Opinion
09-CV-1349 (JG) (JMA).
March 23, 2010
Charles R. Virginia, Virginia Ambinder LLP, New York, N.Y., Attorney for Plaintiffs.
REPORT AND RECOMMENDATION
On March 31, 2009, the Trustees of the Plumbers Local Union No. 1 Welfare Fund, Additional Security Benefit Fund, Vacation Holiday Fund, Trade Education Fund, and 401(K) Savings Plan, the Trustees of the Plumbers and Pipefitters National Pension Fund, and the Trustees of the International Training Fund ("plaintiffs") commenced this action against N.Y. Pipeline Mechanical Contractors, LLC ("defendant" or "N.Y. Pipeline") and Liberty Mutual Insurance Co. ("Liberty Mutual") pursuant to sections 502(a)(3) and 515 of the Employee Retirement Income Security Act, 29 U.S.C §§ 1132(a)(3) and 1145 ("ERISA"), and section 301 of the Labor Management Relations Act, 29 U.S.C. § 185 ("LMRA"), to recover unpaid contributions, interest, liquidated damages, attorneys' fees, and costs. (Amend. Compl. ¶ 1.)
On November 6, 2009, plaintiffs made a motion for default judgment against N.Y. Pipeline and the Clerk of the Court noted the default. (Dkt. Nos. 8, 9.) By order dated December 11, 2009, the Honorable John Gleeson referred the motion to me for a Report and Recommendation ("R R"). For the reasons set forth below, I recommend that the Court enter judgment in favor of plaintiffs against N.Y. Pipeline for $186.965.40.
I. FACTUAL BACKGROUND
Three plaintiffs bring this action on behalf of Local No. 1 of the United Association of Journeymen and Apprentices of the Plumbing and Pipefitting Industry of the United States and Canada (the "Union"). (Amend. Compl. ¶ 5, 11.) First, the Trustees of the Plumbers Local Union No. 1 Welfare Fund, Additional Security Benefit Fund, Vacation Holiday Fund, Trade Education Fund, and 401(K) Savings Plan (the "Local 1 Funds") manage multiemployer benefit plans on behalf of Union members from a principal place of business at 158-29 Cross Bay Boulevard, Howard Beach, New York 11414. (Id. ¶ 4.) Second, the Trustees of the Plumbers and Pipefitters National Pension Fund (the "NPF") manage a multiemployer pension benefit plan on behalf of Union members from a principal place of business at 103 Oronoco Street, Alexandria, Virginia 22314. (Id. ¶ 6.) Third, the Trustees of the International Training Fund (the "ITF") manage a multi-employer welfare benefit plan on behalf of Union members from a principal place of business at 103 Oronoco Street, Alexandria, Virginia 22314. (Id. ¶ 7.) These plans are organized and operated pursuant to a collective bargaining agreement ("CBA") in accordance with ERISA and the LMRA. (collectively "ERISA plans") (Id. ¶¶ 4, 6-7.)
N.Y. Pipeline employs Union members within the five boroughs of the City of New York from a principal place of business at 2323 Haviland Avenue, 1st Floor, Bronx, New York 10462. (Id. ¶ 8, 10, 13.) N.Y. Pipeline is a party to the CBA. (Id. ¶ 12; Decl. of Charles Virginia, Esq. ("Virginia Decl.") ¶ 4; Pl. Ex. A at 49.) The CBA requires N.Y. Pipeline to remit contributions to the ERISA plans based on rates stated in the CBA. (Amend. Compl. ¶ 13; Virginia Decl. ¶ 4; Pl. Ex. A ¶¶ 13-23.) The CBA provides that any employer who fails to remit the required contributions to the Local 1 Funds is liable for the unpaid contributions, interest at a rate of ten percent per annum (or nine percent per annum on amounts owed to the Union), liquidated damages at twenty percent of the eligible principal amount due, attorneys' fees, audit fees, and other collection costs. (Amend. Compl. ¶ 21; Pl. Ex. A ¶ 27.) The CBA provides that any employer who fails to remit the required contributions to the NPF and the ITF is liable for the unpaid contributions, interest at a rate of twelve percent per annum, liquidated damages at ten percent of the principal amount due, attorneys' fees, audit fees, and other collection costs. (Amend. Compl. ¶ 29.) The CBA also requires employers to obtain a bond from a surety company approved by the New York State Insurance Department to guarantee payment of contributions. (Id. ¶ 18.) N.Y. Pipeline secured a benefits bond from Liberty Mutual for $25,000. (Id. ¶ 36.)
Plaintiffs audited the financial books and records of N.Y. Pipeline and learned that N.Y. Pipeline failed to remit contributions to the Local 1 Funds from March through June 2007. (Virginia Decl. ¶ 30; Pl. Ex. D.) Remittance reports prepared and submitted by N.Y. Pipeline show that N.Y. Pipeline also failed to remit contributions to the Local 1 Funds, the NPF, and the ITF from January through February 2009. (Virginia Decl. ¶ 17, 21; Pl. Ex. B.) Plaintiffs allege that N.Y. Pipeline failed to remit contributions to the ERISA plans or submit remittance reports for March 2009. (Supplemental Decl. of Charles Virginia, Esq. ("Virginia Supp. Decl.") ¶¶ 59-66.) Plaintiffs also allege that N.Y. Pipeline failed to remit contributions to the NPF and the ITF for October 2008 and to the 401(k) Savings Plan and Additional Secured Benefit Fund from November 2008 through March 2009. (Id. ¶¶ 48, 69-72.)
On March 31, 2009, plaintiffs filed this action. (Dkt. No. 1.) On April 2, 2009, plaintiffs served N.Y. Pipeline. (Dkt. No. 2.) On April 3, 2009, plaintiffs served Liberty Mutual. (Dkt. No. 3.) On May 5, 2009, plaintiffs amended the complaint. (Dkt. No. 4.) On June 3, 2009, plaintiffs served both N.Y. Pipeline and Liberty Mutual. (Dkt. Nos. 5, 6.) On June 23, 2009, the time to answer expired. (Dkt. Entry June 12, 2009.) On August 7, 2009, plaintiffs dismissed Liberty Mutual from the action in exchange for payment of the bond. (Dkt. No. 7.) On November 6, 2009, plaintiffs made a motion for default judgment against N.Y. Pipeline and the Clerk of the Court noted the default. (Dkt. Nos. 8, 9.) Plaintiffs seek from N.Y. Pipeline $232,257.07 in unpaid contributions, interest, liquidated damages, attorneys' fees, and costs. (Virginia Supp. Decl. ¶ 79.)
Plaintiffs' Supplemental Declaration itemizes the damages that N.Y. Pipeline allegedly owes. (Virginia Supp. Decl. ¶¶ 18-77.) This number actually equals $231,703.20. (Id.)
II. DISCUSSION
A. Liability
"A court accepts as true all well-pleaded allegations against a defaulting defendant for purposes of determining liability."Finkel v. Romanowicz, 577 F.3d 79, 82 n. 6 (2d Cir. 2009). Yet, the "plaintiff[] must . . . establish that on the law it is entitled to the relief it requests, given the facts as established by the default." Trs. of the Plumbers Local Union No. 1 Welfare Fund v. Generation II Plumbing Heating, Inc., No. 07-CV-5150, 2009 U.S. Dist. LEXIS 91607, at *3 (E.D.N.Y. Sept. 9, 2009).
N.Y. Pipeline defaulted. I accept as true N.Y. Pipeline's liability for violating ERISA, 29 U.S.C. § 1145. Section 1145 provides:
Liability is also established under section 301 of the LMRA, which provides, "Suits for violation of contracts between an employer and a labor organization representing employees . . . may be brought in any district court of the United States having jurisdiction of the parties." 29 U.S.C. § 185(a).
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, 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. N.Y. Pipeline employs Union members as defined by ERISA. Plaintiffs act as the administrator of multiemployer plans, including the Local 1 Funds, the NPF, and the ITF, as defined by ERISA. N.Y. Pipeline agreed to the terms of the CBA that require employers to remit weekly contributions to these plans. N.Y. Pipeline failed to remit contributions from March through June 2007 and January through March 2009. The failure of N.Y. Pipeline to remit contributions to the ERISA plans violates ERISA.
B. Damages
When a defendant defaults, the court must conduct an inquiry to "ascertain the amount of damages with reasonable certainty."Alcantara, 183 F.3d at 155 (citing Transatlantic Marine Claims Agency, Inc. v. Ace Shipping Corp., 109 F.3d 105, 111 (2d Cir. 1997)). The Second Circuit permits the court to hold an inquest by affidavit without a hearing so long as the court has "ensured that there was a basis for the damages specified in the default judgment." Transatlantic Marine, 109 F.3d at 111 (quoting Fed.R.Civ.P. 55(b)(2)) (internal citations omitted).
ERISA, 29 U.S.C. § 1132(g)(2) enumerates the type of relief that may be awarded for a violation of section 1145. Section 1132(g)(2) provides:
In any action under this subchapter by a fiduciary for or on behalf of a plan to enforce section 1145 of this title in which a judgment in favor of the plan is awarded, the court shall award the plan —
(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 as the court deems appropriate.29 U.S.C. § 1132(g)(2). Failure to remit contributions to non-ERISA plans, such as Union dues funds, does not violate section 1145; relief may be awarded for breach of the CBA. Finkel v. Rico Elec., Inc., No. 07-CV-2145, 2009 U.S. Dist. LEXIS 97459, at *4 (E.D.N.Y. Sept. 22, 2009).
Plaintiffs submit the following documents in support of the motion for default judgment and damages: (1) a Declaration and Supplemental Declaration of Charles R. Virginia, Esq., counsel for plaintiffs, (2) a copy of the CBA between the Union and N.Y. Pipeline; (4) a copy of the collection policy between the Union and N.Y. Pipeline; (5) the audit report from March through June 2007 prepared by Marshall Moss Payroll Compliance Services, LLC ("Marshall Moss"); (6) remittance reports for December 2008, January 2009, and February 2009 prepared by N.Y. Pipeline; and (7) a billing report prepared by Virginia Ambinder, LLP ("V A"). I consider plaintiffs' submissions a sufficient basis for damages under section 1132(g)(2) from March through June 2007 and January through March 2009 and recommend that the Court award the following relief:
a. Unpaid Contributions, Interest Liquidated Damages
I recommend that the Court award plaintiffs $183,257.29 in unpaid contributions, interest, and liquidated damages. i. The Audit Report
The audit report reflects the calculations of unpaid contributions, interest, and liquidated damages from March through June 2007. Marshall Moss mailed this report to N.Y. Pipeline on June 3, 2009, and incorporated corrections made by Mr. Edward Kirkpatrick of N.Y. Pipeline. N.Y. Pipeline failed to remit $32,716.99 to the Local 1 Funds and $2,843.06 to the Union. Interest on unpaid contributions to the Local 1 Funds at ten percent per annum equals $8,918.74. Interest on the unpaid contributions to the Union funds at nine percent per annum equals $697.52. Liquidated damages at twenty percent of the eligible principal amount due to the Local 1 Funds equal $6,543.40. I recommend that the Court award plaintiffs $51,719.70.
Neither the CBA nor the Collection Policy states whether an employer owes simple or compound interest on unpaid contributions. (Pl. Ex. A ¶ 27; Ex. C. Art. 2 ¶ 6.) Plaintiffs' Supplemental Declaration states that N.Y. Pipeline owes simple interest on unpaid contributions. (Virginia Supp. Decl. ¶ 45, 67, 71, 74.) I recommend that the Court award simple interest. Further, I recommend that the Court calculate interest from the beginning of each delinquency until February 23, 2010, when plaintiffs submitted the Supplemental Declaration.
The audit report does not assess liquidated damages on unpaid contributions to the Union. (Ex. B.) Plaintiffs' Supplemental Declaration requests liquidated damages on all unpaid contributions, including those owed to the Union. (Virginia Supp. Decl. ¶ 75.) I recommend that the Court award liquidated damages consistent with the audit report and only to the Local 1 Funds.
ii. The Remittance Reports
Remittance reports prepared by Mr. Edward Kirkpatrick of N.Y. Pipeline and faxed to plaintiffs reflect the hours worked by Union members and contribution totals for the payroll periods ending December 31, 2008, January 31, 2009, and February 27, 2009.
N.Y. Pipeline remitted contributions for December 2008, (Virginia Supp. Decl. ¶ 42), despite the fact that plaintiffs repeatedly state that N.Y. Pipeline "owes the Union" for December 2008. (Id. ¶¶ 35-41.)
Handwritten calculations prepared by N.Y. Pipeline and remittance reports for January 2009 reflect that N.Y. Pipeline owes $32,410.32 to the Local 1 Funds and $6,607.00 to the NPF and the ITF. (Pl. Ex. B.) The remittance reports for February 2009 reflect that N.Y. Pipeline owes $26,123.99 to the Local 1 Funds and $5,256.55 to the NPF and the ITF. I recommend that the Court award plaintiffs these damages.
Plaintiffs' Supplemental Declaration itemizes the unpaid contributions that N.Y. Pipeline owes for each trade group derived from the remittance reports for January 2009. (Virginia Supp. Decl. ¶¶ 18-25.) This number actually equals $33,150.14 to the Local 1 Funds, though plaintiffs calculate the total of these contributions as $33,309.74. (Id. ¶ 25.) I recommend that the Court disregard both of these amounts and award damages consistent with the handwritten calculations prepared by N.Y. Pipeline because the remittance reports support these calculations.
Plaintiffs' Supplemental Declaration itemizes the unpaid contributions that N.Y. Pipeline owes for each trade group derived from the remittance reports for February 2009. (Virginia Supp. Decl. ¶¶ 26-32.) This number actually equals $26,123.99 to the Local 1 Funds, though plaintiffs calculate the total of these contributions as $26,294.14. (Id. ¶ 33.)
Plaintiffs seek damages on unpaid contributions for March 2009, when Union members worked but N.Y. Pipeline did not submit remittance reports. The Collection Policy of the Union states:
Where an employer is two or more months unpaid in making its Contributions and has not submitted remittance forms showing the employees who worked for him and the hours worked, the Board may project as the amount of the delinquency . . . the average of the monthly payments based on reports actually submitted by the employer for the last three (3) months for which payments and reports were submitted. . . . The projection may be used as a determination of payments due for each unpaid month, and may be used for purposes of any lawsuit and no other proof need be provided by the Trustees to any court or arbitrator to compute the total payments due from the employer for all unpaid months, exclusive of liquidated damages, interest, attorneys' fees and costs set out in this Article.
(Pl. Ex. C at 11-12.) The remittance reports for December 2008 reflect $32,458.09 in contributions to the Local 1 Funds and $6,655.75 to the NPF and the ITF. (Virginia Supp. Decl. ¶ 42, 65.) Averaging the December 2008 contributions with the contributions owed in January and February 2009, as directed by the Collection Policy, I recommend that the Court award plaintiffs $30,577.41 to the Local 1 Funds and $6,173.10 to the NPF and the ITF for March 2009.
Plaintiffs' Supplemental Declaration itemizes the unpaid contributions that N.Y. Pipeline owes for each trade group derived from the remittance reports for December 2008. (Virginia Supp. Decl. ¶¶ 35-41.) This number actually equals $32,458.09 to the Local 1 Funds, though plaintiffs calculate the total of these contributions as $32,610.49. (Id. ¶ 42.)
Interest on unpaid contributions to the Local 1 Funds from January through March 2009 at ten percent per annum equals $5,737.33. Liquidated damages on eligible unpaid contributions to the Local 1 Funds for January through March 2009 at twenty percent of the principal amount due equal $17,258.37. Interest on unpaid contributions to the NPF and the ITF from January through March 2009 at twelve percent per annum equals $1,393.51. Liquidated damages on the unpaid contributions to the NPF and the ITF from January through March 2009 at ten percent of the principal amount due equal $1,803.67.
Using a simple interest formula, $89,111.72 in unpaid contributions to the Local 1 Funds multiplied by ten percent interest divided by 365 days in a year and multiplied by 235 days of delinquency equals $5,737.33.
Consistent with the method employed by the audit report and despite plaintiffs' Supplemental Declaration, (Pl. Ex. B; Virginia Supp. Decl. ¶ 20, 22, 24, 27, 30, 32), the liquidated damages calculation excludes the unpaid contributions to the Union funds from January through February 2009, as well as the average of these contributions for March 2009.
Using a simple interest formula, $18,036.65 in unpaid contributions to the NPF and the ITF multiplied by twelve percent interest divided by 365 days in a year and multiplied by 235 days of delinquency equals $1,393.51.
Plaintiffs seek $6,520.40 for underpaid contributions to the NPF and the ITF for October 2008. (Virginia Supp. Decl. ¶ 48.) However, the remittance reports do not reflect the hours worked by Union members during this period and plaintiffs submit no other evidence, such as an audit report or remittance reports actually submitted by N.Y. Pipeline for the last three months for which payments and reports were submitted, to support this claim. I recommend that the Court deny damages to the NPF and the ITF for October 2008.
Plaintiffs seek $22,650.95 in unpaid contributions, $1,617.71 in interest, and $4,530.19 in liquidated damages to the 401(k) Savings Plan and Additional Secured Benefit Fund from November 2008 through March 2009. (Virginia Supp. Decl. ¶¶ 69-72.) Plaintiffs claim that remittance reports from September through November 2008 support this claim, (id.), yet plaintiffs do not provide these reports. Further, plaintiffs assert in the amended complaint, Declaration, and Supplemental Declaration that the Local 1 Funds collect contributions for the 401(k) Savings Plan and Additional Secured Benefit Fund, and I have already recommended that the Court award damages to the Local 1 Funds from January through March 2009. (Amend. Compl. ¶¶ 4-5; Virginia Decl. ¶ 2; Virginia Supp. Decl. ¶ 2.) Finally, the audit report prepared by Marshall Moss and submitted by plaintiffs as an accurate reflection of damages from March through June 2007 does not calculate these funds separately from the Local 1 Funds. I recommend that the Court deny damages to the 401(k) Savings Plan and Additional Secured Benefit Fund from November 2008 through March 2009, beyond the damages already awarded.
b. Attorneys' Fees
I recommend that the Court award plaintiffs $3,059.10 in attorneys' fees. In the Second Circuit, attorney's fees are determined according to the "presumptively reasonable fee" approach and calculated by multiplying a reasonable hourly rate by a reasonable number of expended hours. See Arbor Hill Concerned Citizens Neighborhood Ass'n v. County of Albany, 522 F.3d 182, 186-90 (2d Cir. 2008). The district court has "considerable discretion" in determining the presumptively reasonable fee; however, it should "bear in mind all of the case-specific variables that [the Second Circuit] and other courts have identified as relevant to the reasonableness of attorney's fees in setting a reasonable hourly rate." Id. at 190 (emphasis in original). 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. at 184, 192.
The fee applicant bears the burden of establishing the reasonableness of the hourly rate and the number of hours expended. New York Ass'n for Retarded Children, Inc. v. Carey, 711 F.2d 1136, 1147-48 (2d Cir. 1983). However, the district court may also rely upon its own knowledge of "the prevailing market rates in the relevant community for similar services for lawyers of reasonable comparable skill, experience, and reputation." Chambless v. Masters, Mates, and Pilots Pension Plan, 885 F.2d 1053, 1058-59 (2d Cir. 1989). In determining the reasonableness of the hours expended, the court must assess "the value of the work product of the particular expenditures to the client's case." Gierlinger v. Gleason, 160 F.3d 858, 876 (2d Cir. 1998). "If the court determines that certain claimed hours are excessive, redundant, or otherwise unnecessary, the court should exclude those hours in its calculation[.]" Id. (internal citations and quotation marks omitted).
V A represents plaintiffs. (Virginia Decl. ¶ 33.) V A charged $250 per hour for the work of member Charles R. Virginia, Esq., $200 per hour for the work of associate Hyun S. Oh, Esq., and $90 for the work of legal assistant Richard Epstein. (Id.) Plaintiffs do not submit any evidence of prevailing market rates. However, attorney rates of $250 and $200 per hour are consistent with rates normally awarded in ERISA default cases in this district. See, e.g., LaBarbera v. J A Concrete Corp., No. 01-CV-1731, 2008 U.S. Dist. LEXIS 55747, at *3 (E.D.N.Y. Apr. 1, 2008) (approving $275 per hour); LaBarbera v. D R Materials, Inc., No. 06-CV-2100, 2007 WL 1041666, at *4 (E.D.N.Y. Apr. 3, 2007) (approving $340 per hour). I find the attorneys' rates reasonable.
A legal assistant or paralegal rate of $90 per hour is greater than rates awarded in ERISA default cases in this district. See, e.g., Masino v. A to E, Inc., No. 07-CV-3462, 2009 U.S. Dist. LEXIS 118529, at *7 (E.D.N.Y. Dec. 21, 2009) (approving $80 per hour); Eng'rs Joint Welfare, Pension, Supplemental Unemployment Benefit Training Funds v. Catone Constr. Co., No. 08-CV-1048, 2009 U.S. Dist. LEXIS 113158, *15-19 (N.D.N.Y. Dec. 4, 2009) (reviewing Eastern District cases that approved $75-80 per hour, and finding $80 per hour reasonable); Fuchs v. Tara Gen. Contr., Inc., No. 06-CV-1282, 2009 U.S. Dist. LEXIS 102286, at *4-8
(E.D.N.Y. Nov. 3, 2009) (approving $75 per hour). I find the $90 paralegal rate unreasonable. I recommend that the Court use an $80 per hour rate.
Plaintiffs request $3,206.95 in attorneys' fees for 23.67 hours expended on this case. (Virginia Supp. Decl. ¶ 76.) Contrary to plaintiffs' assertion, contemporaneous time records reflect that V A worked 23.35 hours on this case. (Pl. Ex. E.) I find the time spent on this case reasonable. Specifically, Mr. Virginia worked .59 hours on this case. At $250 per hour, I recommend that the Court award plaintiffs $147.50 for Mr. Virginia's work. Mr. Oh worked 9.09 hours on this case. At $200 per hour, I recommend that the Court award plaintiffs $1,818.00 for Mr. Oh's work. Mr. Epstein worked 13.67 hours on this case. At $80 per hour, I recommend that the Court award plaintiffs $1,093.60 for Mr. Epstein's work. Therefore, I recommend that the Court award plaintiffs $3,059.10 in attorneys' fees.
c. Costs
I recommend that the Court award plaintiffs $648.98 in costs. Plaintiffs request $350.00 for the filing fee and $289.98 for the cost of service. (Virginia Supp. Decl. ¶ 77; Pl. Ex. D.) These costs are reasonable. Rico Elec., Inc., 2009 U.S. Dist. LEXIS 97459, at *26-27 (awarding $931.46 in costs for filing, photocopying, postage, and service). Therefore, I recommend that the Court award plaintiffs $648.98 in costs.
III. CONCLUSION
For the foregoing reasons, I recommend that the Court enter judgment against N.Y. Pipeline for $186,965.40. I hereby order plaintiffs to serve a copy of this R R on defendant and to file proof of service by ECF promptly. Any objections to this R R must be filed by ECF within fourteen (14) days of the date of entry of this R R. 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.
SO ORDERED.