Empire State Carpenters Welfare, Annuity and Apprentice Training Funds et al v. Conway Construction of Ithaca, Inc.

Filing 128

ORDER re REPORT AND RECOMMENDATION: Pursuant to Fed. R. Civ. P. 72(b) the Court has reviewed the February 7, 2019 Report and Recommendation of Magistrate Judge Steven I. Locke de novo. The Court finds that the Chambless factors weigh in Plaintiff 9;s favor and against awarding attorneys' fees or costs. Accordingly, IT IS HEREBY ORDERED that Defendant's motion for attorney's fees is denied in its entirety. See attached Order. Ordered by Judge Denis R. Hurley on 3/14/2019. (Bochner, Francesca)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
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EMPIRE STATE CARPENTERS
WELFARE, ANNUITY AND APPRENTICE
TRAINING FUNDS, SOUTH CENTRAL
DISTRICT COUNCIL OF CARPENTERS
DEFINED BENEFIT FUND, THE EMPIRE
STATE REGIONAL COUNCIL OF
CARPENTERS,
Plaintiffs,

ORDER
07-CV-2259 (DRH)(SIL)

-againstCONWAY CONSTRUCTION OF
ITHACA, INC.,
Defendant.
-----------------------------------------------------X
HURLEY, Senior District Judge:

INTRODUCTION
Presently before the Court is the Report and Recommendation (“R&R), dated February 7,
2019, of Magistrate Judge Steven I. Locke recommending that the Court deny Defendant’s
motion for attorney’s fees. Defendant filed timely objections to the R&R, and Plaintiffs then
filed a response in support of the R&R.
BACKGROUND
This case has an extensive history, familiarity with which is presumed. (See ECF Nos.
[24], [38], [69], [114], and [125].) As such, the Court only provides a summary of facts and
procedural history necessary to decide the instant motion.
Plaintiffs filed the Complaint commencing this action on June 5, 2007, seeking to recover
unpaid fringe benefits contributions pursuant to a collective bargaining agreement (“CBA”)
under the Employment Retirement Income Security Act (“ERISA”). (Compl. [ECF No. 1].) The
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critical question before the Court was whether Defendant manifested an intent to be bound by the
CBA despite not being a signatory to it. After a lengthy discovery process, this Court granted
summary judgment in Plaintiffs’ favor on March 15, 2012, finding that Defendant was bound by
the CBA. After an evidentiary hearing as to damages, this Court adopted Judge Locke’s
September 14, 2015 R&R and entered judgment against Defendant in an amount of $202,958.75.
(Order [ECF No. 73] at 1.)
Defendant appealed the decision. On September 28, 2016, the Second Circuit found that
there were outstanding questions of material facts as to whether Defendant’s conduct manifested
an intent to be bound by the CBA. The Second Circuit vacated the judgment and remanded the
matter for further proceedings. Following a bench trial primarily addressing this central issue,
this Court issued its decision on April 4, 2018, holding that Plaintiffs “failed to establish by a
preponderance of the evidence their claim against [Defendant] for unpaid fringe benefit
contribution” in that the trial proof demonstrated that “Conway [] never intended to, or did, adopt
the 2001–2006 CBA by conduct or otherwise.” (Findings of Facts and Concl. of Law (ECF No.
114) at 2, 12, 16.) On April 24, 2018, Defendant filed the instant motion for attorneys’ fees and
costs, seeking costs in the amount of $15,593.06 and attorneys’ fees in the amount of $205,014.
(Joseph J. Steflik, Jr. Decl [ECF No. 117] ¶ 28.)
APPLICABLE STANDARD OF REVIEW
Federal Rule of Civil Procedure 72(b) provides that when a magistrate judge issues an
R&R on a matter “dispositive of a claim or defense of a party,” the district court judge shall
make a de novo determination of any portion of the magistrate judge’s disposition to which
specific written objection has been made. Fed. R. Civ. P. 72(b). Accordingly, the Court reviews
the motion for attorney’s fees de novo.

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DISCUSSION
I.

Legal Standard for Motion for Attorney’s Fees
Under ERISA, “the court in its discretion may allow a reasonable attorney’s fee and costs

of action to either party.” 29 U.S.C. § 1132(g)(1); see also LaBarbera v. J.E.T. Res., Inc., 396 F.
Supp. 2d 346, 349–50 (E.D.N.Y. 2005) (explaining that “[u]nder ERISA, an award of attorneys’
fees and costs is within the sound discretion of the trial court”). However, the court’s discretion
“‘is not unlimited,’ inasmuch as it may only award attorneys’ fees to a [party] who has obtained
‘some degree of success on the merits.’” Donachie v. Liberty Life Assur. Co. of Bos., 745 F.3d
41, 46 (2d Cir. 2014) (quoting Hardt v. Reliance Standard Life Ins. Co., 560 U.S. 242, 254–55
(2010)). In applying this standard, the Court should evaluate whether the Court “can fairly call
the outcome of the litigation some success on the merits without conducting a lengthy inquiry
into the question whether a particular party’s success was substantial or occurred on a central
issue.” Dist. Photo Inc. Health Care Plan v. Pyrros, 2017 WL 2334027, at *3 (E.D.N.Y. May
30, 2017) (internal quotations and citation omitted).
Assuming the movant has met the threshold showing of some degree of success on the
merits, the Court next turns to whether to award legal fees. The Second Circuit long ago
established five factors that courts should weigh when considering whether to award legal fees
and costs:
(1) the degree of the offending party’s culpability or bad faith, (2) the ability
of the offending party to satisfy an award of attorney’s fees, (3) whether an
award of fees would deter other persons from acting similarly under like
circumstances, (4) the relative merits of the parties’ positions, and (5)
whether the action conferred a common benefit on a group of pension plan
participants.
Chambless v. Masters, Mates & Pilots Pension Plan, 815 F. 2d 869, 871 (2d Cir. 1987)
abrogation on other grounds recognized by Levitian v. Sun Life & Health Ins. Co., 486 F. App’x
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136 (2d Cir. 2012) (internal citations omitted). These five factors are applied through a lens that
disfavors awards to defendants “to prevent the chilling of suits brought in good faith.” Toussaint
v. JJ Weiser, Inc., 648 F.3d 108, 111 (2d Cir. 2011). The Court will now apply each of the
Chambless factors to the case at bar.
II.

The Motion for Attorney’s Fees and Costs is Denied
1. Degree of the Offending Party’s Culpability or Bad Faith
“This first factor regarding ‘bad faith’ is generally the most significant to the overall

determination whether a defendant should be awarded attorney’s fees in an ERISA setting.”
Critelli v. Fidelity Nat’l Insurance Co. of New York, 554 F. Supp. 2d 360, 364 (E.D.N.Y. 2008).
As noted in this Court’s Findings of Fact and Conclusions of Law, “the evidence of implicit
assent advanced by Plaintiffs is formidable and would certainly have carried the day but for the
compelling and . . . highly credible testimony of [Mr.] Conway [of Defendant].” (Findings of
Fact ¶ 16.) Accordingly, the Court finds that Plaintiffs did not bring this action in bad faith and
that the first factor weighs in Plaintiff’s favor.
2. The Ability of the Offending Party to Satisfy and Award of Attorney’s Fees
“[I]t is only a party’s inability to pay an award that weighs in its favor while its ability to
pay is generally neutral in effect.” Tedesco v. I.B.E.W. Local 1249 Ins. Fund, 2019 WL 140649,
at *4 (S.D.N.Y. Jan. 9, 2019) (emphasis in original). Plaintiffs concede that they could pay
Defendant’s legal fees and costs. (Mem. in Opp. at 5–6.) Therefore, the Court finds that this
factor is neutral.
3. Whether an Award of Fees Would Deter Other Persons from Acting Similarly
Under Like Circumstances
When “an ERISA plaintiff has pursued a colorable (albeit unsuccessful) claim, [this
factor] . . . weighs strongly against granting fees to the prevailing defendant” because awarding
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fees “would likely deter beneficiaries and trustees from bringing suits in good faith for fear that
they would be saddled by their adversary’s fees[.]” Salovaara v. Eckert, 222 F.3d 19, 28 (2d Cir.
2000) (emphasis in original). As noted directly above, Plaintiffs brought this action in good faith
and had significant evidence that weighed in their favor. In light of Plaintiffs’ colorable claim,
this factor weighs in Plaintiff’s favor and against awarding damages.
4. The Relative Merits of the Parties’ Positions
In this case, Plaintiffs’ advanced “formidable” evidence in support of their position but
Mr. Conway’s testimony on behalf of Defendant was so compelling as to carry the day. Thus,
both Plaintiffs’ and Defendants’ positions were meritorious for present purposes. Accordingly,
this factor is neutral.
5. Whether the Action Conferred a Common Benefit on a Group of Pension Plan
Participants
“[T[he fifth Chambless factor, whether the action conferred a common benefit on a group
of plan participants, is generally regarded as either inapplicable or neutral where an ERISA
defendant is seeking attorneys’ fees.” Mahoney v. J.J. Weiser & Co., 646 F. Supp. 2d 582, 594
(S.D.N.Y. 2009). The instant motion for fees was brought by Defendant on its own behalf and
confers no benefit to any other pension plan participants, therefore this factor is neutral or
inapplicable.
6. The Motion for Fees and Costs is Denied
Assessing the five Chambless factors, two of the factors weigh in Plaintiffs’ favor and
three are neutral. Not a single factor weighs in favor of awarding fees to Defendant. While the
Court has empathy for Defendant with regards to the substantial cost of litigating this action,
there is an insufficient basis for awarding Defendant either attorneys’ fees or costs. Thus, the
Court declines to do so.
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CONCLUSION
Pursuant to Fed. R. Civ. P. 72(b) the Court has reviewed the R&R de novo. The Court
finds that the Chambless factors weigh in Plaintiff’s favor and against awarding attorneys’ fees
or costs.
Accordingly,
IT IS HEREBY ORDERED that Defendant’s motion for attorney’s fees is denied in its
entirety.
Dated: Central Islip, N.Y.
March 14, 2019

/s/ Denis R. Hurley
Denis R. Hurley
United States District Judge

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