Default judgment awarded to laborers council for failure to defend against unpaid contribution claims

By Nicholas Malfitano | May 25, 2016

PHILADELPHIA – Last Friday, a Philadelphia federal court entered a default judgment in the favor of the Laborers’ District Council of the Metropolitan Area of Philadelphia and Vicinity and its various Benefit Funds, who sought damages and equitable relief under the Employee Retirement Income Security Act (ERISA) and the Labor Management Relations Act (LMRA).

Judge Gerald J. Pappert approved the default judgment based upon the failure of defendant Phillips Enterprise, Inc. to appear, plead or otherwise defend against the plaintiffs’ complaint. The plaintiffs’ claims arise from Phillips’s alleged failure to “timely pay certain contributions, reports and deductions due pursuant to the parties’ collective bargaining agreement.”

Under the agreement, Phillips promised to: “Submit accurate remittance reports and the appropriate contributions and deductions to the plaintiffs on at least a monthly basis following the month for which contributions were due; remit reports and the contributions and deductions due for all hours of work performed by its employees…in the preceding month and; pay…the plaintiffs interest at a rate of at least prime plus two, accrued interest, liquidated damages, costs of suit and audit, and attorneys’ fees and costs.”

The agreement also gave the plaintiffs power to audit Phillips’ records to ensure compliance with their payment obligations.

According to court records, Certified Public Accountant Perry N. Blackman conducted such an audit of records spanning Jan. 1, 2013 to July 31, 2014, and found that Phillips owed Plaintiffs $30,235.98 in unpaid contributions.

Blackman revised his report on Nov. 23, 2015 to reflect additional fees and accrued interest as of that date, and that Phillips owed an audit fee of $1,800.00 and accrued interest of $1,513.31. Thus, the total amount owed by Phillips as of Nov. 23, 2015 was $17,379.29. As a result of late payments from Phillips, additional interest was charged in the amount of $1,625.10.

“Plaintiffs filed their complaint on Dec. 8, 2015 seeking: (1) all unpaid contributions; (2) accrued interest on both unpaid contributions and those that were paid late; (3) liquidated damages; (4) audit fees; (5) attorneys’ fees and costs; and (6) the ability to audit Phillips’s records and determine amounts due since the last audit,” Pappert said.

After the Clerk of Court entered default on April 4, the plaintiffs filed their motion for default judgment on April 29.

Pappert determined under the collective bargaining agreement and both the ERISA and LMRA, the plaintiffs were due to receive all of the funds they requested in their lawsuit.

“Judgment will accordingly be entered in the following amounts: (1) $14,065.98 in unpaid contributions; (2) $1,513.31 in accrued interest on the unpaid contributions; (3) $1,513.31 in “double interest” as provided by ERISA Section 1132(g)(2)(C)(i); (4) $1,625.10 in accrued interest on late contribution payments; (5) $3,243.50 in attorneys’ fees and costs; and (6) $1,800.00 in audit fees,” Pappert said.

Pappert further stipulated Phillips is also ordered to comply with its obligations under the agreement and allow the plaintiffs to conduct an additional audit.

The plaintiffs are represented by Mariellen Bello of Susanin Widman & Brennan, in Wayne.

U.S. District Court for the Eastern District of Pennsylvania case 2:15-cv-06490

From the Pennsylvania Record: Reach Courts Reporter Nicholas Malfitano at

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