Demopoulos v. Rollin Dairy Corp., 1:21-cv-07923

Plaintiffs (pension fund trustees) brought an ERISA action to collect employer withdrawal liability against Rollin Dairy Corp. after default.
After a February 16, 2022 hearing on Plaintiffs’ order to show cause for default judgment, the Court ordered Plaintiffs to explain why an inquest on damages was unnecessary and to file supporting documentation, including computation of present value of withdrawal liability.
Plaintiffs argued that, under ERISA, failure to timely initiate arbitration waives an employer’s right to contest the assessed withdrawal amount, so no damages inquest was needed; they submitted an actuary’s report and a damages statement.
Plaintiffs acknowledged a defective notice: the fund’s notice misstated the plan year of withdrawal as ending March 31, 2020, when the actual withdrawal occurred in the plan year ending March 31, 2021.
The actuary’s report does not explicitly show the $2,631,595.00 “Unpaid Withdrawal Liability” Plaintiffs seek, so the Court was not satisfied that damages were proven with reasonable certainty.
The Court referred the motion for default judgment to Magistrate Judge Jennifer Willis for a report and recommendation on (1) whether the defective notice affects liability or requires remedial action, and (2) an inquest to determine appropriate damages. Plaintiffs were directed to serve the order on Defendant and file proof of service.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether a defect in the notice (wrong plan year) vitiates employer liability or requires remedy	Plaintiffs did not address a defense based on the notice error and assert the error is immaterial to computation	Defendant (by implication) could argue defective notice defeats or alters the statutory prerequisites for liability	Court referred to Magistrate Judge to decide whether the notice defect vitiates liability, requires modification, or another remedy
Whether an inquest on damages is required and whether Plaintiffs proved the amount sought	Plaintiffs contend employer waived challenge to amount by not timely arbitrating, so no inquest is necessary; submitted actuary’s report and damage statement	Defendant could not challenge amount if arbitration was waived, but lack of adequate documentation undermines Plaintiffs’ showing	Court found Plaintiffs did not prove damages with reasonable certainty on the current record and referred the matter for an inquest to determine damages

514 F. Supp. 3d 463 (E.D.N.Y. 2021) (default-judgment damages require reasonable certainty)
183 F.3d 151 (2d Cir. 1999) (district court must ensure damages are appropriate on default judgment)
13 F.3d 51 (2d Cir. 1993) (district courts have discretion whether an inquest on damages is necessary)
109 F.3d 105 (2d Cir. 1997) (court cannot simply accept plaintiff’s statement of damages without scrutiny)
719 F. Supp. 2d 45 (D.D.C. 2010) (insufficient documentation may require denying ERISA damages request without prejudice)