Ferrara, Sr. et al v. A Star Business Service of New York Corp. et al

Filing 13

MEMORANDUM AND ORDER ADOPTING REPORT AND RECOMMENDATION. Judge Brown's R&R is ADOPTED in its entirety. with the clarifications and qualifications discussed in this Order. Defendants are ORDERED to submit to an audit of their books and records wi thin 30 days of the date of this Order. Within 90 days of the date of this Order, Plaintiffs shall complete their audit and file any further submissions with respect to Plaintiffs' application for unpaid contributions, interest on unpaid contrib utions, and liquidated damages, and for additional attorneys' fees and costs. Plaintiffs shall serve a copy of this Order on Defendants and file an Affidavit of Service with this Court on or before April 8, 2013. Ordered by Judge Joanna Seybert on 3/27/2013. (Nohs, Bonnie)

UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
---------------------------------------X
JOSEPH A. FERRARA, SR.; FRANK H.
FINKEL; MARC HERBST; DENISE
RICHARDSON; THOMAS F. CORBETT;
ANTHONY D’AQUILA; THOMAS GESUALDI;
LOUIS BISIGNANO; DOMINICK MARROCCO;
and ANTHONY PIROZZI,
Plaintiffs,
-againstA STAR BUSINESS SERVICE OF NEW YORK
CORP. and BASS & BASS WGP, INC.,

MEMORANDUM & ORDER
11-CV-5841(JS)(GRB)

Defendants.
---------------------------------------X
APPEARANCES
For Plaintiffs:
Joseph J. Vitale, Esq.
Zachary N. Leeds, Esq.
Cohen, Weiss and Simon LLP
330 West 42nd Street
New York, NY 10036
For Defendants:

No appearances.

SEYBERT, District Judge:
Pending before the Court is Magistrate Judge Gary R.
Brown’s Report and Recommendation (“R&R”), issued on February
26, 2013.

For the following reasons, the R&R is ADOPTED in its

entirety.
BACKGROUND
The
facts

of

this

Brown’s R&R.

Court
case,

assumes
which

familiarity
are

described

with

the

in

detail

underlying
in

Judge

Briefly, Plaintiffs Joseph A. Ferrara, Sr.; Frank

H. Finkel; Marc Herbst; Thomas N. Corbett; Denise Richardson;
Anthony

D’Aquila;

Thomas

Gesualdi;

Louis

Bisignano;

Dominick

Marrocco; and Anthony Pirozzi (collectively “Plaintiffs”), as
Trustees and fiduciaries of the Local 282 Welfare Trust Fund,
the Local 282 Pension Trust Fund, the Local 282 Annuity Trust
Fund, the Local 282 Job Training Trust Fund, and the Local 282
Vacation and Sick Leave Trust Fund (collectively, the “Funds”)
commenced this action against A Star Business Services of New
York

Corp.

and

“Defendants”)

Bass

on

&

December

Bass
1,

WGP,
2011

Inc.

(together,

the

seeking

injunctive

and

monetary relief under Sections 502(a)(3) and 515 of the Employee
Retirement Income Security Act of 1974, as amended (“ERISA”), 29
U.S.C. §§

1132(a)(3) and 1145.

The Funds are “employee benefit

plans” and “multiemployer plans” within the meaning of Sections
3(3)

and

3(37)

of

ERISA.

(Compl.

¶

4.)

Defendants

are

“employers” within the meaning of ERISA (Compl. ¶ 8).
The
employers,

Funds

including

collect

benefit

Defendants,

contributions

pursuant

to

a

Agreement and Declaration of Trust (Trust Agreement).
¶ 6.)

from

Restated
(Compl.

Defendants are also parties to a collective bargaining

agreement (“CBA”), which binds them to the Trust Agreement and
requires them to make contributions to the Funds on behalf of
covered employees.

(Compl. ¶ 5.)

Under the Trust Agreement,

Defendants were to submit remittance reports with each payment
2

to the Funds, including a statement of the number of covered
employees and the number of hours worked by those employees.
(Compl. ¶ 12.)

The Trust Agreement also requires Defendants to

submit to periodic audit reports.
Plaintiffs
audits,

Defendants

(Compl. ¶ 21-23.)

allege
did

(Compl. ¶ 13.)

that,

not

despite

submit

to

two

a

requests

“complete

for

audit.”

Defendants have not submitted appearances in

this action, and on February 21, 2012, the Clerk of the Court
entered a certificate of default.
have

since

moved

for

a

(Docket Entry 5.)

default

judgment,

Plaintiffs

which

this

Court

referred to Judge Brown.
DISCUSSION
Judge Brown made the following recommendations: (1)
that an order issue directing defendants to submit to an audit
of

their

books

and

records

within

thirty

days;

(2)

that

Plaintiffs be given sixty days to complete the audit and to make
any further submissions with respect to Plaintiffs’ application
for unpaid contributions, interest on unpaid contributions, and
liquidated

damages,

and

for

additional

attorneys’

fees

and

costs; and (3) that Plaintiffs be awarded attorneys’ fees and
costs in the amount of $4,681.74.

Plaintiffs, though agreeing

with most of the R&R, lodge specific objections to some of Judge
Brown’s

recommendations.

The

Court

3

will

first

address

the

standard

of

review

before

addressing

the

recommendations

and

Plaintiffs’ objections.
I.

Standard of Review
“When evaluating the report and recommendation of a

magistrate judge, the district court may adopt those portions of
the report to which no objections have been made and which are
not facially erroneous.”

Walker v. Vaughan, 216 F. Supp. 2d

290, 291 (S.D.N.Y. 2002) (citation omitted).

A party may serve

and file specific, written objections to a magistrate’s report
and

recommendation

within

fourteen

days

of

receiving

recommended disposition.

See FED. R. CIV. P. 72(b)(2).

receiving

objections

any

timely

recommendation,

the

district

“court

to
may

the

the
Upon

magistrate’s

accept,

reject,

or

modify, in whole or in part, the findings and recommendations
made by the magistrate judge.”

28 U.S.C. § 636(b)(1)(C); see

also FED. R. CIV. P. 72(b).

A party that objects to a report and

recommendation

out

must

point

the

specific

portions

report and recommendation to which they object.

of

the

See Barratt v.

Joie, No. 96-CV-0324, 2002 WL 335014, at *1 (S.D.N.Y. Mar. 4,
2002) (citations omitted).
When

a

party

raises

an

objection

to

a

magistrate

judge’s report, the Court must conduct a de novo review of any
contested sections of the report.
F. Supp. 815, 817 (S.D.N.Y. 1991).
4

See Pizarro v. Bartlett, 776
But if a party “makes only

conclusory

or

original

general

arguments,

objections,
the

Court

or

simply

reviews

Recommendation only for clear error.”

reiterates

the

his

Report

and

Pall Corp. v. Entegris,

Inc., 249 F.R.D. 48, 51 (E.D.N.Y. 2008).

Furthermore, even in a

de

objections,

novo

review

of

a

ordinarily

will

evidentiary

material

presented
Kennedy

to
v.

party’s

not

the

consider
which

No.

“arguments,

could

magistrate

Adamo,

specific

have

judge

been,

but

the

law

first

in

02-CV-1776,

case

the

2006

WL

Court
and/or

[were]

not,

instance.”

3704784,

at

*1

(E.D.N.Y. Sept. 1, 2006).
II.

Recommendations and Objections
Plaintiffs do not object to the general holdings of

the R&R--namely, that this Court should issue an order directing
Defendants to submit to an audit of their books and records
within

thirty

days,

that

Plaintiffs

be

given

sixty

days

to

complete the audit and to make further submissions, and that
Plaintiffs be awarded attorneys’ fees and costs in the amount of
$4,681.74.
However,

Therefore,

Plaintiffs

the

make

R&R

is

specific

stage, are primarily academic.

ADOPTED
objections

in

its

which,

entirety.
at

this

In any event, in adopting the

R&R, the Court notes some particular qualifications.

5

A.

Estimated Damages
Plaintiffs object to the R&R to the extent that it

recommends

that

Plaintiffs

not

be

permitted

to

seek

damages

based on an estimated audit.
The R&R essentially states that, at this stage, the
Court cannot determine the amount of monetary damages, if any.
This is because there must first be an injunction providing
Defendants the opportunity to submit to an audit.
analysis in this respect is correct.

The Court’s

See Gesualdi v. Innovative

Disposal Sol., No. 09-CV-0820, 2011 WL 1158444, at *4 (E.D.N.Y.
Jan. 18, 2011) (“Once the plaintiffs attempt to conduct the
audit

or

records

if

the
such

for

defendant
audit,

refuses
the

court

to

provide

will

its

books

and

a

basis

for

have

determining the full amount of damages to be awarded to the
plaintiffs.”).
To the extent that the R&R expresses concern regarding
“estimated”

contributions

inquiry

order

in

reasonable

to

certainty.”

due,

ascertain
Credit

the
the

Court

must

amount

Lyonnais

of

Sec.

Alcantara, 183 F.3d 151, 155 (2d Cir. 1999).

“conduct
damages

(USA),

an
with

Inc.

v.

After there has

been an audit, or Defendants fail to comply with the Court’s
Order directing them to submit to one, Plaintiffs correctly note
that

the

CBA

and

Trust

Agreement

6

authorize

the

Funds

to

calculate estimated contributions based on specific formulae.
(Cody Decl. Ex. A at 28-29, Docket Entry 8.)
Thus,

Plaintiffs’

motion

for

damages

is

denied,

at

this stage, with leave to replead following an audit or the
thirty day period in which Defendants may submit to an audit.
Thereafter, Plaintiffs are free to submit a motion for damages
based

upon

Workers

the

estimate

District

formulae.

Counsel

Welfare

See

Fund,

Cement

Concrete

Fund,

Pension

and

Annuity

Fund, Ed. and Training Fund and Other Funds v. Metro Found.
Contractors, Inc., 699 F.3d 230, 235 (2d Cir. 2012) (“We now
explicitly adopt the rule that the parties to a CBA may set
forth

in

the

agreement

an

alternate

method

of

calculating

contributions owed in the event the employer fails to comply
with

its

without

contractual
running

calculated

with

duty

afoul

of

reasonable

to

provide

the

its

books

requirement

certainty.”)

and

that

records

damages

(internal

be

quotation

marks and citation omitted); Ferrara v. Metro D Excavation &
Found., Inc., No. 10-CV-4215, 2011 WL 3610896, at *4 (E.D.N.Y.
July

7,

2011)

(“As

defendant

failed

to

submit

to

an

audit,

plaintiffs have estimated the contributions due to the Funds
using the formulas set forth in the trust agreement.”), adopted
by 2011 WL 3625448.

To be clear, the Court is not expressing

any opinion as to whether Plaintiffs’ damages calculations based
upon the estimates will be accepted or denied.
7

Rather, the

Court seeks to clarify the R&R and allay Plaintiffs’ apparent
concerns

regarding

any

perceived

prohibition

against

the

estimated figure.
B.

Contributions
Plaintiffs further object to the R&R insofar as they

read it to suggest that the estimated audit findings would not
be “contributions” under ERISA Section 502(g)(2), and therefore,
no interest, liquidated damages, or attorney’s fees, which are
mandatory

in

a

contribution

collection

action

under

ERISA

Section 515 would be recoverable.
The R&R does not say as much, and in fact provides
Plaintiffs
damages

with

and

make

contributions.
Plaintiffs’
submit

to

the

any

further

(R&R at 13-14.)

claim
an

opportunity

for

audit

an

under

to

submissions

their

motion

regarding

for

unpaid

Rather, the R&R notes that

injunction
ERISA

renew

requiring

Section

502

is

Defendants
perhaps

to

more

explicit than its claim for unpaid contributions pursuant to
ERISA Section 515.

Again, Plaintiffs’ subsequent submissions

may clarify this potential flaw.
Suffice

it

to

say

at

this

juncture,

however,

that

Plaintiffs have alleged that Defendants did not comply with the
terms of the CBA and Trust Agreement.
Workers,

699

F.3d

at

235

(discussing

See Cement & Concrete
alternate

method

of

calculating contributions when defendant fails to comply with
8

its contractual duty).
IX,

Section

Employer

1(f)

who

Moreover, Plaintiffs allege that Article

of

the

submits

Trust

the

Agreement

required

provides

remittance

that

“an

reports,

but

thereafter fails to comply with an audit request within twenty
days of written demand, is liable for an additional monthly
contribution, which is computed ‘by taking 50 percent of the
number of hours reported for that month and [] multiplying said
number of hours by the current contribution rate.”
¶ 19.)

(Compl.

In addition, the Complaint states that “Defendants, by

virtue of their failure to submit its pertinent books to an
audit within twenty (20) days of written demand, are further
liable

for

an

during

the

period

produced.”

increased
for

monthly

which

the

contribution
books

and

for

each

records

month

were

not

(Compl. ¶ 30.)
Therefore, Plaintiffs are also permitted to submit a

request for additional fees pursuant to Section 502(g)(2) upon
their renewed motion for damages.
C.

Time Frame
Moreover, Plaintiffs object to a portion of the R&R

that

states

‘estimated’
plaintiffs

that

“justice

damages
made

October 2011.”

related

their

most

(R&R at 13.)

does

not

call

to

pay

periods

recent

request

for

for

an
in
an

award
2012

of
when

audit

in

Any objection in this regard is

moot, as the injunction requiring Defendants to submit to an
9

audit

of

their

books

and

records

alleviates

any

concern

regarding the timing of Plaintiffs’ last request for an audit.
In
clarify

that

any
the

event,

the

Court

injunction

takes

compels

this

opportunity

Defendants

to

to

provide

“pertinent books and records for the period from July 15, 2010
through the last day on which Defendants are required to remit
contributions

to

the

Funds

.

.

.”

(Compl.

at

9,

¶

1).

Accordingly, should Plaintiffs chose to renew their motion for
damages, the renewed motion may cover said time period.

See

Trustees of Plumbers and Pipefitters Nat. Pension Fund v. Daniel
Weintraub & Assocs., Inc., No. 04-CV-2611, 2007 WL 4125453, at
*6 (E.D.N.Y. Nov. 16, 2007) (“[D]efendants were placed on notice
by the Complaint, by the Order of Judgment, and by the papers
submitted

in

connection

with

the

motion

for

default,

that

plaintiffs have demanded an award of additional contributions
accrued during the pendency of the litigation.”).
D.

Interest Rate
Moreover, Plaintiffs seek to clarify the applicable

interest rate on unpaid contributions to the Funds.

As the R&R

correctly notes, the Trust Agreement provides that the interest
rate applicable to contributions that are paid late to the funds
is set by the New York General Obligations Law § 5-501.
4; Cody Decl. Ex. A at 30.)

(R&R at

However, that provision has since

been amended and the applicable interest rate is now 1½% per
10

month or 18% per year.

(Cody Decl. ¶¶ 28-29 and Ex. A at ECF #

74.1)
CONCLUSION
Judge Brown’s R&R is ADOPTED in its entirety, with the
clarifications and qualifications discussed above.
Defendants are hereby ORDERED to submit to an audit of
their books and records within thirty days of the date of this
Order.
Within
Plaintiffs

shall

ninety

days

complete

of

their

the

date

of

this

Order,

audit

and

file

any

further

submissions with respect to Plaintiffs’ application for unpaid
contributions, interest on unpaid contributions, and liquidated
damages, and for additional attorneys’ fees and costs.
Plaintiffs shall serve a copy of this Memorandum and
Order on Defendants and file an Affidavit of Service with this
Court, on or before April 8, 2013.
SO ORDERED.

Dated:

/s/ JOANNA SEYBERT______
Joanna Seybert, U.S.D.J.

March
27 , 2013
Central Islip, NY

“ECF” refers to the Court’s Electronic Case Filing System and
the pagination provided therein.
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