Searching over 5,500,000 cases.


searching
Buy This Entire Record For $7.95

Official citation and/or docket number and footnotes (if any) for this case available with purchase.

Learn more about what you receive with purchase of this case.

TRUSTEES OF LOCAL 210 HLT. & INS. FUND v. CHEMICRAFT CORP.

United States District Court, S.D. New York


October 12, 2004.

TRUSTEES OF THE LOCAL 210 HEALTH & INSURANCE FUND, LOCAL 210 PENSION FUND, LOCAL 210 SCHOLARSHIP FUND AND LOCAL 210 LEGAL SERVICE FUND, Plaintiffs,
v.
CHEMICRAFT CORPORATION, CHEMICRAFT INTERNATIONAL, LEEDALL PRODUCTS, INC. AND MELLON CORPORATION, Defendants.

The opinion of the court was delivered by: KEVIN FOX, Magistrate Judge

REPORT AND RECOMMENDATION

TO THE HONORABLE RICHARD M. BERMAN, UNITED STATES DISTRICT JUDGE

I. INTRODUCTION

  In this action, Trustees of the Local 210 Health and Insurance Fund, Local 210 Pension Fund, Local 210 Scholarship Fund and Local 210 Legal Service Fund (collectively "the Funds" or "plaintiffs") allege that Chemicraft Corporation, Chemicraft International, Leedall Products, Inc. and Mellon Corporation (collectively "defendants") failed to make monetary contributions to the Funds as required by a collective bargaining agreement and the Employment Retirement Insurance Security Act ("ERISA"), 29 U.S.C. § 1001, et seq.

  Upon defendants' failure to file an answer or otherwise respond to the Complaint, United States District Judge Richard M. Berman ordered that a default judgment be entered against the defendants. Judge Berman then referred the matter to the undersigned to conduct an inquest and to report and recommend the amount of damages, if any, to be awarded plaintiffs against defendants.

  The Court directed plaintiffs to serve and file proposed findings of fact and conclusions of law, and an inquest memorandum setting forth their proof of damages, costs of this action, and their attorney's fees. Defendants were directed by the Court to serve and file opposing memoranda, affidavits and exhibits, as well as any alternative findings of fact and conclusions of law they deemed appropriate. Defendants failed to do so.

  Plaintiffs' submissions aver that they are entitled to $13,932 in unpaid fringe benefit contributions, $2,786.40 in interest and $1,184.22 in liquidated damages from defendant Chemicraft Corporation; $109,693 in unpaid fringe benefit contributions, $9,323.88 in interest and $21,938.60 in liquidated damages from defendant Chemicraft International; $30,893 in unpaid fringe benefit contributions, $2,625.88 in interest and $6,178.60 in liquidated damages from defendant Leedall Products, Inc.; and $15,993 in unpaid fringe benefit contributions, $1,359.38 in interest and $3,198.60 in liquidated damages from defendant Mellon Corporation. In addition, plaintiffs seek $5,678.75 in attorney's fees and $423 in costs.

  For the reasons set forth below, I recommend that the Funds be awarded $170,511 in unpaid fringe benefit contributions; interest on this sum in an amount to be computed by the Clerk of the Court applying the rates and standards set forth in this report; statutory penalties in an amount equal to the award of interest made herein; and $6,101.75 in costs and attorney's fees.

  II. BACKGROUND AND FACTS

  Based on submissions by the plaintiffs, the Complaint filed in the instant action — the allegations of which, perforce of defendants' default, must be accepted as true, except those relating to damages, see Cotton v. Slone, 4 F.3d 176, 181 (2d Cir. 1993); Greyhound Exhibitgroup, Inc. v. E.L.U.L. Realty Corp., 973 F.2d 155, 158 (2d Cir. 1993) — and the Court's review of the entire court filed maintained in this action, the following findings of fact are made:

  The Funds are jointly-administered, multiemployer, labor-management trust Funds.*fn1 The Funds have their business offices at 345 West 44th Street, New York, New York. Defendants are for-profit domestic corporations, organized and existing under the laws of New York. Id. Defendants maintain their offices at 351 West 35th Street, New York, New York.*fn2

  The purpose of the Funds is to provide medical and other benefits and retirement income to eligible employees on whose behalf employers contribute to the Funds. Contributions to the Funds are made pursuant to collective bargaining agreements between the Service, Production, Merchandising, Wholesale, Distribution, Clerical and Health Related Services, Airline, Airport and Aerospace Employees Union, Local 210 International Brotherhood of Teamsters, AFL-CIO, CLC ("Local 210") and employers in those industries.

  Defendants entered into a collective bargaining agreement ("the Agreement") with Local 210 through which, among other things, defendants became obligated to pay the required monetary contributions to the Funds for all work performed by each employee who was a member of Local 210. The Agreement, a copy of which has been provided by the plaintiffs in support of their application, covers the period January 1, 2000, through December 31, 2004.

  Pursuant to the terms of the Agreement, as a result of work performed by employees of the defendants during, inter alia, the period July 2000 through and including December 2001, benefit contributions became due and owing to the Funds. Plaintiffs' assessment of the amount of the benefit contributions owed for that period is based on reports and records maintained at the office of Kevin O. McCulloch ("McCulloch"), a director of the Funds and the Assistant to the Secretary Treasurer for Local 210. According to McCulloch, who has submitted an affidavit in support of the plaintiffs' damages claim, the subject reports and records reflect information provided to the Funds by the defendants concerning the number of persons who were employed by each defendant during the time period relevant to this action. Attached to the affidavit is a chart which indicates, for each defendant except Mellon Corporation, the amount of unpaid contributions on a month-by-month basis beginning in July 2000 and concluding in December 2001. Defendants failed to make the required contributions for the relevant period; as a result, the Funds were damaged.

  Under the terms of the Agreement, defendants' failure to pay timely the required contributions to the Funds obligated them to pay interest on the outstanding amount of the contributions. However, the Agreement does not fix a rate of interest to be applied in calculating the amount of interest due. Additionally, although defendants' failure to make the requisite contribution payments also triggered a liquidated damages provision of the Agreement that requires defendants to pay the Funds liquidated damages on unpaid contributions, the Agreement is silent on the matter of the rate of liquidated damages to be applied.

  III. CONCLUSIONS OF LAW

  ERISA section 515 states that "[e]very employer who is obligated to make contributions to a multiemployer plan under the terms of the plan or under the terms of a collectively bargained agreement shall . . . make such contributions in accordance with the terms and conditions of such plan or such agreement." 29 U.S.C. § 1145.

  ERISA section 502(g)(2) governs the enforcement of section 515. Section 502(g)(2) provides:

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 or in an amount not in excess of 20 percent (or such higher percentage as may be permitted under Federal or State law) 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, and
(E) such other legal or equitable relief as the court deems appropriate.
29 U.S.C. § 1132(g)(2).

  These provisions were enacted to enable benefit plan participants and beneficiaries to protect their plan's solvency when employers fail to make the requisite financial contributions to the benefit plan(s) and, thereby, do not fulfill their collective bargaining and trust agreement obligations. See Benson v. Brower's Moving & Storage, Inc., 907 F.2d 310, 314 (2d Cir. 1990) ("[B]enefit plans must be able to rely on the contribution promises of employers because plans must pay out to beneficiaries whether or not employers live up to their obligations"); Trustees of Four Joint Boards v. Penn Plastics, Inc., 864 F. Supp. 342, 346-47 (S.D.N.Y. 1994) (observing that, pursuant to ERISA § 515, "the Circuit Courts of Appeals have consistently held employers to their promises to contribute to multiemployer plans as set forth in written agreements").

  The employee benefit plans which are the subject of this litigation are established and maintained pursuant to the trust agreement incorporated by specific reference in Article 28 ("Local 210's Health & Insurance Fund"), Article 29 ("Local 210's Legal Service Fund"), Article 30 ("Local 210's Pension Fund") and Article 31 ("Local 210's Scholarship Fund"), of the Agreement executed by Local 210 and the defendants. The trust agreement governs the terms of the employee benefit plans, the timing of employer contributions to the plans and the penalties for late payments to the plans.

  Defendants have violated the terms of the Agreement by failing to make fringe benefit contributions for the period July 2000 through December 2001. Therefore, the plaintiffs' submissions establish that defendants violated 29 U.S.C. § 1145.

  Unpaid Benefit Contributions

  Pursuant to 29 U.S.C. § 1132(g)(2), plaintiffs are entitled to an award representing the amount of unpaid fringe benefit contributions. Plaintiffs contend that the defendants owe the Funds $170,511 in unpaid fringe benefit contributions for the period July 2000 through December 2001.

  As noted above, in support of their application, plaintiffs have submitted a chart which tallies the amount of unpaid contributions on a month-by-month basis beginning in July 2000 and concluding in December 2001; figures are provided for each defendant except the Mellon Corporation. The chart indicates the number of employees for whom, in a given month, a contribution became due, the amount of the contribution due each of the Funds and, for each defendant represented, a total amount of unpaid contributions. According to McCulloch, the fringe benefit deficiency attributable to each defendant for the period relevant to this action is:

Chemicraft Corporation $ 13,932
Chemicraft International $109,693
Leedall Products, Inc. $ 30,893
Mellon Corporation*fn3 $ 15,993 ________ Total $170,511
  Plaintiffs have submitted no documentary evidence in the form of the defendants' own records, for example, remittance reports or union members' time cards for the period in question, to substantiate the figures presented in the McCulloch affidavit or to establish their source. However, McCulloch avers that the figures to which he attests are drawn from reports and records maintained by his office that reflect pertinent information provided to the Funds by the defendant companies. In addition, the chart attached to the McCulloch affidavit states accurately the amount of the contributions that, pursuant to the Agreement, are due to each of the Funds, per month, for each covered employee. Moreover, the defendants have not challenged the plaintiffs' calculation of the amount of delinquent contributions for the period in question. Consequently, the Court finds that plaintiffs' proofs as to $170,511 of its claim, the amount of unpaid contributions for the period relevant to this action, are sufficiently well supported to allow an award of damages. Accordingly, the defendants owe the Funds $170,511 in delinquent fringe benefit contributions.

  Interest

  By statute, plaintiffs have a right to interest on the unpaid fringe benefit contributions, since once it is determined that an employer has failed to make contributions to an employee benefit fund, as required by a collective bargaining agreement, an award of interest is mandatory. See 29 U.S.C. § 1132(g)(2)(B) (requiring award of interest on unpaid contributions to trust fund that prevails against employer on ERISA § 515 claim); Mason Tenders Dist. Council v. Envirowaste and Transcontractors, Inc., No. 98 Civ. 4040, 1999 WL 370667, at *2 (S.D.N.Y. June 7, 1999). In addition, pursuant to ERISA section 502(g), "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)(2).

  In his affidavit, McCulloch avers that the applicable rate of interest on the unpaid contributions due from each defendant is 6%. However, because the Agreement does not fix a rate of interest, the rate prescribed by 26 U.S.C. § 6621 applies in this case. See O'Hare v. General Marine Transport Corp., 740 F.2d 160, 170 (2d Cir. 1984); Bricklayers Dist. Council Welfare Fund v. Pony Masonry Construction Co., Inc., No. 92 Civ. 1663, 1995 WL 693262, at *2-3 (S.D.N.Y. Nov. 22, 1995). According to the Internal Revenue Service, pursuant to 26 U.S.C. § 6621, the underpayment rate for the relevant periods is: Period Interest Rate

  July 1, 2000 through March 31, 2001 9%

  April 1, 2001 through June 30, 2001 8%

  July 1, 2001 through December 31, 2001 7%

  January 1, 2002 through December 31, 2002 6%

  January 1, 2003 through September 30, 2003 5%

  October 1, 2003 through March 31, 2004 4%

  April 1, 2004 through June 30, 2004 5%

  July 1, 2004 through September 30, 2004 4%

  October 1, 2004 through December 31, 2004 5%

  See Internal Revenue Bulletin: 2004-37, dated September 13, 2004, <http://www.irs.gov/irb>

  The applicable commencement date for the accrual of interest is the date on which a particular payment first became due. See Maguire v. America Piles, Inc., No. 01 Civ. 9483, 2002 WL 31626972, at *1 (S.D.N.Y. Nov. 21, 2002); Envirowaste and Transcontractors, Inc., 1999 WL 370667, at *2; Trustees of Four Joint Boards, 864 F. Supp. at 348. In this case, the Agreement specifies that monthly contributions to Local 210's Health and Insurance and Legal Service Funds are due on the tenth (10th) day of each month; monthly contributions to Local 210's Pension and Scholarship Funds appear to be due on the first (1st) day of each month. Accordingly, the Court recommends that defendants be ordered to pay interest, at the applicable rates, as noted above, calculated from the appropriate commencement date(s) for the accrual of interest.*fn4

  Liquidated Damages

  By statute, plaintiffs are entitled to liquidated damages for the defendants' failure to make the required contributions to the Funds. See 29 U.S.C. § 1132(g)(2)(C); Envirowaste and Transcontractors, Inc., 1999 WL 370667, at *2 (citing Iron Workers Dist. Council of Western New York & Vicinity Welfare and Pension Funds v. Hudson Steel Fabricators & Erectors, Inc., 68 F.3d 1502, 1506 [2d Cir. 1995]). Section 502 of ERISA provides that the amount of statutory damages to be awarded in an action to collect delinquent fringe benefit contributions is equal to the greater of the interest awarded on the unpaid contributions or liquidated damages specified under a fund plan in an amount not to exceed 20%. See 29 U.S.C. § 1332(g)(2).

  Plaintiffs seek liquidated damages in the amount of 20% of the unpaid fringe benefit contributions due and owing from each defendant. However, as noted earlier in this writing, the Agreement is silent on the matter of the rate of liquidated damages to be applied in this case. Therefore, the appropriate measure of the statutory damages owed to the Funds is the amount of the interest due on the unpaid benefit contributions. See Bricklayers Dist. Council Welfare Fund, 1995 WL 693262, at *3 (finding that, where benefit fund plans did not specify any liquidated damages, defendants were liable for statutory damages in the amount of interest on unpaid contributions); Plumbers Local No. 371 Joint Plumbing Indus. Bd. Pension Fund v. Frank Liquori Plumbing and Heating, Inc., No. 95-CV-2892, 1996 WL 445065, at *6 (E.D.N.Y. June 26, 1996) ("[W]here the [collective bargaining agreements] are silent with respect to liquidated damages, the court should make an award of `double interest' consistent with Section 1132(g)(2)(C)(i)."); DeVito v. Hempstead China Shop, Inc. 831 F. Supp. 1037, 1042 (E.D.N.Y. 1993), rev'd on other grounds, 38 F.3d 651 (2d Cir. 1994) (same). Accordingly, the Court recommends that defendants be ordered to pay liquidated damages in the amount of the interest ultimately awarded on the plaintiffs' fringe benefit contributions claim.

  Costs and Attorney's Fees

  An award of costs and reasonable attorney's fees, in an action such as this, to recover unpaid union fringe benefit contributions, is mandatory. See 29 U.S.C. § 1132(g)(2); Bricklayers Dist. Council Welfare Fund, 1995 WL 693262, at *3-4. When fixing a reasonable rate for attorney's fees, it is appropriate for a court to consider and to apply the prevailing market rates in the relevant community for similar legal work of lawyers of reasonably comparable skill, experience and reputation. See Blum v. Stenson, 465 U.S. 886, 895 n. 11, 104 S. Ct. 1541, 1547 n. 11 (1984). In addition, it is permissible for a court to rely upon its own knowledge of private firm hourly rates in deciding what reasonable attorney's fees are in the community. Miele v. N.Y. State Teamsters Conf. Pens. & Retirement Fund, 831 F.2d 407, 409 (2d Cir. 1987).

  In the Second Circuit, a party seeking an award of attorney's fees must support that request with contemporaneous time records that show, "for each attorney, the date, the hours expended, and the nature of the work done." New York State Ass'n for Retarded Children, Inc. v. Carey, 711 F.2d 1136, 1154 (2d Cir. 1983). Attorney fee applications that do not contain such supporting data "should normally be disallowed." Id. at 1154. Disallowance is permitted notwithstanding the mandatory language found at 29 U.S.C. § 1132(g)(2)(D). See Plumbers Local No. 371 Joint Plumbing Indus. Bd. Pension Fund, 1996 WL 445065, at *5.

  In prosecuting this action against the defendants, the Funds engaged the service of the law firm Raab, Sturm & Goldman, LLP. Ari D. Ganchrow, Esq., an attorney with that firm, submitted an affidavit to the Court setting forth the names of the attorneys who worked on this matter and the hourly rate at which each was compensated. Contemporaneous time records for the relevant law firm personnel also were submitted to the Court. The time records, together with the affidavit submitted by Mr. Ganchrow, describe, for each attorney who participated in the prosecution of this action, the date on which the service(s) was provided by the attorney(s); the hours expended by the individual attorney(s); and the nature of the work performed by the attorney(s).

  Plaintiffs' submissions indicate that they incurred attorney fees through the work performed by the following law firm personnel: Regina E. Faul @ $205 per hour; Maura E. Breen @ $205 per hour; and Ari D. Ganchrow @ $205 per hour. The Court finds that, based on the attorneys' background and experience, and the work performed by them in connection with this action, the rates requested by plaintiffs' counsel are reasonable.

  Therefore, the Court finds that $5,678.75 in attorney's fees and $423 in costs were reasonably incurred by the plaintiffs in the course of prosecuting this action against the defendants. Accordingly, plaintiffs should be awarded a total of $6,101.75 in attorneys' fees and costs.

  IV. RECOMMENDATION

  For the reasons set forth below, I recommend that the Funds be awarded: (i) $170,511 in unpaid fringe benefit contributions; (ii) interest on this sum in an amount to be computed by the Clerk of the Court applying the rates and standards set forth in this report; (iii) statutory penalties in an amount equal to the award of interest made herein; and (iv) $6,101.75 in costs and attorneys' fees.

  * * *

  Plaintiffs shall serve defendants with a copy of this Report and Recommendation and shall submit proof of service to the Court.

  V. FILING OF OBJECTIONS TO THIS REPORT AND RECOMMENDATION

  Pursuant to 28 U.S.C. § 636(b)(1) and Rule 72(b) of the Federal Rules of Civil Procedure, the parties shall have ten (10) days from service of this Report to file written objections. See also Fed.R. Civ. P. 6. Such objections, and any responses to objections shall be filed with the Clerk of Court, with courtesy copies delivered to the chambers of the Honorable Richard M. Berman, 40 Centre Street, Room 201, New York, New York, 10007, and to the chambers of the undersigned, 40 Centre Street, Room 540, New York, New York, 10007. Any requests for an extension of time for filing objections must be directed to Judge Berman. FAILURE TO FILE OBJECTIONS WITHIN TEN (10) DAYS WILL RESULT IN A WAIVER OF OBJECTIONS AND WILL PRECLUDE APPELLATE REVIEW. See Thomas v. Arn, 474 U.S. 140 (1985); IUE AFL-CIO Pension Fund v. Herrmann, 9 F.3d 1049, 1054 (2d Cir. 1993); Frank v. Johnson, 968 F.2d 298, 300 (2d Cir. 1992); Wesolek v. Candair Ltd., 838 F.2d 55, 57-59 (2d Cir. 1998); McCarthy v. Manson, 714 F.2d 234, 237-238 (2d Cir. 1983).


Buy This Entire Record For $7.95

Official citation and/or docket number and footnotes (if any) for this case available with purchase.

Learn more about what you receive with purchase of this case.