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Jacobson v. Empire Electrical Contractors

April 1, 2010


The opinion of the court was delivered by: Dora L. Irizarry, U.S. District Judge


Familiarity with the parties, relevant statutes, factual background and procedural history of this case is assumed. On June 27, 2006, the court entered default judgment for plaintiff, and referred the matter to the Honorable Viktor V. Pohorelsky, United States Magistrate Judge, for an inquest on damages. On March 25, 2008, the court adopted the report and recommendation ("R&R") of Judge Pohorelsky in full. See generally Jacobson v. Empire Elec. Contractors, Inc., 2008 WL 819948 (E.D.N.Y. Mar. 25, 2008), vacated in part, 339 F. App'x 51 (2d Cir. 2009). Over plaintiff's objections, the court denied damages for unpaid contributions to the deferred salary plan administered by plaintiff (the "401(k) plan"), and further denied damages for lost interest income on certain late-paid contributions. See id. at *1 (holding that documentation supporting these damage claims was "inadequate and unauthenticated"). The court awarded plaintiff's remaining claims for damages. See id.

On July 30, 2009, the Second Circuit Court of Appeals vacated the judgment in part, and remanded it to this court "with instructions to reconsider the Joint Board's evidence and, as warranted, to calculate a proper amount of damages to award for both components of the unpaid 401(k) contributions." 339 F. App'x at 55. The Second Circuit further ordered that, "[t]o the extent that other damages associated with the unpaid 401(k) contributions-such as prejudgment interest and liquidated damages-are appropriate, we also instruct the district court to award the Joint Board a reasonable amount for those damages." Id. Having reconsidered the relevant evidence, for the reasons set forth below, plaintiff is awarded $31,740.06 in unpaid contributions to the 401(k) plan (consisting of $13,280.36 for unpaid employer contributions and $18,459.70 in unpaid employee contributions), $9,662.86 in interest calculated as of the date of this Order, and $9,662.86 in liquidated damages, for a total of $51,065.77. However, the court denies plaintiff's request for interest on certain late-paid contributions to the 401(k) plan.


"While a party's default is deemed to constitute a concession of all well pleaded allegations of liability, it is not considered an admission of damages." Greyhound Exhibitgroup, Inc. v. E.L.U.L. Realty Corp., 973 F.2d 155, 158 (2d Cir. 1992) (citations omitted); see also FED. R. CIV. P. 8(d). A court may evaluate claims for damages upon a review of detailed affidavits and documentary evidence. See Fustok v. ContiCommodity Servs., Inc., 873 F.2d 38, 40 (2d Cir. 1989); see also FED. R. CIV. P. 55(b)(2) (giving district courts discretion to hold an evidentiary hearing). If the supporting evidence is sufficient, Section 502(g)(2) of ERISA entitles plaintiffs to, inter alia, unpaid contributions, interest, and liquidated damages. See 29 U.S.C. § 1132(g)(2).

Regarding evidence sufficiency, "a stringent burden of proof upon employees would have the practical effect of impairing many of the [ERISA] statute's benefits." Combs v. King, 764 F.2d 818, 826 (11th Cir. 1985). Thus, especially in the absence of contrary evidence from the employer, a court may award damages based on an employees' reasonable approximations. See, e.g., Perishable Food Ind. Pension Fund v. Am. Banana Co., Inc., 2003 WL 21542316, at *3--4 (S.D.N.Y. July 1, 2003).

A. Unpaid 401(k) Contributions

1. Employer and Employee Contributions

The 401(k) plan at issue is both an employee benefit plan and a multi-employer plan within the meaning of ERISA Section 3(3), 29 U.S.C. § 1002(3). During the relevant period, defendant was bound by a collective bargaining agreement ("CBA"), which specified that the 401(k) plan be comprised of both independent employer contributions on behalf of all covered employees ("Employer Contributions"), and employer deductions from specified employees' wages ("Employee Contributions"). Defendant submitted payroll records to plaintiff (Brooks Supplemental Decl. Ex. E), which the court used to extrapolate total gross wages. The court then estimated Employer Contributions by multiplying these total gross wages per week by the FICA/Medicare tax rate of 7.65%, pursuant to the CBA. (Brooks Supplemental Decl. Ex. B, at 13--14; Duffy Decl. ¶ 6); see 26 U.S.C. § 3111(a)--(b). As a result, the total amount of unpaid Employer Contributions due to plaintiff is $13,280.36. (See App. Column D.)

Regarding Employee Contributions, plaintiff is entitled to the contributions which defendants never remitted to Putnam. See Trs. of the Plumbers Local Union No. 1 Welfare Fund v. Philip Gen. Constr., 2007 WL 3124612, at *10 (E.D.N.Y. Oct. 23, 2007). As the CBA does not state the actual percentage of employee wages to be deducted (see Brooks Supplemental Decl. Ex. B, 12 (only a minimum contribution of 1% is required)), the court used the Week 38 values to obtain a ratio of Employee Contributions to Employer Contributions.*fn2 In Week 38, Employee Contributions totaled $1,471.09 and Employer Contributions totaled $1,054.76, resulting in a ratio of 1.39 to 1. Multiplying this ratio by the Employer Contribution amounts already calculated for Weeks 39--50 yields $18,459.70, the amount of unpaid Employee Contributions due to plaintiff. (See App. Column E.) Adding this to the unpaid Employer Contributions calculated above yields $31,740.06, the total amount of unpaid contributions to the 401(k) plan. (See id.)

2. Interest

Where, as here, the governing CBA does not specify an interest rate, ERISA entitles plaintiff to recover interest at the rate prescribed by 26 U.S.C. § 6621. See 29 U.S.C. § 1132(g)(2). Plaintiffs provided the relevant § 6621 rates to the court. (See Brooks Supplemental Decl., Ex. L.) Applying these rates to both the unpaid Employer and Employee Contributions yields $4,043.04 and $5,619.82, respectively, for a total of $9,662.86.*fn3

3. Liquidated Damages

ERISA provides for liquidated damages in "an amount equal to the greater of . . . interest on the unpaid contributions, or . . . [as] provided for under the plan in an amount not in excess of 20 percent . . . ." 29 U.S.C. ยง 1132(g)(2)(C). Twenty percent of the total unpaid contributions of $31,740.06 ($13,280.36 of Employer Contributions and $18,459.70 of Employee Contributions) is $6,348.01 (see App.), which is less than the interest as calculated in ...

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