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Acosta v. N & B Lundy Corp.

United States District Court, M.D. Pennsylvania

May 3, 2017

R. ALEXANDER ACOSTA, SECRETARY OF LABOR, UNITED STATES DEPARTMENT OF LABOR, Petitioner,
v.
N & B LUNDY CORP. d/b/a PITTER PATTER DAY SCHOOL, Respondent.

          MEMORANDUM AND ORDER

          Matthew W. Brann United States District Judge

         Before the Court is Petitioner R. Alexander Acosta, Secretary of Labor, United States Department of Labor's Motion for Adjudication of Civil Contempt against Respondent N & B Lundy Corp. d/b/a Pitter Patter Day School and its principal Bobbi Jo Lundy. For the following reasons, this Motion will be granted.

         I. PROCEDURAL HISTORY

         On April 24, 2015, Kim A. Langer, who was acting for the Regional Director for the Philadelphia Region of the Employee Benefits Security Administration (“EBSA”) - United States Department of Labor, issued a subpoena duces tecum to Respondent N & B Lundy Corporation d/b/a Pitter Patter Day School (“Respondent”).[1] The subpoena requested that Pitter Patter appear at 10:00 a.m. on May 6, 2015, at EBSA's Philadelphia Regional Office in Philadelphia, Pennsylvania, and to produce records relevant to a fiduciary investigation being conducted pursuant to ERISA § 504(a), 29 U.S.C. § 1134(a), for possible violations of Title I of ERISA.[2] Respondent failed to produce any of the requested documents or in any way assist the ongoing investigation.[3]

         On October 12, 2016, Petitioner R. Alexander Acosta, Secretary of Labor, United States Department of Labor (“Petitioner”) filed a Petition to Enforce the Administrative Subpoena.[4] By Order dated October 13, 2016, this Court scheduled a hearing for November 18, 2016 at 10:00 a.m. to afford the Respondent an opportunity to show cause why it should not be required to produce all of the documents requested by the subpoena.[5] Respondent thereafter failed to attend the November 18, 2016 hearing, [6] and the Court issued an Order on that same date enforcing the administrative subpoena and directing Respondent to produce all requested documents within seven days.[7]

         Petitioner filed the instant Motion for Adjudication of Civil Contempt on January 13, 2017.[8] This Motion argues that Respondent and its principal Bobbi Jo Lundy should (1) be held in civil contempt for failure to comply with the November 18, 2016 court order; (2) be ordered to produce all responsive documents in one day; (3) be subjected to a coercive fine of $250.00 per day for any subsequent failure to comply; and (4) be ordered to pay Petitioner a compensatory fine including reasonable attorney's fees.[9] The Court subsequently afforded Respondent an opportunity to show cause why they should not be adjudged in civil contempt at a hearing on April 26, 2017.[10] Respondent again failed to attend this scheduled show cause hearing.[11]

         II. LAW

         Courts possess “inherent power to enforce compliance with their lawful orders through civil contempt.”[12] This power to punish contempt

is a necessary and integral part of the independence of the judiciary, and is absolutely essential to the performance of the duties imposed on them by law. Without it they are mere boards of arbitration, whose judgments and decrees would be only advisory.[13]

         Civil contempt and criminal contempt sanctions differ in their underlying purpose. Sanctions for criminal contempt are “punitive, to vindicate the authority of the court.[14] Civil contempt sanctions, on the other hand, are “penalties designed to compel future compliance with a court order, [and] 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.”[15] In fashioning sanctions for civil contempt, a district court may impose a wide range, including incarceration, fines, or a reimbursement of costs to the complainant.[16]

         To prove civil contempt, the court must find that: (1) a valid court order existed; (2) the defendant had knowledge of the order; and (3) the defendant disobeyed the order.[17] These elements must in turn be established by clear and convincing evidence.[18] “Clear and convincing” evidence is defined at that which

produces in the mind of the trier of fact a firm belief or conviction as to the truth of the allegations sought to be established, evidence so clear, direct and weighty and convincing as to enable the fact finder to come to a clear conviction, without hesitancy, of the truth of the precise facts. . .[19]

         III. FINDINGS OF FACT & CONCLUSIONS OF LAW

         Based on both the evidence adduced by Petitioner and the Court's prior involvement with this case, I find, by clear and convincing evidence, that Respondent N & B Lundy Corp. d/b/a Pitter Patter Day School and principal Bobbi Jo Lundy are in civil contempt of this Court. Sanctions will therefore be imposed to compel future compliance with my Order of November 18, 2016.

         First, I note that, on November 18, 2016, a hearing was held in which Respondent was afforded the opportunity to show cause why the issued administrative subpoenas should not be enforced. Despite personal service by Petitioner of the Order scheduling this hearing together with the Petition to Enforce Administrative Subpoena and Memorandum of Law in Support of Petition to Enforce Administrative Subpoena, [20] Respondent did not attend the November 18, 2016 hearing. The Court therefore entered an Order on November 18, 2016 enforcing the administrative subpoena and directing the Respondent to produce the requested documents within seven days.

         Beyond the existence of a valid Court Order, I also find, by clear and convincing evidence, that Respondent had knowledge of the November 18, 2016 Order and its progeny, including (1) Petitioner's Motion for Adjudication of Civil Contempt, (2) an Order of February 7, 2017 scheduling a show cause hearing, and (3) an Order of March 8, 2017 rescheduling said hearing for April 26, 2017. At the April 26, 2017 hearing, Petitioner stated that service of these documents was effectuated via (1) regular mail to Respondent's personal address, (2) certified mail to Respondent's personal address, (3) email to a known email address, and finally (3) personal service on March 29, 2017. These methods of service, ...


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