Duane Morris Class Action Review - 2023 - Report - Page 165
to compel the payment of the payroll taxes, but Sherwood indicated it would not make
the payroll tax payment. On January 27, 2022, the court held a hearing regarding the
EEOC’s motion for civil contempt. Upon Sherwood’s request for a breakdown of the
individual payments to be made to the claimants, the court continued the hearing until
January 31, 2022. Prior to the start of the hearing on January 31, 2022, the
administrator notified Sherwood that its total payroll taxes owed had increased from
$361,890.68 to $408,749.23 due to the Ohio Department of Jobs and Family Services’
increase in QSF state unemployment tax rate from 2.7% in 2021 to 6.5% in 2022. At the
hearing, the parties were ordered to submit proposed findings of fact and conclusion of
law, which were subsequently submitted on February 10, 2022. Id. at 2-3. The court
held Sherwood in civil contempt for violating the consent decree. First, the court
explained that in order to establish a finding of civil contempt, the EEOC must show that
the other party violated a definite and specific order of the court, through “clear and
convincing evidence.” Id. at *4. The court noted that the consent decree explicitly stated
numerous times that Sherwood was responsible for payroll tax liability, and that
distribution of the settlement funds must be completed by December 14, 2021. Further,
the EEOC produced email communications that Sherwood was informed of its payroll
tax duties by the administrator in accordance with the consent decree. Accordingly, the
court held there was, “clear and convincing evidence,” that Sherwood violated the
consent decree. Id. Second, the court held that Sherwood did not meet its burden to
demonstrate that it took all reasonable steps to comply. Sherwood claimed that it
attempted to negotiate an extension of the deadline, but the court rejected this
approach, noting that its extension request ten days before the deadline was
untimely. Id. The court thus held that “upon [the EEOC’s] unwillingness to negotiate,
[Sherwood] should have complied with the Decree and the Administrator’s request for
payment.” Id. Third, the court held that Sherwood failed to satisfy its burden of giving a
detailed explanation as to why it could not presently comply with the consent decree
and pay the $408,749.23 in payroll taxes. Id. at *5. The court reasoned that Sherwood
made no claim that it did not have the funds, nor did it offer any evidence of its financial
situation. In lieu of offering such evidence, Sherwood proposed paying in installments.
The court rejected this proposal as untimely. It opined that Sherwood should have made
the proposal during settlement negotiations. In addition, the court dismissed Sherwood’s
argument that the EEOC conducted its investigation too slowly. Sherwood argued it
should only be responsible for paying the initial $361,890.68 and should not be required
to pay the additional $46,858.55 resulting from the 3.8% tax increase. The court
rejected this argument on the grounds that the crease in taxes owed was a result of
Sherwood’s delay. As such, the court ordered Sherwood to pay the full amount of
$408,749.23 within 30 days of its order, and to pay any additional costs incurred by the
administrator’s fulfillment of his duties that exceed the $35,000 amount set forth in the
consent decree.
2.
The U.S. Department Of Labor
In 2022, the U.S. Department of Labor (DOL) recovered $1.4 billion for retirement,
health and welfare benefits plans, participants, and beneficiaries. The DOL closed 907
civil investigations and recovered $931 million through administrative investigations.
The DOL also recovered approximately $27 million in back wages, damages, and
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Duane Morris Class Action Review – 2023
