The opinion of the court was delivered by: E. Thomas Boyle United States Magistrate Judge
MEMORANDUM OPINION, ORDER AND JUDGMENT
Plaintiffs, The Trustees of the Empire State Carpenters employee benefit funds (the "Trustees"), bring this action to recover damages from defendant, Tara General Contracting, Inc. ("Tara Contracting"), for unpaid fringe benefit contributions, pursuant to Section 301 of the Labor Management Relations Act ("LMRA"), 29 U.S.C. § 185 and Sections 515 and 502(a)(3) of the Employee Retirement Income Security Act of 1974, as amended ("ERISA"), 29 U.S.C. §§ 1145 and 1132(a). A bench trial was held before the undersigned on January 26, 2009.
Tara Contracting does not dispute that it is required to make fringe benefit contributions to the various employee benefit funds. However, Tara Contracting challenges the methodology by which the hours worked and the benefits paid are recorded by the Trustees, asserting that it has paid all of the fringe benefit contributions owed.
On April 8, 2002, Tara Contracting, a New Jersey entity conducting business within the State of New York, entered into a collective bargaining agreement ("CBA") with the Empire State Regional Council of Carpenters (the "Union"), which was in effect from July 2000 to April 2004. (Tr. 11-12; Pl. Ex. 2; Joint Pre-Trial Order ¶ 7.)*fn1 Pursuant to the CBA, Tara Contracting was obligated to make monetary contributions, on a weekly basis, to certain employee fringe benefit funds (the "Funds") on behalf of its employees for every hour the employees worked. (Tr. 13.)
On April 30, 2004, Tara Contracting entered into an Extension Agreement with the Union, which extended the CBA another sixty (60) days, to June 30, 2004. (Tr. 16; Pl. Ex. 5.) A new CBA became effective between the parties on July 1, 2004 with an expiration date of April 30, 2007. (Tr. 17; Pl. Ex. 6.)
Tara Contracting also executed two compliance forms by which it became obligated to the terms of the CBA's governing Local 11 and Local 964, which are "sister local" unions of Tara Contracting's primary union, Local 7. (Tr. 14-15; Pl. Ex. 3-4.)
Alan Ehl ("Ehl"), the Union's Regional Director for Long Island, testified that in 2002, Tara Contracting failed to pay all of the required fringe benefits for their employees. (Tr. 18-19.) As a result, by letter dated September 9, 2004, Ehl advised Tara Contracting that 383 hours in benefits for eight (8) employees was due and owing for the period July 29 to August 7, 2004. (Tr. 19; Pl. Ex. 7.) Ehl instructed Tara Contracting to remit payment immediately and that failure to do so would be considered a breach of the CBA. (Pl. Ex. 7.) Ehl did not receive any response to his September 9, 2004 letter. (Tr. 21.)
By letter dated September 15, 2009, Hope Brady ("Brady"), the Union's Collections Manager, advised Tara Contracting that, pursuant to the CBA, Tara Contracting was required to submit to an audit of its books and records for the period beginning January 1, 2002. (Tr. 20-21; Pl. Ex. 8.) The purpose of the audit was to determine whether Tara Contracting had made their required contributions to the Funds in accordance with the CBA. (Pl. Ex. 8.) Brady further advised Tara Contracting which records would be needed to conduct the audit and that failure to make the records available would constitute a breach of the CBA. (Pl. Ex. 8.) No response was received from Tara Contracting with respect to Brady's request for an audit. (Tr. 22.)
On September 27, 2004, Brady sent a second audit request letter to Tara Contracting. (Tr. 22-23; Pl. Ex. 10.) Similarly, on September 29, 2004, Ehl sent a second payment request to Tara Contracting for the 383 hours of fringe benefit contributions that were owed. (Tr. 21-22; Pl. Ex. 9.) Tara Contracting never complied with the Union's request for an audit. (Tr. 23.)
An audit of Tara Contracting's records was eventually conducted after the Union's counsel at the time, Meyer, Suozzi, English & Klein, P.C. ("Meyer Suozzi"), sent a letter demanding one. (Tr. 23-24.) The audit was conducted by the Union's accounting firm, Schultheis & Panettieri, LLP ("Schultheis & Panettieri"), for the period January 1, 2002 to October 29, 2004 and determined that there was a fringe benefit deficiency owed by Tara Contracting in the amount of $23,624.31.*fn2 (Tr. 25-26.) By letter dated April 15, 2005, Brady notified Tara Contracting of the deficiency and provided them with a copy of the audit report. (Tr. 25-26; Pl. Ex. 11.) A second letter, dated June 2, 2005, from the Union's counsel, Meyer Suozzi, also advised Tara Contracting of the deficiency and provided them with a copy of the audit report. (Tr. 24; Pl. Ex. 12.) Both letters demanded payment of the outstanding deficiency on a timely basis to avoid further legal action. (Pl. Ex. 11-12.)
A meeting between Tara Contracting and the Union was subsequently held and a revised audit was conducted due to the discovery by Tara Contracting that payments to the Funds had in fact been made for certain employees who were listed in the initial audit. (Tr. 26-27.) By letter dated October 8, 2008, Brady advised Tara Contracting of the results of the revised audit, which found that the deficiency in fringe benefit contributions actually amounted to $12,828.88,*fn3 and provided them with a copy of the revised audit report. (Tr. 27-28; Pl. Ex. 13.) Brady instructed Tara Contracting to remit the amount owed within fourteen (14) days to avoid further legal action. (Pl. Ex. 13.) Brady further instructed Tara Contracting that if the amount of the deficiency was not received within fourteen (14) days, the Union would assess liquidated damages at a rate of twenty percent (20%), increasing the amount owed to $16,627.16. (Pl. Ex. 13.)
Ehl testified that for every job the Union has, it appoints one of its members to serve as a shop steward, whose responsibility is to keep track of the number of hours worked by every union member on that particular job. (Tr. 29,32.) The shop steward creates weekly time reports for the particular job they are assigned to that contain the members' names, their social security numbers or their United Brotherhood of Carpenters number, the local union number they belong to, the number of hours each member worked per day and whether the members received "stamps" for benefits.*fn4 (Tr. 29; Pl. Ex. 13.) The foreman on each job signs the shop steward reports before they are submitted to the Union, verifying their accuracy. (Tr. 30; Pl. Ex. 13.) Ehl testified that the purpose of the shop steward reports is to keep a "true and accurate report" of the number of hours being worked by each Union member. (Tr. 29.)
Regardless of what local union the member belongs to, benefits and wages are to be paid to or on behalf of the union members to the union who oversees the geographic location where the work is performed, which, in this case, was the Empire Carpenters Union, whose geographic territory includes Long Island. (Tr. 32.) According to Ehl, Tara Contracting failed to pay benefits on behalf of those union members who performed work on Long Island but belonged to Local 608, which is Manhattan's local union. (Tr. 33.) However, none of the shop stewards or union members employed by Tara Contracting, including those belonging to Local 608, ever advised Ehl or filed a complaint asserting that they did not receive their wages or benefits. (Tr. 34, 47.)
Stephen Bowen ("Bowen"), the Director of Payroll Audit Services for Schultheis & Panettieri - the firm that conducted the two audits of Tara Contracting's books and records -testified that a payroll audit, also known as a compliance audit, is conducted to ensure that employers are paying benefits in compliance with their contracts with their particular unions. (Tr. 55-56.) Bowen confirmed that the audits conducted with respect to Tara Contracting indicated a deficiency in fringe benefit contributions initially found to be in the amount of $23,624.31 and then revised to $12,828.88. (Tr. 56-60.)
Bowen testified that as part of the audit, his firm conducted an on-site visit to Tara Contracting's place of business and reviewed their payroll and payroll tax records. (Tr. 57-58.) This information was compared with information provided by the Funds demonstrating the hours reported for benefits and the number of stamps purchased and redeemed as well as the shop steward reports. (Tr. 58, 68; Pl. Ex. 14.) Schultheis & Panettieri then compiled a list of the union members employed by Tara Contracting for whom benefits were due but not paid and calculated the total amount due for the time period audited. (Tr. 59; Pl. Ex. 11.)
Bowen testified that thereafter, the amount of unpaid benefits was decreased for two reasons: (1) certain Local 7 members who were listed in the initial audit provided additional information concerning redemptions of their benefits after the initial audit was conducted and (2) the hours for one union member, Diarmund Cronin ("Cronin"), were split into two categories - hours reported to the New York District Council of Carpenters ("NYDCC") and additional hours that were not reported to the Funds or NYDCC. (Tr. 60-61, 64-66.) Tara Contracting was provided a credit for the hours Cronin worked that were reported to the NYDCC in an effort to "resolv[e] this matter unilaterally." (Tr. 62, 94.) This additional information was then included in Schultheis & Panettieri's calculations and the amount of outstanding fringe benefit contributions was reduced by approximately half. (Tr. 60-61; Pl. Ex. 13.) Schultheis & Panettieri did not receive any further information from Tara Contracting to warrant a further offset of the amount of fringe benefit contributions owed. (Tr. 77.) Bowen ...