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Mackey v. J & J Holdings, LLC

United States District Court, D. Minnesota

July 17, 2019

Tim Mackey et al., Plaintiffs,
J & J Holdings, LLC, doing business as Scrapbusters, Defendant.


          Wilhelmina M. Wright United States District Judge

         Plaintiffs move for entry of default judgment against Defendant J & J Holdings, LLC, doing business as Scrapbusters (Scrapbusters), for liability under the Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C. §§ 1001 et seq. (Dkts. 10, 21.) Plaintiffs seek $56, 427.89 for unpaid contributions, liquidated damages, and attorneys' fees and costs. For the reasons addressed below, the Court grants in part and denies in part Plaintiffs' motion.


         Plaintiffs are the Minnesota Laborers Health and Welfare Fund; Minnesota Laborers Pension Fund; Minnesota Laborers Vacation Fund; Construction Laborers' Education, Training, and Apprenticeship Fund of Minnesota and North Dakota; and Minnesota Laborers Employers Cooperation and Education Trust (collectively, the Funds) and their trustees. Created and maintained pursuant to Section 302(c)(5) of the Labor Management Relations Act of 1947, codified as amended at 29 U.S.C. § 186(c)(5), the Funds are administered in accordance with ERISA. Scrapbusters agreed to be bound by the terms of three collective bargaining agreements (CBAs) negotiated by the Laborers District Council of Minnesota and North Dakota on behalf of its affiliated local Unions (District Council). The CBAs cover the period from May 8, 2016, through April 30, 2019.

         The CBAs require Scrapbusters to make monthly contributions to the Funds on behalf of its covered employees for hours worked. The CBAs also require Scrapbusters 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. An employer is “delinquent” under the CBAs 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. The Funds' trustees, or their authorized agents, have the right to inspect a complete set of all relevant payroll and employment records.

         Plaintiffs commenced this ERISA action against Scrapbusters on September 5, 2018, and served the summons and complaint on Scrapbusters on September 10, 2018. Scrapbusters 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 from Scrapbusters 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 October 10, 2018. On January 18, 2019, Plaintiffs filed a motion for default judgment and sought an injunction requiring Scrapbusters to submit any overdue remittance reports.

         The Court granted the Plaintiffs' request for an injunction and held Plaintiffs' motion for default judgment in abeyance on March 15, 2019. Scrapbusters subsequently submitted the required remittance reports, allowing Plaintiffs to calculate the amount of unpaid contributions and liquidated damages. Plaintiffs submitted their calculations to the Court in supplemental affidavits on May 22, 2019. That same day, Plaintiffs filed an updated motion for default judgment. Thereafter, the Court took Plaintiffs' motions for default judgment under advisement.


         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). The record reflects that Scrapbusters was properly served with the amended complaint and failed to answer or otherwise respond. Plaintiffs sought an entry of default, and the Clerk of Court entered default against Scrapbusters on October 10, 2018. The first step of this process is complete.

         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). Therefore, the sole remaining issue before the district court is 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, 818 (8th Cir. 2001). A 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 ...

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