Service Employees International Union Health and Welfare Fund v. North American Cleaning Services Co. Inc. , 264 F. Supp. 3d 1 ( 2017 )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLUMBIA
SERVICE EMPLOYEES
INTERNATIONAL UNION HEALTH AND
WELFARE FUND, et al.,
Plaintiffs,
v. Civil Action No. 17-747 (RDM)
NORTH AMERICAN CLEANING
SERVICES CO. INC. d/b/a Turtle Bay
Building Services,
Defendant.
MEMORANDUM OPINION
This matter is before the Court on Plaintiffs’ Motion for Default Judgment. Dkt. 7.
Plaintiffs are the Service Employees International Union Health and Welfare Fund (“the Fund”),
and its trustees. Dkt. 1 at 2–3 (Compl. ¶¶ 5–6). The Fund is an employee benefit plan that
provides health and welfare benefits to eligible employees, including some who work for
Defendant, North American Cleaning Services Co., Inc. (“NACS”). Id. (Compl. ¶¶ 5, 9).
According to Plaintiffs, Defendant agreed in its collective bargaining agreement with the Service
Employees International Union Local 26 (“SEIU”) to make certain monthly payments into the
Fund and open its books to auditing to confirm compliance. Id. at 4–6 (Compl. ¶¶ 12–16).
Defendant, however, failed to respond to Plaintiffs’ request for documents after it was selected
for an audit. As a result, Plaintiffs brought this suit pursuant to the Employee Retirement Income
Security Act of 1974 (“ERISA”) and the Labor Management Relations Act of 1947 to compel
Defendant to turn over the required records. Id. at 5–6 (Compl. ¶¶ 19–25). Plaintiffs also seek
attorney’s fees and costs incurred in bringing this suit. Id. at 7 (Compl. ¶¶ 3–4). Defendant has
not appeared or responded to the Complaint. For the reasons explained below, the Court hereby
GRANTS the Plaintiffs’ motion for default judgment.
I. BACKGROUND
On April 1, 2013, SEIU entered into a collective bargaining agreement (“CBA”) with
Defendant NACS, which was doing business as “Turtle Bay Building Services.” See Dkt. 1-1;
Dkt. 1 at 3 (Compl. ¶ 8). The CBA obligates NACS to make certain monthly contributions for
eligible employees to the Fund. Dkt. 1 at 4 (Compl. ¶12); Dkt. 1-1 at 9. The CBA also binds
Defendant to the Health Trust Agreement (“Trust Agreement”), which governs the Fund. Dkt. 1
at 4 (Compl. ¶ 13); Dkt. 1-1 at 10. The Trust Agreement subjects employers to several reporting
requirements, two of which are relevant here. First, it requires employers to “submit complete
remittance reports to the . . . Fund with [their] contributions,” which “contain the names of each
covered employee and the number of compensable hours for each employee during the reporting
month.” Dkt. 1 at 4 (Compl. ¶ 14). Second, the “Trust Agreement empowers the Trustees to
audit the payroll records and books of any participating employer,” which means the “employer
is required to make its payroll records and books available to the Fund.” Id. (Compl. ¶15); Dkt.
1-2 at 51–52.
The Fund selected NACS for an audit covering 2014 and 2015, and made requests on
June 14, 2016, August 9, 2016, and September 19, 2016, for the information the Trust
Agreement requires all covered employers to provide. Dkt. 1 at 5 (Compl. ¶19). NACS did not
responded to these requests, nor did it acknowledge Plaintiffs’ “final demand” letter sent on
February 16, 2016. Id. After waiting several months, Plaintiffs filed suit in this Court on April
24, 2017, seeking an order that would “requir[e] the Defendant to timely provide such
information as requested by the Fund in order to perform an audit of the Defendant,” along with
2
a declaration that the Defendant was out of compliance with the CBA and Trust Agreement. Id.
at 6–7 (Compl. ¶¶ 1–2). Plaintiffs also seek attorney’s fees and other costs. Id. at 7 (Compl. ¶¶
3–4).
Defendant has failed to appear or to respond to the Complaint. As previously recounted,
see Dkt. 10, Plaintiffs served the Complaint on Defendant’s Chief Executive Officer on May 10,
2017, Dkt. 4 at 2. Defendant’s answer was due on May 31, 2017. See Fed. R. Civ. P.
12(a)(1)(A)(i). On June 1, 2017, Plaintiffs filed an affidavit for default, Dkt. 5, and the Clerk
entered a default the next day, Dkt. 6. On June 6, 2017, Plaintiffs moved for (1) an entry of
default judgment; (2) an order that Defendant deliver certain records for audit; (3) an order that
Defendant pay any delinquent amounts found as a result of that audit; and (4) an order that
Defendant pay Plaintiffs for their attorney’s fees and costs. See generally Dkt. 7; Dkt. 7-3.
Plaintiffs served their motion on Defendant via first class mail. Dkt. 7 at 13.
Subsequently, the Court issued three orders to show cause. First, the Court ordered that
Plaintiffs make at least a prima facie showing that personal jurisdiction over the absent defendant
existed. See Dkt. 8. On June 13, 2017, the Plaintiffs replied, arguing that the nationwide service
of process provisions in ERISA, the administration of the Fund within the District of Columbia,
and the Defendant’s contacts with the United States by virtue of its operation in Minnesota
justified the Court’s exercise of personal jurisdiction. The Court next ordered the Defendant to
show cause on or before July 6, 2017, why the Court should not enter a default judgment against
it, and ordered Plaintiffs to effect service of that order on the Defendant. Dkt. 10. Plaintiffs did
so, see Dkts. 13, 14, and NACS’s silence continued.
Finally, the Court ordered the Fund and its trustees show cause for awarding them
attorney’s fees and costs. Dkt. 11. The Court noted that, although ERISA authorizes
3
“reasonable attorney’s fees,” the “declaration setting forth [Plaintiffs’] attorneys’ respective rates
and hours billed on this matter, along with the relevant timesheets . . . lack[ed] sufficient detail
for the Court to assess [the] factors” required by the statute. Dkt. 11 at 1. In response, Plaintiffs
have submitted an additional declaration and exhibits that offer more evidence about the
prevailing rates for similar legal work in the community and greater detail as to the costs of this
litigation.
II. ANALYSIS
A. Default Judgment
Obtaining a default judgment requires two steps. At the first step, the plaintiff requests
the Clerk of the Court to enter a default. If the Clerk determines that the “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, the [C]lerk must enter the party's default.” Fed. R. Civ. P.
55(a) (emphasis added). Upon entry of the default, the factual allegations of the complaint are
deemed admitted, which usually establishes the defendant's liability. See, e.g., Robinson v. Ergo
Solutions, LLC, 4 F. Supp. 3d 171, 178 (D.D.C. 2014); Int'l Painters & Allied Trades Indus.
Pension Fund v. Auxier Drywall, LLC, 531 F. Supp. 2d 56, 57 (D.D.C. 2008). At the second
step, the plaintiff must apply for a default judgment, either to the Clerk “for a sum certain or a
sum that can be made certain by computation,” or to the Court in “all other cases.” Fed. R. Civ.
P. 55(b)(1), (2). “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, 531 F.
Supp. 2d at 57 (citing Jackson v. Beech, 636 F.2d 831, 836 (D.C. Cir. 1980)). However, prior to
entering a default judgment, the Court must assure itself that personal jurisdiction exists. Mwani
v. bin Laden, 417 F.3d 1, 6 (D.C. Cir. 2005). Here, Plaintiffs have properly obtained a default
4
from the Clerk of the Court. For the reasons explained below, the Court now concludes that
judgment by default should also be entered in favor of the Fund and its trustees.
As an initial matter, Plaintiffs have made the requisite prima facie showing that the Court
has personal jurisdiction over NACS. See Mwani, 417 F.3d at 7; Edmond v. United States Postal
Serv. Gen. Counsel, 949 F.2d 415, 424 (D.C. Cir. 1991). This suit is brought under ERISA,
which provides that an action “may be brought in the district where the plan is administered,
where the breach took place, or where a defendant resides or may be found, and process may be
served in any other district where a defendant resides or may be found.” 29 U.S.C. § 1132(e)(2).
Under this standard, NACS is subject to suit in this district. First, the Fund is administered in
Washington, D.C. Dkt. 9 at 2. Second, although Plaintiffs do not allege any contacts between
NACS and this district, “ERISA's venue provision ‘has been interpreted to authorize nationwide
service of process.’” Mazzarino v. Prudential Ins. Co. of Am., 955 F. Supp. 2d 24, 28 (D.D.C.
2013) (quoting Flynn v. Ohio Bldg. Restoration, Inc., 260 F. Supp. 2d 156, 170–71 (D.D.C.
2003)). As this Court has previously explained, “jurisdiction over a defendant served pursuant to
a federal statute with a nationwide-service-of-process provision is proper as long as the
defendant has minimum contacts with the United States as a whole.” See Bally Gaming, Inc. v.
Kappos, 789 F. Supp. 2d 41, 46 (D.D.C. 2011) (collecting cases); see also SEC v. Bilzerian, 378
F.3d 1100, 1106 n.8 (D.C. Cir. 2004). Here, sufficient contacts with the United States as a whole
exist because NACS is headquartered in Minneapolis, Minnesota, and conducts its business
there. Dkt. 9 at 2; Dkt. 1 at 3 (Compl. ¶ 8). Plaintiffs have thus made a prima facie showing of
personal jurisdiction.
Having “satisf[ied] itself that it has personal jurisdiction” over the absent defendant,
Mwani, 417 F.3d at 6–7, the Court turns to the substance of the Plaintiffs’ ERISA claims. The
5
statute provides that “[e]very employer who is obligated to make contributions to a
multiemployer plan . . . under the terms of a collectively bargained agreement shall, to the extent
not inconsistent with law, make such contributions in accordance with the terms and conditions
of . . . such agreement.” 29 U.S.C. § 1145. The facts alleged in the Complaint—which are taken
as true by virtue of NAC’s default—establish that NACS has failed to comply with the Trust
Agreement and the CBA by refusing to provide the books and records necessary to conduct an
audit covering January 2014 to December 2015. Dkt. 1 at 5 (Compl. ¶ 18); Dkt. 1-2 at 51 (“The
Trustees shall have the authority, at the expense of the Trust Fund, to audit the payroll books and
records of a participating employer . . . as they may deem necessary in the administration of the
Trust Fund.”).
NACS’s breach of the Trust Agreement and the CBA provide ample bases for the limited
relief Plaintiffs seek. As in previous cases brought in this Court, “equitable relief is warranted
because defendant ‘has demonstrated no willingness to comply with either its contractual or
statutory obligations or to participate in the judicial process.’” Serv. Employees Int’l Nat’l Indus.
Pension Fund v. Tandem Dev. Grp., LLC, No. CV 16-2524, 2017 WL 3530358, at *3 (D.D.C.
Aug. 16, 2017) (quoting Fanning v. Warner Ctr., L.P., 999 F. Supp. 2d 263, 267 (D.D.C. 2013)).
NACS must open its books and participate in the audits as required by the CBA and the Trust
Agreement.
B. Attorney’s Fees
ERISA authorizes the Court to award “reasonable attorney’s fees and costs.” 29 U.S.C. §
1132(g)(2)(D). However, “a fee applicant’s burden in establishing a reasonable hourly rate
entails a showing of at least three elements: the attorneys’ billing practices; the attorneys’ skill,
experience, and reputation; and the prevailing market rates in the relevant community.”
Covington v. District of Columbia, 57 F.3d 1101, 1107 (D.C. Cir. 1995); see also, e.g., Eley v.
6
District of Columbia, 793 F.3d 97, 103–05 (D.C. Cir. 2015); Swanson v. Martins, 232 F. Supp.
3d 23, 27 (D.D.C. 2017). The Plaintiffs first request the $400 filing fee they paid to bring this
suit. They have submitted a declaration stating that the Fund paid the fee, Dkt. 16 at 4, and the
docket also reflects the payment. The Court will award this amount to Plaintiffs.
Plaintiffs also seek $2,764 in attorney’s fees. See Dkt. 16 at 4. In support of this request,
they offer a detailed declaration of counsel and billing records that reflect the number of hours
worked and billing rates of the lawyers and staff who assisted with the case. See Dkt. 16; Dkt.
16-1. The Court has reviewed the invoices and declaration and concludes that they provide
sufficient detail regarding the hours worked and tasks performed. They also show that care was
taken to minimize costs by delegating to more junior lawyers or legal assistants when feasible.
The Court is also satisfied that the billing rates and practices evidenced by the declaration
and supporting exhibits are reasonable when considered in the context of the attorneys’ skill,
experience, and reputation, and as compared to the prevailing market rates in Washington, D.C.
The U.S. Attorney’s Laffey Matrix for 2015-2017, for example, suggests that lawyers with
experience commensurate to Diana Bardes and Lauren McDermott (between five and six years)
are generally compensated at rates in excess of $332 an hour. Dkt. 16-2 at 2. By contrast,
Bardes and McDermott billed their services at $195 an hour. See Dkt. 16 at 4. The senior
partner on the case, John Mooney, has more than thirty-four years of experience and billed his
time at $435 an hour, id. at 2, 4, significantly less than the Laffey rate for attorneys with that
level of experience, which was more than $568 an hour during the time period relevant to this
litigation. Dkt. 16-2 at 2. The pattern holds when it comes to paralegals, who were billed at
$120 an hour in this case, Dkt. 16 at 4, despite a Laffey rate of $154 or more an hour, Dkt. 16-2
at 2.
7
Although these rates fall far below the rates set forth in the Laffey Matrix, the D.C.
Circuit has cautioned against granting an application for attorney's fees without further “evidence
that [the] ‘requested rates are in line with those prevailing in the community for similar
services.’” Eley, 793 F.3d at 104 (quoting Covington, 57 F.3d at 1109). “[E]vidence of the
prevailing market rate can take many forms.” Id. at 104 n.5. The Court may, for example,
consider “affidavits reciting the precise fees that attorneys with similar qualifications have
received . . . in comparable cases,” Covington, 57 F.3d at 1109, and fee awards in similar cases,
see Swanson, 232 F. Supp. 3d at 28 (D.D.C. 2017); Ventura v. L.A. Howard Construction Co.,
139 F. Supp. 3d 462, 464 (D.D.C. 2015). Counsel for Plaintiffs has presented both types of
evidence. She notes that three comparable law firms performing similar work have frequently
been awarded fees far in excess of those requested by Plaintiffs, both in terms of hourly rate and
total amount. Dkt. 16 at 5–6. She also includes three declarations from those other firms
detailing their fees in cases in which awards for attorney’s fees were granted. Dkt. 16-3; 16-4;
16-5. In each case, the fees exceeded those sought by Plaintiffs, even though they involve
similar matters and similar types of legal work performed by comparable firms. See id. The
Court therefore finds the “requested rates [to be] in line with those prevailing in the community
for similar services,” Eley, 793 F.3d at 104 (quoting Covington, 57 F.3d at 1109), and awards
attorney’s fees in the amount of $2,764 to the Fund and its trustees.
8
CONCLUSION
The Court will, accordingly, grant Plaintiffs’ motion for a default judgment.
A separate order will issue.
/s/ Randolph D. Moss
RANDOLPH D. MOSS
United States District Judge
Date: August 28, 2017
9