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Nesse v. Hodges Cleaning Co.

United States District Court, D. Minnesota

December 21, 2018

John Nesse, et al., Plaintiffs,
Hodges Cleaning Co., Defendant.


          Wilhelmina M. Wright United States District Judge

         Plaintiffs move for entry of default judgment[1] against Defendant Hodges Cleaning Co. for liability under the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. §§ 1001 et seq. (Dkt. 9.) Plaintiffs seek $8, 267.86 for unpaid contributions, double interest, and attorneys' fees and costs. For the reasons addressed below, the Court grants Plaintiffs' motion with respect to unpaid contributions and double interest, but the Court grants in part and denies in part the motion with respect to attorneys' fees and costs.


         Plaintiffs are multi-employer benefit plans (collectively, “the Funds”) and the Funds' trustees. Created and maintained pursuant to Section 302(c)(5) of the Labor Management Relations Act of 1974, codified as amended at 29 U.S.C. § 186(c)(5), the Funds are administered in accordance with ERISA. Hodges Cleaning agreed to be bound by the terms of a collective bargaining agreement (CBA) between a multi-employer bargaining committee of the Commercial Cleaning Contractors and the Laborers' District Council of Minnesota and North Dakota. The CBA covers the period from May 27, 2013, through April 30, 2016. Because the CBA automatically renewed for an additional twelvemonth period, Hodges Cleaning was bound to the CBA through at least April 30, 2017.

         The CBA required Hodges Cleaning to make monthly contributions to the Funds on behalf of its covered employees for their hours worked. The CBA also required Hodges Cleaning to set forth the amount due and owing for contributions on a remittance report form, to be submitted to the Funds with its monthly payment. The employer is “delinquent” under the CBA if its remittance report and payment are not postmarked on or before the fifteenth day of the month following the month for which the contributions are due. Additionally, the CBA gives the Funds' trustees, or their authorized agent, the right to inspect a complete set of all relevant payroll and employment records.

         Hodges Cleaning voluntarily complied with a request from the Funds' authorized agent to produce a complete set of its payroll and employment records for the period of August 13, 2015, through December 31, 2016 (audit period). The Funds' authorized agent reviewed these records and determined that there were hours worked by Hodges Cleaning's employees covered by the CBA for which Hodges Cleaning did not submit contributions to the Funds. In total, the Funds' authorized agent determined that $2, 915.90 is due and owing to the Funds for delinquent contributions during the audit period. Plaintiffs allege that Hodges Cleaning has failed to pay these delinquent contributions.

         Plaintiffs commenced this ERISA action against Hodges Cleaning on January 15, 2018, seeking damages for unpaid contributions, double interest, and attorneys' fees and costs. Plaintiffs served the summons and complaint on Hodges Cleaning on February 20, 2018. Hodges Cleaning then had 21 days to file an answer or otherwise respond to the complaint. See Fed. R. Civ. P. 12(a)(1)(A)(i). That deadline passed without any response to the complaint. Plaintiffs applied for an entry of default under Federal Rule of Civil Procedure 55(a), which the Clerk of Court entered on March 14, 2018. Thereafter, Plaintiffs filed the pending motion for default judgment.

         At a September 7, 2018 hearing on Plaintiffs' motion, the Court identified deficiencies in the record as to the damages sought by Plaintiffs and ordered Plaintiffs to supplement the record to cure these deficiencies. Plaintiffs subsequently supplemented the record and, in doing so, amended the amount of attorneys' fees and costs that they seek. The Court took the matter under advisement following a second hearing on November 7, 2018.


         To obtain a default judgment, a party must follow a two-step process. First, the party seeking a default judgment must obtain an entry of default from the Clerk of Court. “When 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, the clerk must enter the party's default.” Fed.R.Civ.P. 55(a). Here, Plaintiffs sought an entry of default, and the Clerk of Court entered default against Hodges Cleaning on March 14, 2018. The Clerk of Court's entry of default is supported by the record, which reflects that Hodges Cleaning was properly served and failed to answer or otherwise respond to the complaint. The first step of the process has been completed.

         Second, after default has been entered, the party seeking affirmative relief “must apply to the court for a default judgment.” Fed.R.Civ.P. 55(b)(2). Upon default, the factual allegations in the complaint are deemed admitted except those relating to the amount of damages. Fed.R.Civ.P. 8(b)(6); accord Murray v. Lene, 595 F.3d 868, 871 (8th Cir. 2010). For this reason, the sole remaining issue before the Court is to determine the amount of damages. See Brown v. Kenron Aluminum & Glass Corp., 477 F.2d 526, 531 (8th Cir. 1973). A party entitled to a default judgment must prove its damages to a reasonable degree of certainty. Everyday Learning Corp. v. Larson, 242 F.3d 815, 819 (8th Cir. 2001). The district court may establish damages “by taking evidence when necessary or by computation from facts of record, to fix the amount which the plaintiff is lawfully entitled to recover and to give judgment accordingly.” Pope v. United States, 323 U.S. 1, 12 (1944).

         Section 502(g)(2) of ERISA governs the calculation of damages for an employer that fails to fulfill its contribution obligations, providing that a court shall award:

(A) the unpaid contributions,
(B) interest on the unpaid contributions,
(C) 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 . . . [of the ...

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