November 13, 2003
This decision may be cited in whole or in any part.
Plaintiffs commenced this action July 19, 2001 pursuant to the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1001 et seq., and the Labor-Management Relations Act, 29 U.S.C. § 185, alleging, inter alia, that defendant Boyd Mechanical Inc. ("Boyd") had breached a collective bargaining agreement ("CBA") by failing to make monetary contributions to the plaintiffs' employee benefits plan. Defendant failed to appear in this action and, pursuant to plaintiffs' request, the Clerk of this Court entered an Entry of Default against Boyd on August 7, 2002. Plaintiffs subsequently filed an April 16, 2003 motion for a default judgment pursuant to Rule 55(b)(2) of the Federal Rules of Civil Procedure ("FRCvP") seeking unpaid employee benefit contributions, interest, attorney's fees and costs in the sum of $17,663.58. For the reasons discussed below, plaintiffs' motion will be granted.
According to the CBA, defendant had been obligated to make certain monetary contributions to the Journeyman Plumbers and Apprentices UA Local Union No. 22 Health and Welfare Fund and Pension Fund.
Under FRCvP 55, district courts may grant default judgment against a party that has failed to plead or otherwise defend. See Enron Oil Corp. v. Diakuhara, 10 F.3d 90, 95-96 (2d Cir. 1993). First, a party moving for default judgment must obtain an Entry Of Default from the Clerk of the Court pursuant to FRCvP 55(a) and, second, the moving party must seek a default judgment from the Clerk of the Court or the Court, depending on the circumstances as set forth in FRCvP 55(b).
In a case such as this, where the moving party has sought default judgment from the Court, FRCvP 55(b)(2) governs and provides that "[i]f, in order to enable the court to enter judgment or to carry it into effect, it is necessary to take an account or to determine the amount of damages or to establish the truth of any averment by evidence or to make an investigation of any other matter, the court may conduct such hearings or order such references as it deems necessary and proper and shall accord a right of trial by jury to the parties when and as required by any statute of the United States." "While a party's default is deemed to constitute a concession of all well pleaded allegations of liability, it is not considered an admission of damages." Greyhound Exhibitgroup, Inc. v. E.L.U.L. Realty Corp., 973 F.2d 155, 158 (2d Cir. 1992). Therefore, while plaintiffs' Complaint, by itself, establishes defendant's liability under ERISA, it is not sufficient to establish their damages. See Flaks v. Koegel, 504 F.2d 702, 707 (2d Cir. 1974) ("While a default judgment constitutes an admission of liability, the quantum of damages remains to be established by proof unless the amount is liquidated or susceptible of mathematical computation.").
Such liability is established because plaintiffs' Complaint sets forth a valid cause of action against defendant pursuant to ERISA. See Au Bon Pain Corp. v. Artect, Inc., 653 F.2d 61, 65 (2d Cir. 1981) (holding that district court should accept all of the factual allegations of the complaint as true when a defendant fails to appear).
In determining damages not susceptible of simple mathematical calculation, a court has the discretion to rely on detailed affidavits or documentary evidence in lieu of an evidentiary hearing. See Action S.A. v. Marc Rich Co., Inc., 951 F.2d 504, 508 (2d Cir. 1991); Fustok v. Conticommodity Servs., Inc., 873 F.2d 38, 40 (2d Cir. 1989); FRCvP 55(b)(2). Moreover, the moving party is entitled to all reasonable inferences from the evidence it offers. Au Bon Pain Corp., supra note 3, at 65.
Plaintiffs have submitted to the Court the affidavit of E. Michael Redmond — Administrator of the plaintiff Funds — and several exhibits in support of their motion. Such evidence shows that defendant had been a party to the CBA with plaintiffs and that, in accordance with such agreement, it was required to, inter alia, make monetary contributions to the Funds and remit Union dues that had been deducted from the paychecks of individual Union members. Plaintiffs have also submitted documentary evidence that shows that defendant failed to pay fringe benefit contributions in the amount of $10,177.66 for the period of August 6, 2000 through February 25, 2001. In addition, such evidence shows that defendant failed to remit to plaintiffs $811.34 in Union dues. The Court finds that plaintiffs' evidence is credible and sufficiently detailed to establish such amounts as representing defendant's delinquency in contributions to the plaintiff Funds. In addition to such damages, plaintiffs also seek interest on the unpaid contributions in the amount of $1,534.33 and $5,140.25 for attorney's fees.
Pursuant to Articles VII and XX of the CBA, defendant was obligated to make fringe benefit contributions to each of the plaintiff Funds based on the number of hours worked by each Union employee. See Redmond Aff., Ex. A.
Such calculations are derived from defendant's own remittance reports — entitled Employer Report of Fringe Benefit Payments to Plumbers and Steamfitters Local Union 22. See Redmond Aff., Ex. D.
ERISA mandates the award of both prejudgment interest on unpaid contributions and reasonable attorney's fees to plaintiffs who obtain a judgment for unpaid contributions pursuant to 29 U.S.C. § 1145. See 29 U.S.C. § 1132(g)(2)(B) (interest) and (D) (attorney's fees); see also N.Y. Teamsters Conference Pension and Ret. Fund v. Boening Bros., Inc., 92 F.3d 127, 135 (2d Cir. 1996) ("As is apparent from the statutory text, an award of attorney's fees and costs is *** mandatory under [section 1132(g)(2)]."). Plaintiffs have calculated interest on the unpaid contributions at a rate of 8 percent per annum pursuant to section 1132(g)(2), which states that "interest on unpaid contributions shall be determined by using the rate provided under the plan, or, if none, the rate prescribed under section 6621 of Title 26." The plan does not provide for such an interest rate; therefore, plaintiffs have properly calculated the interest rate in accordance with 26 U.S.C. § 6621.
Section 1132(g)(2) states that "[i]n any action by a fiduciary for or on behalf of a plan to enforce section 1145 *** 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, *** [and] (D) reasonable attorney's fees and costs of the action ***." (emphasis added).
Plaintiffs applied the Internal Revenue Code's Underpayment rate, as provided by section 6621, which is calculated by adding three percentage points to the applicable Federal short-term interest rate. See 26 U.S.C. § 6621(a)(2) and (b).
In addition, plaintiffs' attorney's fees are reasonable. To determine the reasonable amount of attorney's fees to be awarded, courts within the Second Circuit use the "lodestar" method, "whereby an attorney fee award is derived `by multiplying the number of hours reasonably expended on the litigation times a reasonable hourly rate.'" G.M. ex rel. R.F. v. New Britain Bd. of Educ., 173 F.3d 77, 84 (2d Cir. 1999) (quoting Blanchard v. Bergeron, 489 U.S. 87, 94 (1989)). Plaintiffs' counsel has submitted an Attorney Billing Report detailing the work that was performed on this litigation, which shows a total of 42.2 hours worked on this case by various individuals at plaintiffs' law firm. Plaintiffs seek an additional $853.25 for costs in calculating their total requested fee of $5,140.25. Having found such fees to be reasonable, they will be awarded to plaintiffs.
Plaintiffs have applied the following hourly rates for work performed: $150 per hour for a Senior Partner, $140 per hour for an Associate Attorney, $90 per hour for a paralegal and $50 per hour for a Law Clerk. See Aff. Of Jeffrey F. Reina, Esq., Ex. E.
Accordingly, it is hereby ORDERED that default judgment is awarded to plaintiffs in the amount of $17,663.58 — consisting of $10,177.66 in unpaid contributions, $811.34 in Union dues, $1,534.33 in accrued interest and $5,140.25 for attorney's fees and costs.