Opinion
CV-06-1026 (FB) (JMA).
August 29, 2006
Avram H. Schreiber, Esq., Law Offices of Avram H. Schreiber, New York, New York, Attorney for Plaintiffs.
REPORT AND RECOMMENDATION
By Order dated May 31, 2006, the above-captioned action was referred to me, pursuant to 28 U.S.C. § 636(b), by the Honorable Frederic Block for a report and recommendation to determine the scope of relief, including damages, attorneys' fees, and costs, owed to plaintiffs Gary LaBarbera and Frank Finkel (the "Trustees"), as Trustees of Local 282 International Brotherhood of Teamsters Welfare, Pension, Annuity, Job Training and Vacation Sick Leave Trust Funds (the "Funds"), following the entry of a default judgment against defendant Ingoe Rock Industries, Inc. ("Ingoe") for alleged violations of the Employee Retirement Income and Security Act of 1974 ("ERISA") and the Labor-Management Relations Act of 1947 ("LMRA").
For the reasons contained herein, I respectfully recommend that a judgment be entered against defendant in the sum of $8,306.16, reflecting $474.32 in interest, $2,774.66 in liquidated damages, and $5,057.18 for attorneys' fees and costs.
I. BACKGROUND
"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 Charles Alan Wright, Arthur R. Miller Mary Kay Kane, Federal Practice and Procedure § 2688, at 58-59 (3d ed. 1998)).
This is an action to obtain a judgment for unpaid contributions to multi-employer benefit plans pursuant to sections 502 and 515 of the Employee Retirement Income Security Act of 1974, as amended, 29 U.S.C. §§ 1132(a)(3) and 1145 ("ERISA"), and to enforce the terms of the collective bargaining agreement ("CBA") pursuant to section 301(a) of the Labor-Management Relations Act, as amended, 29 U.S.C. § 185(a) ("LMRA"). Plaintiffs Gary LaBarbera and Frank Finkel sue in their capacity as fiduciaries of the Funds. The Funds are multi-employer benefit plans within the meaning of ERISA, 29 U.S.C. §§ 1002(3) and (37), and collect contributions from employers on behalf of all covered employees. (See Compl. ¶ 2.) The Funds are established and maintained pursuant to a CBA between Local 282 of the International Brotherhood of Teamsters (the "Union") and defendant covering the period July 1, 1993 through June 30, 1996. (See Affirmation of Avram Schreiber, dated Aug. 2, 2006 ("Schreiber Aff."), ¶ 3.)
For the period July 1, 1996 through June 30, 1999, a Memorandum of Agreement was in effect between the parties, which states that the "term[s] and conditions of the 1993-1996 Nassau/Suffolk Heavy Construction Excavating and Asphalt Agreements between the Employer and Local 282 shall remain in effect . . ." subject to the changes listed therein. (See Schreiber Aff., Ex. B.) The parties executed two new Memoranda of Agreement, covering the periods July 1, 1999 through June 30, 2002 and July 1, 2002 through June 30, 2005, respectively. (See id., Exs. C-D.) Additionally, Art. IX, section 1(a) of the Trust Agreement, which is incorporated by reference into the CBA, states in relevant part:
In the event that the Employer has neither signed nor authorized an Industry association to sign a current collective bargaining agreement on its behalf, the Employer shall remain obligated to make timely contributions to each Fund as set forth in the most recent collective bargaining agreement to which the Employer is a party unless the Trustees have received written notice from the Employer, at least 60 days prior to the expiration date of the most recent collective bargaining agreement that the Employer is a party, that the Employer does not intend to sign a new collective bargaining agreement and will not contribute to the Funds for work performed after the expiration date of the most recent collective bargaining agreement to which it is a party.
(See Schreiber Aff., Ex. E at 27.)
There is no evidence that defendant provided the Union with written notice of its intent not to sign a new CBA or contribute to the Funds. In fact, defendant's continued payment of contributions, although delinquent, demonstrates its intent to be bound to the terms of the CBA and Memoranda of Agreement (the "Agreements"). See Trustees of UIU Health Welfare Fund v. N.Y. Flame Proofing Co., 828 F.2d 79, 83 (2d Cir. 1987). Defendant's remittance reports, which were signed by Regina A. Inglese, President of Ingoe, clearly state, "[b]y signing this report you agree to accept the terms of the current Local 282 Industry Collective Bargaining Agreement covering the work performed by your employees." (See Schreiber Aff., Ex. F.) Therefore, defendant remains bound by the terms and conditions set forth in the CBA and subsequent Agreements.
Defendant Ingoe is an employer under ERISA and employs individuals represented by the Union. Defendant was, at all relevant times, and continues to be, bound to the terms of the CBA, which sets forth the wages, hours, other terms and conditions of employment, and obligates defendant to contribute weekly payments to the Funds on behalf of all employees covered by the CBA. (See id. ¶¶ 3-13.) Additionally, as a signatory to the CBA, defendant adopted the Restated Agreement and Declaration of Trust ("Trust Agreement"), which further governs the parties' rights and liabilities under the CBA. (See CBA, section 12(h), annexed to Schreiber Aff. as Ex. A at 20.)
Pursuant to the terms of the 1999-2002 Memorandum of Agreement, which amended section 13 of the CBA, defendant was required to submit its remittance reports and contributions on a weekly basis in the absence of a surety bond. (See Schreiber Aff., Ex. C at 4.) Defendant had seven days from the close of the payroll week to submit the required weekly remittance reports and payments. (See id., Ex. F.)
Plaintiffs allege that for the weeks ending December 2, 2005 through January 27, 2006, defendant either failed to remit payments to the Funds or failed to submit the required payments on time, thus entitling the Funds to interest and liquidated damages on those late payments. (See Compl. ¶ 9; Schreiber Aff. ¶¶ 14-15.) Plaintiffs commenced the instant action on March 7, 2006. After having been personally served with copies of the Summons and Complaint, defendant failed to answer or otherwise move with respect to the Complaint and the time to do so has expired. To date, defendant has failed to make an appearance. As a result, a notation of default was entered by the Clerk of the Court on April 12, 2006. On May 26, 2006, Judge Block granted plaintiffs' motion for default judgment and referred this matter to me for a report and recommendation to determine the scope of relief, including damages, attorneys' fees, and costs, owed to plaintiffs.
II. DISCUSSION
A. Proof of DamagesDefendant's default amounts to an admission of liability. Therefore, all of the well-pleaded allegations in plaintiffs' Complaint pertaining to liability are deemed true. See Greyhound Exhibitgroup, Inc. v. E.L.U.L. Realty Corp., 973 F.2d 155, 158 (2d Cir. 1992), cert. denied, 506 U.S. 1080 (1993). Plaintiffs, however, must prove damages before the entry of a final default judgment. See Credit Lyonnais Securities, Inc. v. Alcantara, 183 F.3d 151, 155 (2d Cir. 1999); Au Bon Pain Corp. v. Artect, Inc., 653 F.2d 61, 65 (2d Cir. 1981). The district court must conduct an inquiry to ascertain the amount of damages with reasonable certainty. See Transatlantic Marine Claims Agency, Inc. v. Ace Shipping Corp., 109 F.3d 105, 108 (2d Cir. 1997). Rule 55(b)(2) of the Federal Rules of Civil Procedure provides that when granting a default judgment, if "it is necessary to take an account or to determine the amount of damages or to establish the truth of any averment by evidence . . . the court may conduct such hearings or order such references as it deems necessary and proper. . . ." The Second Circuit has held that, under Rule 55(b)(2), "it is not necessary for the District Court to hold a hearing, as long as it ensured that there was a basis for the damages specified in the default judgment." Transatlantic Marine, 109 F.3d at 111 (citation and internal quotations omitted).
Plaintiffs submitted the following documentation for the court's review: 1) a copy of the relevant provisions of the CBA and Trust Agreement; 2) a copy of the Memoranda of Agreement; 3) an affirmation from plaintiffs' attorney, Avram H. Schreiber; and 4) a copy of attorney time records. I find that these documents constitute sufficient evidence to form the basis for an award of damages.
B. ERISA Relief
ERISA allows employee benefit plan fiduciaries to bring civil actions to enforce the provisions of the plan and obtain equitable relief. See 29 U.S.C. § 1132(a)(3)(B)(ii); see also id. § 1132(d)(1). Section 1145 makes clear that a plan member's contractual duty to make contributions to multiple employer plans "becomes a statutory requirement, and the duty may be enforced in accordance with § 1132(g)(2)." Gilles v. Burton Const. Co., 736 F.2d 1142, 1143 n. 2 (7th Cir. 1984). With respect to actions by fiduciaries, ERISA also provides for the recoupment of attorneys' fees and costs stemming from delinquent contributions. Section 1132(g)(2) provides that in such actions the district court shall award the following:
Section 1145 requires:
[e]very 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, to the extent not inconsistent with law, make such contributions in accordance with the terms and conditions of such plan or such agreement.29 U.S.C. § 1145. According to the Second Circuit, Congress adopted § 1145 so that benefit plans could rely on their agreements and "'recover delinquent contributions efficaciously, and without regard to issues which might arise under labor-management relations law. . . .'" Benson v. Brower's Moving Storage, Inc., 907 F.2d 310, 314 (2d Cir. 1990), cert. denied, 498 U.S. 982 (1990). "Simply put, benefit plans must be able to rely on the contribution promises of employers because plans must pay out to beneficiaries whether or not employers live up to their obligations." Id.
(A) the unpaid contributions,
(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). Since this action was brought on behalf of employee benefit plans, § 1132(g)(2) controls.
1. Late Payment of Contributions
Defendant, by its default, has admitted to the allegations in plaintiffs' Complaint, specifically, its failure to timely remit contributions to the Funds on behalf of covered employees for the weeks ending December 2, 2005 through January 27, 2006 in the amount of $13,873.36. (See Schreiber Aff. ¶¶ 20-28.) As previously stated, defendant had seven days from the close of each payroll week to submit its weekly remittance reports and payments to the Funds. (See id., Ex. C at 4.) Defendant did not submit its remittance reports and contributions for the weeks ending December 2, 2005 through December 16, 2005 until January 20, 2006. (See id., Ex. F.) The remittance reports and payments for the weeks ending December 23, 2005 through January 27, 2006 were submitted on April 10, 2006. (Id.) Plaintiffs assert that they are entitled to interest and liquidated damages for the late payment of contributions to the Funds during this time period.
The Union's collection policy, which is set forth in the Trust Agreement, as amended on October 28, 2003, provides that "if an Employer fails to pay contributions to the Funds as required when due, and the Employer is in default for five working days, the Employer is required to pay interest at the rate of [1.5 percent] per month . . . together with attorneys [sic] fees, auditors [sic] fees and liquidated damages." (See "Letter to Employers from Local 282 Board of Trustees," dated Oct. 29, 2003, annexed to Schreiber Aff. as Ex. H.) Based upon the amount of delinquent contributions for the weeks ending December 2, 2005 through January 27, 2006, plaintiffs have calculated the total interest owed to be $474.32. (See Schreiber Aff. ¶ 32.) Accordingly, defendant owes the Funds $474.32 in interest for the late payment of contributions.
Article IX, section 3(b) of the Trust Agreement provides for additional damages equal to the greater of the (i) interest due; or (ii) liquidated damages in the sum equal to twenty percent of past late contributions. (See id., Ex. E at 31.) Here, the interest amounts to $474.32; therefore, the greater amount of twenty percent of the late contributions, $2,774.66, will be awarded.
In sum, defendant owes the Funds $3,248.98, reflecting $474.32 in interest and $2,774.66 in liquidated damages, for the past late payment of contributions.
2. Attorneys' Fees and Costs
a. Attorneys' Fees
Plaintiffs also seek an award of attorneys' fees pursuant to 29 U.S.C. § 1132(g)(2), which mandates that the court grant reasonable attorneys' fees and costs in ERISA matters brought by fiduciaries to enforce the terms of the CBA. The Second Circuit has adopted the lodestar approach to calculating attorneys' fees.See Bourgal v. Lakewood Haulage, Inc., 827 F. Supp. 126, 129 (E.D.N.Y. 1993) (citing Chambless v. Masters, Mates Pilots Pension Plan, 885 F.2d 1053, 1058-59 (2d Cir. 1989)). Under the lodestar method, attorneys' fees are determined by taking "the number of hours reasonably expended on the litigation [multiplied] by a reasonable hourly rate." Hensley v. Eckerhart, 461 U.S. 424, 433 (1983); see also Chambless v. Masters, Mates Pilots Pension Plan, 885 F.2d 1053, 1058-59 (2d Cir. 1989), cert. denied, 496 U.S. 905 (1990).
Reasonable hourly rates are determined by reference to "the prevailing [marketplace rates] in the community for similar services by lawyers of reasonably comparable skill, experience and reputation." Cruz v. Local Union No. 3, 34 F.3d 1148, 1159 (2d Cir. 1994) (citations omitted). To receive such fees, plaintiffs must present time records to substantiate their fee request. See New York Ass'n for Retarded Children v. Carey, 711 F.2d 1136, 1147-48 (2d Cir. 1983). Such time records must be contemporaneous and indicate "for each attorney, the date, the hours expended, and the nature of the work done." Id. at 1148. Once the lodestar has been calculated, the district court takes into account "subjective factors, such as the risk of the litigation, the complexity of the issues, and the skill of the attorneys," New York State Ass'n for Retarded Children, 711 F.2d at 1140, and should exclude hours that are "excessive, redundant, or otherwise unnecessary."Hensley, 461 U.S. at 434. Finally, a fee applicant has the burden of establishing its hourly rate and hours expended. See Blum, 465 U.S. at 896 n. 11.
In support of plaintiffs' request for attorneys' fees, plaintiffs' attorney, Avram H. Schreiber, submitted contemporaneous time records that reflect 24.30 hours of work performed in connection with the instant action, amounting to $4,676.73. (See Schreiber Aff., Ex. I.) These records reveal that counsel prepared, inter alia, several demand letters to the employer, the Complaint, the Request for Default Judgment, and an Affirmation in Support of Entry of Plaintiffs' Claim for Damages. Mr. Schreiber bills at an hourly rate of $275.00, and associates Cristina Cruz and Woomee Lee bill at an hourly rate of $200.00. Denise Dees, a paralegal, bills at an hourly rate of $70.00 (See Schreiber Aff. ¶ 29.) Having reviewed the attorney declaration and contemporaneous time records, I find that both the total hours expended and the hourly billing rates are reasonable. Accordingly, defendant owes plaintiffs $4,676.73 for reasonable attorneys' fees incurred during the pendency of this action.
b. Costs
Pursuant to 29 U.S.C. § 1132(g)(2)(D), plaintiffs seek reimbursement for costs and disbursements in the amount of $380.45, reflecting $250.00 for the court filing fee, $65.00 for service of process, and $65.45 for miscellaneous expenses, such as photocopies and postage. Plaintiffs submitted documentation to substantiate their request. I find these expenses reasonable and recommend that they be granted in full. Accordingly, defendant owes plaintiffs $380.45 for costs and disbursements.
III. CONCLUSION
I respectfully recommend that a judgment be entered against defendant in the sum of $8,306.16, reflecting $474.32 in interest, $2,774.66 in liquidated damages, and $5,057.18 for attorneys' fees and costs.
Any objections to this Report and Recommendation must be filed with the Clerk of the Court, with a copy to the undersigned, within ten (10) 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. 72, 6(a), 6(e).