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explaining that a court must consider "what a reasonable client would be willing to pay"
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11-CV-2885 (ARR) (RLM)
08-10-2012
TRUSTEES OF THE LOCAL 813 INSURANCE TRUST FUND, THE LOCAL 1034 PENSION TRUST FUND, and THE LOCAL 813 AND LOCAL 1034 SEVERANCE AND RETIREMENT TRUST FUND, Plaintiffs, v. BRADLEY FUNERAL SERVICE, INC., Defendant.
REPORT AND RECOMMENDATION ROANNE L. MANN, UNITED STATES MAGISTRATE JUDGE :
This action was commenced on June 15, 2011, by the plaintiff-trustees ("plaintiffs") of the Local 813 Insurance Trust Fund (the "Insurance Fund"), Local 1034 Pension Trust Fund (the "Pension Fund"), and Local 813 and Local 1034 Severance and Retirement Trust Fund (the "Severance Fund") (collectively, the "Funds"), against defendant Bradley Funeral Services, Inc. ("Bradley" or "defendant"). Plaintiffs contend that for the period of time from January through March 2010, defendant failed to submit contributions to the Funds, as required by the terms of a collective bargaining agreement (the "CBA"), and that defendant thereby violated the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. §§ 1132(a)(3), 1145, and breached the CBA, in violation of Section 301 of the Labor Management Relations Act (the "LMRA"), 29 U.S.C. § 185. See Complaint (Compl.) ¶¶ 1, 4, 5, 7-9, Electronic Case Filing ("ECF") Docket Entry ("DE") #1.
Though properly served, defendant did not answer or otherwise appear in this action and, on October 18, 2011, the Clerk of the Court noted defendant's default. See Clerk's Entry of Default (Oct. 18, 2011), DE #6. Later that day, the Honorable Allyne R. Ross, to whom the case is assigned, referred plaintiffs' motion for a default judgment to the undersigned magistrate judge for a report and recommendation. See Order Referring Motion (Oct. 18, 2011), DE #8. On October 20, 2011, this Court ordered defendant to respond to plaintiffs' default judgment motion by November 9, 2011. See Order (Oct. 20, 2011), DE #9. Defendant has yet to respond to this Court's order.
For the reasons that follow, this Court recommends that plaintiffs' motion for default judgment be granted and that plaintiffs be awarded $6,839.45 in unpaid contributions, attorneys' fees and costs, plus prejudgment interest on $4,178.07, to be calculated by the Clerk of the Court from February 10, 2010 through entry of judgment. Additionally, plaintiffs should be awarded liquidated damages in an amount equal to the calculated prejudgment interest.
BACKGROUND
Defendant Bradley, an employer within the meaning of ERISA, 29 U.S.C. § 1007(5), and of the LMRA, 29 U.S.C. § 185, executed a collective bargaining agreement with Local Union 813 of the International Brotherhood of Teamsters, effective November 1, 2007 through March 31, 2010. See Compl. ¶¶ 6-7; CBA, Ex. 4 to Affidavit of Sharon Huang in Support of Plaintiffs' Motion for a Default Judgment (Oct. 18, 2011) ("Huang Aff."), DE #5-4. Pursuant to the terms of the CBA, which in turn incorporated separate trust agreements (the "Trusts") for each of the Funds, Bradley was required to make contributions to the Funds, which are third-party beneficiaries of the CBA. See Compl. ¶¶ 7, 8. More specifically, the CBA required that for covered employees, Bradley remit to the Funds, by the tenth of each month, contributions to the Local 813 Insurance Fund, the Local 1034 Pension Fund, and the Local 813 and Local 1034 Severance Fund. See Compl. ¶ 8; CBA § 22, DE #5-4 at 7-11. Plaintiffs, who are fiduciaries within the meaning of ERISA, 29 U.S.C. §§ 1002(37), 1145, see Compl. ¶ 5, allege that defendant failed to make the requisite contributions for the period from January 2010 to March 2010. See Compl. ¶ 13.
The Funds are also employee benefit plans as defined by ERISA, 29 U.S.C. § 1002(3), and multi-employer, labor management trust funds administered pursuant to a CBA, within the meaning of the LMRA, 29 U.S.C. § 186(c)(5)-(6).
The CBA and Trusts further provide that, in the event Bradley failed to timely pay the required contributions, defendant would be obligated to pay interest (at a rate of 1.5 percent per month) from the date such delinquent contributions became due until the date of payment; liquidated damages (in an amount equal to the interest on the unpaid contributions or 20 percent of the unpaid contributions, whichever is greater); and reasonable costs and attorneys' fees incurred by plaintiffs. See Compl. ¶ 11; CBA § 23-e; Agreement and Declaration of Trust ("Trust Agreement") §§ 9.4. 9.6, DE #5-4 at 18, 19.
Plaintiffs filed this action on June 15, 2011. Following months of inactivity in the case, this Court ordered plaintiffs to show cause as to why the case should not be dismissed for lack of prosecution. See Order to Show Cause (Oct. 18, 2011), DE #4. That same day, plaintiffs moved for default judgment. See Plaintiffs' Motion for Entry of Default (Oct. 18, 2011), DE #5. Plaintiffs seek an award of $4,178.07 in unpaid contributions, plus prejudgment interest thereon, liquidated damages, and reasonable attorneys' fees and costs. See Affidavit of Anthony S. Cacace ("Cacace Aff.") ¶ 11, DE #5-2. Plaintiffs' application is unopposed.
DISCUSSION
A party's default admits all well-pleaded factual allegations in the complaint. See Transatlantic Marine Claims Agency, Inc. v. Ace Shipping Corp., 109 F.3d 105, 108 (2d Cir. 1997); Greyhound Exhibitgroup, Inc. v. E.L.U.L. Realty Corp., 973 F.2d 155, 158 (2d Cir. 1992). An admission of liability, however, does not admit damages: the plaintiff bears the burden of proving damages, and the defendant must be given the opportunity to contest the amount. See Greyhound, 973 F.2d at 158. Where, as here, the defendant has never appeared, "the Court's determination is based solely on plaintiff's submissions." Gilbert v. Hotline Delivery, No. 00-CV-0160 (MBM)(RLE), 20001 WL 799576, at *2 (S.D.N.Y. July 10, 2011). It is within the Court's discretion to determine whether plaintiffs' burden has been met, and whether or not to hold an evidentiary hearing. See Fustok v. ContiCommodity Servs., Inc., 873 F.2d 38, 40 (2d Cir. 1989).
I. LIABILITY
The complaint in this case contains a well-pleaded ERISA claim. Section 1145 of ERISA mandates that "[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 . . . make such contributions in accordance with the terms and conditions of such plan or such agreement." See 29 U.S.C. § 1145; see also, e.g., Cement & Concrete Workers Dist. Council Welfare Fund v. Metro Found. Contractors Inc., No. 08-CV-4563 (FB) (SMG), 2010 WL 827901, at *2 (E.D.N.Y. Mar. 4, 2010). ERISA provides jurisdiction over claims brought to enforce an employer's obligation to make the required contributions. See 29 U.S.C. § 1132(f).
In the instant case, plaintiffs allege that defendant violated the terms of the CBA by failing to submit required contributions to the Funds. See Compl. ¶¶ 15-17, 21-23; see also Cacace Aff. ¶ 9. The pleading's uncontested factual allegations are sufficient to state a claim that defendant violated the terms of the CBA and, by extension, ERISA. As plaintiffs have established ERISA liability, the Court respectfully recommends entry of a default judgment against defendant, in the amounts discussed below.
Since the relief requested by plaintiffs under the LMRA is also available under ERISA, the Court need not address liability and damages under the LMRA. See generally Indu Craft, Inc. v. Bank of Baroda, 47 F.3d 490, 497 (2d Cir. 1997) ("A plaintiff seeking compensation for the same injury under different legal theories is of course entitled to only one recovery.").
II. DAMAGES
The Court must next consider the appropriate measure of damages to award plaintiffs. Although a defendant, by defaulting, admits all well-pleaded allegations pertaining to liability, a plaintiff must provide evidence to substantiate its request for damages; it is within the Court's discretion to determine whether that burden has been met. See, e.g., Greyhound, 973 F.2d at 158.
ERISA provides that, upon a finding that an employer violated Section 1145, the plan (here, each of the Funds) is entitled to judgment in the amount of the delinquent contributions, as well as interest, liquidated damages, reasonable attorneys' fees and costs. See 29 U.S.C. § 1132(g)(2). "Section 1145 makes clear that a plan member's contractual duty to make contributions to multiple employer plans is a statutory requirement, and violations of § 1145 are enforceable through civil actions brought under § 1132(g)." Labarbera v. Andrew's Trucking Corp., No. 06 CV 6243(NG)(JMA), 2007 WL 4224631, at *3 (E.D.N.Y. Nov. 26, 2007) (citation omitted). "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 the employers live up to their obligations." Benson v. Brower's Moving Storage, Inc., 907 F.2d 310, 314 (2d Cir. 1990) (citation omitted).
A. Estimated Delinquent Contributions
By its default, defendant has admitted that it failed to remit contributions on behalf of employees covered by the CBA. See Finkel v. Omega Commc'n Servs., Inc., 543 F.Supp.2d 156, 160 (E.D.N.Y. 2008); Andrew's Trucking, 2007 WL 4224631, at *3. Pursuant to the CBA, defendant is liable for those unpaid contributions. See Compl. ¶ 11. Accordingly, plaintiffs seek $4,178.07 in delinquent contributions.
The delinquent contributions identified by plaintiffs relate to the period from January 1, 2010 through March 31, 2010. The $4,178.07 is broken down among the Funds as follows:
| Month | Insurance Fund | Pension Fund | Severance Fund |
|---|---|---|---|
| Jan. 2010 | $1,271.95 | $225.00 | $110.00 |
| Feb. 2010 | $1,017.56 | $180.00 | $88.00 |
| Mar. 2010 | $1.017.56 | $180.00 | $88.00 |
| Total: | $3,307.07 | $585.00 | $286.00 |
B. Interest on Unpaid Contributions
ERISA provides that where an employer fails to remit contributions, the plaintiff is entitled to interest on the unpaid contributions, calculated at the rate provided in the plan or, if none is stated, the rate prescribed in 26 U.S.C. § 6621. See 29 U.S.C. § 1132(g)(2)(B); Omega Commc'n, 543 F.Supp.2d at 161. In this case, the Trust Agreements provide that employers who fail to pay required contributions when due shall be liable for interest at the rate of 1.5 percent per month from the due date to the date of the payment. See Huang Aff. ¶ 9; Trust Agreement § 9.4(d)(5). In this case, plaintiffs request interest for unpaid contributions for the period January 1, 2010 through March 31, 2010; those contributions have never been paid. See Huang Aff. ¶¶ 11, 16.
Plaintiffs submit only those pages of the Insurance Fund's Trust Agreement that relate to payment obligations. See Trust Agreement, DE #5-4 at 16-19. Sharon Huang, the Funds' Administrator, avers in her affidavit that "[t]he Funds' respective Trusts are identical as they relate to employers' payment obligation . . . ." See Huang Aff. ¶ 10 n.3.
Because ERISA is silent regarding the accrual date of prejudgment interest, courts in this District have adopted a simplified method of interest calculation, as set forth in New York statutory law. See, e.g., Trustees of the Plumbers Local Union No. 1 Welfare Fund v. Philip Gen. Constr., No. 05 CV 1665 (NG)(RLM), 2007 WL 3124612, at *11 (E.D.N.Y. Oct. 23, 2007) (citing N.Y. C.P.L.R. § 5001(b)); Trustees of the Nat'l Org. of Indus. Trade Unions v. Davis Grande Co., No. 03-CV-6229 (NG)(SMG), 2006 WL 1652642, at *3 (E.D.N.Y. June 9, 2006)). Under this method, prejudgment interest accrues "from a 'single reasonable intermediate date' when damages are incurred over a period of time." See Finkel v. Triple A Grp., Inc., 708 F.Supp.2d 277, 287 (E.D.N.Y. 2010) (citing N.Y. C.P.L.R. § 5001(b)). In this case, February 10, 2010 represents a reasonable midpoint, and this Court recommends adopting that date as the accrual date.
Therefore, plaintiffs should be awarded interest on unpaid contributions due for the period of January 1, 2010 through March 31, 2010, with interest accruing as of February 10, 2010, through the date final judgment is entered. See, e.g., Laundry, Dry Cleaning Workers & Allied Indus. Health Fund, Unite Here! v. Jung Sun Laundry Grp. Corp., No. 08-CV-2771 (DLI)(RLM), 2009 WL 704723, at *6 (E.D.N.Y. Mar. 16, 2009) (calculating plaintiffs' prejudgment interest through entry of final judgment). More specifically, the Court recommends that plaintiffs be awarded prejudgment interest, to be calculated by the Clerk of Court, based on a 1.5 percent monthly interest rate and a $4,178.07 principal balance, using the accrual date of February 10, 2010, through the date judgment is entered.
C. Liquidated Damages
ERISA provides for liquidated damages for unpaid contributions. Liquidated damages are available in the greater of either the interest on the unpaid contributions or as provided for under the plan, in an amount not in excess of twenty percent of the unpaid contributions. See 29 U.S.C. § 1132(g)(2)(C). Here, the Trust Agreements provide for liquidated damages in an amount equal to the greater of the interest on the unpaid contributions or twenty percent of the delinquent contributions. See Trust Agreement, § 9.6(c), DE #5-4 at 19.
In the instant case, the interest on the unpaid contributions exceeded $1,258 as of October 2011, see Huang Aff. ¶ 16, and thus is necessarily greater than 20 percent of the $4,178.07 in unpaid contributions. For that reason, plaintiffs seek liquidated damages equal to the amount of interest owed to them. The amount of interest has increased due to the passage of time, and will continue to increase through entry of final judgment. The Court recommends that plaintiffs be awarded liquidated damages equal to the amount of prejudgment interest, as determined by the Clerk of the Court.
D. Attorneys' Fees and Costs
ERISA and the Trust Agreements provide that when an employee benefit fund prevails in an action to recover delinquent contributions, the defendant is liable for plaintiffs' reasonable attorneys' fees and costs. See 29 U.S.C. § 1132(g)(2)(D); Trust Agreement, DE #5-4 at 19. Plaintiffs allege that they have incurred fees and expenses totaling $3,047.50. See Cacace Aff. ¶¶ 19, 22.
"In determining the sum due to plaintiffs' attorneys in fees and costs, the Court looks to what a reasonable client would be willing to pay to determine the 'presumptively reasonable fee.'" Masino v. Columbus Constr. Corp., No. 08-CV-1592 (RRM)(CLP), 2009 WL 2566956, at *6 (E.D.N.Y. Aug. 19, 2009) (citing Arbor Hill Concerned Citizens Neighborhood Ass'n v. Cnty. of Albany, 522 F.3d 182, 183-84 (2d Cir. 2008)). To calculate the presumptively reasonable fee or lodestar, "a court must first determine a reasonable hourly rate for the legal services performed[,]" using factors such as the labor and skill required, the difficulty of the legal questions, the attorney's customary hourly rate, the amount at stake, and awards in similar cases. Id. (quoting Arbor Hill, 522 F.3d at 186 n.3 (listing twelve factors)). Under the so-called "forum rule," courts should, in assessing the reasonableness of the hourly rates, use the hourly rates charged in the district in which the reviewing court sits. See Simmons v. N.Y. City Transit Auth., 575 F.3d 170, 174-76 (2d Cir. 2009) (internal citations and quotations omitted). Once the Court determines the reasonable hourly rate, it must then multiply that rate by the reasonable number of hours expended, to arrive at the presumptively reasonable fee. See Arbor Hill, 522 F.3d at 190.
1. Attorney and Paralegal Hourly Rates
Plaintiffs' application for attorneys' fees reflects a total of 7.75 hours at a rate of $295 per hour for one associate and 2.25 hours at a rate of $165 per hour for litigation support personnel. See Cacace Aff. ¶¶ 18-19. In support of their request for attorneys' fees, plaintiffs have submitted an affidavit from attorney Anthony Cacace -- an associate and the only attorney whose time was billed in this case. Mr. Cacace graduated from law school in 2008 and had been prosecuting these types of actions for two years. See Cacace Aff. ¶ 16; http://www.proskauer.com/professionals/anthony-cacace/.
Based on a review of the case law, this Court concludes that for ERISA cases in this District, the requested rate for the associate, Mr. Cacace, while high, is within the range of reasonable rates. See Ferrara v. All Am. Trucking Servs., Inc., No. CV-11-1157 (ADS)(AKT), 2012 WL 1042936, at *7 (E.D.N.Y. Feb. 17, 2012), adopted by 2012 WL 1041840 (Mar. 28, 2012), (finding, in an ERISA case, that the reasonable hourly rates in this District vary from $100 to $295 per hour for associates) (quoting Penberg v. HealthBridge Mgmt., No. 08-CV-1534 (CLP), 2011 WL 1100103, at *6-7 (E.D.N.Y. Mar. 22, 2011)); Maritime Fish Prods., Inc., No. 11 CV 844 ENV, 2012 WL 2609321, at *17 (E.D.N.Y. May 31, 2012), adopted by 2012 WL 2674667 (E.D.N.Y. July 5, 2012) (awarding $325 an hour for two associates with similar experience: one graduated in 2007, the other in 2008). Accordingly, this Court respectfully recommends that plaintiffs be awarded the requested rate of $295 per hour for Mr. Cacace.
The billing rate of $165 for litigation support is higher than the rates typically approved in ERISA default actions in this District. See Ferrara v. All-Around Trucking Inc., No. 10-CV-5845 (RRM), 2011 WL 6026300, at *6 (E.D.N.Y. Nov. 8, 2011), adopted by 2011 WL 6026294 (E.D.N.Y. Dec. 2, 2011) (adopting $100 as reasonable paralegal rate); Empire State Carpenters Welfare, Pension Annuity, Apprenticeship, Charitable Trust, Labor Mgmt. Cooperation & Scholarship Funds v. A-Plus Flooring, Inc., No. CV-10-1634 (JS)(AKT), 2011 WL 4407447, at *7 (E.D.N.Y. Aug. 26, 2011), adopted by 2011 WL 4407431 (E.D.N.Y. Sep. 29, 2011) (awarding $100 per hour for paralegals); Concrete Flotation Sys., Inc. v. Tadco Constr. Corp., No. 07-CV-319 (ARR)(VVP), 2010 WL 2539771, at *8 (E.D.N.Y. Mar. 15, 2010), adopted by 2010 WL 2539661 (E.D.N.Y. June 17, 2010) (adopting $100 as reasonable rate for paralegals). This Court respectfully recommends that plaintiff be awarded a billing rate of $100 per hour for services rendered by the firm's litigation support group.
2. Hours Billed
In support of their application for attorneys' fees, plaintiffs have submitted a document itemizing the time charges in this case. See Detail Description of Services Rendered ("Description of Services"), DE #5-2 at 20. Plaintiffs seek to recover ten hours of attorney and litigation support time. See id. Specifically, plaintiffs claim 7.75 hours of work by associate Anthony Cacace and a combined 2.25 hours of paralegal work. See id. Courts in this District readily approve comparable hourly totals in ERISA default cases. See, e.g., Gesualdi v. Giacomelli Tile Inc., No. CV10-4841 (ADS) (WDW), 2011 WL 4352548, at *4 (E.D.N.Y. Aug. 18, 2011), adopted by 2011 WL 4356157 (E.D.N.Y. Sept. 16, 2011) (approving as reasonable 14.6 hours of work); Ferrara v. Corona & Son Trucking, Inc., No. 09CV5352 (SLT)(ALC), 2010 WL 5490918 (E.D.N.Y. Oct. 27, 2010), adopted by 2011 WL 63607 (E.D.N.Y. Jan. 6, 2011) (approving as reasonable 14.9 hours of work).
Nevertheless, the requested hours in this case should be reduced due to imprecise billing and paralegal-type work performed by an attorney. First, plaintiffs' counsel's method of billing tends to overstate the amount of time expended, since the firm divides the billed hours into fifteen-minute increments instead of the preferred six-minute increments. See Description of Services; La Barbera v. Pass 1234 Trucking, Inc., No. 04 CV 1364(SJ)(MDG), 2007 WL 2908175, at *7 (E.D.N.Y. Sept. 28, 2007) (reducing hours billed by 15%, due in part to the billing method of fifteen-minute increments instead of six-minute increments). Second, some of the work billed for Mr. Cacace was paralegal-type work performed by an attorney, such as drafting a civil cover sheet and arranging with a process server for service of the complaint. See Description of Services; Top Banana, LLC v. Dom's Wholesale & Retail Ctr., Inc., 04 Civ. 2666 (GBD)(AJP), 2008 WL 4925020, at *2 (S.D.N.Y. Nov. 10, 2008) (ordering 5% reduction to take into account attorney hours billed for performing paralegal-type work). As a result, this Court respectfully recommends reducing the billable hours of the associate by ten percent and reducing the hours expended by paralegals by five percent.
Having multiplied each of the adjusted hourly rates by the corresponding reduced number of hours for Mr. Cacace and for litigation support personnel, this Court recommends that the sum of those calculations ($2,271.38) be awarded to plaintiff as attorneys' fees.
($295 x (7.75 hrs. - 10%)) + ($100 x (2.25 hrs. - 5%)).
3. Costs
Plaintiffs also request an award for costs totaling $390.00, consisting of the court filing fee of $350.00 and a $40.00 fee incurred in connection with service of process. See Cacace Aff. ¶ 22. These costs are plainly reasonable, and therefore the Court respectfully recommends recovery of the full $390.00.
CONCLUSION
For the foregoing reasons, this Court recommends that plaintiffs be awarded judgment against defendant in the sum of $6,839.45 in unpaid contributions, attorneys' fees and costs, plus prejudgment interest on $4,178.07, to be calculated by the Clerk of the Court from February 10, 2010 through entry of judgment. Additionally, plaintiffs should be awarded liquidated damages in an amount equal to the calculated prejudgment interest.
Any objections to the recommendations contained herein must be filed with Judge Ross on or before August 27, 2012. Failure to file objections in a timely manner may waive a right to appeal the District Court order. See 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 6(a), 6(d), 72; Small v. Sec'y of Health & Human Servs., 892 F.2d 15, 16 (2d Cir. 1989) (per curiam).
The Clerk is directed to enter this Report and Recommendation into the ECF System and to transmit a copy by Federal Express to Bradley Funeral Service, Inc., at 45 South Highland Ave., Ossining, New York 10562.
SO ORDERED. Dated: Brooklyn, New York
August 10, 2012
/s/ _________
ROANNE L. MANN
UNITED STATES MAGISTRATE JUDGE