Trustees of The Local 531 Pension Fund v. Flexwrap Corp.
MEMORANDUM AND ORDER, pltfs. motion for summary judgment is GRANTED. This court finds that deft. is liable to pltfs. for unpaid withdrawal liability in the amount of $270,161.33, plus interest at the rate of 5.6% per year from 5/1/10, liquidated damages of $54,032.27, attorneys fees of $19,593.75 and costs of $524.43. The Clerk of Court is directed to enter judgment accordingly and to close the case. Ordered by Judge Roslynn R. Mauskopf on 8/1/2011. (Greene, Donna)
IN CLERK'S OFFICE
US DISTRICT COURT E.D.N.Y.
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
TRUSTEES OF THE LOCAL 531
AUG 0 2 2011
MEMORANDUM & ORDER
09-CV-1439 (RRM) (RML)
- against FLE)(WRAP CORP.,
MAUSKOPF, United States District Judge.
The Board of Trustees of the Local 531 Pension Fund ("Plaintiffs") move for summary
judgment against Flexwrap Corp. ("Defendant") on its claim for withdrawal liability arising
under the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1001, et seq., as
amended by the Multiemployer Pension Plan Amendments Act of 1980, 29 U.S.C. § 1381, et
seq. (Doc. No. 18.) Defendant has not opposed that motion. For the reasons set forth below,
Plaintiffs' motion is GRANTED.
The following facts are drawn from Plaintiffs' Rule 56.1 Statement ("PIs.' 56.1 Stmt.")
and have not been disputed by Defendant. Because Defendant has not disputed Plaintiffs'
statement of facts, those facts are deemed admitted for purposes of the motion. See E.D.N.Y.
Local Civil Rule 56.1 (c); Giannullo v. City of New York, 322 F.3d 139, 140 (2d Cir. 2003) ("If
the opposing party ... fails to controvert a fact so set forth in the moving party's Rule 56.1
statement, that fact will be deemed admitted.").
The Local 531 Pension Fund (the "Fund") is both an "employee pension benefit fund"
and an "employee benefit fund" as defined, respectively, in Sections 3(2) and 3(3) of ERISA, 29
U.S.C. §§ 1002(2), (3). (PIs.' 56.1 Stmt.
1.) The Fund is administered at 2137-2147 Utica
Avenue, Brooklyn, New York, 12234. (ld.
2.) The Fund is operated pursuant to its Trust
Agreement, as well as rules and regulations concerning the administration of the Local 531
Pension Plan ("Plan Rules"). (Id.
3.) Defendant entered into a series of collective bargaining
agreements with Local 531, International Brotherhood of Teamsters, requiring Defendant to
make monthly contributions to the Fund. (ld.
4,5.) In December 1997, the collective
bargaining agreements were amended, relieving Defendant, and other contributing employers, of
the obligation to make monthly contributions to the Fund. (ld.
6.) As a result ofthese
amendments, the Fund was terminated by a mass withdrawal of the employers. (ld.
December 1, 1997, Defendant ceased to have an obligation to make monthly contributions to the
Fund, causing its complete withdrawal from the Fund. (ld.
Plaintiffs' former actuary, Milliman & Robertson, then determined the withdrawal
liability of all employers that had been contributing to the Fund, including Defendant. (ld.
On or about March 27, 1998, Plaintiffs notified Defendant of the amount of its estimated
withdrawal liability and provided it with a quarterly payment schedule. (ld.
10.) On or about
January 27, 1999, after Plaintiffs had reassessed the liability of the withdrawing employers, it
notified Defendant that its total withdrawal liability was $513,998.79. (ld.
11.) The payment
schedule set forth in the January 27, 1999 demand for payment, which Defendant admits it
received, required 56 quarterly payments of $12,761.51 each, beginning May 1, 1998, and a final
payment of$663.56. (ld.
12.) Neither party initiated arbitration proceedings under Section
4221 (a) of ERISA, 29 U.S.C. § 1401(a) with regard to Plaintiffs' determination of the amount of
withdrawal liability owed by the Defendant. (ld.
Defendant admits that it failed to pay in full each of the required quarterly payments that
were due beginning on May 1,2008. (ld.
15.) In November 2008, February 2009, and April
2009, Plaintiffs notified Defendant of its demand for unpaid quarterly payments. (Id.
Defendant has failed to make a single full payment after Plaintiffs issued their April 2009
demand, although it tendered some partial payments of$500. (Id.
Defendant admitted its debt to the Fund in a letter to the Court. (Id.
Defendant ceased operations. (Id.
17.) On April 20, 2009,
18.) As of January 2010,
Under the Plan Rules, if an employer fails to pay its withdrawal liability quarterly
payment when due, and such failure is not cured within 60 days after the employer receives
notice of such failure, the employer is deemed to be in default of its withdrawal liability
obligation, making the total unpaid withdrawal liability immediately payable. (Id.
When it is has defaulted, the employer is also liable for interest on the total unpaid withdrawal
liability from the due date of the first payment that was not timely made. (Id.
22.) The Plan
Rules further provide that should Plaintiffs utilize proceedings to enforce the collection of
withdrawal liability, the Plan shall be entitled to reasonable attorneys' fees, litigation costs, and
any and all other costs of the proceeding. (Id.
23.) If judgment is entered in favor of Plaintiffs,
the Plan Rules require the employer to pay, in addition to the principal and interest due,
liquidated damages equal to the greater of 20% ofthe amount due or the interest due. (Id.) At a
meeting of the Board of Trustees of the Fund held on September 21, 2006, the Trustees adopted
an interest rate of 5.6% on unpaid withdrawal liability. (Id.
24; Reich Aff., Ex. F.)
Under the Plan Rules, Defendant has defaulted on its withdrawal liability obligation and
Plaintiffs are entitled to accelerate the balance of withdrawal liability payments due. (Pis.' 56.1
25-26.) Plaintiffs' actuary, O'Sullivan Associates, has provided a final report of
outstanding principal withdrawal liability. (Id.
32-33.) According to the actuary's report, the
total amount of outstanding withdrawal liability due as of May 1,2010 was $270,161.33. (Id.)
Interest continues to accrue at a rate of 5.6% per year. (Id. ~ 34.)
Plaintiffs commenced this case on April 8, 2009. (See Compl. (Doc. No.1).) Plaintiffs
seek the following in this action: (1) the unpaid withdrawal liability, which as of May 1,2010
was $270,161.33; (2) interest on the unpaid withdrawal liability, accumulating from May 1,2010
at a rate of5.6%; (3) liquidated damages of $54,032.27; (4) attorneys' fees of$19,593.75; and
(5) costs of $524.43. (PIs.' 56.1 Stmt. ~~ 38-40; PIs.' Br. in Supp. ofSumm. Judg. at 12.) On
April 20, 2009, Defendant's Chief Financial Officer wrote to this Court and acknowledged its
debt to the Fund, stating that the "bad economy" made it "impossible" for Defendant to make its
required quarterly withdrawal liability payments. (Doc No.3.) Defendant has not taken nor
sought to take any discovery in this case, nor has it raised objection to any of Plaintiffs' actuarial
reports. (Pis.' 56.1 Stmt.
35-36.) Defendant has also opted not to depose Plaintiffs' actuary
or proffer an expert report of its own. (Id.
37.) Plaintiffs moved for summary judgment on
October 6,2010. (Doc. No. 18.)
STANDARD OF REVIEW
Summary judgment is appropriate when the pleadings, depositions, interrogatories,
admissions, and affidavits demonstrate that there are no genuine issues of material fact in dispute
and that one party is entitled to judgment as a matter oflaw. See Fed. R. Civ. R 56(c); Celotex
Corp. v. Catrett, 477 U.S. 317, 322 (1986). A genuine issue of material fact exists "if the
evidence is such that a reasonable jury could return a verdict for the nonmoving party."
Anderson v. Liberty Lobby, Inc., 477 U.S. 242,248 (1986).
In deciding a summary judgment motion, a district court must draw all reasonable
inferences in favor of the nonmoving party. See id. at 249 (citing Adickes v. S. H Kress & Co.,
398 U.S. 144, 158-59 (1970)); Castle Rock Entm 't, Inc. v. Carol Publ'g Grp., Inc., 150 F.3d
132, 137 (2d Cir. 1998). Thus, the court must not "weigh the evidence but is instead required to
view the evidence in the light most favorable to the party opposing summary judgment, to draw
all reasonable inferences in favor of that party, and to eschew credibility assessments." Amnesty
Am. v. Town ofW Hartford, 361 F.3d 113, 122 (2d Cir. 2007) (quoting Weyant v. Okst, 101 F.3d
845, 854 (2d Cir. 1996)). Any evidence in the record of any material fact from which an
inference could be drawn in favor of the non-moving party precludes summary judgment. See
Castle Rock Entm 't, 150 F.3d at 137.
Once the movant has demonstrated that no genuine issue of material fact exists, such that
it is entitled to judgment as a matter of law, then "the nonmoving party must come forward with
'specific facts showing that there is a genuine issue for trial. '" Matsushita Elec. Indus. Co., Ltd.
v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (quoting Fed. R. Civ. P. 56(e)) (emphasis in
original). However, there must exist more than mere "metaphysical doubt as to the material
facts" to defeat a summary judgment motion. Id. at 586. Instead, the non-moving party must
present "concrete evidence from which a reasonable juror could return a verdict in his favor."
Anderson, 477 U.S. at 256. Only disputes over material facts "that might affect the outcome of
the suit under the governing law" will properly preclude the entry of summary judgment. Id at
248; see also Matsushita, 475 U.S. at 586.
"Even when a motion for summary judgment is unopposed, the district court is not
relieved of its duty to decide whether the movant is entitled to judgment as a matter oflaw." Vt.
Teddy Bear Co. v. 1-800 BEARGRAM Co., 373 F.3d 241,242 (2d Cir. 2004); Amaker v. Foley,
274 F.3d 677, 681 (2d Cir. 2001) ("[W]hen a nonmoving party chooses the perilous path of
failing to submit a response to a summary judgment motion, the district court may not grant the
motion without first examining the moving party's submission to determine ifit has met its
burden of demonstrating that no material issue of fact remains for trial .... "); Ramnarain v. City
of New York, 474 F.Supp.2d 443, 446 (E.D.N.Y. 2007) (same). Courts will grant unopposed
motions for summary judgment "so long as [movants] have met their threshold burden of
production." Washington v. City o/New York, No.05-CV-8884 (LAP), 2009 U.S. Dist. LEXIS
47488, at *16 (S.D.N.Y. June 5, 2009) (citation omitted).
ERISA requires an employer that withdraws from a multiemployer plan to contribute
"withdrawal liability" to the plan. See 29 U.S.C. §§ 1381, 1399. "[A]n employer withdrawing
from a multi employer pension plan [is required to] pay a fixed and certain debt to the pension
plan. This withdrawal liability is the employer's proportionate share of the plan's unfunded
vested benefits, calculated as the difference between the present value of vested benefits and the
current value of the plan's assets." Amalgamated Lithographers ofAm. Litho. Indus. Pension
Plan v. UNZ & Co., 670 F. Supp. 2d 214,221 (S.D.N.Y. 2009) (citation and internal quotation
marks omitted). A "complete withdrawal" from a plan occurs when the employer "(1)
permanently ceases to have an obligation to contribute under the plan, or (2) permanently ceases
all covered operations under the plan." 29 U.S.c. § 1383(a).
After an employer withdraws, the plan sponsor must calculate the amount of withdrawal
liability and notify the employer of that amount. See 29 U.S.C. § 1382. Within 90 days of
receiving this notice, the employer may request the plan to "review any specific matter relating
to the determination of the employer's liability and the schedule of payments." 29 U.S.C. §
1399(b). Any dispute over the plan's calculation of withdrawal liability must be settled through
arbitration, and if the employer fails to request arbitration within the statutory time frame, it is
barred from challenging the amount of withdrawal liability calculated by the plan. See 29 U.S.C.
§ 1401; Levy Bros. Frocks, Inc., 846 F .2d at 886; UNZ & Co., 670 F. Supp. 2d at 222 ("Failure
to demand arbitration within the statutory time frame bars the employer from contesting liability
for the amount demanded."); ILGWU Nat'! Ret. Fund v. Smart Modes ofCa!., Inc., 735 F. Supp.
103,106 (S.D.N.Y. 1990)(same).
If an employer defaults in making timely withdrawal payments, the plan is entitled to
immediate payment of the entire unpaid amount ofthe employer's withdrawal liability, plus
accrued interest from the date of the first scheduled payment not timely made. 29 U.S.C. §
1399(c)(5). A "default" is defined as "the failure to make, when due, any" withdrawal payment
"if the failure is not cured within 60 days after the employer receives written notification from
the plan sponsor of such failure" or "any other event defined in rules adopted by the plan which
indicates a substantial likelihood that an employer will be unable to pay its withdrawal liability."
In an action to collect withdrawal liability "in which a judgment in favor of the plan is
awarded, the court shall award the plan" reasonable attorneys' fees and costs, interest, and
liquidated damages. 29 U.S.C. §§ 1132(g), 1451(b). This award is mandatory. See Nat'!
Pension Plan of the UNITE HERE Workers Pension Fund v. Swan Finishing Co., No. 05-CV6819 (SAS), 2006 U.S. Dist. LEXIS 28281, at *16-17 (S.D.N.Y. May 10,2006) (citations
The uncontested facts before this Court demonstrate that, as a result of Defendant's
withdrawal from the Fund on December 1, 1997, it was required to pay withdrawal liability to
the Fund. Indeed, Defendant admits that it has an obligation to Plaintiffs for unpaid withdrawal
liability. (Pis.' 56.1 Stmt.
15, 18.) Defendant's failure to make required quarterly payments
has rendered it in default under ERISA and the Plan Rules. See 29 U.S.C. § 1399(c)(5); Article
14, Section 14.11(c) of the Plan Rules; see also Bowers v. Transportacion Maritima Maxicana,
SA., 901 F.2d 258,261 (2d Cir. 1990).1 Thus, Plaintiffs are entitled to ''the outstanding amount
of [Defendant'sJ withdrawal liability, plus accrued interest on the total outstanding liability from
the due date of the first payment which was not timely made." 29 U.S.C. § 1399(c)(5); Article
14, Section 14.11 of the Plan Rules. Moreover, because it did not demand arbitration, Defendant
is barred from challenging Plaintiffs' calculation of the amount of unpaid withdrawal liability.
Levy Bros. Frocks, Inc., 846 F.2d at 886; see also 29 U.S.c. 1401(a)(l) ("Any dispute between
an employer and the plan sponsor of a multi employer plan concerning a determination made
under sections 4201 through 4219 [29 USCS §§ 1381-1399J shall be resolved through
arbitration."); Labarbera v. United Crane & Rigging Servs., 08-CV-3274, 2011 U.S. Dist.
LEXIS 20939, at * 13 (E.D.N.Y. Mar. 2, 2011) ("an employer's failure to arbitrate or dispute the
plan sponsor's calculation in the face of proper notification will result in the court's adoption of
the sum proffered by the plan, even in the absence of documentation as to how the figure was
calculated" (citations omitted».
On June 2, 2010, Plaintiffs' actuary, O'Sullivan Associates, issued a final report
demonstrating that Defendant's withdrawal liability, including both unpaid principal and interest
due through May 1,2010, is $270,161.33. (Sharkey Aff.,-r 11.) Defendant has not taken nor
sought to take any discovery in this case, and it has not raised a single objection to any of
Plaintiffs' actuarial report. (PIs.' 56.1 Stmt. ,-r 35.) Moreover, Defendant has chosen not to
depose Plaintiffs' actuary or proffer its own expert report.
The Court has
reviewed Plaintiffs' submission, including its actuarial report, and finds that Plaintiffs have met
their burden of demonstrating that no material issue of fact remains for trial. Amaker v. Foley,
274 F .3d 677, 681 (2d Cir. 2001). Accordingly, this Court finds that Defendant is liable to
1 Defendant is also in default pursuant to the Plan Rules because it ceased operations in January 2010. (See PIs.'
56.1 Stint. '\119; Article 14, Section 14.11(c) of the Plan Rules).
Plaintiffs for unpaid withdrawal liability in the amount of$270,161.33, plus interest at the rate of
5.6% per year from May 1,2010, and liquidated damages of $54,032.27 (or 20% of the unpaid
contributions), as provided in the Plan Rules. See 29 U.S.C. § 1132(g)(2).
Plaintiffs are also entitled to reasonable attorneys' fees and costs. 29 U.S.C. §
1132(g)(2). The starting point for determining a reasonable fee is the determination of the
"lodestar," or, as it is now characterized in this Circuit, the "presumptively reasonable fee,"
which is calculated by multiplying the number of hours reasonably expended by the attorney on
behalf of a successful client by a reasonable hourly rate for that attorney. See Arbor Hill
Concerned Citizens Neighborhood Ass 'n v. Cnty. ofAlbany, 522 F.3d 182, 183 (2d Cir. 2008);
Luciano v. Olsten Corp., 109 F.3d 111, 115 (2d Cir. 1997); Overcash v. United Abstract Grp.,
Inc., 549 F. Supp. 2d 193, 197 (N.D.N. Y. 2008) (quoting Porzig v. Dresdner, Kleinwort, Benson,
N Am. LLC, 497 F.3d 133, 141 (2d Cir. 2007)); King v. JCS Enters., Inc., 325 F. Supp. 2d 162,
166 (E.D.N.Y. 2004) (citing Green v. Torres, 361 F.3d 96, 98 (2d Cir. 2004) and Quarantino v.
Tiffany & Co., 166 F.3d 422, 425 (2d Cir. 1999)). District courts have broad discretion, using
"'their experience with the case, as well as their experience with the practice of law, to assess the
reasonableness'" of each component of a fee award. Fox Indus., Inc. v. Gurovich, No. 03-CV5166 (TCP)(WDW), 2005 WL 2305002, at *2 (E.D.N.Y. Sept. 21,2005) (quoting Clarke v.
Frank, 960 F.2d 1146, 1153 (2d Cir. 1992)). In so doing, courts should take into account the socalled Johnson factors.2 Johnson v. Ga. Highway Express, 488 F.2d 714, 717-19 (5th Cir.
These factors are: (1) time and labor required; (2) the novelty and difficulty ofthe question; (3) the skilJ requisite
to perform the legal service properly; (4) the preclusion of other employment by the attorney due to acceptance of
the case; (5) the customary fee; (6) whether the fee is fixed or contingent; (7) time limitations imposed by the client
or the circumstances; (8) the amount involved and the results obtained; (9) the experience, reputation, and ability of
the attorney; (10) the 'undesirability' of the case; (II) the nature and length of the profession relationship with the
client; and (12) awards in similar cases.
1974); see Us. Football League v. Nat 'I Football League, 887 F.2d 408,415 (2d Cir. 1989)
(adopting Johnson factor analysis).
Plaintiffs request $19,593.75 in attorneys' fees, which represents 82 hours of work, billed
at a rate of $250 an hour for partners and associates, and $125 per hour for paralegals. (Paster
Decl. at Exs. D, E.) Plaintiffs support their request with time records detailing the tasks their
attorneys and paralegals completed throughout the course of litigation and the number of hours
expended on each task. (ld.) This Court finds Plaintiffs' counsel's hourly rates reasonable and
in line with rates awarded in this area to counsel with comparable experience. See, e.g., Finkel v.
Fred Todino & Sons, Inc., 08-CV-4598, 2010 U.S. Dist. LEXIS 118279, at *16 (E.D.N.Y. Oct.
8,2010) (finding reasonable hour rates of$370 for partners, $275 for associates, and $90 for
paralegals in ERISA case involving unopposed motion for summary judgment to collect
withdrawal liability); Gesualdi v. MBM Indus., 10-CV-2607 (BMC), 2010 U.S. Dist. LEXIS
96319, at *6 (E.D.N.Y. Sept. 13,2010) (awarding rates of$390 for partners and $280 for
associate in ERISA case involving default judgment); Sheehan v. Metro. Life Ins. Co., 450 F.
Supp. 2d 321,328-29 (S.D.N.Y. 2006) (awarding $ 425 hourly rate for senior partner, $ 375 for
junior partner, $ 300 for associates, and $ 150 for paralegals in ERISA case); T & M Meat Fair,
Inc. v. United Food and Commercial Workers, Local 174, No. 02-CV-2415 (RWS), 2002 U.S.
Dist. LEXIS 18495, at *12 (S.D.N.Y. Sept. 25,2002) (plaintiffs' counsel's hourly rate of$ 250
held reasonable in ERISA case). The Court also finds that the time expended here is reasonable
for a case that proceeded to summary judgment. See Finkel, 2010 U.S. Dist. LEXIS 118279, at
* 17 (finding approximately 80 hours a reasonable amount of time to litigate ERISA case
involving unopposed motion for summary judgment to collect withdrawal liability).
Accordingly, Plaintiffs' motion for $19,593.75 in attorneys' fees is granted.
Finally, Plaintiffs seek $524.43 in costs for court filing fees, process server fees, and two
small charges for delivery services. An award of attorney's fees should "include those
reasonable out-of-pocket expenses incurred by attorneys and ordinarily charged to their clients."
LeBlanc-Sternberg v. Fletcher, 143 F.3d 748, 763 (2d Cir. 1998) (citation and internal quotation
marks omitted). Costs "incidental and necessary to the litigation" are recoverable. Tips Exports,
Inc., v. Music Mahal, Inc., 01-CV-5412, 2007 WL 952036, at *11 (E.D.N.Y. Mar. 27, 2007); see
Reichman v. Bonsignore, Brignati & Mazzotta, P.e., 818 F.2d 278,283 (2d Cir. 1987)
(attorneys' costs "incidental and necessary to the representation" of their clients included in fee
award). Here, the filing fees, process server fees, and de minimus delivery charges for which
Plaintiffs seek reimbursement constitute reasonable out-of-pocket expenses. Accordingly,
Plaintiffs' motion for $524.43 in costs is granted.
For the reasons set forth above, Plaintiffs' motion for summary judgment (Doc. No. 18) is
GRANTED. This Court finds that Defendant is liable to Plaintiffs for unpaid withdrawal
liability in the amount of $270,161.33, plus interest at the rate of 5.6% per year from May 1,
2010, liquidated damages of$54,032.27, attorneys' fees of$19,593.75 and costs of $524.43.
The Clerk of Court is directed to enter judgment accordingly and to close the case.
Dated: Brooklyn, New York
August 1, 2011
s/Roslynn R. Mauskopf
ROSLYNN R. MAUSKOPF
United States District Judge