INTERNATIONAL UNION OF OPERATING ENGINEERS LOCAL 825 EMPLOYEE BENEFIT FUNDS v. GETTY CONTRACTING, LLC

Filing 4

MEMORANDUM OPINION. Signed by Judge Kevin McNulty on 7/20/2015. (nr, )

UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NEW JERSEY

INTERNATIONAL UNION OF OPERATING
ENGINEERS LOCAL 825 EMPLOYEE
BENEFIT FUNDS AND THE TRUSTEES
THEREOF,

Civ. No. 2:14-7799 (KM)(JBC)
MEMORANDUM
ACCOMPANYING ORDER TO
SHOW CAUSE

Petitioner,
V.

GETTY CONTRACTING LLC,
Respondent.

The petition asks the Court to confirm six arbitration awards. There is
some question, however, as to whether the Respondent has been properly
served. I will therefore order the Petitioner to show cause why the petition
should not be denied for improper service (or, in the alternative, to remedy any
defect). In addition, I note a few issues with the awards that should be
addressed in Petitioner’s submission.

Background
The Petitioner in this case, International Union of Operating Engineers
Local 825 Employee Benefit Funds arid the Trustees Thereof (the “Fund”), is a
trust benefiting a union of construction workers. The Fund pays employee
benefits to union members. It alleges that respondent, Getty Contracting LLC,
entered into a collective bargaining agreement whereby Getty agreed to make
payments to the Fund. Getty, the Fund seems to allege, was delinquent in
making these contributions during various periods from August of 2013
through April of 2014. The Fund has initiated six arbitration proceedings
against Getty. It appears, though, that the Funds sought not the delinquent

contributions themselves but rather interest, liquidated damages, and
attorneys’ fees. This is unexplained.
Getty did not appear in the arbitration. The arbitrator therefore entered
six default awards. Each award ordered Getty to pay some combination of
interest, liquidated damages, attorneys’ fees, and an arbitrator’s fee.
•

Five of the six orders awarded interest. The award indicates that the
arbitrator used an interest rate of “5.25% (Prime plus 2%).” None of the
awards indicates the principal amount upon which this interest payment
calculation is based, nor the period during which the balance was
outstanding.

•

Five of the six awards awarded “Liquidated Damages.” These appear to
have been calculated as 20% of the amount of interest due. See, e.g.,
Referral No. 73621L, awarding $74.82 of liquidated damages, which is
20% of the interest amount of $374.10.

•

All six orders award “Attorney’s fees and costs.” For five of the six
awards, this is calculated as 15% of the interest due. For the sixth award
(No. 7370FS), the calculation is not apparent from the award.

•

Each of the six awards orders Getty to pay an $800 arbitration fee.

In total, the six awards ordered Getty to pay some $7,227.91, comprising
$2,427.91 in interest, attorneys’ fees, and liquidated damages, plus $4,800.00
in arbitration fees.
Discussion

Getty has petitioned this Court to confirm the arbitrator’s awards pursuant
to 9 U.S.C. § 9. Getty has not entered an appearance or otherwise defended
this case. The record, though, leaves some question as to whether Getty has
been properly served with the petition or with the motion to confirm the
arbitration award under 9 U.S.C. § 9. I will therefore order the Fund to show
cause as to why the Petition should not be dismissed for failing to properly
serve the Respondent. For the benefit of the parties, I will also take this
opportunity to note two apparent discrepancies in the award that should be
addressed in any subsequent submission.
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Service
The Federal Arbitration Act allows any party to an arbitration to apply to
a federal district court to confirm the award. 9 U.s.c

§ 9. The Act, however,

also requires that the Petitioner properly serve the Respondent with the
application. How that service must be accomplished depends on whether the
adverse party is a resident of the district in which the award was made.
If the adverse party is a resident of the district within which the award
was made, such service shall be made upon the adverse party or his
attorney as prescribed by law for service of notice of motion in an action
in the same court. If the adverse party shall be a nonresident, then the
notice of the application shall be served by the marshal of any district
within which the adverse party may be found in like manner as other
process of the court.
9 U.S.C.

§ 9. Thus, if the adverse party is a resident of the district, the

petitioner need only serve the petition as if it were a motion. In this instance,
that would permit, for example, mail notice, see FED. R. Civ. P. 5(b)(2)(c)). If,
however, the adverse party is not a resident of the district in which the award
was made, service via the U.S. Marshal is required. 9 U.S.C.

§ 9, supra.

The Fund states that it served its motion to confirm the arbitration
awards by mail. The arbitrator issued his awards in the District of New Jersey.
See, e.g., Referral No. 6370F5 (indicating that the award was issued from
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Springfield, New Jersey). The Fund states that Getty’s principal place of
business is in New York. (See Petition,

¶ 4; cert. Svc., 1). It may well be, then,

that Getty is not a resident of the district in which the awards were made. If it

Citations to the record will be abbreviated as follows:
“Petition” Petition to Confirm Arbitration Awards, Dkt. No. 1.
“Cert. Svc.” Certification of Service, Dkt. No. 3-3.
“Collection Policy” Contribution Collection Policy and Procedures, Dkt. No. 1-2, Exh.
B.
“Referral No. “ this refers to any of six awards by the arbitrator. Each is titled
“Default Award of Arbitrator,” and all are found at Dkt. No. 1-3, Exh. C.
—

—

—

—

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is a nonresident of New Jersey, Getty must be served via the U.S. Marshal in
its home district.
Where a party has failed to enter an appearance, the court must take
special care to ensure that it was served. Proper service is the only reassurance
the Court has that the Respondent has indeed been notified of the suit and has
chosen not to defend it. Prudence, therefore, counsels that I order the Fund to
either demonstrate to the Court that service has already been accomplished
properly, or else to remedy any defect in service, or on or before the date in the
accompanying Order to Show Cause.
The arbitration award
For the benefit of the parties, I also note certain issues in connection
with the arbitrator’s award. In responding to the Order to Show Cause, The
Fund should address each issue.
Pay periods

First, four of the six arbitration awards seem to cover duplicate periods.
Referral No. 73641L found that payments were delinquent for the time period of
January 1, 2014 through March 31, 2014. Referral No. 74521L found a
delinquency for the same period. Likewise, Referral No. 73631L finds that
payments were delinquent for the period October 1, 2013 through December
31, 2013. Referral No. 73651L awards for part of the same period, December 2,
2013 through December 31, 2013.
I do not fault the arbitrator; he took the case as he found it, and entered
a default award when Getty did not appear. Further, there may well be an
explanation for these overlapping periods. From the record before me, however,
the explanation is not apparent.
Separate arbitration fees

Overall, the Fund is alleging delinquencies for the period August 2013
through April 2014. Rather than bring one action before the arbitrator alleging
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a delinquency for that entire period, the Fund seems to have divided that
period into smaller segments and initiated a separate arbitration for each
period. The arbitration hearings for all six matters were held on the same day,
August 18, 2014. See, e.g., Referral No. 6370FS. The arbitrator ordered a
separate award for each. This might ordinarily be harmless. However, the
arbitrator has ordered Getty to pay a separate arbitration fee for each of the six
awards he issued.
Here, too, I do not fault the arbitrator, who, in light of Getty’s default,
took the matters as presented by the Fund. Nor do I begrudge the arbitrator his
fee; presented with six matters, as to each he charged his customary fee, which
appears quite reasonable.
The trouble is that the Fund’s seemingly arbitrary decision to divide the
matter into six proceedings has resulted in a sixfold fee. That is the Fund’s
decision to make, if it is paying the fee. But here it seeks to visit the
consequences of that decision on its adversary, shifting the sixfold fee to Getty.
In total, the arbitrator has ordered Getty to pay $4,800 in arbitration
fees—$800 for each of the matters presented. I note that this sum is
approximately double the $2,427.91 in damages awarded (described as
interest, attorneys’ fees, and liquidated damages).
As I say, I have no quarrel with the notion that the Fund, because of its
decision to bring six separate proceedings, may have incurred a larger fee.
Without further explanation, however, I may find it necessary to modify the
portion of the award that shifts that sixfold fee to Getty.
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note as well that separating this matter into six different arbitrations may
have affected the attorneys’ fees calculation. Only five awards listed the interest
amount on which the attorneys’ fee award was based. I will therefore confme my
discussion to those five awards. The Collection Policy provides that attorneys’ fees are
to be calculated at a rate of “fifteen (15%) percent on the first $750.00; ten (10%) on
any amount in excess of $750.00.” (Collection Policy, § 8 ¶ 3) If the six awards here
were treated as a single award, the total amount subject to attorneys’ fees would be
$1,470.77 (374.10 + 453.27 + 230.58 + 198.61 + 214.21 = $1,470.77) (Referral Nos.
73621L, 7631L, 73641L, 73651L, 74521L, respectively). That would result in attorneys’
fees of $184.58 (15% on the first $750, or $112.50 plus 10% on the remaining
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Conclusion
The Fund will be asked to show cause why their petition should not be
dismissed, or the awards modified, based on the foregoing issues. A separate
order will issue.

Dated: July 20, 2015

K’VIN MCNUL1’Y
United States District Judg

$720.77, or $72.08, for a total of $184.58). As it is now, those five awards order Getty
to pay attorneys’ fees of $220.60.
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