Opinion
21 Civ. 9172 (VEC) (GWG)
06-28-2022
BOARD OF TRUSTEES OF THE UNITED FURNITURE PENSION FUND A, Plaintiff, v. PREMIER RESTORATION TECHNOLOGIES, Defendant.
REPORT & RECOMMENDATION
GABRIEL W. GORENSTEIN, UNITED STATES MAGISTRATE JUDGE
Plaintiff, the Board of Trustees of the United Furniture Pension Fund A (the “Fund”), bring this action alleging unpaid withdrawal liability under the Employee Retirement Income Security Act (“ERISA”), 29 U.S.C. § 1002 et seq., and the Fund's Agreement and Declaration of Trust (“Trust Agreement”) against defendant Premier Restoration Technologies (“Premier”). See Complaint, filed Nov. 5, 2021 (Docket # 1) (“Comp.”). Premier has defaulted and the Fund now seeks a default judgment under Federal Rule of Civil Procedure 55(b)(2). For the following reasons, the Fund's motion should be granted and judgment should be entered in the Fund's favor in the amount of $1,387,104.00, plus interest accruing at a rate of $380.03 per day from March 1, 2021. until the date judgment is entered.
See Motion for Default Judgment, filed Mar. 18, 2022 (Docket # 12) (“Pl. Mot.”); Declaration of Jonathan Evan Goldberg, filed Mar. 18, 2022 (Docket # 13); Proposed Default Judgment, filed Mar. 18, 2022 (Docket # 14); Proposed Findings of Fact and Conclusions of Law, filed Apr. 22, 2022 (Docket # 19) (“Proposed Findings”); Declaration of Dee Anne Walker, filed Apr. 22, 2022 (Docket ## 20-21) (“Walker Decl.”).
I. BACKGROUND
On November 5, 2021, the Fund filed a complaint alleging that Premier failed to pay withdrawal liability payments in violation of ERISA and the Trust Agreement. See Comp. ¶¶ 10-22. Premier waived service of the summons and complaint on December 22, 2021. See Waiver of Service, filed Feb. 15, 2022 (Docket # 5). Nevertheless, Premier failed to respond to the complaint and the Clerk issued a certificate of default. See Clerk's Certificate of Default, filed Mar. 17, 2022 (Docket # 11).
Shortly thereafter, the Fund filed the instant motion for a default judgment under Federal Rule of Civil Procedure 55(b)(2). See Pl. Mot. The matter was then referred to the undersigned. See Amended Order Referring Case to Magistrate Judge, dated Mar. 22, 2022 (Docket # 15). The Court issued a scheduling order directing the plaintiff to file proposed findings of fact and conclusions of law. See Scheduling Order, dated Mar. 22, 2022 (Docket # 16). The Scheduling Order was served on Premier on March 24, 2022. See Affidavit of Service, filed Apr. 1, 2022 (Docket # 17). The Fund's proposed findings of fact and conclusions of law - which sought damages in the amount of $1,391,438.70 - were filed on April 22, 2022. See Proposed Findings at 7. Premier never responded to the Fund's submissions.
II. FINDINGS OF FACT AND CONCLUSIONS OF LAW
In light of Premier's default, the Fund's properly pleaded allegations in the complaint, except those related to damages, are accepted as true. See, e.g., City of New York v. Mickalis Pawn Shop, LLC, 645 F.3d 114, 137 (2d Cir. 2011) (“It is an ‘ancient common law axiom' that a defendant who defaults thereby admits all ‘well-pleaded' factual allegations contained in the complaint.”) (quoting Vt. Teddy Bear Co., Inc. v. 1-800 Beargram Co., 373 F.3d 241, 246 (2d Cir. 2004)); Finkel v. Romanowicz, 577 F.3d 79, 84 (2d Cir. 2009) (“In light of [defendant's] default, a court is required to accept all . . . factual allegations as true and draw all reasonable inferences in [plaintiff's] favor.”).
As for damages, the Fund bears the burden of establishing its entitlement to the amount sought. Trs. of Local 813 Ins. Tr. Fund v. Rogan Bros. Sanitation Inc., 2018 WL 1587058, at *5 (S.D.N.Y. Mar. 28, 2018). In the case of a default where the defendant has never appeared, “a court may base its determination of damages solely on the plaintiff's submissions.” Id. (citing Fustok v. ContiCommodity Servs., Inc., 873 F.2d 38, 40 (2d Cir. 1989)). While a court must “take the necessary steps to establish damages with reasonable certainty,” Transatlantic Marine Claims Agency, Inc. v. Ace Shipping Corp., 109 F.3d 105, 111 (2d Cir. 1997), a court need not hold a hearing “as long as it ensure[s] that there [is] a basis for the damages specified in the default judgment,” Fustok, 873 F.2d at 40. Here, the Fund's submissions provide a sufficient basis for ascertaining damages and thus no hearing is required. Moreover, no party requested a hearing.
A. Liability of Premier
The Fund is an “employee pension benefit plan” under 29 U.S.C. § 1002(2) and a “multiemployer plan” under 29 U.S.C. §§ 1002(37)(A), 1301(a)(3). Walker Decl. ¶¶ 3-4. In October 2007, Premier entered into a collective bargaining agreement with IUE/CWA Local 463, AFL-CIO, pursuant to which Premier was obligated “to make monthly contributions to the [Fund].” Id. ¶¶ 6-7. On December 18, 2020, as a result of Premier's non-payment of contributions, “the [Fund] notified [Premier] that the [Fund] had determined that [Premier] had permanently ceased to have an obligation to contribute to the [Fund] in the [Fund] fiscal year beginning March 1, 2020.” Id. ¶ 8 (citing Letter from Harry Boot to Mark Schlossberg dated Dec. 18, 2020, annexed as Ex. B to Walker Decl. (Docket # 21-2) (“Dec. 18 Letter”); see also 29 U.S.C. § 1383(a)(1) (“a complete withdrawal from a multiemployer plan occurs when an employer . . . permanently ceases to have an obligation to contribute under the plan”).
The withdrawal of an employer from a multi-employer pension plan is governed by ERISA. Upon the withdrawal of an employer who contributes to a plan, the employer must pay to the plan its “allocable amount of unfunded vested benefits,” or what is known as “withdrawal liability.” 29 U.S.C. § 1381(a), (b)(1). The statutory scheme for determining an employer's liability for unfunded vested benefits has been succinctly summarized in Amalgamated Lithographers of Am. v. Unz & Co., 670 F.Supp.2d 214 (S.D.N.Y. 2009):
When an employer withdraws from a plan . . ., the plan sponsor must determine the amount of liability and notify the employer of the amount. 29 U.S.C. § 1382. The employer must be notified “as soon as practicable” after withdrawal, and the notice must include the amount of the liability, a schedule for liability payments, and a demand for payment in accordance with the schedule. 29 U.S.C. § 1399(b)(1). Once the employer receives notice, it must begin payment in accordance with the schedule within 60 days, “notwithstanding any request for review or appeal of determinations of the amount of such liability or of the schedule.” 29 U.S.C. § 1399(c)(2) ....
Any dispute concerning the plan's assessment of liability must be settled through arbitration. 29 U.S.C. § 1401(a)(1) .... If no arbitration proceeding is initiated within [the time frames provided by statute], then the amount demanded by the plan becomes final and must be paid in accordance with the schedule provided by the plan. 29 U.S.C. § 1401(b)(1). Failure to demand arbitration within the statutory time frame bars the employer from contesting liability for the amount demanded. 29 U.S.C. § 1401(a)(1), (b)(1); ILGWU National Retirement Fund v. Levy Bros. Frocks, Inc., 846 F.2d 879, 885-87 (2d Cir. 1988).
If the employer defaults in making payments pursuant to the schedule, the plan may require immediate payment of the entire unpaid amount of the employer's withdrawal liability, plus accrued interest on the total outstanding liability from the date of the first scheduled payment that was not timely made. 29 U.S.C. § 1399(c)(5). Id. at 221-22.
In conformity with the applicable statutes, when Premier withdrew from the Fund, the Fund assessed $1,720,641.00 in withdrawal liability against Premier. Walker Decl. ¶ 9. To meet this liability, the Fund determined that Premier was required to pay $14,449.00 in 80 quarterly installments, with the first payment due March 1, 2021. Id. The Fund informed Premier of this in a letter dated December 18, 2020. Id.; see also Dec. 18 Letter. On May 10, 2021, the Fund notified Premier that it had failed to pay the first installment and stated “that if th[e] delinquency was not cured in 60 days, the full withdrawal liability would be accelerated.” Walker Decl. ¶ 11; see also Letter from Betsy McKinney to Mark Schlossberg dated May 10, 2021, annexed as Ex. C to Walker Decl. (Docket # 21-3). Premier did not cure the delinquency, and on July 22, 2021, the Fund notified Premier that the full amount of the withdrawal liability had been accelerated pursuant to 29 U.S.C. § 1399(c)(5). Walker Decl. ¶ 13; see also Letter from Dee Ann Walker to Mark Schlossberg dated July 22, 2021, annexed as Ex. D to Walker Decl. (Docket # 21-4). Premier has not paid any part of the withdrawal liability, requested a review of the withdrawal liability, or initiated arbitration. See Comp. ¶ 19; Walker Decl. ¶ 12.
This amount was subsequently “reduced to $1,155,920 by operation of the 20-year limitation on payments prescribed in ERISA Section 4219(c)(1)(B).” Walker Decl. ¶ 9 n.1.
Because Premier failed to make any of the required payments and failed to challenge its liability through arbitration, it may not contest the liability assessment calculated by the Fund. See 29 U.S.C. § 1401(b)(1); Bowers v. Transportation Maritima Mexicana, S.A., 901 F.2d 258, 263 (2d Cir. 1990); ILGWU Nat'l Ret. Fund, 846 F.2d at 886-87. Moreover, Premier's default on its payment obligations allows the Fund to “require immediate payment of the outstanding amount of [the] employer's withdrawal liability.” 29 U.S.C. § 1399(c)(5); see also Rogan Bros. Sanitation, 2018 WL 1587058, at *6.
B. Damages
1. Withdrawal Liability
As noted above, “[f]ailure to demand arbitration within the statutory time frame bars the employer from contesting liability for the amount demanded.” Amalgamated Lithographers of Am., 670 F.Supp.2d at 222 (citing 29 U.S.C. § 1401(a)(1), (b)(1); ILGWU Nat'l Ret. Fund, 846 F.2d at 885-87). Here, the evidence submitted by the Fund reflects that Premier did not demand arbitration at all, much less within the statutorily required period. See Walker Decl. ¶ 12. Accordingly, the Fund should be awarded $1,155,920.00, which is Premier's full withdrawal liability. See id. ¶¶ 9 n.1, 17.
We next address the Fund's requests for interest and liquidated damages on the withdrawal liability.
2. Interest and Liquidated Damages
The Fund seeks interest on the withdrawal liability and liquidated damages. See Proposed Findings at 6-7. “In any action . . . to compel an employer to pay withdrawal liability, any failure of the employer to make any withdrawal liability payment within the time prescribed shall be treated in the same manner as a delinquent contribution ....” 29 U.S.C. § 1451(b). In any action involving delinquent contributions “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] (C) an amount equal to the greater of . . . (i) interest on the unpaid contributions, or liquidated damages provided for under the plan in an amount not in excess of 20 percent” of the unpaid contributions. 29 U.S.C. § 1132(g)(2).
The Trust Agreement provides that the Fund is entitled to interest on the amount of unpaid contributions owed at the rate of 1% per month of delinquency, or the prevailing prime interest rate plus two percentage points, whichever is greater. See Amendments Made as of November 14, 2007 to the Agreement & Declaration of Trust, Dated October 10, 1962, as Amended, Establishing the United Furniture Workers Pension Fund A (the “Fund”), annexed as Ex. E to Walker Decl. (Docket # 21-5) (“2007 Amendments”), at *33. The Fund has submitted evidence that the prevailing interest rate for the period from March 1, 2021 through March 31, 2022 ranged from 3.25% to 3.38% annually. Walker Decl. ¶ 16. Thus, the higher rate of 1% per month of Premier's delinquency, amounting to a 12% annual interest rate, governs in this case, see id.; 2007 Amendments at *33. The Fund is therefore entitled to interest at a rate of $380.03 per day ([1,155,920.00 * 0.12] / 365) from March 1, 2021 until the date judgment is entered.
“*” denotes pagination assigned by the ECF system, which we employ where a document's own pagination is absent or inconsistent.
As noted, separate from an award of withdrawal liability and interest thereon, ERISA provides for an additional award of interest or an award of liquidated damages not exceeding 20% of the withdrawal liability amount, whichever is greater. See 29 U.S.C. §§ 1132(g)(2), 1451(b); 2007 Amendments at *33 (providing for award of 20% of unpaid contributions or additional award of interest). Here, 20% of the unpaid withdrawal liability amounts to $231,184.00 ([1,155,920.00] * [0.20]), which exceeds an award calculated with the interest amount noted above. Accordingly, the Fund should also be awarded $231,184.00 in liquidated damages.
The total amount of damages to be awarded is thus $1,387,104.00, plus interest accruing at a rate of $380.03 per day from March 1, 2021 until the date judgment is entered.
III. CONCLUSION
For the foregoing reasons, the Fund's motion for default judgment (Docket # 12) should be granted and judgment should be entered against defendant awarding the Fund $1,387,104.00, plus interest accruing at a rate of $380.03 per day from March 1, 2021 until the date judgment is entered.
PROCEDURE FOR FILING OBJECTIONS TO THIS REPORT AND RECOMMENDATION
Pursuant to 28 U.S.C. § 636(b)(1) and Rule 72(b) of the Federal Rules of Civil Procedure, the parties have fourteen (14) days including weekends and holidays from service of this Report and Recommendation to serve and file any objections. See also Fed.R.Civ.P. 6(a), (b), (d). Such objections (and any responses to objections) shall be filed with the Clerk of the Court, with copies sent to the Hon. Valerie E. Caproni, at 40 Foley Square, New York, New York 10007, and to the undersigned, at 500 Pearl Street, New York, New York 10007. Any request for an extension of time to file objections must be directed to Judge Caproni. If a party fails to file timely objections, that party will not be permitted to raise any objections to this Report and Recommendation on appeal. See Thomas v. Arn, 474 U.S. 140 (1985); Wagner & Wagner, LLP v. Atkinson, Haskins, Nellis, Brittingham, Gladd & Carwile, P.C., 596 F.3d 84, 92 (2d Cir. 2010).