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Dr. Gerald Finkel, As Chairman of the v. Alltek Security Systems Group

September 29, 2011


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


On October 22, 2010, Plaintiff Dr. Gerald Finkel, as Chairman of the Joint Industry Board of the Electrical Industry (the "Joint Board"), commenced this action against the defendant, Alltek Security Systems Group, Inc. ("Alltek" or "employer"), pursuant to the Employee Retirement Income Security Act, 29 U.S.C. §§ 1001, et seq. ("ERISA"), and the Labor Management Relations Act of 1947 ("LMRA"), 29 U.S.C. § 185, for alleged violations of collective bargaining agreements (the "CBAs"). On December 15, 2010, Plaintiff moved for the clerk's entry of default. On January 5, 2011, default was entered against the defendant and the court referred any requests for damages and/or attorney fees to United States Magistrate Judge Viktor V. Pohorelsky. On January 28, 2011, Plaintiff moved for default judgment. Magistrate Judge Pohorelsky issued a Report and Recommendation ("R & R"),*fn1 dated August 26, 2011, recommending the court enter default judgment and award Plaintiff a total of $103,535.12 (plus $6.83 per diem interest starting January 29, 2011) and $5,516.72 in attorneys' fees and costs broken down as follows: $68,822.10 and $1,963.92 in interest (plus $5.11 in per diem interest) for unpaid contributions in the weeks ending April 21, 2010 through June 16, 2010; $14,655.25 and $2,462.30 in interest (plus $1.72 in per diem interest) for unpaid contributions in the Audit Period; $58.20 in interest for late payments to the 401(k) Plan that were paid before the lawsuit was filed; $15,573.35 in liquidated damages; and $5,516.72 in total attorney's fees and costs. (R & R at 17). On September 9, 2011, Plaintiff timely filed objections to the R & R challenging: (1) the denial of damage awards for unpaid dues assessments and loan repayments; and (2) the modification of Plaintiff's proposed calculation of interest owed on unpaid contributions. (See Docket Entry 14.) In further support of these damages claims, Plaintiff filed an additional declaration, (Declaration of Christina A. Sessa dated September 7, 2011 ("Second Sessa Decl.")), and attached exhibits.

As set forth below, upon de novo review of Plaintiff's objections and additional evidence, the R & R is modified to the extent that Plaintiff's method of calculating interest owed on the unpaid contributions is accepted. However, the court agrees with the magistrate judge that Plaintiff has not shown it is entitled to an award of the dues assessments. Accordingly, the court adopts that portion of the R & R. Having found no clear error in those portions of the R & R to which no objections are made, the court adopts the remainder of the R & R in its entirety.

I.Standard of Review

Where a party objects to an R & R, a district judge must make a de novo determination with respect to those portions of the R & R to which the party objects. See FED. R. CIV. P. 72(b); United States v Male Juvenile, 121 F.3d 34, 38 (2d Cir. 1997). Portions of the R & R to which the parties have not objected are reviewed for clear error. See Orellana v. World Courier, Inc., 2010 WL 3861013, at *2 (E.D.N.Y. Sept. 28, 2010).The district court may then "accept, reject, or modify the recommended disposition; receive further evidence; or return the matter to the magistrate judge with instructions." FED. R. CIV. P. 72(b); see also 28 U.S.C. § 636(b)(1).


A.Unpaid Dues Assessments and Loan Repayments*fn2

As part of its default motion, the Joint Board sought $710.01 in outstanding dues assessments for the weeks ending April 21, 2010 through June 16, 2010, which are monies normally used to fund the operating expenses of Local Union No. 3 of the International Brotherhood of Electrical Workers, AFL-CIO ("Local 3"). (Declaration of Christina A. Sessa dated January 25, 2011 ("First Sessa Decl.") ¶¶ 27-29; Second Sessa Decl. ¶¶ 8-9.) Judge Pohorelsky recommended not awarding Plaintiff damages for the dues assessments because Plaintiff failed to provide evidence of an agreement obligating Alltek to remit union dues to the Joint Board on behalf of its employees. (See R & R at 10-11.) Plaintiff has objected, arguing that a dues assessment letter issued by the Joint Board, in conjunction with two of Alltek's payroll reports showing the defendant remitted dues on prior occasions, are more than sufficient evidence to demonstrate Alltek's agreement. (See Pl. Obj. at 4-5.) After de novo review, the court concurs with the magistrate judge and adopts his recommendation in this respect.

The Joint Board has the authority under the May 12, 2010 collective bargaining agreement (the "2010 CBA") to collect "dues assessments" that "the employer agrees or is obligated to deduct from the employees' paychecks." (First Sessa Decl. Ex. G at 21 Art II, Sec. 17; Second Sessa Decl. ¶ 6.) This memorializes what has been a long standing practice between the parties to the CBAs. (Second Sessa Decl. ¶ 7.) Neither the 2010 CBA nor the longstanding practice between the parties obligate employers to remit dues assessments, but only authorize the Joint Board to collect dues where the employer so agrees. Here, the Joint Board has not shown Alltek agreed to remit the union dues sought herein.

In support of recovery for the dues assessments, Plaintiff submitted a letter from the Joint Board, dated March 13, 1997 (the "March Letter"), giving notice to employers that Local 3 members had agreed upon an increase to one percent (1%) of the dues assessment rate.*fn3

(First Sessa Decl. ¶ 12 & Ex. P; Second Sessa Decl. ¶ 9.) In further support, Plaintiff also submitted Alltek's weekly remittance reports, from April 7, 2010 and April 14, 2010, showing that on these two occasions, Alltek did remit dues assessments to the Joint Board at the one percent (1%) rate indicated in the March Letter. (First Sessa Decl. ¶ 19 & Ex. R; Second Sessa Decl. Ex C.) Plaintiff asserts that these submissions, along with the 2010 CBA, are more than sufficient evidence to show an agreement exists between Alltek and the Joint Board. (See Pl. Obj. at 5.) As authority for its assertion, Plaintiff cites Finkel v. East End Elec. Associates, Ltd., 2007 WL 2572167, at *2-3 (E.D.N.Y. Aug. 31, 2007), wherein this court previously granted the Joint Board recovery of dues assessments after it submitted, inter alia, the March 13, 1997 dues assessment letter and payroll reports prepared by East End. However, in East End Elec. Associates, unlike in the instant matter, the employer agreed it had an outstanding obligation to the Joint Board, because the payroll reports prepared by East End calculated the total amounts it owed for eleven weeks of unpaid contributions which the Joint Board sought. Id.

Here, the Joint Board has not provided the court with similar reports prepared by Alltek acknowledging its outstanding liability for the periods of unpaid contributions. Instead, the Joint Board only points to Alltek's prior conduct in remitting dues assessments on two occasions before its delinquency, as evidence of an ongoing agreement. Such prior conduct, absent some additional evidence such as an unsigned writing obligating Alltek to remit dues, language in the CBA itself specifically obligating all signatories to remit dues, or some other form of written admission as to its ongoing liability, such as payroll reports from the delinquent contribution periods, is insufficient to show Alltek agreed to be bound to remit dues assessments to the Joint Board. See Brown v. C. Volante Corp., 194 F.3d 351, 354-355 (2d Cir. 1999) (employer evinced intention to adopt unsigned CBAs specifically requiring all employers to remit assessments to employee fund where employer, inter alia, previously submitted sixty-one remittance reports which contained a phrase indicating that they were submitted in accordance with the CBA, consented to an audit, and sent letter to the Trustees acknowledging its responsibility to the funds); see also Empire State Carpenters Welfare Annuity v. Conway Const. of Ithaca, Inc., 2010 WL 625352, at *7 (E.D.N.Y. Feb. 19, 2010) (employer's conduct demonstrated its intent to be bound to unsigned 2001 CBA requiring contributions to employee fund where employer, inter alia, was a signatory to prior CBAs, complied with the terms of the 2001 CBA by continuing to contribute benefits, submitted remittance reports over a two year period, agreed to an audit, and attempted to terminate its obligation to the 2001 CBA in accordance with the CBA's termination procedure).

Accordingly, Plaintiff is not entitled to an award of dues assessments and the magistrate judge properly reduced Plaintiff's recovery for unpaid ...

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