United States District Court, E.D. New York
January 29, 2015
BOARD OF TRUSTEES of the LOCAL 50 PENSION FUND, Plaintiff,
BAKER HILL PACKING INC., Defendant
For Board of Trustees of the UFCW Local 50 Pension Fund, Plaintiff: Anthony S. Cacace, LEAD ATTORNEY, Proskauer Rose LLP, New York, NY.
REPORT AND RECOMMENDATION
STEVEN I. LOCKE, United States Magistrate Judge.
Before the Court on referral from the Honorable Joanna Seybert for Report and Recommendation in this action brought pursuant to the Employee Retirement Income Security Act (" ERISA"), 29 U.S.C. § 1001 et seq., is Plaintiff's motion for a default judgment. By Complaint filed on April 5, 2013 (" Compl."), DE , Plaintiff Board of Trustees of the Local 50 Pension Fund (" Plaintiff" or the " Fund") commenced this action against Defendant Baker Hill Packing Inc. (" Defendant" or " Baker Hill") to recover withdrawal liability and related relief. Baker Hill failed to answer or otherwise respond, and on August 8, 2014 Plaintiff filed its motion for a default judgment, DE , seeking: (i) payment of $394, 482 for withdrawal liability; (ii) $49, 054.78 for accrued prejudgment interest at a rate of 6.00% from August 14, 2012 to August 1, 2014; (iii) $78, 896.40 for liquidated damages; (iv) $650 for costs of the action; and (v) $4, 818.75 for attorneys' fees. See Declaration of Anthony S. Cacace, sworn to on August 8, 2014 (the " Cacace Decl.") at ¶ 24. By order dated August 22, 2014, DE , Judge Seybert referred the motion to the undersigned for a Report and Recommendation " on whether the pending motion should be granted and, if necessary, to determine the appropriate amount of damages, costs and/or fees to be awarded."
For the reasons set forth below, my recommendation is that the motion be granted and damages awarded as follows: $394, 482 for outstanding withdrawal liability, $46, 494.84 for prejudgment interest on the outstanding withdrawal liability, $78, 896.40 for liquidated damages, $4, 736.25 for attorneys' fees, and $650 for costs of the action.
The following facts are taken from the Complaint and accepted as true for purposes of this motion. The Fund is a jointly administered, multiemployer, labor-management trust fund established and maintained pursuant to Collective Bargaining Agreements in accordance with Section 302(c)(5) of the Taft-Hartley Act, 29 U.S.C. § 186(c)(5). See Compl. ¶ 2. The Fund is also an employee pension benefit plan, as defined by ERISA. See id. By virtue of a Collective Bargaining Agreement (" CBA") that Baker Hill executed with UCFW Local 342 (a labor organization that collectively bargained on Plaintiff's behalf), Baker Hill was obligated to contribute to the Fund in accordance with the terms of the CBA and the applicable Agreement and Declaration of Trust (" Trust Agreement") governing the Fund. See id. ¶ 5. Plaintiff did not provide a copy of the CBA or Trust Agreement with its Complaint or motion papers.
As of November 25, 2008, the Fund experienced a mass withdrawal by contributing employers, as defined in Section 4041(a) of ERISA, 29 U.S.C. § 1341a. See Compl. ¶ 6. As required under the statute, the Fund sent a letter to Baker Hill on January 26, 2009 (the " Notice Letter") notifying it of the mass withdrawal and informing it that contributing employers were no longer required to make monthly contributions to the Fund on or after November 25, 2008. See id.; see also Affidavit of George Leventis, sworn to on August 5, 2014 (the " Leventis Aff."), at ¶ 9; Compl. Ex. A, Letter Dated January 26, 2009.
The Notice Letter outlined a three-step process by which Defendant's withdrawal liability would be determined: (1) first, the Fund would demand, in writing, " initial withdrawal liability" from Baker Hill, the amount of which is calculated pursuant to 29 C.F.R. § 4041A.23, together with a payment schedule. Baker Hill would be required to make payments in accordance with that schedule until; (2) the Fund determined and gave notice of " redetermination liability, " calculated pursuant to 29 C.F.R. § 4219.11(b)(2). Upon such notice, Baker Hill would continue making payments, but in accordance with an amended redetermination schedule until; (3) the Fund finally determined its " reallocation liability" under 29 C.F.R. § 4219.11(b)(3). Upon receiving notice of its final liability amount and payment schedule, Baker Hill would make payments in satisfaction of that amount. See generally Compl. Ex. A.
Accordingly, the Fund sent a letter on August 14, 2009 (the " Initial Withdrawal Letter") notifying Baker Hill of its " initial withdrawal liability" in the amount of $204, 252, payable in one lump sum or 80 quarterly installments of $1, 512. See Compl. ¶ 7; Leventis Aff. ¶ ¶ 10-11; Compl. Ex. B, Letter Dated August 14, 2009. The Initial Withdrawal Letter indicated that Defendant's first payment would be due on October 13, 2009. See id.
Plaintiff also sent another letter, dated March 7, 2011 (the " Reallocation Letter"), notifying Baker Hill that its final " reallocation liability" was $414, 138 and providing an updated payment schedule. See Compl. ¶ 8; Leventis Aff. ¶ 13; Compl. Ex. C.
At this point, the Court notes that, according to the three-step procedure outlined in the Notice Letter, the Fund was required to send Defendant a notice of its " redetermination liability" after the Initial Withdrawal Letter, but before the Reallocation Letter. The Complaint does not allege this was ever done, and no such notice is provided with the instant motion papers. However, the Reallocation Letter specifically states as follows:
Please note, however, that because your company is currently delinquent on its quarterly payments, your company's withdrawal liability is due to be accelerated on November 18, 2010, as set forth in the letter sent to you by the Fund on September 18, 2010.
In accordance with that letter, please cure your company's delinquency by sending payment of $3, 024.00 made directly to the order of 'UCFW Local 50 Pension Trust Fund' and forward to the undersigned [George Leventis] at the address below.
Please be advised that if the Company's failure is not cured by the date noted above, the Company will be deemed in default of its withdrawal liability as provided by Section 4219(c)(5) of ERISA. The Fund will then be entitled to require immediate payment of the outstanding amount of the Company's withdrawal liability, plus accelerated interest. . . .
Compl. Ex. C.
Thus, it appears the Fund warned Defendant on March 7, 2011 that it was required to cure alleged delinquencies by November 18, 2010. The impossibility of Defendant's compliance with this demand is self-evident. Moreover, Plaintiff does not provide the referenced September 18, 2010 letter, or allege whether, save for the alleged $3, 024 arrears, Baker Hill made the required payments toward its initial withdrawal liability between August 14, 2009, when it received notice of that amount, and March 7, 2011, the date of the Reallocation Letter.
The Fund then sent another letter on August 17, 2012 (the " Default Letter"). The Default Letter referenced the Reallocation Letter as follows: " [The Reallocation Letter] stated that the Company's payment of withdrawal liability to the Fund was required to commence no later than sixty (60) days after the date of such letter . . . The initial payment was due on or before August 11, 2012." See Compl. Ex. D, Letter Dated August 17, 2012. Based on my review of the Reallocation Letter, these statements by the Fund are untrue. Specifically, the Reallocation Letter did not indicate that payment was due 60 days thereafter; to the contrary, it alleged that Baker Hill was behind on its payments and was required to cure its delinquencies by November 18, 2010, a date that had passed more than three months earlier. The Reallocation Letter also does not state that Defendant's payment of any delinquent sums became due on August 11, 2012. In addition, the Default Letter states that Defendant owes $1, 513.49, despite its prior Reallocation Letter, which stated that Defendant owed $3, 024.00. Plaintiff fails to reconcile these inconsistencies in its motion papers.
The Default Letter does, however, provide notice that if Defendant's delinquencies persist for 60 additional days, it would be deemed in default under Section 4219(c)(5) of ERISA and the Fund would be entitled to accelerate payment of the outstanding amount of withdrawal liability, plus accrued interest, penalties, costs and attorneys' fees. See id.; Compl. ¶ 9; Leventis Aff. ¶ 14.
Finally, approximately one year and four months later, on October 18, 2012, the Fund sent a letter (the " Acceleration Letter") notifying Defendant that it had failed to make payment as required, despite its prior demand, and therefore the outstanding amount of $414, 138 was immediately due, together with applicable interest and liquidated damages, less a credit of $19, 656 representing payments previously made by Defendant. See Compl. Ex. E; Compl. ¶ 10; Leventis Aff. ¶ 15.
According to Plaintiff, Baker Hill never cured its default and did not seek review of any part of the Fund's liability determination. Based on these events, the Fund brought claims against Defendant for violations of the CBA and ERISA. As set forth above, Baker Hill never responded or otherwise moved with respect to the Complaint. Baker Hill's default was noted by the Clerk of the Court on April 30, 2014, DE , and the Fund moved for a default judgment on August 8, 2014, DE .
II. Legal Standards
A. Standard of Review
Motions for default judgments are governed by Rule 55 of the Federal Rules of Civil Procedure (" Fed. R. Civ. P."), which provides for a two-step process. See Fed.R.Civ.P. 55; Priestley v. Headminder, Inc., 647 F.3d 497, 504-05 (2d Cir. 2011); Gesualdi v. Ava Shypula Testing & Inspection, Inc., CV 13-01873, at *6-*7 (E.D.N.Y. Feb. 28, 2014) (Report and Recommendation), adopted by (E.D.N.Y. Apr. 10, 2014). Initially, the moving party must obtain a certificate of default from the Clerk of the Court. See Fed.R.Civ.P. 55(a). Once the certificate of default is issued, the moving party may apply for entry of a default judgment. See id. Rule 55(b).
Where a default occurs, the well-pleaded factual allegations set forth in a complaint relating to liability are deemed true. See Greyhound Exhibitgroup, Inc. v. E.L. U.L. Realty Corp., 973 F.2d 155, 158 (2d Cir. 1992); Ferrara v. PJF Trucking LLC, 13-CV-7191, at *9-*10 (E.D.N.Y. Aug. 14, 2014) (Report and Recommendation), adopted by (E.D.N.Y. Sept. 22, 2014); Ava Shypula, at *7; Gesualdi v. Magnolia Pro Trucking Inc., CV 11-14082, at *5 (E.D.N.Y. Aug. 20, 2012) (Report and Recommendation), adopted by (E.D.N.Y. Sept. 11, 2012); Joe Hand Promotions, Inc. v. El Norteno Rest. Corp., CV-06-1878, at *4 (E.D.N.Y. Sept. 11, 2007) (Report and Recommendation), adopted by; see also Fed.R.Civ.P. 8(b)(6) (" An allegation--other than one relating to the amount of damages--is admitted if a responsive pleading is required and the allegation is not denied").
However, " just because a party is in default, the plaintiff is not entitled to a default judgment as a matter of right." Profi-Parlkiet Sp. Zoo v. Seneca Hardwoods LLC, 13 CV 4358, at *11 (E.D.N.Y. May 23, 2014) (Report and Recommendation), adopted by (E.D.N.Y. Jun. 18, 2014) (internal quotation omitted); see Bravado Int'l Grp. Merchandising Servs., Inc. v. Ninna, Inc., 655 F.Supp.2d 177, 186 (E.D.N.Y. 2009). Liability is not established simply because the complaint remains unanswered. See PJF Trucking, at *10. This is because a default does not establish those allegations which are conclusory and it does not excuse defects in the pleadings. See id.; see also Gunawan v. Sake Sushi Rest., 897 F.Supp.2d 76, 83 (E.D.N.Y. 2012); Said v. SBS Elecs., Inc., CV 08-3067, at *6-*7 (E.D.N.Y. Feb. 24, 2010), adopted as modified, (E.D.N.Y. Mar. 30, 2010). Accordingly, the district court must determine whether the plaintiff's allegations establish liability as a matter of law. See City of New York v. Mickalis Pawn Shop, LLC, 645 F.3d 114, 137 (2d Cir. 2011); Ava Shylupa, at *8.
Courts consider three factors when determining whether to grant a default judgment: (i) whether the defendant's default was willful; (ii) whether the defendant has a meritorious defense; and (iii) the level of prejudice to the non-defaulting party if the motion is denied. See PJF Trucking, at *10-*11; Magnolia Pro Trucking, at *6; Reliance Commc'ns LLC v. Retail Store Ventures, Inc., CV 12-2067, at *6-*7 (E.D.N.Y. Aug. 7, 2013) (Report and Recommendation), adopted by (E.D.N.Y. Aug. 29, 2013). The decision whether to grant a default judgment rests with the sound discretion of the district court. See Shah v. New York State Dep't of Civil Serv., 168 F.3d 610, 615 (2d Cir. 1999); Ainbinder v. Money Ctr. Fin. Grp., Inc., 10-CV-5270, at *7 (E.D.N.Y. Mar. 24, 2014).
In the event that liability is established, the Court must ascertain damages with " reasonable certainty." Credit Lyonnais Sec., Inc. v. Alcantara, 183 F.3d 151, 155 (2d Cir. 1999); see Gesualdi v. Tapia Trucking LLC, 11-CV-4174, at *4 (E.D.N.Y. Oct. 15, 2012) (Report and Recommendation), adopted by (E.D.N.Y. Mar. 6, 2013). The inquest can be held by affidavit, without a hearing, so long as the Court endeavors to ensure that there is a basis for the damages specified in the default judgment. See Transatlantic Marine Claims Agency, Inc. v. Ace Shipping Corp., 109 F.3d 105, 111 (2d Cir. 1997); Tapia Trucking, at * 4-*5.
B. Applicable Law
The inquiry begins with whether the factual allegations set forth in the Complaint, which are now taken as true, establish liability. See, e.g., PJF Trucking, at *13 (" Although Defendant's default constitutes an admission of all factual allegations in the Complaint as they relate to liability, Plaintiffs must nevertheless demonstrate that the uncontested allegations set forth valid claims"). Plaintiff claims that Defendant's liability stems from its withdrawal from the Fund and subsequent failure to satisfy its resulting withdrawal liability obligations under the CBA and ERISA.
" Withdrawal liability is part of a comprehensive legislative scheme designed to address the adverse consequences that arise when individual employers terminate their participation in, or withdraw from, multiemployer pension plans." Burke v. Hamilton Equip. Installers, Inc., 02-CV-519, at *11 (W.D.N.Y. Oct. 16, 2006). " Withdrawal from a multiemployer pension plan occurs when an employer 'permanently ceases to have an obligation to contribute under the plan, or permanently ceases all covered operations under the plan.'" Daniello v. Planned Sys. Integration, CV 07-1729, at *4 (E.D.N.Y. June 25, 2009) (Report and Recommendation), adopted by (July 17, 2009) (quoting 29 U.S.C. § 1383)). " 'Congress determined that unregulated withdrawals from multiemployer pension plans could endanger their financial vitality and deprive workers of . . . vested [pension] rights. . . .'" (quoting Connolly v. Pension Benefit Guaranty Corp., 475 U.S. 211, 227-28, 106 S.Ct. 1018, 1019, 89 L.Ed.2d 166 (1986)). Accordingly, " '[i]f an employer withdraws from a multiemployer plan in a complete withdrawal or a partial withdrawal, then the employer is liable to the plan in the amount determined under [ERISA] to be the withdrawal liability.'" Vacca v. Bridge Chrysler Jeep Dodge, Inc., CV 06-3543, at *13-*14 (E.D.N.Y. Sept. 4, 2008) (Report and Recommendation) (quoting 29 U.S.C. § 1381(a)).
" Following withdrawal from a plan, the fund is vested with authority to determine the amount of withdrawal liability. It must then notify the withdrawing employer of its withdrawal liability, set a payment schedule, and formally demand payment." Burke, at *11 (citing 29 U.S.C. § § 1382, 1399); see Daniello, at *5 (" Once an employer has withdrawn from a plan, the sponsor of the plan determines the amount of the withdrawal liability . . . and notifies the withdrawing employer of that amount and provides an amortized payment schedule." (citations omitted)). " After receiving notice of withdrawal liability from the plan, an employer must make payments according to the plan's payment schedule within 60 days of receiving the plan's demand for withdrawal liability."
" Various statutory provisions afford the employer an opportunity to challenge the plan's assessment of the employer's liability, or to request more information." Id. (citing 29 U.S.C. § 1399(b)(2) (providing, in part, that within 90 days of receiving the notice, the employer may request that the plan sponsor review specific matters relating to the determination of the employer's liability and the schedule of payments); id. § 1401).
If the employer fails to make payments consistent with the procedure
outlined above, the plan sponsor must again notify the employer of its default
and, if not cured within 60 days of receiving notice of nonpayment, " the fund
is entitled to immediate payment of the employer's entire withdrawal liability,
in addition to accrued interest on the total outstanding liability." see 29 U.S.C. § 1399(c)(5) (providing that in the event of a default, the plan sponsor " may require immediate payment of the outstanding amount of an employer's withdrawal liability, plus accrued interest on the total outstanding liability from the due date of the first payment which was not timely made."); Vacca, at *15 (" Thus, '[w]hen an employer is in default, the Fund [is] entitled to require immediate payment of the entire withdrawal liability amount demanded plus interest.'" (quoting Trustees of the Local 531 Pension Plan v. Corner Dist., Inc., No. 07-CV-529, at *10)).
" Under the structure of ERISA, any disputes over an employer's withdrawal liability are to be resolved through arbitration. Either party may initiate arbitration within 60 days after either (1) the date the employer is notified of its liability or (2) 120 days after the employer contacts the plan sponsor about any disputes or requests for review of its withdrawal liability." Id. (citing 29 U.S.C. § 1401(a)). " If neither party initiates an arbitration proceeding pursuant to [ERISA], 'the amounts demanded by the plan sponsor under section 1399(b)(1) [there]of . . . shall be due and owing on the schedule set forth by the plan sponsor. The plan sponsor may bring an action in State or Federal court of competent jurisdiction for collection.'" (quoting 29 U.S.C. § 1401(b)(1)). " [I]f an employer fails to initiate the arbitration process to contest the amount of withdrawal liability assessed against it, the employer has waived its right to arbitration, and a federal court will not make an independent determination that the plan sponsor's assessment was unreasonable." (citing Nat'l Fund Pension Plan of the UNITE HERE Workers Pension Fund v. Westchester Lace & Textiles, Inc., No. 05 Civ. 6138, at *14 (S.D.N.Y. July 21, 2006); see Bowers v. Greenpoint Warehousing & Dist. Servs., Inc., 91 Civ. 3784, at *4 (S.D.N.Y. May 6, 1992) (" Failure to initiate arbitration within the statutory time period operates as a waiver of arbitration, thereby fixing the withdrawal liability and foreclosing any challenge to its imposition.")
Finally, " ERISA provides that '[i]n any action under this section to compel an employer to pay withdrawal liability, any failure of the employer to make any withdrawal liability payment within the time prescribed shall be treated in the same manner as a delinquent contribution (within the meaning of Section 1145 of this title).'" (quoting 29 U.S.C. § 1451(b)). Therefore, a prevailing plaintiff in a withdrawal liability case is entitled to an award of:
(A) the unpaid contributions [or, as here, the principal amount of outstanding withdrawal liability];
(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 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).
A. Withdrawal Liability
Here, Plaintiff's allegations, together with the uncontested facts before the Court, establish liability as a matter of law. See Bricklayers Ins. & Welfare Fund v. Verse Inc., 12-CV-4271, at *8 (E.D.N.Y. Aug. 20, 2013) (Report and Recommendation), adopted by (E.D.N.Y. Sept. 11, 2013). Specifically, the evidence demonstrates that the Fund made a determination on or about November 25, 2008 that it had experienced a mass withdrawal of contributing employers. The Court notes that Plaintiff failed to specifically allege or submit evidence to establish how it made such a determination. Nonetheless, consistent with its obligations under ERISA, the Fund notified Defendant of the withdrawal on January 26, 2009, and later, on August 14, 2009, notified it of the amount of its initial withdrawal liability and set a payment schedule. Under ERISA, Baker Hill had 60 days from its receipt of the Initial Withdrawal Letter (until October 13, 2009) to begin making the payments set forth therein. The Court again notes that Plaintiff does not allege whether, and to what extent, Baker Hill complied with this demand, but it is reasonable to infer from the documentation that at some point between October 13, 2009 and March 7, 2011, Baker Hill failed to remain current on its payments and owed $3, 024, the equivalent of two installments.
The evidence further establishes that on March 7, 2011, consistent with ERISA, Plaintiff notified Baker Hill of the amount of its reallocation liability and provided an updated payment schedule. A Declaration from the Fund's actuary, David B. Reid (the " Reid Decl."), together with a report prepared by his firm which sets forth the method in which Defendant's withdrawal liability was calculated, are undisputed and their contents are accepted as true by the Court. See Compl. Ex. C. The Reallocation Letter also notified Baker Hill of its arrears in the amount of $3, 024, as noted above.
The evidence establishes that between March 7, 2011 and August 14, 2012, Baker Hill cured its initial default and became current on its quarterly payments. See Reid Decl ¶ 7 (asserting that the Fund's records reflect that Baker Hill " was current on its quarterly payments on its reallocation liability until August 14, 2012, at which point Defendant failed to make any further payments."). The evidence thus establishes that promptly upon Defendant's missed quarterly payment on August 14, 2012, the Fund notified Baker Hill of its default and appropriately cautioned that the failure to cure within 60 days would result in acceleration of the full amount of reallocation liability. More than 60 days later, on October 18, 2012, it appearing that Defendant had not cured its default, the Fund demanded immediate payment of the full amount of Defendant's outstanding liability.
It is undisputed that Defendant never requested that the Fund review the determination of its liability or the schedule of payments. It is also undisputed that Baker Hill never initiated an arbitration proceeding to resolve any dispute it may have had concerning the Fund's various determinations, namely: that Defendant effected a complete withdrawal from the Fund; that the Fund calculated the amount of withdrawal liability as required under ERISA; and that Defendant was, at the time, in default of its payment obligations. " It is well-established that when a defendant fails to initiate arbitration under ERISA's provisions, the defendant's withdrawal liability becomes fixed and all defenses to that withdrawal liability are waived." Vacca, CV 06-3543, at *19 (collecting cases). Due to Defendant's failure to initiate arbitration proceedings, it has waived its right to do so and, more importantly, to assert any defenses to Plaintiff's claims for recovery of withdrawal liability in this action. Accordingly, the Court concludes that Plaintiff has sufficiently established a basis for withdrawal liability under ERISA.
B. Default Judgment Factors
Having concluded that there is a basis for liability, the Court turns to the relevant factors outlined above, namely, willfulness, the existence of a meritorious defense, and prejudice, to determine whether, under the circumstances, entry of a default judgment is appropriate.
" When a defendant is continually and 'entirely unresponsive, ' defendant's failure to respond is considered willful." See PJF Trucking, at *12 (citations omitted) (finding that the defendant's failure to respond to the Complaint in an ERISA default case " sufficiently demonstrate[d] willfulness."). Plaintiff submits five letters that it sent to Baker Hill between 2009 and 2012 either advising of a default under the payment schedule, demanding payment thereunder, or both. It is undisputed that Baker Hill did not meaningfully respond to the Fund's efforts. Plaintiff also submits an affidavit of service demonstrating that Baker Hill was served with the Summons and Complaint on March 27, 2014. See Cacace Decl. Ex. 2. Baker Hill did not answer or other respond to the Complaint, and did not seek an extension of time to respond. Finally, Plaintiff submits a Certificate of Service, DE [12-10], establishing that Baker Hill was served with the instant motion for default judgment and accompanying papers. " There is no indication that Defendant's failure to respond to the Complaint, despite being properly served, was anything but deliberate, " and therefore willful. PJF Trucking, at *12.
2. Meritorious Defense
As noted above, Defendant's failure to seek timely arbitration under ERISA precludes it from asserting defenses to Plaintiff's claims here. See Trs. of the 1199 SEIU Health Case Employees Pension Fund v. Traymore Chemists, Inc., 13 CV 4070, at *9 (E.D.N.Y. June 25, 2014) (Report and Recommendation), adopted by (E.D.N.Y. Aug. 25, 2014) (holding, in the context withdrawal liability under ERISA, that " if no arbitration is initiated, the employer 'waives its right to arbitration and its right to assert any defenses in [an] action seeking withdrawal liability.'" (quoting Bakery & Confectionary Union & Industrial Pension Fund v. Mt. Rose Ravioli & Macaroni Co., Inc., at *7 (E.D.N.Y. Nov. 10, 2011)); Vacca, at 19 (" It is well-settled that when a defendant fails to initiate arbitration under ERISA's provisions, the defendant's withdrawal liability becomes fixed and all defenses to that withdrawal liability are waived.").
In any event, even if Defendant had not waived its right to assert defenses in this collection action, the Court would nevertheless be unable to determine whether Defendant had a meritorious one because it did not answer or respond to the Complaint and did not oppose this motion. Accordingly, this factor weighs in favor of granting the Fund's motion.
The final factor to consider is whether the non-defaulting party would be prejudiced if the motion to default were to be denied. See Eastern Sav. Bank, FSB v. Beach, CV 13-341, at *19 (E.D.N.Y. Feb. 12, 2014) (Report and Recommendation), adopted by (E.D.N.Y. Mar. 10, 2014). I find denying this motion would prejudice Plaintiff by effectively leaving it without recourse, " as there are no additional steps available to secure relief in this Court." Bridge Oil Ltd. v. Emerald Reefer Lines, LLC, 06 Civ. 14226, at *5 (S.D.N.Y. Oct. 27, 2008).
Based on the foregoing, the Court concludes, and accordingly recommends to Judge Seybert, that entry of a default is appropriate.
The final question before the Court is whether to award damages and, if so, in what amount. See Finkel v. Union Elevator Corp., 07-CV-2227, at *5 (E.D.N.Y. Mar. 14, 2011) (" A defendant's default constitutes an admission of liability for all well-pleaded factual allegations in the complaint, except for those relating to damages.") (citing Greyhound Exhibitgroup, Inc. v. E.L.U.L. Realty Corp., 973 F.2d 155, 158 (2d Cir. 1992); Au Bon Pain Corp. v. Artect, Inc., 653 F.2d 61, 65 (2d Cir. 1981)). A default " effectively constitutes an admission that damages were proximately caused by the defaulting party's conduct: that is, the acts pleaded in a complaint violated the laws upon which a claim is based and caused injuries as alleged." Id.
Consequently, the moving party is entitled to all reasonable inferences from the
evidence it offers.
As noted, ERISA provides that, for purposes of measuring damages, collection actions seeking the recovery of withdrawal liability are to be treated as actions seeking the recovery of delinquent contributions under 29 U.S.C. § 1132(g)(2). The burden on Plaintiff is to establish a " reasonable basis" for the damages it seeks. See id. However, " ERISA provides for these awards in any action brought to compel an employer to pay withdrawal liability when judgment is entered in favor of the plan." Vacca, at *21 (citing 29 U.S.C. § § 1132(g), 1451(b)). " 'Therefore, such awards are not discretionary with the court.'" Id. (quoting New York Teamsters Conference Pension & Retirement Fund v. Hogan-Souhan All Star Dairy, No. 87-CV-627, at *6 (N.D.N.Y. June 7, 1988)).
1. Principal Withdrawal Liability
As described more fully above, the Court has reviewed the evidence provided in support of Plaintiff's claims, including the undisputed report by the Fund's actuary setting forth the method in which the withdrawal liability was calculated, and finds that liability in the principal amount of $394, 482 (representing the total reallocation liability of $414, 138 less $19, 656 in payments made by Defendant) has been sufficiently established thereby. Accordingly, I recommend to Judge Seybert that judgment in that amount be awarded to Plaintiff.
2. Interest on Withdrawal Liability
Plaintiff also seeks prejudgment interest, from August 14, 2012 through August 1, 2014, at an annual rate of 6.00%, in the total amount of $49, 054.78. See Cacace Decl. ¶ 24(b). According to George Leventis, the Fund's Assistant Administrator, such interest is provided for in the Plan's Withdrawal Liability Procedures (the " Procedures"), a copy of which was provided to the Court. See Leventis Aff. Ex. 5. Leventis affirms that the Procedures, which are undated, were in force at the time of Baker Hill's withdrawal from the Fund. See id. ¶ 7. According to the Procedures: " The rate of interest on overdue and defaulted initial withdrawal liability, determination liability and reallocation liability shall be one-half of one percent per month[, ]" or 6% annually. See Procedures at ¶ 5. The Court notes that prejudgment interest on delinquent withdrawal liability is also authorized under ERISA. See 29 U.S.C. § 1132(g)(2)(B).
Here, the Declaration of the Fund's actuary summarily asserts that the amount of interest accrued on the principal outstanding withdrawal liability from August 14, 2012 (the date of Defendant's first missed payment) through August 1, 2014, equals $49, 054.78. However, Reid does not indicate how that figure was calculated and Plaintiff provides no relevant supporting documentation to substantiate Reid's determination. This is " regrettable because the [C]ourt is deprived of a meaningful opportunity to" validate this aspect of Plaintiff's damages. See Daniello, at *10. More importantly, the Court has uncertainties about Reid's calculation, which, without the benefit of substantiating documentation, the Court cannot reconcile and must resolve in accordance with this district's prior decisional law. Specifically, utilizing a method of calculating interest previously espoused in this district, the Court calculated the accrued interest for this period as $46, 494.84 (an amount $2, 559.94 less than Reid's figure). As explained by Magistrate Judge Reyes in Daniello v. PML Furniture Group of NJ, Ltd., 06-CV-5261, at *7-*8 n.5 (E.D.N.Y. May 6, 2009), and adopted by District Judge Vitaliano at (E.D.N.Y. Dec.9, 2009), this number was calculated by taking the number of days between the due date of the first delinquent payment, August 14, 2012, and the date Plaintiff chose as the end date for its calculation, August 1, 2014 (717 days) and multiplying it by the daily interest rate of $64.85 ($394, 482 (delinquent withdrawal liability) x 0.06 (yearly interest) = $23, 668.92 (yearly interest) / 365 days = $64.85 per day interest). To the extent Plaintiff has failed to provide some supporting evidence to convince this Court to depart from this established mathematical calculation, the Court recommends to Judge Seybert a prejudgment interest award of $46, 494.84.
In addition, although Plaintiff requested only accrued interest through August 1, 2014, since Defendant's withdrawal liability remains delinquent, daily interest continues to accrue until judgment is entered. See Leventis Aff. ¶ 17 (affirming that Baker Hill failed to make any payment to the Fund after October 18, 2012); Reid Decl. ¶ 9 (same); see also Bd. of Trs. v. Merrick Assoc. Mkt., Inc., CV 11-4310, at *15 (E.D.N.Y. Aug. 21, 2012) (Report and Recommendation), adopted by (E.D.N.Y. Sept. 13, 2012) (awarding daily interest until judgment was entered despite Plaintiff's request only for accrued interest through date default motion was filed). Accordingly, the Court recommends to Judge Seybert that daily interest of $64.85 per day be awarded for each day after August 1, 2014, until judgment is entered.
3. Additional Damages
Plaintiff further seeks liquidated damages under the Procedures and ERISA in the amount of $78, 896.40. See Cacace Decl. ¶ 24(c). Paragraph 6 of the Procedures provides that " Liquidated damages on overdue and defaulted initial withdrawal liability, determination liability and reallocation liability shall be the greater of interest on the overdue or defaulted liability or twenty percent (20%) of the overdue or defaulted liability." See Leventis Decl. ¶ 6. Plaintiff contends that 20 percent of the delinquent withdrawal liability, or $78, 896.40, is greater than the amount Reid calculated in interest owed. Initially, it warrants emphasizing that the evidence does not support Reid's interest figure, and the Court instead adopts $46, 494.84 as the interest accrued between August 14, 2012 and August 1, 2014. In either event, even with daily interest accruing through the date of this Report, 20 percent of the outstanding liability is the greater sum. Cf. Magnolia Pro Trucking, at *22-*23 (applying interest rate for purposes of fixing liquidated damages award where accrual of daily interest leading up to entry of judgment rendered that figure greater than 20 percent of the unpaid contributions).
Accordingly, the Court recommends to Judge Seybert that a liquidated damages award of $78, 896.40 be awarded to Plaintiff.
4. Reasonable Attorneys' Fees
Plaintiff also requests attorneys' fees in the amount of $4, 818.75. See Cacace Decl. ¶ 25. Such fees are recoverable under ERISA. See 29 U.S.C. § 1132(g)(2)(D). " Courts within the Second Circuit determine attorneys' fees according to a standard of 'presumptively reasonable fee.'" See (quoting Simmons v. N.Y.C. Transit Auth., 575 F.3d 170, 174 (2d Cir. 2008); Arbor Hill Concerns Citizens Neighborhood Ass'n v. County of Albany, 522 F.3d 182, 189 (2d Cir. 2007)). Under this method, " fees are calculated by multiplying a reasonable hourly rate by a reasonable number of expended hours." See Tapia Trucking, at *9-*10 (citing Arbor Hill, 575 F.3d at 186-90). " The Court has 'considerable discretion' in determining the presumptively reasonable fee; however, it should 'bear in mind all case-specific variables that [the Second Circuit] and other courts have identified as relevant to the reasonableness of attorneys' fees in setting a reasonable hourly rate.'" Id. " Ultimately, the Court should be guided by what a 'reasonable, paying client, who wishes to pay the least amount necessary to litigate the case effectively' would be willing to pay.'" Id.
The party seeking reimbursement of attorneys' fees bears the burden of proving the reasonableness and necessity of hours spent and rates charged. See generally N.Y. State Ass'n for Retarded Children, Inc. v. Carey, 711 F.2d 1136 (2d Cir. 1983). A request for an award of attorneys' fees must be supported by contemporaneous time records that describe with specificity, by attorney, the nature of the work done, the hours expended, and the dates on which the work was performed. See Cruz v. Local Union No. 3 of the IBEW, 34 F.3d 1148, 1160-61 (2d Cir. 1994).
Here, Plaintiff seeks $4, 818.75 for legal services rendered by the following individuals: associate Anthony Cacace, at a rate of $325 per hour; associate Aaron Feuer, at a rate of $200 per hour; legal assistant Thomas Rossidis, at a rate of $100 per hour; and litigation support staff members Allen Healy, Anthony Lopez, and Michael R.D. Cooper, each at a rate of $100 per hour. Plaintiff supports its request with contemporaneous time records that detail the tasks the attorneys and paralegals completed for this case, and the number of hours expended on each task. See Cacace Decl. Ex. 4.
" This District has 'routinely approved hourly rates ranging from $200-$400 for partners, $100-$300 for associates, and $70-$90 for paralegals." Tapia Trucking, at *12 (quoting Magnolia Pro Trucking Inc., at *27). " However, courts in this District have accounted for the relative simplicity of ERISA default cases by consistently approving rates that are closer to the lower end of this range." Id. (citations omitted). Here, attorney Cacace, who was admitted to the bar in 2009, states that he is a member of his firm's " dedicated ERISA group and the attorney at [his] firm with primary responsibility for prosecuting actions for the recovery of employee benefits on behalf of the firm's Taft-Hartley funds clients, including the Plaintiff." Cacace Decl. ¶ 14. Plaintiff does not provide any additional detail on the other individuals for whose services it seeks reimbursement, other than to state that attorney Feuer is a second-year associate in the Firm's dedicated ERISA practice group. See id. ¶ 16. Cacace contends that the charged rates are nevertheless " justified by the fact that Proskauer provides its clients with the benefit of its extensive resources as an international firm and a leader in ERISA litigation." Id. ¶ 17. Plaintiff does not identify which of Proskauer's extensive resources as an international firm were required in this default action.
Based on this district's precedent, the Court finds that the rates charged by Feuer, Rossidis, Healy, Lopez, and Cooper are generally within the approved ranges for such services. E.g., Bldg. Material Teamsters Local 282 v. A Star Business Servs. of N.Y. Corp., 11 CV 4646, at *21-*22 (E.D.N.Y. May 30, 2012) (Report and Recommendation), adopted by (E.D.N.Y. Aug. 6, 2012) (approving $200 per hour for associate with 5 years of post-clerkship experience and $275 per hour for partner with 23 years' experience); Tapia Trucking, at *12-*14 (approving $275 per hour for partner work and reducing hourly rate for associates with 5 and 2 years' experience to $150 and $100, respectively); Magnolia Pro Trucking, at *10 (approving $325 per hour for partner with 23 years of experience; $250 per hour for attorney with 6 years' experience; and $90 per hour for paralegal); Finkel v. Jones Lang LaSalle Americas, Inc., No. 08-CV-2333, at *13-*14 (E.D.N.Y. Nov. 12, 2009) (Report and Recommendation), adopted by (E.D.N.Y. Dec. 23, 2009) (approving $250 per hour for partner work, $235 per hour for senior associates, and $225 per hour for junior associates). However, the rate charged by Cacace exceeds the upper limit of the approved range and, particularly in light of the relative simplicity of this default action, is not warranted here. Notably, in Trustees v. Bradley Funeral Service, Inc., 11-CV-2885, (E.D.N.Y. Aug. 10, 2012) (Report and Recommendation), adopted by (Sept. 4, 2012), Judge Mann found that $295 per hour was a reasonable rate for Cacace, and reduced the hourly rates for litigation support personnel from his firm to $100.
Accordingly, I recommend to Judge Seybert that, here, the charged rates for attorney Feuer and the litigation support personnel are reasonable and within the approved range for such services in this district, but I recommend that the Court reduce the hourly rate for Cacace to $295.
As to the number of hours billed, counsel billed a total of 20.25 hours of attorney time and 4.25 hours of non-attorney time. See Cacace Decl. Ex. 4. Based on my review of the contemporaneous time records, the number of hours billed appears reasonable and in line with the amount of work required to effectively litigate an ERISA default case in this district. See, e.g., Tapia Trucking, at *14-*15 (approving 32.40 hours); Magnolia Pro Trucking, at *30-*31 (approving 21.40 hours); Ferrara v. Metro D Excavation & Found., Inc., 10 CV 4215, at *20-*21 (E.D.N.Y. July 7, 2011) (Report and Recommendation), adopted by (E.D.N.Y. Aug. 16, 2011) (approving 32.1 hours). Accordingly, it is recommended that Plaintiff be awarded $4, 736.25 in attorneys' fees.
5. Costs of the Action
Finally, Plaintiff seeks reimbursement of costs which total $650.00. See Cacace Decl. ¶ 24(d). Specifically, Plaintiff seeks to recover the $350 filing fee for this action and $300 in costs related to effecting service of process upon Defendant. See id. In support its request, Plaintiff provides an invoice from its process server detailing the efforts made to serve Defendant. See id. Ex. 2.
ERISA provides for the recovery of costs associated with the litigation, see 29 U.S.C. § 1132(g)(2)(D), and " [a] court will generally award 'those reasonable out-of-pocket expenses incurred by the attorney[s] and which are normally charged fee paying clients, '" Jones Lang LaSalle, at *16 (quoting Reichman v. Bonsignore, Brignati & Mazzotta, P.C., 818 F.2d 278, 283 (2d Cir. 1987)). This Court finds Plaintiff's request for costs reasonable and adequately supported. See id. (awarding $464.68 for " filing fees, service of process, and some postage and photocopying"); see also Ava Shypula Testing & Inspection, at *19 (awarding $601.80 for the court-filing fee, service of process on the defendant, postage, photocopying, and accessing the docket); PJF Trucking LLC, at *47-*48 (awarding 492.69 for costs associated with service of process, postage, and copying); Bldg. Material Teamsters, at *23-*24 (awarding $386.24 for filing fees, photocopies and postage); Tapia Trucking, at *15 (awarding $625.04 for " court filing fees, service of process costs, and other related fees, including photocopying and postage"); Magnolia Pro Trucking, at *33-*34 (awarding $588.85 for " postage, process service fees and court filing fees"). Accordingly, the Court recommends that Plaintiffs be awarded $650 in costs.
In accordance with the foregoing, the undersigned recommends Plaintiff be awarded withdrawal liability, interest, liquidated damages, attorneys' fees, and costs as follows:
Outstanding Withdrawal Liability
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Interest on Outstanding Withdrawal Liability
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Liquidated Damages on Withdrawal Liability
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Daily Interest Through Entry of Judgment
A copy of this Report and Recommendation is being served on Plaintiff by electronic filing on the date below. Plaintiff is directed to serve a copy of it on Defendant and promptly file proof of serve by ECF. Any objections to this Report and Recommendation must be filed with the Clerk of the Court within fourteen (14) days of receipt of this report. Failure to file objections within the specified time waives the right to appeal the District Court's order. See 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 6(a), 72.