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SCHUELER v. RAYJAS ENTERPRISES

UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK


April 4, 1994

ELMORE V. SCHUELER, as Chairman of the Board of Teamsters, Local 445, CONSTRUCTION DIVISION HEALTH and WELFARE FUND, LOCAL 445 CONSTRUCTION DIVISION PENSION FUND, and LOCAL 445 CONSTRUCTION DIVISION ANNUITY FUND, Plaintiffs,
v.
RAYJAS ENTERPRISES, INC., Defendant.

The opinion of the court was delivered by: VINCENT L. BRODERICK

MEMORANDUM ORDER

 VINCENT L. BRODERICK, U.S.D.J.

 Plaintiffs are seeking a default judgment in this case brought under the Employee Retirement Income Security Act, 29 USC 1132, 1145, involving nonpayment of contributions allegedly due to employee benefit funds pursuant to a collective bargaining agreement. Jurisdiction over this case arises under 28 USC 1331.

 Plaintiffs appear to be entitled to a default judgment, defendant not having answered or otherwise moved with respect to the complaint served on October 20, 1993, but the amount of attorney's fees sought exceeds the principal amount in dispute although no active litigation apart from settlement negotiations appears to have taken place.

 For the reasons indicated in Schueler v. Roman Asphalt Corp., 827 F. Supp. 247, 253-58 (SDNY 1993), this amount is difficult to justify. The relevance of the Government's analysis of the bill which later became the Federal Debt Collection Procedures Act of 1990 (the "Act"), 28 USC 3001 et. seq., in regard to creditors' attorney's fees appears to have been overlooked.

 While not directly binding, the Act is persuasive as the most recent Congressional declaration of an approach to debt collection viewed as appropriate. The most relevant section of the Act is 28 USC 3011, which establishes a flat 10% (ten per cent) creditor's attorney fee as a backup or default option where other amounts are not fixed by statute. The Government's Section-by-Section Analysis of ยง 1961, 100th Cong, 2d Sess (1987) states in regard to initial legislation similar to the final enactment of 28 USC 3011:

 

This section provides that the United States may recover a designated percentage of the debt . . . no defendant will be penalized for contesting a claim by incurring additional costs, thus exerting a chilling effect on the exercise of the defendant's constitutional right to a day in court.

 That statement in its entirely is attached to this memorandum order as Appendix A, including editorial material explaining the chronology of this document and cross-references to the relevant provisions of the statute as passed by Congress.

 This matter is referred to United States Magistrate Judge Mark D. Fox for a Report and Recommendation concerning the amounts due for the underlying debts and reasonable attorney's fees under 29 USC 1332 (g) and the principles set forth in Schueler v. Roman Asphalt, 827 F. Supp. 247 (SDNY 1993).

 SO ORDERED.

 Dated: White Plains, New York

 April 4, 1994

 Gerard L. Goettel

 in the absence of

 VINCENT L. BRODERICK, U.S.D.J.

 APPENDIX A

 The editorial material which follows is reprinted from Manual of Federal Practice, by permission of Shepard's/McGraw-Hill, Inc., copyright by Shepard's/McGraw-Hill, Inc. Further reproduction of any kind is strictly prohibited. For subscription information, please contact Shepard's/McGraw-Hill, Inc., 555 Middle Creek Parkway, Colorado Springs, Colorado 80921; 1-800-525-2474.

 The text of the Government's statement itself is of course in the public domain and therefore not editorial material.

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© 1992-2004 VersusLaw Inc.



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