Opinion
05-CV-3909 (NG) (RER).
June 21, 2006
REPORT RECOMMENDATION
Plaintiffs, Bruce Del Turco, Vincent Delazzero, Thomas Lane and James Batalone, as Trustees and Fiduciaries of the Tile Layers Local Union 52 Pension, Insurance, and Welfare, and Annuity Funds ("Local 52 Benefit Funds"), Charles Hill, Edward Gahn, Scott Erath and Vincent Anastasi, as Trustees and Fiduciaries of the Tile Helpers Local 88 Welfare, Annuity and Vacation Funds ("Local 88 Benefit Funds"), John J. Flynn, James Boland, Gerald O'Malley, Ken Lambert, Gerard Scarano, H.J. Bramlett, Eugene George, Paul Songer, Charles Velardo, Matthew Aquiline, Gregory R. Hess, Michael Schmerbeck and Vincent Delazzero as Trustees and Fiduciaries of the Bricklayers Trowel Trades International Pension, Health and Annuity Funds ("International Benefit Funds") and Charles Hill, as President of Tile, Marble and Terrazzo Local No. 7 of N.Y. N.J., BAC, (collectively the "Funds"), bring this action against Carrara Stone, Inc., ("Carrara") alleging that Carrara violated the Employee Retirement Income Security Act of 1974, as amended 29 U.S.C. 1001, et. seq. ("ERISA") by failing to make its required contributions to the Funds.
In light of defendant's failure to appear or otherwise defend this action, plaintiffs moved for default judgment on February 17, 2006. Docket Entry 7. Upon plaintiffs' application, on February 23, 2006 the Clerk of the Court noted the default judgment pursuant to Fed.R.Civ.P. 55(a). Docket Entry 8. The Honorable Nina Gershon then referred this case to me for a report and recommendation on the issue of damages, interest, costs, and attorney's fees. Docket Entry 9. Plaintiffs have submitted the declarations of their counsel, Charles R. Virginia, dated February 17, 2006 ("Virginia Decl."), in support of their application for damages. Docket 7.
Facts
The Funds are multi-employer benefit funds within the meaning of ERISA. Compl. ¶¶ 3-5 see also 29 U.S.C. §§ 1102(37) and 1145. The Funds collectively provide welfare, pension, and annuity benefits to its members (the "Union"). Id. ¶ 8. Defendant entered into a collective bargaining agreement (the "CBA") with the Union. Id. ¶¶ 9-10. Pursuant to the terms of the CBA, defendant is required to pay specific wages and benefit contributions to the Funds for all work performed by its employees who are covered by the CBA. Id. The amounts to be contributed are determined by set rates in the CBA. Id. Although the Funds have demanded payment, the defendant has failed to make the required contributions. Id. ¶18. Plaintiffs Local 52 Benefit Funds allege that defendant failed to make fringe benefit contributions in an estimated amount of $35,250.00 for the period through January 2002 through the present; plaintiffs Local 88 Benefit Funds allege that the defendant failed to make fringe benefit contributions in an estimated amount of $30,750.00 for the period through January 2002 through the present; and plaintiffs International Benefit Funds allege that the defendant failed to make fringe benefit contributions in an estimated amount of $9,000.00 for the period through January 2002 through the present. Id. ¶¶ 25, 32, 42. Additionally, since the commencement of this action, defendant has continued to fail to make the required contributions. Virginia Decl. ¶ 12. Plaintiffs allege that the defendant now owes contributions in the amount of $75,000 for the time period of January 2002 through the present. Id.
On August 16, 2005, plaintiffs filed the instant action seeking unpaid contributions, interest on the unpaid contributions, liquidated damages, attorney's fees and costs, and a permanent injunction enjoining defendant from further violations of the CBA. Compl. ¶¶ 25, 32, 42, 85. A copy of the summons and complaint was served by delivering two copies to Carol Vogt, an agent in the office of the Secretary of State of the State of New York on September 26, 2005. Docket Entry 2. To date, defendant has failed to file an answer or otherwise appear in this action. By Order dated March 28, 2006 the parties were directed to submit papers in support of their calculations of damages. Docket Entry 9. Defendant has not submitted any papers in opposition to plaintiffs' damages calculations.
Discussion
Once a default judgment is entered, a defendant is deemed to have admitted all of the well-pleaded allegations in the complaint pertaining to liability. See Greyhound Exhibitgroup, Inc. v. E.L.U.L. Realty Corp., 973 F.2d 155, 158 (2d Cir. 1992); Montcalm Pub. Corp. v. Ryan, 807 F. Supp. 975, 977 (S.D.N.Y. 1992).The allegations in plaintiffs' complaint establish the elements of liability required to state a claim under § 1145 of ERISA. Section 1145 states:
Every employer who is obligated to make contributions to a multiemployer plan under the terms of the plan or under the terms of a collectively bargained agreement shall . . . make such contributions in accordance with the terms and conditions of such plan or such agreement.29 U.S.C. § 1145. Plaintiffs allege that defendant entered into a collective bargaining agreement with the Union under which defendant was obligated to make contributions to the Funds and that defendant failed to make such contributions. Compl. ¶ 1. Thus, plaintiffs have established that defendant is liable under ERISA.
Although the allegations of a complaint pertaining to liability are deemed admitted upon entry of a default judgment, allegations relating to damages are not. See Greyhound Exhibitgroup, 973 F.2d at 158. Rather, claims for damages must generally be established in an evidentiary proceeding at which the defendant is afforded the opportunity to contest the amount claimed. Id. An evidentiary presentation is required so that the court may ensure that there is a basis for damages sought before entering judgment in the amount demanded. Fustok v. Conticommodity Servs., Inc., 873 F.2d 38, 40 (2d Cir. 1989). A court may make this determination based upon evidence presented at a hearing or upon a review of detailed affidavits and documentary evidence. See Fed.R.Civ.P. 55(b)(2); Action S.A. v. Marc Rich Co., Inc., 951 F.2d 504, 508 (2d Cir. 1991); Fustok, 873 F.2d at 40. Plaintiffs in this case seek an award of $75,000 which consists of unpaid contributions, along with interest on the unpaid contributions, liquidated damages, and attorney's fees and costs. Virginia Decl. ¶¶ 4, 11. Defendant has not submitted any opposition to the papers submitted by plaintiff. Accordingly, a hearing is not warranted.
A plaintiff who has established liability under Section 1145 is entitled to an award of: 1) the amount of unpaid contributions; 2) interest on the unpaid contributions; 3) liquidated damages provided for under the plan; 4) reasonable attorney's fees and costs, and 5) such other legal and equitable relief as the court deems appropriate. 29 U.S.C. § 1132(g)(2).
Plaintiff seeks $35,250.00 in unpaid contributions to the Local 52 Benefit Funds, along with simple interest at a rate of 10% per annum yielding a total interest of $7,187.04 through February, 13, 2006. Virginia Aff. ¶¶ 8-9 (incorrectly labeled as ¶¶ 9-10). Plaintiff also seeks $30,750.00 in unpaid contributions to the Local 88 Benefit Funds, along with simple interest at a rate of 10% per annum yielding a total interest of $6,264.48 through February 13, 2006. Id. Additionally, plaintiff seeks $9,000 in unpaid contributions to the International Benefit Funds, along with a simple interest rate of 15% per annum yielding a total interest of $2,752.80 through February 13, 2006. Id. ¶¶ 10-11. Thus, plaintiffs seek a total of $75,000.000 in unpaid contributions, along with the total amount of interest through February 13, 2006 which is $16,204.32.
Pursuant to Rule 54(a) of the Federal Rules of Civil Procedure, judgment entered in default shall not be different from the amount stated in the demand for judgment. Fed.R.Civ.P. 54(a). The District Court has discretion, however, to award damages that accrue during the pendency of an ERISA action when such damages are explicitly requested in the complaint. See Ames v. Stat Fire Suppression, Inc., 227 F.R.D. 361 (E.D.N.Y. 2005). Plaintiff expressly requested that the Court include as part of this action "unpaid contributions . . . plus interest" through February 13, 2006. Virginia Aff. ¶ 8 (incorrectly labeled as ¶ 9). Therefore, I respectfully recommend that plaintiffs be awarded $75,000.00 in unpaid contributions from January 2002 through February 13, 2006, and $16,204.32 in accrued interest from February 1, 2004 through February 13, 2006.
In addition, plaintiffs are entitled to liquidated damages in an amount equal to the greater of: 1) the interest on the unpaid contributions, or 2) an amount provided for under the plan that is no greater than 20% of the unpaid contributions. 29 U.S.C. § 1132(g)(2)(C)(i), (ii). In this case, the CBA between the parties provides for liquidated damages "in the amount of 20% of the contribution delinquency . . . " According to the plaintiffs, the aggregate amount of liquidated damages owed is $8,400.00 which represents 10% of the $35,250.00 in unpaid contributions to the Local 52 Benefit Funds equaling $3.525.00, 10% of the $30,750.00 in unpaid contributions to the Local 88 Benefit Funds equaling $3,075.00, and 20% of the $9,000.00 in unpaid contributions to the International Benefit Funds equaling $1,800.00. Virginia Aff. ¶¶ 12-14. Accordingly, it is respectfully recommended that plaintiffs be awarded $8,400.00 in liquidated damages.
Although the CBA provides for liquidated damages in the amount of 20% of the contribution delinquency, in plaintiff's moving papers plaintiff seeks liquidated damages at a rate of 10% for both Local 52 Benefit Funds and Local 88 Benefit Funds.
Plaintiffs also seek to recover attorney's fees. An award of fees and costs is mandatory pursuant to 29 U.S.C. § 1132(g)(2)(D). In addition, the parties agreed by contract that attorney's fees and costs were to be paid to plaintiffs. See Collective Bargaining Agreement at § 3(L)(d). As directed by the Second Circuit in New York State Ass'n for Retarded Children v. Carey, 711 F.2d 1136, 1148 (1983), plaintiffs have submitted a declaration of their attorney and contemporaneous time records. Plaintiffs assert that they have incurred $2,597.33 in attorney's fees for a total of 13.96 hours spend on the case. Id. ¶ 15 (incorrectly labeled as ¶ 12). In his affidavit, counsel sets forth a description of the billing rates of his firm which are as follows: $200.00 per hour for the work of an attorney; and $75.00 per hour for the work of legal assistants. Id. The rates charged by counsel appear reasonable. See Tokyo Electron Arizona, Inc. v. Discreet Indus. Corp., 215 F.R.D. 60, 64 (E.D.N.Y. 2003) (finding rates of $400 for a partner and $180 for a third-year associate reasonable); New Leadership Comm. v. Davidson, 23 F.Supp.2d 301, 310 (E.D.N.Y. 1998) (finding rates of $275 for a partner and $200 for an associate reasonable). Accordingly, I respectfully recommend that plaintiffs be awarded $2,597.33 in attorneys fees.
Counsel also asserts that it expended $250.00 in court costs for the filing of this action. Virginia Aff. ¶ 15 (incorrectly labeled as ¶ 12). Under ERISA section 502(g)(2)(D) court fees are recoverable. Furthermore, the CBA provides for the plaintiffs to be awarded ". . . such other costs and penalties as may be assessed by a court as provided under ERISA." See Collective Bargaining Agreement at § 3(L)(d). I therefore recommend that plaintiffs be awarded $250.00 in costs for the commencement of this suit.
Finally, plaintiffs seek a permanent injunction enjoining Carrara from any further violations of the CBA. Compl. ¶ 85. In an ERISA action, a successful plaintiff is entitled to "such other . . . equitable relief as the court deems appropriate." 29 U.S.C. § 1132(g)(2)(E). In this case, the Court finds that plaintiffs' legal remedy is adequate as plaintiffs will recover all of the unpaid contributions plus interest, liquidated damages, and attorney's fees and costs. Therefore, I respectfully recommend that plaintiffs' request for a permanent injunction be denied.
Conclusion
For the foregoing reasons, I respectfully recommend that default judgment be entered against Carrara in the amount of $102,451.65, comprised of $75,000.00 in unpaid contributions, $16,204.32 in interest on the unpaid contributions, $8,400.00 in liquidated damages, $2,597.33 in attorney's fees, and $250.00 in costs. Any objections to the recommendation made in this Report must be filed with the Clerk of the Court and the Chambers of the Honorable Nina Gershon within ten days of receiving this Report and Recommendation. Failure to file timely objections may waive the right to appeal the District Court's Order. See 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 6(a), 6(e), 72; Small v. Secretary of Health Human Servs., 892 F.2d 15, 16 (2d Cir. 1989). Plaintiffs are hereby directed to serve copies of this Report and Recommendation upon defendant at its last known address, and to file proof of service with the Clerk of the Court.