. Graphic Arts requests $5,835.90 in

attorney fees and $938.98 in costs. The Court grants these requests.

III. CONCLUSION

For the foregoing reasons, this Court grants Plaintiff’s Motion for Judgment by Default

[9] and awards damages totaling $1,490,284.86.

A separate Order of judgment will accompany this Opinion.

Date: October 28, 2011 _______________/s/__________________ ALAN KAY UNITED STATES MAGISTRATE JUDGE