Demopoulos v. Sweet Clover Farms Inc.
1:17-cv-07257
E.D.N.YOct 29, 2019Background
- Plaintiffs are the trustees of the Milk Industry Office Employees Pension Fund; defendant Sweet Clover Farms, Inc. was bound to the Fund by collective bargaining agreements.
- Plaintiffs allege Sweet Clover permanently ceased contribution obligations during the plan year ending March 31, 2017, constituting a "complete withdrawal" under ERISA.
- On May 4, 2017 plaintiffs issued a demand calculating withdrawal liability (stating $469,040 total with a prepayment option of $171,870 or monthly payments); defendant did not contest or pay.
- Plaintiffs sent a 60-day cure notice (July 31, 2017); defendant failed to cure; plaintiffs sued (Dec. 13, 2017) and clerk entered default (Mar. 19, 2018).
- On default-judgment motion, the court treats well-pleaded facts as admitted but must independently confirm legal basis for relief and quantify damages with reasonable certainty.
- Magistrate Judge Bloom recommended granting default judgment: $171,870 withdrawal liability; $19,579.05 interest through May 18, 2018 plus $84.76/day thereafter; $34,374 liquidated damages; $4,725 attorney’s fees; $582.50 costs.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Appropriateness of default judgment | Default entered; plaintiffs entitled to judgment for unpaid withdrawal liability | No responsive pleading or opposition | Default judgment recommended; court must still verify legal sufficiency of allegations |
| Liability for withdrawal under ERISA (complete withdrawal) | Sweet Clover permanently ceased contributions → complete withdrawal → liable for allocated withdrawal liability under ERISA | No response/challenge to the statutory determination | Court found allegations sufficient; defendant liable for withdrawal liability |
| Amount of withdrawal liability principal | Fund calculates liability and, after demand and no timely challenge/arbitration, the Fund's figure is binding (administrator affidavit identifies $171,870 unpaid) | No challenge to calculation within statutory timeframe | Awarded $171,870 as principal (defendant forfeited right to contest calculation) |
| Remedies: interest, liquidated damages, fees, costs | Seek 18% interest, liquidated damages (20% per plan), attorneys’ fees and costs | No opposition | Awarded interest $19,579.05 to May 18, 2018 plus $84.76/day; liquidated damages $34,374 (20%); attorneys’ fees $4,725 (15.75 hrs × $300); costs $582.50 |
Key Cases Cited
- Enron Oil Corp. v. Diakuhara, 10 F.3d 90 (2d Cir. 1993) (default judgments disfavored; resolve on merits when possible)
- Transatlantic Marine Claims Agency, Inc. v. Ace Shipping Corp., 109 F.3d 105 (2d Cir. 1997) (well-pleaded allegations deemed admitted after default)
- Credit Lyonnais Secs. (USA), Inc. v. Alcantara, 183 F.3d 151 (2d Cir. 1999) (damages allegations not automatically accepted; court must assess damages with reasonable certainty)
- Cement & Concrete Workers Dist. Council Welfare Fund v. Metro Found. Contractors, Inc., 699 F.3d 230 (2d Cir. 2012) (default admits liability as to well-pleaded facts)
- Hensley v. Eckerhart, 461 U.S. 424 (U.S. 1983) (lodestar method for calculating reasonable attorneys’ fees)
- Arbor Hill Concerned Citizens Neighborhood Ass’n v. County of Albany, 522 F.3d 182 (2d Cir. 2008) (standard for determining reasonable hourly rates)
- Blum v. Stenson, 465 U.S. 886 (U.S. 1984) (fee awards should reflect prevailing market rates)
- Rolls-Royce plc v. Rolls-Royce USA, Inc., 688 F. Supp. 2d 150 (E.D.N.Y. 2010) (court must confirm unchallenged facts provide basis for liability and relief)