MAUSKOPF, District Judge.
By Motion filed November 8, 2007, Plaintiff moved for default judgment. By Order entered February 21, 2008, this Court granted the motion and referred the
Pursuant to 28 U.S.C. § 636(b) and Federal Rule of Civil Procedure 72, the Court has reviewed the R & R for clear error and, finding none, concurs with the R & R in its entirety. See Covey v. Simonton, 481 F.Supp.2d 224, 226 (E.D.N.Y.2007).
Accordingly, it is hereby ORDERED that Plaintiff be awarded damages in the total amount of $77,089.54 plus interest on unpaid contributions as outlined in the R & R.
SO ORDERED.
STEVEN M. GOLD, United States Magistrate Judge.
Plaintiff, as Chairman of the Joint Industry Board of the Electrical Industry (the "Joint Board"), brings this action pursuant to the Employer Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. §§ 1132 and 1145, and Section 301 of the Labor Management Relations Act ("LMRA"), 29 U.S.C. § 185. Plaintiff seeks to recover monies he claims are owed by defendants The Triple A Group, Inc ("TAG") and Michael Volpe ("Volpe") to various benefit funds. Plaintiff also seeks to recover interest, liquidated damages, and attorney's fees and costs.
Upon plaintiffs application and in light of defendants' failure to appear in or otherwise defend this action, the Clerk of Court noted the default of the defendants on November 9, 2007. Docket Entry 11. The Honorable Roslynn R. Mauskopf granted plaintiffs motion for default judgment and referred the matter to then Magistrate Judge Kiyo A. Matsumoto for an inquest on damages. The case was subsequently reassigned to me.
Once found to be in default, 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), cert. denied, 506 U.S. 1080, 113 S.Ct. 1049, 122 L.Ed.2d 357 (1993); Montcalm Pub. Corp. v. Ryan, 807 F.Supp. 975, 977 (S.D.N.Y.1992). A court, however, retains the discretion to determine whether a final default judgment is appropriate. Enron Oil Corp. v. Diakuhara, 10 F.3d 90, 95 (2d Cir.1993). Even after a defendant has defaulted, "[a] plaintiff must ... establish that on the law it is entitled to the relief it seeks, given the facts as established by the default." U.S. v. Ponte, 246 F.Supp.2d 74, 76 (D.Me.2003) (citation omitted). See also Au Bon Pain Corp. v. Artect, Inc.,
Plaintiff has established the elements of liability required to state a claim pursuant to 29 U.S.C. § 1145. Section 1145 provides:
29 U.S.C. § 1145.
Plaintiff is the administrator of multiemployer benefit plans as defined by ERISA.
Plaintiffs complaint also seeks additional monies allegedly owed by TAG, stating "the Joint Board collects assessments payable to the Union by certain employees ... who authorize their employers to deduct from their wages ... certain contributions" (the "Non-ERISA Plans").
Plaintiff also seeks amounts that became due and owing during the pendency of this action. Federal Rule of Civil Procedure 54(c) generally limits recovery on a default judgment to the relief sought in the complaint; the rule provides that "[a] default judgment must not differ in kind from, or exceed in amount, what is demanded in the pleadings." Rule 54(c) is not violated, however, when a court awards damages that accrued during the pendency of the litigation if the complaint put defendant on notice that plaintiff might seek such damages. See King v. STL Consulting, LLC, 2006 WL 3335115, at *4-5 (E.D.N.Y. Oct. 3, 2006); Ames v. STAT Fire Suppression, Inc., 227 F.R.D. 361, 362 (E.D.N.Y.2005).
MOORE'S FEDERAL PRACTICE § 54.71[1] (2009). See also Silge v. Merz, 510 F.3d 157, 159 (2d Cir.2007) (holding that the district court correctly applied Rule 54(c) by declining to award prejudgment interest because plaintiff failed to seek it in his complaint).
In his motion for default judgment, plaintiff seeks unpaid 2007 and 2008 contributions other than those identified in the complaint. Compare Compl. ¶¶ 35, 36 with Hock Decl. ¶¶ 9, 10.
Plaintiff also seeks interest and liquidated damages on contributions defendants paid late that accrued after this lawsuit was filed. See Hock Decl. ¶¶ 16, 18 and Exs. A, B. However, plaintiff did not plead in his complaint that these amounts were sought; rather, the complaint demands interest and liquidated damages only on "unpaid contributions due under the CBAs." Compl. wherefore cl. (B) (emphasis added). By requesting interest and liquidated damages on late-paid contributions in his motion for default judgment, plaintiff now seeks a judgment "different in kind" than that demanded in his complaint in violation of Rule 54(c). See Silge, 510 F.3d at 160-61. Plaintiff "could easily have drafted a complaint that included a distinct claim for [interest and liquidated damages on late-paid contributions] in the demand clause. By operation of Rule
Finally, the question arises whether Volpe, upon whom plaintiff seeks to impose personal liability for some of the contributions and damages, may be held individually liable under ERISA. ERISA specifically provides for liability against an "employer," and a corporate officer is ordinarily not personally liable for the ERISA obligations of the corporation. An officer may be held personally liable in cases involving fraud or facts warranting piercing the corporate veil. See Cement & Concrete Workers Dist. Council Welfare Fund v. Lollo, 35 F.3d 29, 35 (2d Cir.1994); Sasso v. Cervoni, 985 F.2d 49, 50-51 (2d Cir. 1993). In addition, and pertinent here, a corporate officer may be held individually liable if there is "clear and explicit evidence" of the parties' intent that he be personally bound. See Mason Tenders Dist. Council Welfare Fund v. Thomsen Constr. Co., 301 F.3d 50, 53-54 (2d Cir. 2002) (noting that "New York law requires that there be `clear and explicit' evidence of the defendant's intent to add personal liability to the liability of the entity," and that "the high degree of intention ... goes beyond the mere presence of a personal liability clause in the signed agreement"); see also Lollo, 35 F.3d at 35.
In this case, Volpe entered into a settlement agreement in a prior litigation (the "Stipulation") in which he explicitly assumed personal liability for some of plaintiffs claims. More specifically, the Stipulation provides that Volpe will be personally liable for all contributions due under the 2004 CBA in effect through May 10, 2007. Compl. ¶¶ 34, 37, 56; Sessa 11/7/07 Decl. Ex. F. The Stipulation states that TAG and Volpe "admit and acknowledge that they owe, jointly and severally, [past] contributions to the [Joint Board]" and "agree to make all weekly contributions required under the [2004] CBA as they become due." Sessa 11/7/07 Decl. Ex. F ¶¶ 1, 6. In addition, Volpe signed the Stipulation twice—once on behalf of TAG and once on behalf of himself, see id., following the "nearly universal practice" utilized where a corporate officer simultaneously assumes corporate and individual liability. Thomsen, 301 F.3d at 54. Plaintiff has thus established that Volpe is jointly and severally liable with TAG for delinquent contributions that became due under the 2004 CBA that was in effect through May 10, 2007.
Although the allegations of a complaint pertaining to liability are
As noted above, plaintiff seeks unpaid ERISA contributions, unpaid contributions to Non-ERISA Plans, interest, liquidated damages, attorney's fees and costs. For ERISA contributions, the damages recoverable for a violation of § 1145 are enumerated in § 1132(g)(2), which provides that the court shall award the plan as follows:
29 U.S.C. § 1132(g)(2). For the Non-ERISA Plans, plaintiffs damages are limited to those provided for in the CBAs and trust agreements.
When plaintiff originally filed this action on June 29, 2007, he sought unpaid contributions alleged to be due to ERISA and Non-ERISA Plans for various weeks between March and May 2007. Compl. ¶¶ 35, 36. While this action was pending, TAG paid the outstanding contribution amounts owed. Sessa 11/7/07 Decl. ¶ 15; Hock Decl. ¶¶ 9, 10. TAG, however, failed to pay additional contributions that became due after the case was filed. Hock Decl. ¶ 21. Consequently, plaintiff filed supplemental declarations providing updated figures on July 3, 2008.
PHBP 1/17/07, 1/24/07, 2/21/07 $ 14.94 VHUI/401(k) 10/17/07-10/31/07 $10,597.86 VHUI/401(k) 11/7/07-12/19/07 $11,909.79TOTAL $22,522.59
Hock Decl. ¶¶ 9, 10, 21; Sessa 11/7/07 Decl. Ex. K; Sessa 7/3/08 Decl. Exs. B and E. Plaintiff's calculations appear correct and I therefore recommend that these funds be awarded $22,522.59 for unpaid 2007 contributions. In addition and as discussed above, defendant Volpe is jointly and severally liable with TAG for contributions due prior to May 10, 2007. Accordingly, his joint and several liability is limited to the $14.94 in unpaid contributions due to the PHBP fund.
Plaintiff also states that TAG has failed to remit contributions to the Plans for the seven weeks ending March 26, 2008 through April 16, 2008 and June 4, 2008 through June 18, 2008. Hock Decl. ¶ 21. Furthermore, TAG has failed to report to plaintiff any wages and hours worked by union employees since the week ending April 9, 2008. Sessa 7/3/08 Decl. ¶ 9 and Ex. C. If a plaintiff establishes that an employer's records are inadequate, such as where an employer fails to submit required payroll reports, the court may estimate the damages to be awarded. See Jacobson v. Empire Elec. Contractors, Inc., 2008 WL 819948, at *3 (E.D.N.Y. Mar. 25, 2008). Accordingly, plaintiff has calculated the amount of unpaid 2008 contributions based on earlier payroll reports the Joint Board did receive. The early 2008 payroll reports (for weeks ending January 9, 2008 through March 19, 2008, see Sessa 7/3/08 Decl. Ex. A, and for the week ending April 9, 2008, see id. Ex. C) indicate that TAG employed one union member and paid the following amounts:
PHBP $694.29 DEN $ 63.23 ANN $200.00 E & C $ 2.89 NEBF $ 66.30 Dues $ 22.10 JIB $ 20.00
Sessa 7/3/08 Decl. Ex. A. These amounts generally correspond to the rates indicated by the Joint Board for "A" Rated Journeypersons in a May 16, 2007 memo to employers ("JIB Memo").
PHBP $4,860.03 DEN $ 442.61 ANN $1,400.00 E & C $ 20.23 NEBF $ 464.10 Dues $ 154.70 JIB $ 140.00TOTAL $7,481.67
With respect to the 401(k) and VHUI contributions, plaintiff alleges that these funds are owed $850.97 per week for the period of weeks ending January 9, 2008 through April 16, 2008 and June 4, 2008 through June 18, 2008. Hock Decl. 1121 and Ex. E. Thus, plaintiff calculates that the funds are owed a total of $15,317.46 for these eighteen weeks.
Finally, with respect to contributions due to the EESISP fund, plaintiff calculates the weekly contribution due as $138.13, see Hock Decl. Ex. E, but the contribution due for the EESISP, unlike the other funds, is not listed on the payroll reports, see Sessa 7/3/08 Decl. Ex. A. Plaintiff states that the contribution rate for this fund depends on the type of work performed by the employee and provides a list identifying the various classes of employees and respective rates. Sessa 11/7/07 Decl. ¶ 9 and Ex. D. Plaintiff has not identified the class of employee for whom he seeks benefits, but appears to be applying the rate listed on the schedule for contractors (6.25% times $2,210.00 (reportable gross wages) equals $138.13). Accordingly, I respectfully recommend that the EESISP fund be awarded $966.91 ($138.13 x 7 weeks of contributions owed) in unpaid contributions.
In sum, the Joint Board has demonstrated that plaintiff is owed $46,288.63 ($22,522.59 + $7481.67 + $15,317.46 + $966.91) in unpaid contributions to the ERISA and Non-ERISA Plans.
Several issues arise with respect to the question of interest, including what funds are entitled to interest and on which contributions, what rate to apply, and when interest should begin to accrue.
First, the funds are entitled to interest on all unpaid contributions. Clearly, plaintiff is entitled to interest on
The next question is what interest rate applies to the various funds. For ERISA violations, § 1132 states that interest is calculated "using the rate provided for under the plan, or, if none, the rate prescribed under section 6621 of Title 26." 29 U.S.C. § 1132(g)(2). Here, only the PHBP and NEBF trust agreements provide for specific interest rates.
Finally, with respect to the question of when the interest accrues, interest should accrue from the date the contributions became due and owing.
I turn now to the calculation of interest for the various Plans.
For the 2007 PHBP contributions, the interest rate is "one-half percent (½%) above the prime rate quoted by Citibank as of the first of each calendar quarter." See Sessa 11/7/07 Decl. Ex. C. The prime rate during the relevant part of 2007 was 8.25%. See http://www.wsjprime rate.us/walLstreet_journaLprime_rate_istory.htm. Accordingly, I recommend that plaintiff be awarded interest on the 2007 PHBP delinquency of $14.94 at the rate of 8.75% beginning from May 30, 2007.
For the 2008 PHBP, DEN, ANN, and E & C delinquencies totaling $6,622.87, I consider that the prime rate hovered between 4 and 6.5% during 2008 and recommend that plaintiff be awarded 6% interest beginning from May 1, 2008, a midpoint of the delinquency period that ran from March 26, 2008 through June 18, 2008. For the VHUI/401(k) delinquencies of $15,317.46, I recommend that plaintiff be awarded 6% interest beginning from March 12, 2008, a midway date for the period from January 9, 2008 through June 18, 2008, the period of delinquency. As noted above, the NEBF has its own interest rate of 10%, compounded monthly, and I recommend that plaintiff be awarded this interest rate beginning from May 1, 2008 on the delinquency of $464.10.
When plaintiff filed his complaint, he alleged unpaid contributions for the period of weeks ending March 28, 2007 through May 23, 2007.
Total Portion of Interest Interest Due for which Volpe Plan Due is Personally Liable PHBP $179.32 $125.42 DEN $ 10.35 $ 6.65 VHUI $ 79.16 $ 54.91 ANN $ 45.19 $ 31.35 E & C $ 1.58 $ .65 NEBF $ 16.48 $ 11.41 401(k) $315.80 ---Total $647.88 $230.39
Hock Decl. ¶¶ 11, 48, Exs. A, H.
Volpe's Personal Plan Interest Due Liability JIB $ 4.85 $ 3.37 Dues $ 4.99 $ 3.46 EESISP $31.21 $ 1.75 BENE DLQ $ 2.12 $ 1.75Total $43.17 $10.33
Id., Exs. B, H.
Plaintiff also seeks interest on late-paid contributions that were paid late after this lawsuit was filed. See Id. Exs. A, E, and F. As discussed above, plaintiff failed to meet the notice requirements of Rule 54(c) with respect to this demand. Because I recommend that defendants are not liable for these interest amounts, I do not recommend any award for interest on these latepaid contributions.
Plaintiff also seeks $439.40 in interest for pre-litigation (from 2005 through 2007) late-paid contributions to the 401(k) Plan.
Plaintiff also seeks 20% of the unpaid ERISA contributions as liquidated damages. Turner Decl. 1121. As discussed above, I recommend limiting an award of liquidated damages to those contributions that were unpaid at the time this suit was commenced and for those that accrued during the litigation but remain unpaid. See 29 U.S.C. § 1132(g)(2)(C)(ii); Iron Workers, 68 F.3d at 1507. For the contributions subject to § 1132(g)(2)(C), ERISA provides for liquidated damages in an amount equal to the greater of interest on unpaid contributions, or an amount provided for in the governing plan not to exceed 20% of the delinquent contributions. 26 U.S.C. § 1132(g)(2). The CBA provides for liquidated damages in the amount of 20% of the delinquent contributions.
20% of the 20% of the 20% of the Late-paid Contributions Volpe's Unpaid 2007 Unpaid 2008 (March, 28, 2007 Personal Plan Contributions Contributions through May 23, 2007) Total Liability
PHBP $ 2.99 $ 972.01 $1,218.82 $2,193.82 $ 881.07 DEN --- $ 88.52 $ 77.11 $ 165.63 $ 50.92 ANN --- $ 280.00 $ 336.00 $ 616.00 $ 240.00 E & C --- $ 4.05 $ 11.84 $ 15.89 $ 4.99 NEBF --- $ 92.82 $ 111.38 $ 204.20 $ 79.56 401(k)/VHUI $4,501.53 $3,063.49 $ 926.79 $ 8,491.81 $ 420.98 Total: $11,687.35 $1,677.02
Hock Decl. Exs. A, H.
Plaintiff also alleges that two checks totaling $7,310.48, both dated June 12, 2008, were returned for insufficient funds and seeks an award for this amount.
Plaintiff is entitled to recover reasonable attorney's fees and costs. Upon a finding that defendants have been delinquent in paying contributions, liability for attorney's fees under § 1132(g)(2) is mandatory. See Iron Workers, 68 F.3d at 1506. Counsel has submitted contemporaneous time records with the application for damages, in compliance with New York State Association for Retarded Children, Inc. v. Carey, 711 F.2d 1136, 1148 (2d Cir.1983). Turner Decl. Ex. E. Plaintiff seeks reimbursement for $10,302.50 in attorney's fees. Id. ¶ 24. The hourly rates, ranging from $200 to $225 per hour for attorneys and $75 per hour for paralegals, and time expended appear reasonable and should be approved. In addition, plaintiff seeks $818.53 in costs for filing, service, postage, and photocopying. Id. ¶ 28. This amount
For the reasons set forth above, I respectfully recommend that TAG be found liable to the plaintiff in the total amount of $77,089.54, as follows:
In addition, I recommend that the Clerk of Court calculate the following interest on the unpaid contributions at the time final judgment is entered:
Of the $69,788.06 owed, defendant Volpe is jointly and severally liable with TAG in the amount of $2,266.31 for delinquencies that became due on or before May 10, 2007, including unpaid contributions, interest on unpaid and late-paid contributions, liquidated damages, and attorney's fees and costs, as follows:
Any objections to this Report and Recommendation must be filed within ten days
In addition, I am unable to verify fully the calculation of amounts owed to the E & C fund, Dues, and JIB. Again, the rates identified in the JIB Memo indicate that E & C contributions are 1.033%. Id. Ex. B77. While 1.033% of $2,080 (the employee's standard gross wages) is $21.49, plaintiff seeks $2.89. See Hock Decl. Ex. E at 4 (calculating $2.89 in unpaid E & C Contributions per pay period); Sessa 7/3/08 Decl. Ex. A (reflecting a deduction of $21.49, at a rate of 1.033%, for the E & C fund). The JIB contribution is 1% of the employee's wages, which amounts to $20.80, yet plaintiff seeks $20.00. Sessa 11/7/07 Ex. B77-78; Hock Decl. Ex. F. Because plaintiff requests lower amounts in his motion than it appears are owed, I recommend that plaintiff's calculations be accepted. Finally, I have been unable to locate where the contribution rate for Dues is stated. Nonetheless, TAG previously paid Dues in the amount of $22.10 per week, see Sessa 7/3/08 Decl. Exs. A, C, and I therefore recommend that this amount be used to calculate the unpaid Dues.