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Greater St. Louis Construction Laborers Welfare Fund v. J L Brown Contracting Service, Inc.

United States District Court, E.D. Missouri, Eastern Division

September 20, 2016

GREATER ST. LOUIS CONSTRUCTION LABORERS WELFARE FUND, et al., Plaintiffs,
v.
J L BROWN CONTRACTING SERVICE, INC., Defendant.

          MEMORANDUM AND ORDER

          CAROL E. JACKSON UNITED STATES DISTRICT JUDGE

         This matter is before the Court on plaintiffs' motion to hold defendant J L Brown Contracting Service, Inc. and its alleged principal officer, Jimmie Brown, in civil contempt for failure to comply with the order compelling defendant to submit to an accounting by production of records. Neither defendant nor Brown has responded to the motion, and the time permitted for doing so has expired.

         I. Background

         Plaintiffs bring this action to collect delinquent fringe benefit contributions pursuant to Section 301 of the Labor Management Relations Act of 1974 (LMRA), as amended, 29 U.S.C. § 185, and pursuant to Section 502 of the Employee Retirement Income Security Act of 1974 (ERISA), as amended, 29 U.S.C. § 1132. Plaintiffs are four employee benefit plans (the Pension, Welfare, Vacation, and Training funds), their trustees (collectively, the plans), and Local Union Nos. 42 and 110 of the Laborers International Union of North America. Defendant is an employer in an industry affecting commerce within the meaning of the LMRA and ERISA. Plaintiffs allege that defendant failed to make timely and full contributions to the plans as required under the terms of two collective bargaining agreements.

         II. Procedural History

         Plaintiffs filed the instant case on June 18, 2015. Service was achieved on defendant on June 30, 2015. Because defendant failed to timely answer, the Clerk of Court entered default against it on August 17, 2015. Plaintiffs moved for an order to compel an accounting, to determine the amount of their damages. On October 6, 2015, the Court granted the motion. See Fed. R. Civ. P. 55(b)(2)(A). Defendant was ordered to produce for inspection by plaintiffs within thirty days all books, ledgers, payroll records, cash disbursement ledgers, bank statements, and other documents reflecting or pertaining to all hours worked by and wages paid to its employees for the period beginning March 1, 2014, through October 6, 2015.

         On January 11, 2016, having received no update on the status of the accounting, the Court ordered plaintiffs to file a motion for default judgment. However, on January 13, 2016, plaintiffs informed the Court that defendant had filed a voluntary petition for bankruptcy on October 13, 2015, and that the petition was still under consideration. Consequently, on January 14, 2016, the Court vacated the order to file a motion for default judgment and, pursuant to the automatic stay provision of 11 U.S.C. § 362(a)(1), stayed this action pending completion of the bankruptcy case.

         On July 12, 2016, plaintiffs filed the instant motion. Among other things, they averred that defendant's bankruptcy action was dismissed on May 24, 2016. After confirming the dismissal, the Court lifted the stay on July 13, 2016. Following dissolution of the stay, defendant was required to respond to the motion for contempt. As mentioned, it did not respond. On August 16, 2016, the Court ordered the defendant to show cause why it should not be held in contempt for failing to comply with the Court's October 6, 2015, order to compel an accounting. The defendants did not respond to the Court's show cause order by the August 31, 2016, deadline.

         III. Discussion

         First, termination of the stay renews defendant's obligation to respond to the entry of default and to produce its records. Its continued noncompliance means it is again appropriate to order plaintiffs to file a motion for default judgment. See Fed. R. Civ. P. 55; Weitz Co., LLC v. MacKenzie House, LLC, 665 F.3d 970, 977 (8th Cir. 2012); Murray v. Lene, 595 F.3d 868, 871 (8th Cir. 2010).

         Second, several considerations bear on whether to hold defendant in contempt for noncompliance with the order to produce its records. “Federal courts possess certain inherent powers, including the power to punish for contempts, which reaches both conduct before the court and that beyond the court's confines.” Isaacson v. Manty, 721 F.3d 533, 538-39 (8th Cir. 2013) (quotation marks and citation omitted). A court thus has the inherent power to sanction litigants for noncompliance with its orders. Id.; see E.D. Mo. L.R. 12.02. A district court is “give[n] substantial deference” to decide “whether sanctions are warranted because of its familiarity with the case and counsel involved.” Willhite v. Collins, 459 F.3d 866, 869 (8th Cir. 2006) (citation omitted).

         “A party seeking civil contempt bears the initial burden of proving, by clear and convincing evidence, that the alleged contemnors violated a court order.” Chi. Truck Drivers v. Bhd. Labor Leasing, 207 F.3d 500, 505 (8th Cir. 2000) (citation omitted). Defendant had thirty days following issuance of the October 6, 2015, order to produce the required records. After six days passed with no response, on the seventh day, October 13, defendant filed for bankruptcy, staying operation of that order. Twenty-four days thus remained for defendant to comply with the order. Pursuant to the order, the stay expired automatically on May 24, 2016, when defendant's bankruptcy action was dismissed, which the Court reiterated on July 13, 2016. Defendant was therefore required to comply no later than August 4, 2016. That deadline passed, and defendant still has not complied and produced its records to plaintiffs.

         Clear and convincing evidence thus shows that defendant has failed to comply. Where a party has not complied with a court order, “the burden” shifts to the recalcitrant individual “to show an inability to comply.” Id. Defendant was afforded ample opportunity to explain why it cannot comply with the order, but it has not done so. Therefore, the Court finds it is appropriate to hold defendant in civil contempt of court for its failure to comply with the order to produce its records.

         Several additional factors bear on what sanction to impose for that contempt. “Civil contempt may be employed either to coerce the defendant into compliance with a court order or to compensate the complainant for losses sustained, or both.” Id. (citation omitted). “[C]ivil contempt sanctions, or those penalties designed to compel future compliance with a court order, are considered to be coercive and avoidable through obedience, and thus may be imposed in an ordinary civil proceeding upon notice and an opportunity to be heard.” Int'l Union, United Mine Workers of Am. v. Bagwell, 512 U.S. 821, 827 (1994). “Where a fine is not compensatory, it is civil . . . if the contemnor is afforded an opportunity to purge, ” such as a “per diem fine imposed for each day a contemnor fails to comply with an affirmative court order.” Id. at 829 (citation omitted); see Hicks ex rel. Feiock v. Feiock, 485 U.S. 624, 632 (1988) (holding that a fine “payable to the court is . . . remedial when the defendant can avoid paying the fine simply by performing the affirmative act required by the court's order”). A court also may require a contemnor to bear a movant's attorneys' fees and costs incurred to bring a motion for contempt. See Jake's, Ltd., Inc. v. City of Coates, 356 F.3d 896, 900 (8th Cir. 2004); see also Chambers v. NASCO, Inc., 50 ...


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