L.I. Head Start Child Development Services, Inc. v. Economic Opportunity Commission of Nassau County, Inc.
820 F. Supp. 2d 410
E.D.N.Y2011Background
- This case follows a prior ERISA liability decision holding defendants violated fiduciary duties by underfunding the CAAIG Plan.
- Damages hearing determined four components: unpaid contributions, prejudgment interest, reasonable attorneys’ fees, and costs.
- Statutory period under ERISA §1113(1)(A) was fixed; claims found within six-year window (1995–2001 diversion period).
- Damage methodology relied on Macaluso (Rowley) and Sedgwick analyses; Rowley-based calculations were preferred.
- Plan reserves and funding decisions occurred from 1993–June 1998; plan terminated June 30, 1998; estate of Kearse asserted limited personal liability.
- Court reaffirmed law-of-the-case and rejected defendant arguments that no damages were due because funds were paid.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether plaintiffs proved damages for underfunding the Plan | Head Start (plaintiffs) | Dfts argue no damages; funds fully paid | Damages proven; unpaid contributions totaling $832,945 (1995–1998) established. |
| Whether damages are time-barred by statute of limitations | Plaintiffs rely on 1995–1998 period; prior years excluded | Pre-1995 evidence barred; later period relevant | Damages limited to 1995–June 30, 1998; prior years excluded. |
| Whether Kearse estate liability extends beyond 1996 | Kearse remained major fiduciary through 1998 | ERISA §409(b) limits liability after resignation | Kearse estate liable for breaches through June 1998; not limited to Oct 1996. |
| Whether ERISA remedies are available separate from Trust Agreement | ERISA and Trust Agreement both enforceable | Only Trust Agreement remedies apply if ERISA no minimums | ERISA remedies apply; noncompliance violative even if Trust complied. |
| Whether government grants shield damages | Grants not exclusive source; damages permit | Grants exclusive fund source; no damages | Government grants defense rejected; damages award permissible. |
Key Cases Cited
- L.I. Head Start Child Dev. Servs. Inc. v. HOC of Nassau County, Inc., 634 F.Supp.2d 290 (E.D.N.Y. 2009) (liability for underfunding; damages hearing; ERISA duties)
- L.I. Head Start Child Dev. Servs. Inc. v. EEOC of Nassau County, Inc., 558 F.Supp.2d 378 (E.D.N.Y. 2008) (statute-of-limitations; six-year window for fiduciary breach claims)
- Boyce v. Soundview Tech. Group, Inc., 464 F.3d 376 (2d Cir. 2006) (certainty of damages; feasible estimates acceptable)
- Contemporary Mission, Inc. v. Famous Music Corp., 557 F.2d 918 (2d Cir. 1977) (test for admissibility of prospective damages; reasonable estimate)