NEW JERSEY BUILDING LABORERS' STATEWIDE PENSION FUND AND TRUSTEES THEREOF v. U.S.E.U.S.

Filing 9

OPINION. Signed by Judge Kevin McNulty on 3/25/2015. (nr, )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY

Civ. No. 13-7449 (KM)(SCM)

NEW JERSEY BUILDING LABORERS’
STATEWIDE PENSION FUND AND
TRUSTEES THEREOF,

OPINION
Plaintiff,

V.

U.S.E.U.S., also known as U.S.
ENVIRONMENTAL UNIVERSITY,
Defendant.

The U.S. Environmental University entered into a collective bargaining
agreement with the New Jersey Building Laborers District Council. As part of
that agreement, the University was to make contributions to the Council’s
pension fund, plaintiff New Jersey Building Laborers’ Statewide Pension Fund.
The Pension Fund alleges that the University has failed to make those
contributions. Having filed suit in this Court and received no response from the
defendant, the Fund has now moved for a default judgment. The motion will be
granted.
Background
Defendant U.S. Environmental University (the “University”) entered into a
collective bargaining agreement (“CBA”) with the New Jersey Building Laborers
District Council.’ The CBA required the University to contribute to the

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Citations to the record will be abbreviated as follows:
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employees’ pension fund, The New Jersey Building Laborers Statewide Pension
Fund (the “Pension Fund”) for fringe benefits. (Castrovinci Affidavit,

¶ 3). As of

April 30, 2012, Environmental University withdrew its recognition of the
Council as the bargaining representative for University employees. (Id. at

¶ 4).

It therefore ceased making contributions to the Pension Fund.
The Pension Fund alleges that at the time the University withdrew, there
were benefits that had vested, but that the University had not yet funded. That
is, the University had committed to making certain contributions to the
pension fund, but had not actually made its payments. (Castrovinci Affidavit,

¶ 5). This is referred to as “withdrawal liability.” 29 U.S.C. § 139 1(a). See also
IUE Multi-Employer Pension Fund v. M & C Vending, Inc., No. 2:1 1-cv-04335,
2013 WL 2007298, at *1 (D.N.J. May 13, 2013) (defining withdrawal liability as
“benefits that the employer has already promised to the beneficiaries but has
not yet paid into the fund”).
Federal law requires that when an employer “withdraws” from
participating in a pension plan, as the University allegedly did here, the plan
shall determine the employer’s withdrawal liability, then notify the employer
and collect payment. 29 U.S.C.

§ 1382; 29 U.S.C. § 1399(b)(1)(A).

Here, the Fund, with the assistance of an actuary, calculated the
University’s withdrawal liability to be $22,517.00. (Segal Letter, 1). The Fund
notified the University of its liability, and requested payment in four quarterly
installments of $5,740, plus a final installment of $685. The Fund alleges that
the University did not make any payments. (Castrovinci Affidavit,

¶ 11). Nor

“Castrovinci Affidavit” Affidavit of Mary Castrovinci In Support of Motion for Final
Judgment by Default, Dkt. Nos. 8-2, 8-3.
“Castrovinci Letter” Letter from Mary Castrovinci to U.S.E.U.S., dated April 9, 2013.
Affidavit of Mary Castrovinci, No. 8-3, Exh. G.
“CBA” Collective Bargaining Agreement, Affidavit of Mary Castrovinci, Nos. 8-2, 8-3,
Exh. A.
“Segal Letter” Letter from Segal to Mary Castrovinci, Affidavit of Mary Castrovinci,
No. 8-3, Exh. F.
—

—

—

—

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has the University requested to refer the matter to arbitration, as it is allowed
to do under 29 U.S.C.

§ 1401(a)(1). Id.

The Fund filed suit in this Court to collect the withdrawal liability from
the University. The Fund filed its complaint in this Court on December 11,
2013. (Dkt. No. 1). The University made no response. On July 2, 2014, the
Clerk entered a default against the University pursuant to FED. R. CIV. P. 55.
(Dkt. No. 7). As the University has made no appearance or otherwise defended
the suit, the Fund has now moved for a default judgment (Dkt. No. 8). In
addition to the unfunded contributions, the Fund requests interest, costs,
attorneys’ fees, and liquidated damages.
The Fund brings suit under a federal statute, 29 U.S.C.

§ 140 1(b)(1). This

Court therefore has subject matter jurisdiction over the case pursuant to 28
U.S.C.

§ 1331.
Discussion

Motion for default judgment
The Fund has made its request for these damages in a motion for a
default judgment, so I do not have the University’s side of the story. This
presents obvious challenges. Applying established law, however, I find that a
default judgment is appropriate.
I have examined the complaint, and I find that it sets forth a valid claim
for withdrawal liability under ERISA

§ 420 1(a), 29 U.S.C. § 138 1(a). The

Complaint alleges that the parties were subject to a CBA that required
contributions to the Pension Fund. (Complaint ¶j 7-9) The University
contributed to the Pension Fund until April 30, 2012, but then completely
withdrew. (Id.

¶{ 9-12, 20-2 1) The Pension Fund duly demanded payment of

the Pension Fund’s withdrawal liability and set forth a schedule of payments.

¶J 13-14, 23) The University did not pay the installments and is in default,
and it has not demanded arbitration. (Id. ¶J 15-17, 24) The liability is alleged
(Id.

to be $22,517, and the complaint demands the other and additional forms of
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relief authorized by the statute. (IcL

¶ 25, Prayer for Relief) Facially, this meets

the statutory requirements, as set forth in more detail below.
In deciding whether to grant a default judgment, courts consider three
factors: 1) whether the plaintiff has been substantially prejudiced by the delay
involved; 2) whether the default was caused by excusable or inexcusable
neglect on the part of the defendant; and 3) whether the defendant has a
defense to the action. Catanzaro v. Fischer, 570 F’. App’x 162, 165 (3d Cir.
2014) (non-precedential, citing Chamberlain u. Giampapa, 210 F.3d 154, 164
(3d Cir. 2000). Here, all three factors favor entry of a default judgment.
First, the Fund has indeed been prejudiced by the University’s failure to
answer. It has incurred additional costs, been unable to make any progress in
its case, and has suffered additional costs.
Second, I must consider whether default was caused by excusable or
inexcusable neglect on the part of the University. The summons here was
returned executed. (See Dkt. No. 5). Thus, I must presume that the University
is aware of the action. In addition, it had the opportunity to avoid or reduce its
liability by initiating arbitration proceedings in 2013. The University’s delay in
payment, therefore, is not excusable.
Third, the defendant likely has no defense to this action, for reasons
explored in the following sections. The terms of the contract are clear. Because
the defendant did not initiate arbitration proceedings, it has waived its right to
contest the amount of its unfunded contribution. Therefore, the only issues left
for it to contest are interest, attorneys’ fees, and costs. The interest calculation
is specified by statute, and the attorneys’ fees and costs are reasonable.
Therefore, I find that the defendant likely has no defense to the action.
A default judgment is appropriate. I now consider the forms of relief
available, and the plaintiff Pension Fund’s presentation as to the amount of its
damages.
Governing law
Federal law prescribes various procedures for determining and collecting
an employer’s withdrawal liability. First, the pension fund calculates the
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employer’s withdrawal liability, demands payment from the employer, and
provides a proposed schedule of payments. 29 U.S.C.

§ 1382(2), (3); 1399(b)(1).

Once notified, the employer has 90 days to request clarification or point to any
inaccuracies in that calculation. 29 U.S.C.

§ 1399(b)(2)(A). If the employer

makes no such response, the employer has 60 days from the date it was
originally notified of its liability to initiate arbitration proceedings to contest the
amount of the withdrawal liability. 29 u.s.c.

§ 1401(a)(1). If the employer does

not demand arbitration within that 60 day period, the liability amount
determined by the plan sponsor becomes due on the schedule set forth by the
plan sponsor. 29 U.S.C.

§ 1401(b)(1). In other words, by failing to demand

arbitration the employer waives its right to dispute aspects of the Fund’s
liability determination. Bd. of Trustees of Trucking Employees of N. Jersey
Wefare Fund, Inc.-Pension Fund v. Kero Leasing Corp., 377 F.3d 288, 294-95 n.
5 (3d Cir. 2004). If the employer still does not pay the withdrawal liability, the
plan may bring a claim in federal court to collect the amount due. 29 U.S.C.

§ 1401(b)(l).
If the plan prevails in district court, the unpaid contributions are treated
as delinquent. 29 U.S.C.

§ 145 1(b). That subjects the employer to the rules

governing civil enforcement proceedings in ERISA cases generally. Id. Those
provisions require the court to award the prevailing party the unpaid
contributions, interest, liquidated damages, and reasonable attorney’s fees and
costs:
In any action under this subchapter by a fiduciary for or on behalf of a plan to
enforce section 1145 of this title 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,
(C) an amount equal to the greater of—
(i) interest on the unpaid contributions, or
(ii) liquidated damages provided for under the plan in an amount not in
excess of 20 percent (or such higher percentage as may be permitted
under Federal or State law) of the amount determined by the court under
subparagraph (A),
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(D) reasonable attorneys fees and costs of the action, to be paid by the
defendant, and
(E) such other legal or equitable relief as the court deems appropriate.
For purposes of this paragraph, 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.

§ 1132(g)(2).

29 U.S.C.

Application to this case
Here, the Pension Fund calculated the University’s withdrawal liability to

$ 22,517.00. (Segal Letter, 1; Castrovinci Affidavit, ¶J 6-7). See generally 29
U.S.C. § 1391 (method of calculating withdrawal liability). According to the
be

Fund, the University neither requested clarification of this figure, nor initiated
arbitration proceedings. (Castrovinci Affidavit,

¶ 11). The University has

therefore waived its right to contest the Pension Fund’s calculation of the
unfunded contributions. See 29 U.S.C.

§ 140 1(b)(1). The first payment became

due according to the Fund’s schedule on June 10, 2013, i.e., 60 days after the
initial notification of liability was sent to the University. (Castrovinci Letter, 1).
Under 29 U.S.C.

§ 1 132(g)(2), the prevailing party in an action to recover

unfunded contributions is entitled to the unpaid contributions themselves,
plus interest, liquidated damages, and reasonable attorneys’ fees and costs. I
calculate the amount due to the Fund to be as follows:
•

Unpaid contributions of $22,517.00. (Segal Letter, 1).

•

(B) Interest of $5,893.20:
•

Interest is charged at the rate specified in the collective bargaining
agreement. 29 U.S.C.

§ 1 132(g)(2) (“interest on unpaid

contributions shall be determined by using the rate provided under
the plan, or, if none, the rate prescribed under section 662 1 of Title
26.). The collective bargaining agreement between the University

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and the Council specified an interest rate of 18% per annum.
(CBA, 56).
The starting date of the interest calculation is the date on which
each payment was due, as specified in the Fund’s notification of
liability to the University. 29 U.S.C.

§ 1399(c)(3) (“Each annual

payment determined [for withdrawal liability] shall be payable in 4
equal installments due quarterly, or at other intervals specified by
plan rules. If a payment is not made when due, interest on the
payment shall accrue from the due date until the date on which
the payment is made.”).
•

Because the collective bargaining agreement does not specify
otherwise, I have assumed that interest compounds annually.

•

The Fund informed the University that its liability should be paid
in quarterly installments of $5,470.00, beginning on June 10,
2013, with a final payment of $685 due on June 10, 2014.
(Castrovinci Affidavit, Exh. G, 2). Thus, each time the University
did not pay an installment, interest began to run for that
installment. The interest runs through the date of this decision,
March 25, 2015. The chart below summarizes the interest
calculation

2

2 Interest is calculated using the formula P x
P
i

=

=

(1+i)A(n/365)

-

P where:

the original payment due
the interest rate, here 18%

A

signifies an exponent

n

=

the number of days between the premium due date and the date of this

decision

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Payment
due date

6/10/2013
9/10/2013
12/10/2013
3/10/2014
6/10/2014
Total

•

Amount due

$

5,470.00
5,470.00
5,470.00
5,470.00
685.00

No. of days btw
due date and
date of decision
653
561
470
380
288

Interest

$

$

*

1,885.08
1,584.54
1,299.36
1,028.65
95.56
5,893.20

The statute provides that a court shall additionally order the defendant
to pay the greater of either (i) interest on the unpaid contribution,
determined using the rate provided for in the plan; or (ii) liquidated
damages at a rate provided for in the plan of up to 20% of the unfunded
contributions. 29 U.S.C.

§ 1132(g)(2)(C). Here, 20% of the unfunded

contributions would be $4,503.40 (0.2 x 22,517). Interest on the
unfunded contributions is $5,893 (see above). Therefore, I shall elect to
award interest on the unfunded contributions of $5,893.
•

The statute requires me to award costs and attorneys’ fees. 29 U.S.C.

§ 1 132(g)(2)(D). The Fund has attested that its attorneys’ fees are $686
(8-5,

¶ 5), and its costs are $400 (8-5, ¶ 6). I find these figures to be

reasonable, and therefore will award costs and attorneys’ fees totaling
$1,086.00.

Therefore, the Fund is entitled to a total award of $35,389.40 ($22,517
+

5,983

+

1,086).

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+

5,983

Conclusion
For the foregoing reasons, plaintiff’s motion for entry of a default
judgment is GRANTED. The Court will enter JUDGMENT in the amount of
$35,389.40.

Dated: March 25, 2015
Newark, New Jersey

KEVIN McNULTY
3
United States District Judge

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