UNITED STATES DISTRICT COURT DISTRICT OF NEW JERSEY
August 24, 2012
TRUSTEES AND FIDUCIARIES OF UNITE HERE HEALTH; HONORABLE JOSEPH E. IRENAS UNITE HERE HEALTH;
TRUSTEES AND FIDUCIARIES OF THE UNITE HERE LOCAL 54 SEVERANCE TRUST FUND;
UNITE HERE LOCAL 54 SEVERANCE TRUST FUND;
AND UNITE HERE LOCAL 54, PLAINTIFFS,
RESORTS INTERNATIONAL HOTEL, INC.;
RAC ATLANTIC CITY HOLDINGS, LLC; AND TRIMONT REAL ESTATE ADVISORS, INC., DEFENDANTS.
The opinion of the court was delivered by: Irenas, Senior District Judge:
In this suit Plaintiffs seek to collect delinquent employee benefit fund contributions from Defendant Resorts International Hotel, Inc. ("RIH"), and to enforce an arbitration award granting amounts due under the parties' collective bargaining agreement. RIH has not appeared in this action; and on March 9, 2012, the Clerk of Court entered default against it. Plaintiffs presently ask this Court to enter against RIH judgment by default in excess of $3 million. The Court held a oral argument on the Motion on July 25, 2012, at which time it asked Plaintiffs' counsel to submit a supplemental brief in support of the Motion. The Court has now considered Plaintiffs' supplemental submissions, and for the reasons stated herein, the Motion will be granted.*fn1
Plaintiff UNITE HERE Local 54 is a labor union which was a party to a collective bargaining agreement with Defendant RIH from 2004 until 2011. In the collective bargaining agreement ("CBA"), RIH agreed to make certain monthly contributions to Plaintiffs UNITE HERE Health Fund and UNITE HERE Severance Fund. (Amend. Compl. Ex. A, B) RIH allegedly failed to make contributions in October, November, and December of 2010. (Amend. Compl. ¶¶ 31, 45)*fn2
Then, according to the Amended Complaint, "on or about December 6, 2010, RIH closed its business and instituted a layoff of [UNITE Here's] members." (Amend. Compl. ¶ 53) RIH sold the business to DGMB Casino, LLC which "began operations on the same day-- December 6, 2010. The business transitioned seamlessly [and] continued to operate as normal." (DeCaprio Aff. ¶ 4) "Some" of the laid-off employees "were immediately hired by DGMB" and continued to work at the casino. (Id. ¶ 6)*fn3 However, DGMB did not assume the CBA and many employees were paid less money. (Id.)
Plaintiffs assert that during the lay-off RIH "violated multiple articles of the relevant CBA" and "multiple" "grievances" were subsequently submitted to binding arbitration through the American Arbitration Association. (Amend. Compl. ¶¶ 54, 56-58) An arbitration hearing was held on May 25, 2011. (Amend. Compl. ¶ 63; Ex. G) RIH appeared at the hearing, represented by Fox Rothschild, LLP. (Id.)
In an Award and Opinion dated June 24, 2011, Arbitrator James Mastriani found for UNITE HERE on all grievances and directed RIH to pay the following sums of money to UNITE HERE:
* Lump sum $1500.00 due for 740 employees $1,108,500.00
* Accrued vacation owed $773,633.35
* Health and Welfare contributions owed $987,838.95
* Severance Fund contributions $3,452.95
* Pension contributions $227,283.49
* Ivelesse Gonzalez*fn4 $1,856.01 Total $3,102,564.75 (Amend. Compl. Ex. G, p. 8)
Plaintiffs allege "RIH has failed and refused to comply with the final and binding Arbitrator's Award." (Amend. Compl. ¶ 72)
This lawsuit followed. Count 1, entitled "Plaintiff Health Fund v. RIH-- ERISA," seeks to recover "unremitted principal contributions" to the Health Fund for October, November and December 2010, along with interest, liquidated damages, and collection costs (including attorney fees) (Amend. Compl. ¶¶ 31-39).
Count 2, entitled "Plaintiff Severance Fund v. RIH-- ERISA," seeks to recover "unremitted principal contributions" to the Severance Fund for November and December 2010, along with interest, liquidated damages, and collection costs (including attorney fees) (Amend. Compl. ¶¶ 45-51).
Count 3, entitled "Plaintiff UNITE HERE, Local 54 v. RIH--Enforcement of Arbitration Award," seeks enforcement of the Arbitrator's Award pursuant to the Taft-Hartley Act, 29 U.S.C. § 185 (Amend. Compl. ¶ 5).
Plaintiffs acknowledge that Count 3 overlaps somewhat with Counts 1 and 2 insofar as the Arbitrator awarded UNITE HERE delinquent contributions, interest and liquidated damages for the same periods covered by Counts 1 and 2. They explain that they are not seeking double recovery "but are rather requesting the relief under alternative theories." (Amend. Compl. ¶ 75 fn. 2, 3) Plaintiffs' proposed Order for Judgment by Default (which was submitted with the supplemental materials filed after oral argument on the Motion) reflects the overlap and does not include double awards.
RIH has not answered the Amended Complaint (nor did it answer the original Complaint), and no attorney has entered an appearance on RIH's behalf. Upon Plaintiffs' application, the Clerk of Court entered default on March 9, 2012. As noted previously, Plaintiffs presently move for default judgment against Defendant RIH on Counts 1 through 3 of the Amended Complaint.*fn5
"Three factors control whether a default judgment should be granted: (1) prejudice to the plaintiff if default is denied, (2) whether the defendant appears to have a litigable defense, and (3) whether defendant's delay is due to culpable conduct." Chamberlain v. Giampapa, 210 F.3d 154, 164 (3d Cir. 2000). The decision whether to enter default judgment pursuant to Fed. R. Civ. 55(b)(2) is left to the sound discretion of the district court. Hritz v. Woma Corp., 732 F.2d 1178, 1180 (3d Cir. 1984); see also Chamberlain, 210 F.3d at 164 (applying abuse of discretion standard of review to denial of motion for default judgment).*fn6
Additionally, default judgment cannot be entered on an improperly served complaint. Gold Kist, Inc. v. Laurinburg Oil Co., Inc., 756 F.2d 14, 19 (3d Cir. 1985). Thus, a plaintiff seeking default judgment must demonstrate proper service upon the defendant against whom default judgment is sought.
At oral argument on the Motion, the Court inquired as to whether the Complaint and Amended Complaint were properly served. After considering Plaintiffs' supplemental submissions, the Court concludes that RIH was properly served.
Pursuant to Fed. R. Civ. P. 4, a corporation must be served "by delivering a copy of the summons and of the complaint to an officer, a managing or general agent, or any other agent authorized by appointment or by law to receive service of process," Fed. R. Civ. P. 4(h)(1)(B); or "by following state law for serving a summons in an action brought in courts of general jurisdiction in the state where the district court is located or where service is made," Fed. R. Civ. P. 4(e)(1), which in this case means "by serving a copy of the summons and complaint . . . on any officer, director, trustee or managing or general agent, or any person authorized by appointment or by law to receive service of process on behalf of the corporation, or on a person at the registered office of the corporation in charge thereof." N.J. Ct. R. 4:4-4(a)(6).
Plaintiffs filed a return of service for the original Complaint which indicates that the summons and Complaint were left with "Gil Brooks, Esq.," at his law firm's New Jersey office.
Similarly, Plaintiffs' affidavit of service for the Amended Complaint indicates that the Amended Complaint was "served" upon "Gilbert Brooks, Esq.," who is identified as "agent or person in charge of Defendant's office or usual place of business."*fn7
Plaintiffs have submitted a document from the State of New Jersey Department of Treasury, Division of Revenue, dated July 30, 2012, identifying Mr. Brooks as RIH's appointed agent for service of process. (Second Ehrenberg Aff. Ex. A) The document also indicates that the last change of agent for service of process was in 2010 (id.), thereby supporting the inference that Mr. Brooks was RIH's registered agent for service of process when he was served with the Complaint and Amended Complaint on November 11, 2011 and February 3, 2012 respectively. Accordingly, the Court concludes that RIH was validly served with process.
Turning to the Chamberlain factors, the Court agrees with Plaintiffs that they will suffer prejudice absent entry of default judgment. UNITE HERE prevailed in arbitration over a year ago. The delinquent contributions became due almost two years ago. Absent an enforceable judgment, Plaintiffs are not likely to recover from RIH any of the money to which they are entitled.
Nor does it appear that RIH has a litigable defense. As to Counts 1 and 2 (the ERISA claims for delinquent contributions), the Arbitrator already rejected RIH's defenses.*fn8
As to Count 3 (confirmation of the arbitration award), the available defenses are quite limited because "'[c]courts are not authorized to review the arbitrator's decision on the merits.'" The Major League Umpires Ass' v. The American League of Professional Baseball Clubs, 357 F.3d 272, 279 (3d Cir. 2004)(quoting Major League Baseball Players Ass'n v. Garvey, 532 U.S. 504, 509 (2001)). "Rather, arbitration awards enjoy a strong presumption of correctness that may be overcome only in certain limited circumstances," id. at 280, none of which appear to apply in this case.*fn9
Lastly, it appears that RIH has made a deliberate choice not to litigate this case. In addition to being properly served with process twice, the Court called Mr. Brooks at his law firm and left him a voicemail advising him of the oral argument on the instant Motion. Despite ample notice, RIH has never appeared or given any other indication that it intends to defend this suit.
Accordingly, the Court concludes that all three Chamberlain factors weigh in favor of entering default judgment.
For the above-stated reasons, Plaintiffs' Motion for Default Judgment will be granted. An appropriate Order and Judgment accompany this Opinion.
Joseph E. Irenas, S.U.S.D.J.