270 F. Supp. 3d 593
E.D.N.Y.2017Background
- The Fund (Division 1181 Amalgamated Transit Union — NY Employees Pension Fund) sued D & A Bus Co., Inc. (D & A) and Anchor Bus Co., Inc. under ERISA and the MPPAA for withdrawal liability, interest, liquidated damages, attorney’s fees, costs, and an injunction to compel disclosure of businesses under common control.
- The Fund determined D & A completely withdrew from the multiemployer plan effective June 30, 2014, and assessed $575,545.00 withdrawal liability with an 80-quarter payment schedule; notices were sent but D & A did not pay or timely arbitrate.
- The Clerk entered default after defendants failed to answer; Magistrate Judge Tomlinson recommended default judgment against D & A but denied default judgment as to Anchor for insufficient factual allegations of common control; plaintiffs voluntarily dismissed Anchor without prejudice and Judge Hurley adopted the R&R as to D & A.
- The court found statutory prerequisites satisfied: plan determined withdrawal, provided notice/demand and payment schedule, and D & A defaulted by failing to make interim payments and failing to initiate arbitration (waiving substantive defenses).
- Damages awarded (as recommended and adopted): $575,545.00 principal; $38,732.30 accrued interest through July 19, 2017; liquidated damages of $115,109.00 (20%); attorneys’ fees reduced to $3,806.00; costs $846.03; and an injunction ordering D & A to provide a complete list of trades/businesses under common control within 20 days of judgment.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether withdrawal liability procedure and notice requirements were met so plan can collect accelerated liability | Fund: it properly determined D & A’s complete withdrawal, calculated liability, sent Notice & Demand and follow-up notices, and provided cure/default warning | D & A: (no responsive pleading; no arbitration) | Held: Fund met §1399(b) requirements; D & A defaulted; full liability accelerated and owed. |
| Whether failure to request arbitration bars defenses and challenge to amount assessed | Fund: D & A failed to timely arbitrate, so it waived challenges and must pay the assessed amount | D & A: (no timely arbitration or response asserted) | Held: Failure to timely request arbitration waived defenses; court may adopt plan’s liability calculation. |
| Whether Anchor is jointly and severally liable under common-control theory | Fund: Anchor was a trade or business under common control with D & A and thus jointly liable; notice to one member gives notice to all | Anchor: (no answer; court must still have factual basis) | Held: Complaint’s conclusory allegation of common control insufficient; Anchor not held liable and claim dismissed without prejudice (plaintiff voluntarily dismissed). |
| Proper measure of damages (interest, liquidated damages, fees, costs) and reasonableness of fee request | Fund: seeks principal, interest (prime+2%), 20% liquidated damages (greater of interest/liquidated), reasonable attorneys’ fees and costs per ERISA and plan rules | D & A: (no opposition; court must still review reasonableness and supporting detail) | Held: Court accepted principal and interest calculation, awarded 20% liquidated damages, reduced attorneys’ hourly rates and applied 10% across-the-board hour reduction yielding $3,806.00 fees; awarded specified costs except pro hac vice fees and certain certificates/overhead. |
Key Cases Cited
- Trustees of Local 138 Pension Trust Fund v. F.W. Honerkamp Co., 692 F.3d 127 (2d Cir. 2012) (discussing ERISA’s purposes and multiemployer plan context)
- Connolly v. Pension Benefit Guaranty Corp., 475 U.S. 211 (U.S. 1986) (explaining ERISA’s goal to protect vested pension benefits and PBGC role)
- R.A. Gray & Co. v. Pension Benefit Guaranty Corp., 467 U.S. 717 (U.S. 1984) (context for MPPAA enactment and risk of mass withdrawals)
- Concrete Pipe & Prods. of Cal. v. Constr. Laborers Pension Trust, 508 U.S. 602 (U.S. 1993) (multiemployer plan advantages and statutory background)
- Milwaukee Brewery Workers’ Pension Plan v. Joseph Schlitz Brewing Co., 513 U.S. 414 (U.S. 1995) (MPPAA changed incentives by imposing withdrawal charges)
- Greyhound Exhibitgroup, Inc. v. E.I. U.I. Realty Corp., 973 F.2d 155 (2d Cir. 1992) (default admissions: factual allegations deemed admitted but damages must be proved)
- Flaks v. Koegel, 504 F.2d 702 (2d Cir. 1974) (default judgment damages analysis; liquidated or mathematical amounts may be awarded without detailed proof)