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32BJ North Pension Fund v. Nutrition Management Services Co.

United States District Court, S.D. New York

October 27, 2017

THE 32BJ NORTH PENSION FUND and its BOARD OF TRUSTEES, Plaintiffs,
v.
NUTRITION MANAGEMENT SERVICES COMPANY, a/k/a NUTRITION MANAGEMENT SERVICES, INC., a/k/a NUTRITION MANAGEMENT SERVICES CORP., Defendant.

          OPINION & ORDER

          KATHERINE B. FORREST United States District Judge.

         This is an ERISA action seeking delinquent contributions due to the 32BJ North Pension Fund (“Pension Fund”). Plaintiffs' claims initially involved three audit periods, referred to as the First, Second, and Third Audit Periods. By Order dated February 13, 2017, the Court granted summary judgment as to the Second Audit Period. On May 26, 2017, the Court held a bench trial on the First and Third Audit Periods. The parties also made several post-trial filings. This matter was fully submitted as of August 15, 2017.

         At base, the dispute between the parties relates to what, if any, delinquent contributions remain to be paid on the First and Third Audits, and whether plaintiff is entitled to any interest and liquidated damages on those amounts. Defendant argues that a settlement was entered into between the parties that resolved all amounts owed for the First Audit period, that such settlement did not include interest or liquidated damages, and that because plaintiff has improperly credited payments towards interest, it has incorrectly calculated what defendant has paid and what remains owing. For its part, plaintiff argues that the parties never entered into a settlement that resolved interest or liquidated damages on delinquent contributions, that the agreement that the parties reached was solely as to a payment plan, and that plaintiff never waived or compromised interest or liquidated damages. Therefore, plaintiff claims, its calculations as to amounts due and owing are correct.

         The Court agrees with the plaintiff-the governing law and agreements provide for both interest and liquidated damages, and plaintiff never agreed to forego them. The Court also agrees that the payment plan for delinquent contributions was just that-a payment plan-and not a settlement agreement that resulted in an accord and satisfaction. From this, the Court determines that defendant continues to owe plaintiff certain amounts as delinquent contributions, interest, and liquidated damages.

         The instant Opinion & Order constitutes the Court's findings of fact and conclusions of law.

         I. FINDINGS OF FACT

         The Court's findings of fact are made by a preponderance of the evidence.

         A. Witnesses and Documents

         Plaintiff's four witnesses testified live and by declaration: Violsa Perashi, Manager of the North Benefit Fund's billings and collection department, (ECF Nos. 55, 87, 91); Stuart Gritz, the Fund's outside auditor (ECF No. 67), Owen M. Rumelt (ECF No. 89), previously plaintiff's counsel, and Michael Fox, a payroll audit manager for the Fund's outside auditor (ECF No. 88). Plaintiff also introduced 19 documents, including the governing agreements, spreadsheets of payments, and communications between the parties. The defendant called one witness, the Chief Operating Officer of Nutrition Management, Kathleen A. Hill, (ECF No. 85-2, Hill Decl.), and introduced three documents, including its calculation of payments.

         B. Nutrition Management

         Nutrition Management provides comprehensive healthcare food service and facilities management to healthcare facilities. (Hill Decl. ¶ 2.) Until approximately April 2015, Hebrew Home of Westchester, in Valhalla, New York, was represented by Services Employees International Union, Local 32 BJ (the “Union” or “32BJ”). (Id.) The predecessor union to the 32BJ was the 32E. (Id. ¶ 3.) A collective bargaining agreement (“CBA”) between the Union and Nutrition Management provided for pension contributions as described further below, and that are at issue in this case.

         Nutrition Management experienced certain cash flow issues that resulted in delinquent pension plan contributions commencing in 2008.

         C. The Relevant Terms of the CBA and MOAs

         At all times pertinent to this action, defendant and the Union were parties to a collective bargaining agreement (“CBA”) and memoranda of agreements (“MOAs”). The CBA had originally been entered into in 1998, by 32 BJ's predecessor, Local 32E. (PX 1.)

         The CBA and MOAs provided that defendant make monthly contributions to the Pension Fund. (Hill Decl. ¶ 3.) Article 22 of the CBA set forth the monthly rate at which defendant was required to contribute to the Pension Fund for each eligible employee. (PX 1.) According to that provision, the defendant had to make contributions for each eligible employee covered thereunder. An employee had to have been employed for at least six months, and to work 22.5 hours per week, in order to trigger a contribution obligation. (Id.) To fulfill its obligations, the employer was obligated to provide the Union, on a monthly basis, the names of employees for which it was making payments. (Id.) The CBA further provides that “[t]he parties understand that the Local 32E Pension Fund will be held and managed under the terms and provisions of an Agreement and Declaration of Trust to be executed in connection with the said Fund, a copy of which is to be filed with the Employer and the Union.” (Id.)

         The MOAs (also part of PX 1), extended the duration of the CBA, but did not amend the basis upon which defendant was to make contributions (that is, once the employee had met the minimum employment duration and hours worked requirements). (PX 1, MOA ¶ 4.) Notably, in the MOA effective as of April 30, 2014, Nutrition agreed to make the required contributions and “the Employer hereby adopts and shall be bound by the Agreement and Declaration of Trust as it may be amended and the rules and regulations adopted or hereafter adopted by the Trustees of each Fund.” (Id. ¶ 5.)

         D. The Trust Agreement

         In 2002, a group of employers and the Union entered into an Amended and Restated Agreement and Declaration of Trust (the “Agreement” or “Trust Agreement”). That Agreement was between certain predecessor entities and 32E, including the Bronx Realty Advisory Board, Inc., the Boiler Service Maintenance and Repair Employers Association of New York, associations composed of employers of building services employees (the “Associations”) and Local 32B-32J, SEIU, AFL-CIO (defined as the “Union”). (PX 19.) This Agreement reflects that effective as of March 2001, Local 32E had been merged into Local 32B and Local 32J. (Id.) The Trust Agreement defines “Employer” as including “any employer in the building services industry that has or may hereafter have a Collective Bargaining Agreement in effect with the Union.” (Id., Art. I, § 9.) The term “Collective Bargaining Agreement” is defined as an agreement entered into between one of the Employers and the Union. (Id. Art. I, § 6.)

         The Trust Agreement provides that if contributions are not timely made, the “Trustees may take any action necessary to enforce payment.” (Id. Art. VII, § 8.) The Agreement further provides that:

An Employer that does not pay Contributions when due shall be obligated to pay, in addition to any penalties required under any applicable Collective Bargaining Agreement or ...

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