United States District Court, E.D. New York
TRUSTEES OF THE PAVERS AND ROAD BUILDERS DISTRICT COUNCIL WELFARE, PENSION, ANNUITY AND APPRENTICESHIP, SKILL IMPROVEMENT AND SAFETY FUNDS And THE HIGHWAY, ROAD AND STREET CONSTRUCTION LABORERS LOCAL UNION 1010, Plaintiffs,
GENRUS CORP., Defendant.
REPORT AND RECOMMENDATION
L. Pollak, United States Magistrate Judge
26, 2018, plaintiffs, Trustees of the Pavers and Road
Builders District Council Welfare, Pension, Annuity and
Apprenticeship, Skill Improvement and Safety Funds and the
Highway, Road and Street Construction Laborers Local Union
1010 ("Trustees" or "plaintiffs")
commenced this action against Genrus Corp.
("Genrus" or "defendant"), under Sections
502 and 515 of the Employee Retirement Income Security Act of
1974 ("ERISA"), as amended, 29 U.S.C. §§
1132 and 1145; Section 301 of the Labor Management Relations
Act of 1947 ("LMRA"), as amended, 29 U.S.C. §
185, seeking to collect delinquent employer contributions
owed to a group of employee benefit plans.
(Compl. ¶ 1).
proper service on the New York Secretary of State on July 27,
2018, defendant Genrus failed to answer or otherwise respond
to the Complaint. (Marimon Decl. ¶ 4, Ex. Q). On
September 27, 2018, plaintiffs requested a Certificate of
Default and on September 28, 2018, the Clerk of Court entered
a notation of default. (Id. ¶ 3). Thereafter,
on October 31, 2018, plaintiffs filed a motion for default
judgment. Plaintiffs' motion was referred to the
undersigned to determine liability and damages and to issue a
Report and Recommendation. Defendant has failed to submit any
paperwork to the Court, despite the Court's Order
requesting such paperwork on February 14, 2019.
reasons set forth below, the Court respectfully recommends
that plaintiffs' motion for default judgment be granted,
and that damages be awarded in the amount of $15,
999.28. Further, the Court respectfully recommends
an Order be granted directing defendant to submit to an audit
of its books and records from December 1, 2014 through the
Trustees of the Pavers and Road Builders District Council
Welfare, Pension, Annuity and Apprenticeship, Skill
Improvement and Safety Funds (collectively, the
"Funds") are employer and employee trustees of
multi-employer labor-management trust funds organized and
operated in accordance with Section 302 of the LMRA. (Compl.
¶ 4). The Funds are established pursuant to a Collective
Bargaining Agreement between the Highway, Road and Street
Construction Laborers Local Union (the "Union") and
defendant Genrus. (Id., ¶¶ 5, 6). The
Funds are "employee benefit plans," as defined in
Section 3(1) of ERISA. (Id. ¶ 3). The Funds
have their principal place of business in Whitestone, N.Y.
(14 ¶ 4). Defendant Genrus is located at 200-31 Linden
Boulevard, St. Albans, N.Y. (Id. ¶ 6).
to the Complaint, the CBA requires Genrus to make monthly
contributions to the Funds and pay dues check-offs for every
hour of Covered Work on behalf of certain employees within
the trade and geographical jurisdiction of the Union.
(Id. ¶¶ 8, 9). Under the CBA, Genrus is
required to submit periodic reports to the Funds, detailing
the number of hours of Covered Work performed, and, when
requested, furnish its books and records to the Funds for
audit purposes. (Id., ¶ 12). The CBA provides
that if an employer fails to pay contributions when due, the
Funds may collect interest at an annual rate of 10% on the
amount of unpaid interest, liquidated damages, and any
attorney's fees required to collect the contributions.
(Id., ¶¶ 10, 11). Under the Trust
Agreements that are incorporated by reference in the CBA, the
Trustees have promulgated a policy that provides that if
Genrus fails to make contributions when due, the Funds are
entitled to collect interest on the delinquent contributions
at an annual rate of 10% and liquidated damages of 10% as
well. (Id., ¶¶ 13, 14, 16).
allege that Genrus failed to pay appropriate contributions
and make payments for dues check-offs for Covered Work
performed during the periods of March and April 2016, June
and July 2016,  and October 2017. (Id., ¶
19). Genrus has also refused to comply with the Funds'
request to submit to an audit covering the period December 1,
2014 through the date of the Complaint. (Id. ¶
20). Plaintiffs seek an award of delinquent contributions,
interest, liquidated damages, and attorney's fees and
costs. In addition, the Trustees seek an order requiring
Genrus to furnish its books and records and submit to an
audit to determine if Genrus has complied with its obligation
to remit contributions and dues to the Funds and the Union.
(Id. ¶ 37). Plaintiffs allege that despite
their demand, Genrus has failed to comply with the Funds'
efforts to conduct an audit. (Id. ¶ 38).
move for default judgment pursuant to Rule 55(b)(2) of the
Federal Rules of Civil Procedure. Prior to the district
court's grant of default judgment, the Clerk of the Court
entered a default because defendant "failed to plead or
otherwise defend [against the instant Complaint]."
Fed.R.Civ.P. 55(a). A clerk's entry of default is not the
same as a default judgment granted by the court. Rather, Rule
55 sets forth a two-step process in which first a default,
and then a default judgment, is entered. See Enron Oil
Corp. v. Diakuhara, 10 F.3d 90, 95 (2d Cir. 1993). After
a default has been entered against a party, if that party
fails to appear or otherwise move to set aside the default
pursuant to Rule 55(c), a default judgment may be entered.
See Fed.R.Civ.P. 55(b). In this case, the Clerk of the Court
entered a default against defendant on September 28, 2018,
and the motion for default judgment was filed on October 31,
Second Circuit has warned that default judgment is an extreme
remedy that should be used only when the need to move a case
forward expeditiously trumps a party's right to be heard
before a court of law. See Meehan v. Snow, 652 F.2d
274, 277 (2d Cir. 1981). When evaluating whether to grant a
default judgment, the Court must weigh the costs of prolonged
litigation against offering "litigants a reasonable
chance to be heard." Enron Oil Corp. v.
Diakuhara, 10 F.3d at 95-96; see also Meehan v.
Snow, 652 F.2d at 277. It is well-settled that defaults
are "generally disfavored" and "doubts should
be resolved in favor of the defaulting party." Enron
Oil Corp. v. Diakuhara, 10 F.3d at 95-96. As such,
courts should take great care in entering default judgment,
ensuring if at all possible that both parties may have their
cases judged on the merits. Id.
possesses significant discretion and may consider a number of
factors in deciding whether or not to grant a default
judgment, including "whether the grounds for default are
clearly established," "the amount of money
potentially involved," and the record of attempts to
involve the defaulting party in the proceedings. See
Hirsch v. Innovation Int'l. Inc., No. 91 CV
4130, 1992 WL 316143, at *2 (S.D.N.Y. Oct. 19, 1992)
(citations omitted). Additionally, a court may consider
whether material issues of fact remain, whether the facts
alleged in the complaint state a valid cause of action,
whether plaintiff has been substantially prejudiced by the
delay involved, and how harsh an effect a default judgment
might have on the defendant. See Au Bon Pain Corp. v.
Artect, Inc., 653 F.2d 61, 65 (2d Cir. 1981); 10A
Charles Alan Wright, Arthur R. Miller & Mary Kay Kane,
Federal Practice and Procedure, §§ 2685,
2688 (3d ed. 1998).
Entry of Default Judgment
benefit plans operated by plaintiffs fall under the purview
of ERISA in that the Funds are run by an organization of
employees with the goal of providing health and retirement
benefits to members of the employee organization, in
accordance with 29 U.S.C. § 1002. ERISA specifies the
types of damages to be awarded when judgments are entered in
favor of benefit plans. See 29 U.S.C. § 1132(g)(2).
These include the following:
1. the unpaid contributions,
2. interest on the unpaid contributions,
3. an amount equal to the greater of-
i. interest on the unpaid contributions, or
ii. liquidated damages provided for under the plan in an
amount not in excess of 20 percent (or such higher percentage
as may be permitted under Federal or State law) of the amount
determined by the court under subparagraph (A),
4. reasonable attorney's fees and costs of the action, to
be paid by the defendant, and
5. such other legal or equitable relief as the court deems
Id. Plaintiffs have also alleged a claim under 29
U.S.C. § 1145, which ...