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U.A., AFL-CIO v. CCR Fire Protection, LLC

United States District Court, M.D. Louisiana

June 21, 2018

ROAD SPRINKLER FITTERS LOCAL UNION NO. 669, U.A., AFL-CIO
v.
CCR FIRE PROTECTION, LLC, AGENT OF QUICK RESPONSE FIRE PROTECTION, LLC, ET AL.

          RULING AND ORDER

          JOHN W. deGRAVELLES JUDGE UNITED STATES DISTRICT COURT

         I. INTRODUCTION

         This matter is before the Court on three motions. The first is a Motion for Default Judgment against Defendant CCR Fire Protection, LLC (“CCR”) pursuant to Federal Rule of Civil Procedure (“Rule”) 55(b)(2) filed by Plaintiff Road Sprinkler Fitters Local Union No. 669, U.A., AFL-CIO (“Plaintiff” or “the Union”). (Docs. 106, 132). The Court held a hearing on this Motion on February 1, 2018. (Doc. 133). Following the hearing, Defendants Quick Response Fire Protection, Rajendra Bhakta, Nilesh Patel, Rosael Rodriguez, and Theresa Rodriguez filed Oppositions to the Motion for Default Judgment. (Docs. 142, 143, 144). Plaintiff filed a single Reply to these Oppositions. (Doc. 147).

         The second motion before the Court is a Motion to Dismiss pursuant to Rule 12(b)(2) filed by Bhakta. (Doc. 116). The third motion is a Motion to Dismiss pursuant to Rules 12(b)(1) and 12(b)(6) filed by Patel. (Doc. 117). Plaintiff filed a single Opposition to both Motions to Dismiss. (Doc. 126). Bhakta and Patel both replied in further support of their Motions to Dismiss. (Docs. 134, 135).

         For the reasons discussed below, these Motions are denied.

         II. PLAINTIFF'S ALLEGATIONS

         Plaintiff brings this suit pursuant to the Labor Relations Management Act (the “Act”), 29 U.S.C. section 185(a), to enforce the terms of a settlement agreement and collective bargaining agreement. (Doc. 98 at 1). Named as Defendants are CCR; Quick Response; Rosael Rodriguez; Theresa Rodriguez; Patel; and Bhakta. (Id. at 2-3). All Defendants are alleged to be “employers” within the meaning of the Act. (Id.). Plaintiff alleges that Defendants who are natural persons are “employers” because this term includes a “person acting as an agent of an employer directly or indirectly[.]” (Id.).

         CCR and Quick Response install, maintain, and repair fire sprinkler systems in Louisiana, Arkansas, and Mississippi. (Id. at 5). At all relevant times, Rosael Rodriguez was “an owner and agent” of CCR, and Theresa Rodriguez was its office manager. (Id.). Bhakta and Patel provided “the original capital investment” when CCR was initially founded, as well as “several additional financial investments thereafter.” (Id. at 4). Bhakta and Patel signed CCR's original Articles of Incorporation and jointly held a “majority in interest, ” as defined in CCR's Operating Agreement. (Id; see also Doc. 98-2 at 1-2, 5). “At all material times, [Patel and Bhakta] collectively held a majority interest in [CCR] with vested authority to affirm and consent to the business decisions of CCR including entering into labor agreements.” (Doc. 98 at 5). CCR's March 2017 annual report identifies Bhakta and Patel as “the only two corporate members” of CCR, and the report was signed electronically by Patel. (Id.; see also Doc. 98-3 at 1).

         Plaintiff and the National Fire Sprinkler Association, Inc., a “national trade association employer representing contractors in the fire protection industry, ” have been parties to a series of national collective bargaining agreements, one of which was effective between 2013 and 2016. (Doc. 98 at 4). In May 2013, Plaintiff and CCR entered into a collective bargaining agreement whereby CCR agreed to be bound by the terms of the national agreement with certain exceptions. (Id. at 4-5).

         In August 2014, Plaintiff filed an unfair labor practice charge with the National Labor Relations Board (“NLRB”), claiming that CCR had violated the collective bargaining agreement. (Id. at 6). At the outset of the trial before the NLRB in February 2016, Plaintiff and CCR, “through [Rosael and Theresa Rodriguez], ” engaged in settlement negotiations. (Id.). According to Plaintiff, Plaintiff and CCR entered into a settlement agreement “with the approval of majority owners Patel and Bhakta pursuant to the Operating Agreement.” (Id.; see also Doc. 98-2 at 1-2). Also according to Plaintiff, the terms of the agreement included that “CCR would pay $450, 000.00 over eight (8) years to [Plaintiff] and the National Automatic Sprinkler Industry fringe benefit funds (“NASI”) along with a down payment to be agreed upon, payment of back-pay for the wrongfully terminated employee, confirmation of [Plaintiff's] status as the bargaining representative of the employees, an agreement to remain bound by the current and future CBAs and a notice to be mailed out to employees regarding the terms of settlement.” (Doc. 98 at 6). In exchange, Plaintiff withdrew its charge. (Id.). CCR, “through” Theresa Rodriguez, “affirmed on the record” that it agreed to the terms of the settlement agreement, and the parties agreed to reduce its terms to writing. (Id. at 7). Thereafter, Plaintiff contends that CCR, “through” Rosael and Theresa Rodriguez, refused to sign the written agreement and “reneged” on their agreement to make payments. (Id.). Plaintiff's representatives attempted to contact CCR on several occasions, but their attempts were rebuffed. (Id.).

         Plaintiff contends that, within a month of the settlement conference, CCR “reopen[ed]” as Quick Response, which performs the same work as CCR and generally retains CCR's employees, managers, and customers. (Id. at 7-8). According to Plaintiff, Quick Response is an alter ego of and successor to CCR and is bound by the terms of the collective bargaining and settlement agreements described supra. (Id. at 8). Plaintiff further maintains that Rosael and Theresa Rodriguez, Patel, and Bhakta intended to evade their obligations to Plaintiff by purporting to enter into the settlement agreement with no intention of honoring it. (Id.).

         III. PROCEDURAL HISTORY

         This case was initially filed in July 2016. (See generally Doc. 1). Several Motions to Dismiss were filed. (Docs. 20, 21, 24). Among these Motions was a Rule 12(b)(2) Motion to Dismiss by Bhakta, which (like Bhakta's present Motion, discussed infra) argued that Bhakta's contacts with Louisiana were insufficient to give rise to personal jurisdiction. (Doc. 24-1 at 2-8). The Court granted this Motion, agreeing that Plaintiff had failed to establish that the Court had personal jurisdiction over Bhakta. (Doc. 78 at 2-3). The Court granted leave to amend to permit Plaintiff to provide factual allegations supporting jurisdiction over Bhakta. (Id. at 3). The Second Amended Complaint contains additional allegations concerning Bhakta's contacts with Louisiana, including that: (1) in addition to CCR, Bhakta and Patel own and operate eight businesses in and around Baton Rouge; (2) Bhakta has an office in Denham Springs, Louisiana, located in a hotel that he owns; (3) Bhakta's office address is the domicile address for CCR; (4) Bhakta engaged a Hammond, Louisiana accountant on CCR's behalf; and (5) for his Louisiana businesses, including CCR, Bhakta “files annual state income tax reporting business and personal income.” (Doc. 98 at 3-4).

         In August 2017, Plaintiff moved for the entry of default against CCR, contending that Plaintiff had effected service and CCR had not appeared. (Doc. 90-1 at 1-2). The Clerk of Court entered default the same day. (Doc. 91).

         IV. GENERAL STANDARDS

         The Motions before the Court are brought pursuant to Rules 55(b)(2), 12(b)(1), 12(b)(2), and 12(b)(6). The Court addresses each standard in turn.

         a. Rule 55(b)(2)

         Another section of this Court has recently discussed the standards applicable to default judgments:

The service of a summons triggers a duty to respond to a complaint and a failure to respond may result in the entry of default or default judgment under Federal Rule of Civil Procedure 55. Rogers v. Hartford Life & Accident Ins. Co., 167 F.3d 933, 937-39 (5th Cir. 1999). When a party establishes by affidavit or some other method that there has been a default, the Clerk of Court will enter the default. N.Y. Life Ins. Co. v. Brown, 84 F.3d 137, 141 (5th Cir. 1996). Once there has been an entry of default, the plaintiff may apply to the Court for a default judgment. Id.
Default judgments are usually disfavored under the Federal Rules of Civil Procedure. Sun Bank of Ocala v. Pelican Homestead & Sav. Ass'n, 874 F.2d 274, 276 (5th Cir. 1989). A default judgment is considered to be a drastic remedy that should only be available “when the adversary process has been halted because of an essentially unresponsive party.” Id. (quoting H.F. Livermore Corp. v. Aktiengesellschaft Gebruder Loepfe, 432 F.2d 689, 691 (D.C. Cir. 1970)). Therefore, a party is not entitled to a default judgment, even where the defendant is technically in default. Ganther v. Ingle, 75 F.3d 207, 212 (5th Cir. 1996).
In determining whether a default judgment should be entered, the Fifth Circuit has developed a two-part test. Taylor v. City of Baton Rouge, 39 F.Supp.3d 807, 813 (M.D. La. 2014). First, the Court must determine whether the entry of default judgment is appropriate under the circumstances. Lindsey v. Prive Corp., 161 F.3d 886, 893 (5th Cir. 1998). Factors relevant to this determination include: (1) whether there are material issues of fact at issue; (2) whether there has been substantial prejudice; (3) whether the grounds for default have been clearly established; (4) whether the default was caused by excusable neglect or good faith mistake;(5) the harshness of default judgment; and (6) whether the court would think itself obliged to set aside the default on a motion by Defendant. Id. Second, the Court must assess the merits of Plaintiff's claims and find a viable claim for relief. Nishimatsu Constr. Co. v. Hous. Nat'l Bank, 515 F.2d 1200, 1206 (5th Cir. 1975).

J&J Sports Prods., Inc. v. Boil & Roux Kitchen, LLC, 2018 WL 1089267, at *1 (M.D. La. Feb. 27, 2018); see also Mason v. Lister, 562 F.2d 343, 345 (5th Cir. 1977) (entry of default judgment is “generally committed to the discretion of the district court”).

         b. Rule 12(b)(1)

         Concerning the standard for Rule 12(b)(1) motions, the Fifth Circuit has explained:

Motions filed under Rule 12(b)(1) . . . allow a party to challenge the subject matter jurisdiction of the district court to hear a case. Fed.R.Civ.P. 12(b)(1). Lack of subject matter jurisdiction may be found in any one of three instances: (1) the complaint alone; (2) the complaint supplemented by undisputed facts evidenced in the record; or (3) the complaint supplemented by undisputed facts plus the court's ...

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