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Board of Trustees of the Local 295/Local 851 -- I.B.T. Employer Group Pension Trust Fund v. Hail Air Freight

April 15, 2008

BOARD OF TRUSTEES OF THE LOCAL 295/LOCAL 851 -- I.B.T. EMPLOYER GROUP PENSION TRUST FUND, PLAINTIFF,
v.
HAIL AIR FREIGHT, INC., ET AL., DEFENDANTS.



The opinion of the court was delivered by: Gerard E. Lynch, District Judge

OPINION AND ORDER

Plaintiff, an employee pension trust fund, brings this motion to have defendants Hail Air Freight, Inc. ("Hail"), Ava Courier & Messenger, Inc. ("Ava"), and Harbor Air Integrated Logistics, Inc., ("Harbor") (collectively, the "Companies"), and Jeffrey Wilkens, president of Hail, cited for contempt as a result of the failure of the Companies to satisfy a July 2006 default judgment against them, and the failure of both the Companies and Wilkens to provide discovery and appear for depositions in connection with that judgment.*fn1 Plaintiff also requests that the Court order the Companies and Wilkens to pay the attorneys' fees that plaintiff has incurred as a result of their unlawful conduct. Plaintiff's motion will be denied, with leave to renew the motion should the Companies and/or Wilkens fail to comply with the directives set out below.

BACKGROUND

Because neither the Companies nor Wilkens responded to plaintiff's motion, the following facts, provided by plaintiff in its supporting documentation, will be taken as true for the purposes of this motion.

On January 24, 2006, plaintiff, an organization consisting of the trustees and fiduciaries of a multi-employer pension plan, instituted the underlying action seeking to enforce the withdrawal liability obligations of defendant Hail. The complaint was amended in March 2006 to add Ava and Harbor as parties, and to hold Ava and Harbor jointly and severally liable with Hail for the unpaid withdrawal liability, along with interest, liquidated damages, and attorneys' fees and costs thereon. (Paster Aff. ¶ 3; Pl. Exs. A, B.)

Each of the Companies failed to answer or otherwise respond to plaintiff's complaint. As a result, on June 22, 2006, plaintiff moved by Order to Show Cause for a default judgment against the Companies. (Paster Aff. ¶ 5.) On July 7, 2006, default judgment was entered against the Companies. (Id. ¶ 6; Pl. Ex. C.) The default judgment held the Companies jointly and severally liable in the amount of $47,463.08, with interest accruing thereon from the date of judgment until the judgment was paid. (Pl. Ex. C.)

Over six months later, on January 24, 2007, plaintiff served a copy of the default judgment order, along with restraining notices concerning the assets of all three companies, upon each of the Companies by certified mail. (Paster Aff. ¶ 8; Pl. Exs. D-F.) Plaintiff had previously sent restraining notices and information subpoenas to the banks with which the Companies were most likely to maintain accounts, but those notices and subpoenas failed to locate any assets of the Companies. (Paster Aff. ¶ 10.) None of the Companies responded to the notices, and only the documents served upon Ava were claimed by the addressee. (Pl. Ex. D.)

On May 17, 2007, in a further attempt to satisfy the judgment, plaintiff served a subpoena pursuant to Fed. R. Civ. P. 45, requiring Wilkens, the sole owner of Hail, to provide documents related to Hail's assets by May 31, 2007, and to appear for a deposition on June 14, 2007. (Paster Aff. ¶ 12; Pl. Ex. G.) Wilkens was personally served with the subpoena. (Pl. Ex. G.) However, Wilkens never produced the requested documents, nor did he appear for his scheduled deposition. (Paster Aff. ¶ 13.)

Upon the failure of Wilkens to appear for his deposition or produce the requested documents, on July 11, 2007, plaintiff served information subpoenas on each of the Companies via both certified and first class mail. (Paster Aff. ¶ 12; Pl. Exs. H-J.) The subpoenas requested various information related to the Companies' assets. (Pl. Exs. H-J.) Each subpoena served by certified mail was returned to plaintiff unclaimed, but the subpoenas served by first class mail were not returned to plaintiff. (Id.) Once again, the Companies did not respond to the subpoenas.

As a result of both the Companies' failure to satisfy the default judgment, and the Companies' and Wilkens's failure to respond to plaintiff's discovery requests, on September 20, 2007, plaintiff filed a motion for civil contempt against the Companies and Wilkens. Plaintiff served the motion upon the Companies and Wilkens via certified and first-class mail. (Letter from Rachel S. Paster to the Court, dated Oct. 23, 2007, at 1.) Although the certified mail copies of the motion sent to Ava, Harbor, and Wilkens were returned unclaimed, the copy sent to Hail was signed for by Wilkens, and none of the first-class mail copies were returned to plaintiff. (Id.)

Neither the Companies nor Wilkens responded to plaintiff's motion by the return date of October 23, 2007. Accordingly, the motion is deemed fully submitted, and will be decided solely on the basis of plaintiff's submission.

DISCUSSION

Plaintiff moves to hold the Companies in contempt for failure to satisfy the default judgment and for failure to comply with plaintiff's discovery requests, pursuant to Federal Rule Civil Procedure 70. According to Rule 70, "[i]f a judgment directs a party to . . . deliver . . . documents or . . . to perform any other specific act and the party fails to comply within the time specific," the Court may "adjudge the party in contempt" of court. A civil contempt sanction under Rule 70 serves to "coerce the contemnor into future compliance with the court's order or to compensate the complainant for losses resulting from the contemnor's past noncompliance." N.Y. State Nat'l Org. for Women v. Terry, 886 F.2d 1339, 1352 (2d Cir. 1989); see also id. at 1351 ("A sanction imposed to compel obedience to a lawful court order or to provide compensation to a complaining is civil."); Badegely v. Santacroce, 800 F.2d 33, 36 (2d Cir. 1986) ("The purpose of civil contempt . . . is to compel a reluctant party to do what a court requires of him."). In addition, plaintiff moves to hold Wilkens in contempt for failure to comply with the information subpoenas and deposition notice served upon him pursuant to Federal Rule of Civil Procedure 71, which provides, in relevant part, that "when obedience to an order may be lawfully enforced against a person who is not a party, that person is liable . . . to the order as if a party."

In the Second Circuit, to support a finding of contempt, a movant must establish by clear and convincing evidence that (1) the order the contemnor failed to comply with is clear and unambiguous, (2) the proof of noncompliance is clear and convincing, and (3) the contemnor has not diligently attempted to comply in a reasonable manner. See Perez v. Danbury Hosp., 347 F.3d 419, 423-424 (2d Cir. 2003); City of New York v. Local 28, Sheet Metal Workers' Int'l Assoc., 170 F.3d 279, 282-83 (2d Cir. 1999). Though the violation need not be willful, the movant seeking the contempt order must demonstrate that "the contemnor was not reasonably diligent in attempting to comply." Local 28, 170 F.3d at ...


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