SU v. MARLTON PIKE PRECISION, LLC 401(K) AND PROFIT SHARING PLAN

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF NEW JERSEY

CAMDEN VICINAGE

JULIE A. SU, Acting Secretary of

Labor, United States Department of

Labor,

Civil Action No. 23-02972

Plaintiff, (RMB/SAK)

v. OPINION

MARLTON PIKE PRECISION,

LLC 401(K) AND PROFIT-

SHARING PLAN and ANTONIO

L. SALA,

Defendants.

APPEARANCE:

Daniel M. Moczula

U.S. DEPARTMENT OF LABOR

201 Varick Street, Room 983

New York, New York 10014

On behalf of Plaintiff Julie A. Su, Acting Secretary of Labor

RENÉE MARIE BUMB, Chief United States District Judge:

This is a breach-of-fiduciary-duty action under Title I of the Employee

Retirement Income Security Act of 1974 (“ERISA”), as amended, 29 U.S.C. § 1001,

et seq. The sole trustee and fiduciary of a covered employee benefit plan allegedly

abandoned the plan’s participants when his company ceased operating, preventing the

participants from accessing their money. Acting Secretary of Labor, Julie A. Su,

(“Plaintiff”) commenced this action, and Marlton Pike Precision, LLC 401(K) and

Profit-Sharing Plan (the “Plan”) and Antonio L. Sala (“Sala”), fiduciary and

designated trustee of the Plan (collectively, “Defendants”), have failed to respond.

Plaintiff now moves for default judgment pursuant to Federal Rule of Civil Procedure

55(b)(2). For the reasons that follow, Plaintiff’s Motion will be GRANTED.

I. BACKGROUND

On May 31, 2023, Plaintiff commenced this action against Defendants under

Title I of ERISA, as amended, 29 U.S.C. § 1001, et seq. [Compl., Docket No. 1.]

Plaintiff asserts that Sala abandoned the Plan, leaving it without a fiduciary or trustee

in violation of ERISA §§ 402(a)(1) and 403(a), 29 U.S.C. §§ 1102(a)(1) and 1003(a).

[Id. ¶¶ 23–24, 26–27.]

On or about January 1, 2005, Marlton Pike Precision, LLC (the “Company”),

a private employer, sponsored the Plan as an employee pension benefit plan, as defined

by ERISA. [Id. ¶¶ 6, 8.] Sala is the designated trustee of the Plan and the President of

the Company. [Id. ¶ 9; see also Decl. of Brandon Pfister ¶ 5(b), Docket No. 6-2

(“Decl.”).] As trustee, Sala is a fiduciary to the Plan’s participants. [Compl. ¶ 7; Decl.

¶ 5(b).] Sala also has the sole authority to administer and/or terminate the Plan and

make distributions. [Decl. ¶¶ 5(b), 6.]

The Company went out of business in 2017. [Compl. ¶ 10; Decl. ¶ 5(c).] Since

the Company ceased operations, Sala has not taken steps to ensure that there is a

fiduciary acting on behalf of the Plan, nor has the Plan been terminated. [Compl. ¶ 11;

Decl. ¶ 5(e).] Further, the Plan did not appoint a successor, named fiduciary, or

discretionary trustee to administer and/or terminate the Plan. [Decl. ¶ 5(f).] From at

least 2017, no individual or entity has come forward to assume responsibility for the

Plan or to distribute its assets to Plan participants. [Compl. ¶ 12.] Because there is no

fiduciary actively managing the Plan, its participants have been unable to access their

accounts. [Compl. ¶¶ 13–14; Decl. ¶ 5(g).] As of March 4, 2022, the Plan had two

participants, including Sala, and its assets had the approximate value of $47,890.90.

[Compl. ¶¶ 15, 18; Decl. ¶¶ 5(d).]

In December 2021, one Plan participant contacted the Employee Benefits

Security Administration of the United States Department of Labor (“EBSA”) to

submit a complaint. [Decl. ¶ 3.] The Plan participant sought to withdraw his funds.

[Id.] Thereafter, EBSA contacted Sala to terminate the Plan and distribute assets to

participants; however, he did not complete this process. [Decl. ¶ 7.] PAi is the Plan’s

custodian. [Compl. ¶ 19.] The EBSA also contacted PAi to ask whether it would act

as a qualified termination administrator of the Plan, but it declined to do so. [Compl.

¶ 20; Decl. ¶ 8.] Plaintiff commenced this action shortly thereafter.

Service of the Summons and Complaint were made upon Defendants on June

16, 2023. [Docket Nos. 3, 4.] The time for Defendants’ response expired on July 7,

2023, and Defendants have not since answered the Complaint. [See generally Docket.]

On July 13, 2023, Plaintiff requested an entry of default, [Docket No. 5], which

the Clerk subsequently entered on July 17, 2023. Plaintiff filed the instant Motion on

August 22, 2023, which was served upon Defendants. [Mot. Default J., Docket No.

6; Cert. of Service, Docket No. 6-4.] Defendants have not opposed or otherwise

responded or appeared in this litigation. [See generally Docket.]

Plaintiff requests that default judgment be entered against Defendants, that Sala

be removed as fiduciary and trustee of the Plan, and that an independent fiduciary be

appointed to administer and terminate the Plan with costs charged to Sala. [Pl.’s Br.

in Supp. of Mot. Default J. at 7–8, Docket No. 6-1 (“Pl’s. Br.”).]

II. LEGAL STANDARDS

Federal Rule of Civil Procedure 55(b)(2) allows a court, upon a plaintiff’s

motion, to enter default judgment against a defendant that has failed to plead or

otherwise defend a claim for affirmative relief. Though a court has discretion to enter

default judgment in appropriate circumstances, there is a firmly-established preference

that disputes be decided on the merits whenever practicable. Hritz v. Woma Corp., 732

F.2d 1178, 1180–81 (3d Cir. 1984).

Before granting default judgment, a court must consider a number of issues: (1)

whether it has subject matter jurisdiction over the claims at issue and personal

jurisdiction over the defendant, (2) whether the defendant is exempt from entry of

default judgment, (3) whether there is sufficient proof of service, (4) whether a

sufficient cause of action has been stated, and (5) whether default judgment is

otherwise proper. Trustees of N.J. B.A.C. Health Fund v. Thurston F. Rhodes, Inc., 2017

WL 3420912, at *2 (D.N.J. Aug. 9, 2017) (internal citation omitted); Laborers Int’l

Union of N. Am. Local No. 199 Welfare, Pension, Apprenticeship & Training Annuity v.

RAMCO Solutions, 2013 WL 4517935, at *2–3 (D.N.J. Aug. 26, 2013) (“LIUNA”);

Chanel, Inc. v. Gordashevsky, 558 F. Supp. 2d 532, 535–36 (D.N.J. 2008). Although a

court should accept the facts pled in the Complaint as true for the purpose of deciding

the motion for default judgment, the plaintiff bears the burden of proving damages, if

applicable. Comdyne I, Inc. v. Corbin, 908 F.2d 1142, 1149 (3d Cir. 1990). Whether

default judgment is proper depends on (1) whether the plaintiff will be prejudiced if

default is not granted, (2) whether the defendant has a meritorious defense, and (3)

whether the defendant’s delay is the result of culpable misconduct. Butler v.

Pennsylvania Bd. of Prob. & Parole, 613 F. App'x 119, 122 (3d Cir. 2015) (quoting

Chamberlain v. Giampapa, 210 F.3d 154, 164 (3d Cir. 2000)).

III. DISCUSSION

A. The Court’s Jurisdiction

First, the Court considers its subject matter jurisdiction over Plaintiff’s claims.

“Verifying the Court’s jurisdiction is of particular concern where, as here, the

defaulting party has failed to make any sort of appearance or submit any responsive

communication to the Court.” Liuna, 2013 WL 4517935, at *2. Here, Plaintiff alleges

that Defendants’ conduct violates ERISA, a federal statute. The Court therefore has

federal question jurisdiction over Plaintiff’s claims. See 29 U.S.C. § 1132(e)(1)

(providing that the district courts of the United States shall have exclusive jurisdiction

of civil actions under ERISA brought by the Secretary of Labor).1

Next, the Court considers its basis for exercising personal jurisdiction over the

defaulting Defendants. See Budget Blinds, Inc. v. White, 536 F.3d 244, 259 (3d Cir. 2008)

(stating that if a court does not have personal jurisdiction, the entry of a default

judgment is “not merely erroneous; [but] never should have been entered in the first

place”). The Third Circuit has held that, where a federal statute authorizes nationwide

service of process, “the jurisdiction of a federal court need not be confined by the

defendant’s contacts with the state in which the federal court sits.” Pinker v. Roche

Holdings Ltd., 292 F.3d 361, 369 (3d Cir. 2002). Rather, the federal court’s personal

jurisdiction “may be assessed on the basis of the defendant’s national contacts when

the plaintiff’s claim rests on a federal statute authorizing nationwide service of

process.” Id. (collecting cases). ERISA so provides. See 29 U.S.C. § 1132(e)(2)

(“process may be served in any other district where a defendant resides or may be

found.”); Fink ex rel. Nation Safe Drivers Emp. Stock Ownership Plan v. Wilmington Trust,

N.A., 473 F. Supp. 3d 366, 372–73 (D. Del. 2020) (hereafter, “Fink”) (“It is undisputed

that ERISA provides nationwide service[] of process.” (citing § 1132(e)(2)).

1 The Court also observes that venue in this District is proper. Actions under

ERISA “may be brought in the district where the plan is administered.” 29 U.S.C. §

1132(e)(2). Here, the Plan is alleged to have been administered in Cherry Hill, New

Jersey, [Compl. ¶ 4], so venue is properly established.

Here, Defendants were properly served with process within the United States.

[See Docket Nos. 3, 4 & 6-4.] Accordingly, the Court may exercise personal

jurisdiction over Defendants pursuant to § 1132(e)(2). See, e.g., Fink, 473 F. Supp. 3d

at 373 (explaining that, under ERISA, court may exercise personal jurisdiction over

individual defendants who are properly served with process in the United States, even

if they lack contacts with the state in which the court sits).

B. Fitness of Defendants to be Subject to Default Judgment

Second, the Court observes that none of the Defendants appears to be an infant

or incompetent person or a person in military service, which could exempt a defendant

from default judgment in appropriate circumstances. See Fed. R. Civ. P. 55(b)(2); see

also 50 U.S.C. § 3931. Accordingly, Defendants are subject to default judgment under

Rule 55(b)(2). See Liuna, 2013 WL 4517935, at *3.

C. Proof of Service

Third, the Court considers whether Defendants were properly served with

process in this action. See Thurston F. Rhodes, Inc., 2017 WL 3420912, at *2. Here,

Plaintiff served Defendants with the Complaint and Summons on June 16, 2023 at

their address in Marlton, New Jersey. [Docket Nos. 3, 4.] When Defendants failed to

respond to the Complaint, Plaintiff properly sought and obtained entry of default

pursuant to Rule 55(a). [Docket No. 5.] Plaintiff filed the instant Motion on August

22, 2023, and again served Defendants at their address in Marlton. [Docket Nos. 6-4.]

Accordingly, the Court finds that there has been sufficient proof of service upon

Defendants.

D. Cause of Action

Fourth, the Court must determine whether Plaintiff’s Complaint states a proper

cause of action against Defendants. See Liuna, 2013 WL 4517935, at *3. The Court

accepts as true Plaintiff’s well-pled factual allegations but disregards its legal

conclusions. See id. Plaintiff asserts that Sala breached his fiduciary duties to Plan

participants by violating Sections 402(a) and 403(a) of ERISA, 29 U.S.C. §§ 1102(a)(1)

and 1003(a). [Compl. ¶¶ 23–24, 26–27.] Plaintiff contends that he is thus liable under

ERISA § 409(a), 29 U.S.C. § 1109(a), for abandoning the Plan. [See id. ¶¶ 24, 27.]

Under Section 402(a) of ERISA, every “employee benefit plan shall be

established and maintained pursuant to a written instrument . . . [that] shall provide

for one or more named fiduciaries who jointly or severally shall have authority to

control and manage the operation and administration of the plan.” 29 U.S.C. §

1102(a)(1). Section 403(a) of ERISA provides that:

Except as provided in subsection (b), all assets of an employee benefit

plan shall be held in trust by one or more trustees. Such trustee or trustees

shall be either named in the trust instrument or in the plan instrument

described in section 1102(a) of this title or appointed by a person who is

a named fiduciary, and upon acceptance of being named or appointed,

the trustee or trustees shall have exclusive authority and discretion to

manage and control the assets of the plan, except to the extent that—

(1) the plan expressly provides that the trustee or trustees are

subject to the direction of a named fiduciary who is not a trustee,

in which case the trustees shall be subject to proper directions of

such fiduciary which are made in accordance with the terms of the

plan and which are not contrary to this chapter, or

(2) authority to manage, acquire, or dispose of assets of the plan is

delegated to one or more investment managers pursuant to section

1102(c)(3) of this title.

29 U.S.C. § 1103(a). Under Section 409(a) of ERISA, “[a]ny person who is a fiduciary

with respect to a plan who breaches any of the responsibilities, obligations or duties

imposed upon fiduciaries by this subchapter [Tile I of ERISA] . . . shall be subject to

such other equitable or remedial relief as the court may deem appropriate, including

removal of such fiduciary.” 29 U.S.C. § 1109(a).

“To plead breach of fiduciary duty under ERISA, a plaintiff must allege that (1)

the defendant is a plan fiduciary, (2) the defendant breached its fiduciary duty, and (3)

the breach resulted in losses to the plan.” Alcatel-Lucent, 2016 WL 3406227, at *3 (citing

29 U.S.C. § 1109(a); In re Schering-Plough Corp. ERISA Litigation, 420 F.3d 231, 235 (3d

Cir. 2005); and Kenseth v. Dean Health Plan, Inc., 610 F.3d 452, 464 (7th Cir. 2010)).

Courts have issued default judgment to the Department of Labor where a plan’s trustee

failed to actively administer the plan. See, e.g., Perez v. Am. Health Care, Inc. 401(k) Plan,

2015 WL 5682446, at *1 (D.N.J. Sep. 25, 2015) (Martini, J.) (noting that such conduct

violates a trustee’s fiduciary duties as set forth in 29 U.S.C. § 1104(a)(1)). Courts will

remove an absent trustee and appoint a successor trustee, in appropriate cases, at the

Department of Labor’s request. See id. at *2 (collecting cases).

Here, Plaintiff has stated a valid cause of action for breach of fiduciary duty.

See Alcatel-Lucent, 2016 WL 3406227, at *3. As alleged, the Company is the sponsor

of the Plan and Sala is the Plan’s trustee. [Compl. ¶¶ 1, 9.] EBSA’s investigation

concluded that Sala is named in the Summary Plan Document as trustee, with the

requisite authority to administer and/or terminate the plan. [Decl. ¶ 5(b).]

Accordingly, Sala is a fiduciary of the Plan under ERISA. See 29 U.S.C. § 1102(21)(A)

(explaining that a fiduciary is anyone who “exercises any authority or control

respecting management or disposition of [plan] assets”); id. § 1102(a)(1) (stating that

every employee benefit plan must have a named fiduciary with authority to control

and manage the operation and administration of the plan).

Additionally, Sala’s breach of duty and the resulting injury are clearly alleged.

In 2017, Sala ceased actively administering the Plan when the Company went out of

business, and he has failed to terminate the Plan and distribute its assets to participants.

[Compl. ¶¶ 10–13; Decl. ¶¶ 5(e), 5(f), 6, 7.] As a result, the two remaining participants

of the Plan have not been able to access their accounts. [Compl. ¶¶ 14, 15, 21; Decl. ¶

5(g).] Failing to hold assets of a covered employee benefit plan in trust by abandoning

the plan sets forth a prima facie case of breach of fiduciary duty under ERISA. See 29

U.S.C. § 1103(a) (subject to certain exceptions not relevant here, “all assets of an

employee benefit plan shall be held in trust by one or more trustees”); id. § 1104(a)(1)

(setting forth that a “fiduciary shall discharge his duties with respect to a plan solely in

the interest of the participants and beneficiaries”); Am. Health Care, Inc. 401(k) Plan,

2015 WL 5682446, at *1 (finding that Department of Labor set forth valid cause of

action for breach of fiduciary duty where plan trustee and fiduciary failed to hold assets

in trust by actively administering plan).

Therefore, because Sala allegedly abandoned the Plan, Plaintiff has sufficiently

stated a cause of action for breach of fiduciary duty under ERISA. See 29 U.S.C. §

1109(a); Am. Health Care, Inc. 401(k) Plan, 2015 WL 5682446, at *3; Alcatel-Lucent, 2016

WL 3406227, at *3.

E. Propriety of Default Judgment

Fifth, the Court assesses whether default judgment is appropriate. To determine

whether default judgment is proper, the Court must consider the prejudice to Plaintiff

if the Motion for Default Judgment were not granted. See Butler, 613 F. App’x at 122

(citing Chamberlain, 210 F.3d at 164). By failing to respond to Plaintiff’s Complaint or

oppose the Motion for Default Judgment, Defendants have deprived Plaintiff of the

opportunity to litigate its claims. Therefore, the Court finds that Plaintiff would be

prejudiced if the Motion for Default Judgment were not granted.

Next, the Court addresses whether Defendants have a litigable defense and

whether Defendants’ delay is the result of culpable misconduct. Id. Because

Defendants have failed to oppose the Motion for Default Judgment, the Court is “not

in a position to determine whether [Defendants have] any meritorious defense or

whether any delay is the result of culpable misconduct.” Teamsters Health & Welfare

Fund of Phila. & Vicinity v. Rock Canyon, Inc., 2015 WL 881694, at *1 (D.N.J. Mar. 2,

2015) (citation and internal quotation marks omitted); see also N.J. Bldg. Laborers'

Statewide Pension Fund & Trs. Thereof v. Pulaski Constr., 2014 WL 793563, at *3 (D.N.J.

Feb. 26, 2014) (“The Court has no duty to construct a defense for Defendant.”).

In fact, Defendants’ “failure to respond permits the Court to draw an inference

of culpability on [their] part.” Fed. Ins. Co. v. Secure Cargo Corp., 2013 WL 1222653, at

*3 (D.N.J. Mar. 25, 2013) (citing Surdi v. Prudential Ins. Co. of Am., 2008 WL 4280081,

at *2 (D.N.J. Sept. 8, 2008)). Defendants were served with the Complaint and the

instant Motion, [see Docket Nos. 3, 4, 6, 7], yet they have not responded to either, [see

generally Docket]. The Court finds Defendants’ failure to respond to be indicative of

their culpability. See Moroccanoil, Inc. v. JMG Freight Grp. LLC, 2015 WL 6673839, at

*2 (D.N.J. Oct. 30, 2015) (citing Nationwide Mut. Ins. Co. v. Starlight Ballroom Dance

Club, Inc., 175 F. App’x 519, 523 (3d Cir. 2006) (holding that defendant’s failure to

respond to communications from plaintiff enables a court to infer culpability)). Thus,

the Chamberlain factors favor entry of default judgment against Defendants.

F. Relief

Finally, the Court must determine whether Plaintiff’s request for relief is proper

under ERISA. Plaintiff requests that the Court remove Sala as fiduciary and trustee

of the Plan and appoint an independent fiduciary to terminate the Plan and distribute

its assets to Plan participants. [Pl’s. Br. at 7–8.] Relying on the investigation of

Brendon Pfister of the EBSA, [Decl. ¶¶ 9–10], and the Proposal for administrative and

consulting services of Metro Benefits, Inc., [Decl., Ex. 2], Plaintiff requests the

installment of Mr. David Lipkin, F.S.A., as the replacement trustee, [Pl.’s Br. at 8].

ERISA authorizes the Secretary of Labor to bring an action in district court to

“enjoin any act or practice which violates any provision in this subchapter.” 29 U.S.C.

1132(a)(5). Additionally, if a fiduciary is found to have breached his duties, he “shall

be subject to such other equitable or remedial relief as the court may deem appropriate,

including removal of such fiduciary.” 29 U.S.C. § 1109(a).

While ERISA does not explicitly grant courts the authority to appoint a

replacement fiduciary, courts have previously decided that “replacement of a fund

administrator under ERISA is appropriate where the administrator is in substantial

violation of his fiduciary duties.” Delgrosso v. Spang & Co., 769 F.2d 928, 937 (3d Cir.

1985); see also Am. Health Care, Inc. 401(k) Plan, 2015 WL 5682446, at *2 (deciding that

replacement of absent fiduciary was proper). Here, as Plaintiff has alleged that Sala

abandoned the Plan and Mr. Lipkin appears to have the requisite experience to act as

a proper fiduciary, [see Decl., Ex. 3 (Lipkin CV)], the Court will grant the relief sought

by the Acting Secretary.2

IV. CONCLUSION

For the foregoing reasons, the Motion for Default Judgment will be

GRANTED. An accompanying Order shall issue separately.

s/Renée Marie Bumb

RENÉE MARIE BUMB

Chief United States District Judge

DATED: February 7, 2024

2 In this regard, the Court finds that the Metro Benefits, Inc. Proposal for

administrative and consulting services submitted by Mr. Lipkin is reasonable. [See

Decl., Ex. 2 (Metro Benefits, Inc. Proposal); see also Decl. ¶ 10 (swearing that proposed

charge for such services is “consistent with the market rate for the required work”).]

Accordingly, the Court will permit the Plan to reimburse Mr. Lipkin the fees, costs,

and expenses he necessarily incurs distributing Plan assets and administering and

terminating the Plan, not to exceed the proposed fee of $1,500.00.