United States District Court, S.D. New York
TRUSTEES OF THE NEW YORK CITY DISTRICT COUNCIL OF CARPENTERS PENSION FUND, WELFARE FUND, ANNUITY FUND, AND APPRENTICESHIP, JOURNEYMAN RETRAINING, EDUCATIONAL AND INDUSTRY FUND, et al., Petitioners,
FORMULA 1 BUILDERS, LLC, Respondent.
MEMORANDUM OPINION AND ORDER
GREGORY H. WOODS UNITED STATES DISTRICT JUDGE.
Trustees of the New York City District Council of Carpenters
Pension Fund, Welfare Fund, Annuity Fund, and Apprenticeship,
Journeyman Retraining, Educational and Industry Fund; the
Trustees of the New York City Carpenters Relief and Charity
Fund; the New York City and Vicinity Carpenters Labor
Management Corporation (together, the “Funds”);
and the New York City District Council of Carpenters (the
“Union, ” and collectively with the Funds, the
“Petitioners”) seek to confirm an arbitration
award obtained against Formula 1 Builders, LLC
(“Formula 1” or “Respondent”)
pursuant to Section 301 of the Labor Management Relations Act
(“LMRA”), 29 U.S.C. § 185. For the following
reasons, the award is confirmed.
to a collective bargaining agreement entitled Independent
Building Construction Agreement (the “CBA”)
entered into between Formula 1 and the Union, Formula 1 was
required to pay hourly benefit contributions to the Funds at
certain specified rates for all employees covered by the CBA.
ECF No. 12, Decl. of Brian Spencer (“Spencer
Decl.”), ¶¶ 3-4, 9 & Ex. C, Independent
Building Construction Agreement (“CBA”) at 35-40
(art. XV). The CBA also required Formula 1 to furnish
its books and payroll records when requested by the Funds for
the purpose of completing an audit to ensure that Formula 1
had complied with its benefit contribution obligations.
Id. art. XV § 1; see also Ozard Decl.,
Ex. D (Revised Statement of Policy for Collection of Employer
Contributions) § IV, ¶ 1.
respect to dispute resolution, the CBA provided that
“[s]hould any dispute or disagreement arise between the
parties hereto, or between the Union and any employer-member
signatory hereto, concerning any claim arising from payments
to the Fund[s] of principal and/or interest which is
allegedly due, either party may seek arbitration of the
dispute before the impartial arbitrator designated
hereunder.” CBA, art. XV, § 7. The CBA also
provided that “[t]he arbitrator shall have full and
complete authority to decide any and all issues raised by the
submission and to fashion an appropriate remedy including,
but not limited to, monetary damages” and that
“[t]he arbitrator's award . . . shall be final and
binding upon the parties hereto and the individual Employer,
if any, and shall be wholly enforceable in any court of
competent jurisdiction.” Id. It also provided
that “[t]he cost of the arbitration, including the fees
to be paid to the arbitrator, shall be included in the award
and shall be borne by the losing party.” Id.
their right under the CBA, the Funds attempted to conduct an
audit of Formula 1's books and payroll records covering
the period of October 30, 2013 through February 3, 2016 to
determine whether Formula 1 had complied with its
contribution requirements. Ozard Decl. ¶ 11. However, a
dispute arose when Formula 1 refused to submit to the audit.
Id. As a result, the Funds conducted an estimated
audit pursuant to the Revised Statement of Policy for
Collection of Employer Contributions (the “Collection
Policy”),  which provides:
In the event that an employer refuses to permit a payroll
review and/or audit upon request by the Fund Office or the
Outside Accounting Firms, or if the employer refuses the
Outside Accounting Firms access to pertinent records, . . .
the Fund Office shall determine the estimated amount of the
employer's delinquent contributions based on the
assumption that the employer's weekly hours subject to
contributions for each week of the requested audit period are
the highest number of average hours reported per week for any
period of four consecutive weeks during the audit period.
Ozard Decl., Ex. D, § IV ¶ 12. In accordance with
the Collection Policy, when Formula 1 refused to submit to
the requested audit, the Funds determined that the highest
average hours reported by Formula 1 in a consecutive
four-week period during the requested audit period had
occurred during the weeks ending March 26, 2014 through April
16, 2014 (the “Estimated Audit Period”). Ozard
Decl. ¶ 14. The Funds calculated the average of the
weekly contributions owed during that four-week period as
$24, 812.14. See Ozard Decl., Ex. E (Formula 1
Builders Estimated Audit (Oct. 30, 2016-Feb. 3, 2016)),
columns A-D. The Funds applied that estimated weekly
contribution to the number of weeks in the Estimated Audit
Period and subtracted all contributions actually paid by
Formula 1 during that period, arriving at a total delinquency
of $2, 562, 364.56. Id. Ex. E, column E.
Collection Policy also provided that “[i]nterest owed
by a delinquent employer shall be calculated at the prime
lending rate of Citibank plus 200 basis points, compounded
daily, on a declining principal basis. Interest shall accrue
from the date the contributions were due to the date when
payment of the contributions is received.” Ozard Decl.
¶ 15; Collection Policy, § V, ¶ 1 (emphasis
omitted). The Collection Policy explicitly stated that an
estimated audit determination “shall constitute
presumptive evidence of delinquency.” Collection
Policy, § IV, ¶ 12.
to the CBA, the Funds initiated arbitration. After providing
notice to both parties, the arbitrator held a hearing on June
2, 2016. Ozard Decl., Ex. F. At the hearing, Petitioners
appeared through counsel and submitted testimony and other
evidence in support of their claims. Ozard Decl., Ex. G
(Award) at 2. No representative appeared at hearing on behalf
of Formula 1; because Petitioners had provided proof that
Formula 1 had legally sufficient notice of the hearing and
the claims against it, the arbitrator held Formula 1 in
default and proceeded in its absence. Id. On June 6,
2016, the arbitrator issued his award, finding that the
“uncontroverted testimony and evidence”
established that Formula 1 was bound to the CBA and was thus
required to comply with the Funds' requested audits.
Id. The arbitrator determined that, based on the
“substantial and credible evidence of the case as a
whole, ” Formula 1 had violated the CBA and owed the
Funds $2, 562, 364.56 in estimated principal benefit
contributions; $180, 317.37 in interest; $512, 472.91 in
liquidated damages; $400.00 in “court costs;” $1,
500 in attorneys' fees; and $500 for the arbitrator's
fee, for a total award of $3, 257, 554.84. Id. at
2-3. The arbitrator also awarded interest, to accrue at the
rate of 5.5% from the date of issuance of the award.
Id. at 3.
February 17, 2017, Petitioners commenced the instant
confirmation action, asserting that Formula 1 had not
satisfied any portion of the arbitral award. See ECF
No. 1. The Court directed Petitioners to file any
declarations and affidavits with which it intended to support
its petition by March 17, 2017 and directed Formula 1 to file
any opposition by March 31, 2017. ECF No. 8. Petitioners
filed their motion for summary judgment and supporting
documents on March 17, 2017. ECF Nos. 11-16.
served their petition and summons on Formula 1 on February
23, 2017. ECF No. 10. They also served the Court's
scheduling order on February 23, 2017, ECF No. 9, and they
served their motion for summary judgment on March 17, 2017.
ECF. No. 17. Despite being properly served with the petition
and summons, Petitioners' motion for summary judgment,
and the Court's order establishing deadlines for opposing
that motion, Formula 1 has not appeared in this action.