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Board of Trustees of the United Wire Metal and Machine Pension, Health and v. 5 Boro Mechanical

September 28, 2012

BOARD OF TRUSTEES OF THE UNITED WIRE METAL AND MACHINE PENSION, HEALTH AND WELFARE FUNDS; AND THE INTERNATIONAL BROTHERHOOD OF TEAMSTERS LOCAL 810, PLAINTIFF,
v.
5 BORO MECHANICAL, INC., DEFENDANT.



The opinion of the court was delivered by: Townes, United States District Judge:

MEMORANDUM & ORDER

Plaintiffs, Board of Trustees of the United Wire Metal and Machine Pension Funds ("Funds"), and the International Brotherhood of Teamsters Local 810 ("Local 810"), bring this action against Defendant 5 Boro Mechanical, Inc., seeking to recover $80,950.00 in withdrawal liability and $35,718.30 in delinquent benefit contributions, plus interest, liquidated damages, as well as various fees and costs. Defendant did not answer or otherwise respond to Plaintiffs' complaint and Plaintiffs now move for default judgment. For the reasons set forth below, Plaintiffs' motion is granted.

I. BACKGROUND

A. Facts

Plaintiff trustees are the named fiduciaries of the Funds, jointly administered, multiemployer, labor-management trust funds established and maintained pursuant to certain Collective Bargaining Agreements in accordance with Section 302(c)(5) of the Taft--Hartley Act, 29 U.S.C. § 186(c)(5). (Am. Compl. ¶ 4). Plaintiff Local 810 is a labor union within the meaning of Section 301 of the Taft-Hartley Act, 29 U.S.C. § 185. (Am. Compl. ¶ 7).

Defendant, as a member of the Staten Island Heating and Air Conditioning Association, was bound by that Association's collective bargaining agreement ("CBA") with Local 810 and therefore obligated to contribute to the Funds under the terms of the CBA and the applicable Agreement and Declaration of Trust. (Am. Compl. ¶ 13).

On or about November 9, 2009, Defendant withdrew completely from the Funds, triggering the imposition of withdrawal liability. (Am. Compl. ¶ 14). By letter dated July 26, 2010 ("Demand Letter"), the Funds notified Defendant that it had effected a complete withdrawal and therefore was subject to the payment of withdrawal liability. (Am. Compl. ¶ 16). The Demand Letter explained that the payment schedule provided for liability of $80,950.00 and that payments were to commence no later than 60 days after the letter's date, or September 26, 2010. (Am. Compl. ¶ 16). On September 27, 2010, the Funds sent another letter ("Default Letter") notifying Defendant that it was now in default and demanding immediate payment of the withdrawal liability amount plus accrued interest. (Am. Compl. ¶ 17). By letter dated December 27, 2010, the Funds again informed Defendant of the default and amounts due. (Am. Compl. ¶ 19). Defendant did not reply.

Plaintiffs commenced this action on January 10, 2011, pursuant to the Employee Retirement Income Security Act of 1974, ("ERISA"), 29 U.S.C. §1001 et seq., and the Multiemployer Pension Plan Amendments Act of 1980 ("MPPAA"), 29 U.S.C. § 1381 et seq. Plaintiffs have demonstrated that Defendant was properly served with the Summons and Complaint. (Docket Nos. 6, 7 Ex. 4). In addition, the Clerk's entry of default on May 11, 2011, indicates that Defendant has failed to answer or otherwise respond. On August 31, 2011, Plaintiffs moved for a default judgment, arguing that Defendant (1) completely withdrew from the Funds on or about November 9, 2009; and (2) failed to pay all required benefits contributions on behalf of its employees under the CBA. (Am. Compl. ¶¶ 22, 28). As noted, Plaintiffs seek $80,950.00 for the first claim and $35,718.30*fn1 for the second claim, plus interest, fees and costs.

II. DISCUSSION

A. Standard of Review

"Where, as here, 'the court determines that defendant is in default, the factual allegations of the complaint, except those relating to the amount of damages, will be taken as true.'" Chen v. Jenna Lane, Inc., 30 F. Supp. 2d 622, 623 (S.D.N.Y.1998) (quoting 10A C. Wright, A. Miller & M. Kane, Fed. Prac. & Proc. § 2688, at 58-59 (3d ed. 1998)). Although Federal Rule of Civil Procedure 55(b)(2) provides that damages in a default judgment may be determined through a hearing, "[d]etailed affidavits and other documentary evidence can suffice in lieu of an evidentiary hearing." Chanel, Inc. v. Louis, No. 06-CV-5924(ARR)(JO), 2009 WL 4639674, at *4 (E.D.N.Y. Dec. 7, 2009) (citing Action S.A. v. Marc Rich & Co., Inc., 951 F.2d 504, 508 (2d Cir. 1991)). Moreover, a plaintiff need only prove that the "compensation sought relate[s] to the damages that naturally flow from the injuries pleaded." Greyhound Exhibitgroup, Inc. v. E.L.U.L. Realty Corp., 973 F.2d 155, 159 (2d Cir. 1992).

B. Withdrawal Liability Claim

Under the MPPAA, "an employer who is obligated to contribute to a multiemployer pension plan [must] pay its proportionate share of the plan's unfunded vested benefits upon withdrawal from the plan." Bowers v. Transportacion Maritima Mexicana, S.A., 901 F.2d 258, 261 (2d Cir. 1990) (citing 29 U.S.C. § 1381(a)). In response to such a withdrawal, "the entity maintaining the plan . . . must determine the amount of the employer's withdrawal liability, notify the employer of the amount and make a demand for payment." ILGWU Nat'l Ret. Fund v. Levy Bros. Frocks, Inc., 846 F.2d 879, 881 (2d Cir.1988); see 29 U.S.C. § 1399(b)(1). The statutory scheme of the MPPAA has been described as "pay-first-question-later," so that the employer must, regardless of any intention to request review or appeal, begin payment within 60 days of the demand letter. Bowers, 901 F.2d at 263; see 29 U.S.C. § 1399(c)(2). Failure to make timely withdrawal liability payments triggers the plan sponsor's entitlement to "immediate payment of the entire unpaid amount . . . , plus accrued interest." Trustees of Local 531 Pension Fund v. Flexwrap Corp., 818 F. Supp. 2d 585, 589 (E.D.N.Y. 2011) (citing 29 U.S.C. § 1399(c)(5)).

Furthermore, within 90 days of receiving the notice, the employer may request the plan sponsor to "review any specific matter relating to the determination of the employer's liability and the schedule of payments." 29 U.S.C. § 1399(b)(2)(A)(i). An employer seeking to dispute the liability amount must thereafter seek arbitration within 60 days of either (1) the date the plan sponsor completes a requested review; or (2) 120 days after the request for review is made, whichever is earlier. 29 U.S.C. § 1401(a)(1). Significantly, if the employer fails to seek arbitration in a timely manner, "it is ...


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