UNITED STATES DISTRICT COURT FOR THE EASTERN DISTRICT OF NEW YORK
September 13, 1993
GINA DEVITO, CHARLES CASTELLI, RALPH VAMPINI, and RUTH GORDON, as Trustees of Local 1245 General Benefits Funds, Plaintiffs,
HEMPSTEAD CHINA SHOP, INC., Defendant.
The opinion of the court was delivered by: ARTHUR D. SPATT
MEMORANDUM DECISION AND ORDER
SPATT, District Judge.
The plaintiffs brought this action pursuant to 29 U.S.C. §§ 1132 and 1145 ("ERISA") to collect delinquent contributions to the plaintiff Funds under the terms of a collective bargaining agreement with the defendant. The plaintiffs previously moved for summary judgment, seeking an order granting them mandatory relief under 29 U.S.C. § 1132(g)(2). The defendant cross-moved for summary judgment dismissing the complaint and for leave to file a counterclaim.
This Court issued a Memorandum Decision and Order on October 22, 1992, granting summary judgment in favor of the plaintiffs. The Court further determined that the defendant was required to pay interest on the unpaid contributions. In that same Order, the Court directed counsel for the plaintiffs to submit an affidavit by November 4, 1992, concerning the issue of attorney's fees as provided in section 502(g)(2)(D) of ERISA. The Court advised counsel for the defendant that he had until November 13, 1992 to respond to the plaintiffs' affidavit.
Based upon questions which arose concerning the issues of interest and attorney's fees, the Court conducted a status conference on November 24, 1992. At that time, counsel for both sides advised the Court of the parties' agreement that the amount of delinquent contributions due the plaintiff Funds, pursuant to the Court's October 22, 1992 decision, was $ 55,302.00, covering the period from April, 1989 through March, 1992. However, the parties were unable to agree on the amount of interest and attorney's fees. The Court gave both sides additional time to submit papers. The Court now addresses the two issues of attorney's fees and interest.
I. Calculation of Interest
The Employee Retirement Income Security Act ("ERISA") in its enforcement section provides as follows:
"§ 1132. Civil enforcement
* * *
(g) Attorney's fees and costs; awards in actions involving delinquent contributions
* * *
(2) In any action under this subchapter by a fiduciary for or on behalf of a plan to enforce section 1145 of this title in which a judgment in favor of the plan is awarded, the court shall award the plan --
(A) the unpaid contributions,
(B) interest on the unpaid contributions,
(C) an amount equal to the greater of --
(i) interest on the unpaid contributions, or
(ii) liquidated damages provided for under the plan in an amount not in excess of 20 percent . . . of the amount determined by the court under subparagraph (A)
(D) reasonable attorney's fees and costs of the action, to be paid by the defendant. . . . "
For purposes of this paragraph, interest on unpaid contributions shall be determined by using the rate provided under the plan, or, if none, the rate prescribed under section 6621 of Title 26" (29 U.S.C. § 1132 [g]) (emphasis supplied).
The language of Section 1132(g) is mandatory, and once the provision applies, the district court must award liquidated damages (see Benson v. Brower's Moving & Storage, Inc., 726 F. Supp. 31, 36 [E.D.N.Y. 1989], aff'd, 907 F.2d 310 [2d Cir.], cert. denied, 498 U.S. 982, 112 L. Ed. 2d 524, 111 S. Ct. 511 ; McDonald v. Centra, Inc., 946 F.2d 1059, 1065 [4th Cir. 1991], cert. denied, 119 L. Ed. 2d 244, 112 S. Ct. 2325 ; Michigan Carpenters Council v. C.J. Rogers, Inc., 933 F.2d 376 [6th Cir. 1991]; Idaho Plumbers & Pipefitters v. United Mechanical Contractors, Inc., 875 F.2d 212, 215 [9th Cir. 1989]). Therefore, based upon the language of 29 U.S.C. § 1132(g)(2)(A) and (B), once judgment in favor of the plan has been awarded by the Court, the plan is entitled to both the unpaid contributions and interest on the unpaid contributions.
In discussing the "interest" provision of the statute, the Second Circuit has noted the following:
". . . 29 U.S.C. § 1132(g)(2) explicitly states that 'interest on unpaid contributions shall be determined by using the rate provided under the plan' or if none is specified, at a statutorily prescribed rate based on an adjusted prime rate figure. 26 U.S.C. § 6621 (1982). The statute itself allows plans to include a 20% liquidated damages provision, 29 U.S.C. § 1132(g)(2)(C)(ii), so it could hardly be considered against public policy for the parties to agree to a rate of 2% above the prime rate" ( O'Hare v. General Marine Transport Corp., 740 F.2d 160, 170 [2d Cir. 1984], cert. denied, 469 U.S. 1212, 105 S. Ct. 1181, 84 L. Ed. 2d 329 ).
The statute therefore provides for a double interest payment or alternative liquidated damages to compensate a multiemployer benefit fund plan for costs incurred in connection with delinquencies ( O'Hare, supra, at p. 171).
In this case, the plaintiff states that the plan of the General Benefits Fund of Local 1245 does not provide a rate of interest. Nor does it appear that there is any applicable provision in the collective bargaining agreement. Counsel for the plaintiff fund has therefore applied the rate prescribed in 26 U.S.C. § 6621, and has arrived at the following rates for the periods in question:
. Apr. 1, 1989-June 30, 1989 12%
. Jul. 1, 1989-Sep. 30, 1989 12%
. Oct. 1, 1989-Dec. 31, 1989 11%
. Jan. 1, 1989-March 31, 1990 11%
. Apr. 1, 1990-June 30, 1990 11%
. Jul. 1, 1990-Sep. 30, 1990 11%
. Oct. 1, 1990-Dec. 31, 1990 11%
. Jan. 1, 1991-March 31, 1991 11%
. Apr. 1, 1991-June 30, 1991 10%
. Jul. 1, 1991-Sep. 30, 1991 10%
. Oct. 1, 1991-Dec. 31, 1991 10%
. Jan. 1, 1992-March 31, 1992 9%
. Apr. 1, 1992-June 30, 1992 8%
. Jul. 1, 1992-Sep. 30, 1992 8%
. Oct. 1, 1992-Dec. 31, 1992 7%
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