Trustees of Empire State Carpenters Annuity, Apprenticeship, Labor-Management Cooperation, Pension and Welfare Funds v. Rodrigue
2:13-cv-05760
| E.D.N.Y | Mar 29, 2017Background
- Plaintiffs (trustees of multiemployer benefit funds) audited MR Drywall's payroll for Jan 1, 2008–June 30, 2011 and concluded MR Drywall owed $438,717.24; an arbitrator awarded $641,009.32.
- MR Drywall had signed prior memoranda and a 2006 memorandum extending the Region 3 Master Agreement; an unsigned copy of the 2006–2011 CBA was admitted and Rodrigue testified he signed it for MR Drywall.
- The CBA incorporated funds’ policies, and the Funds adopted a Collection Policy (March 6, 2012) providing for audits, arbitration, liquidated damages, interest, audit costs, and attorneys’ fees for delinquent contributions.
- Plaintiffs moved to confirm the arbitration award and for summary judgment against Claude Rodrigue (doing business as MR Drywall); defendants objected, contesting arbitration consent, notice, audit reliability, and Rodrigue’s personal liability.
- Magistrate Judge Locke recommended confirming the award, finding the CBA (and thus the Collection Policy) binding on MR Drywall, that MR Drywall waived defenses by failing to appear at arbitration, and that Rodrigue is personally liable as sole proprietor; the district court adopted the R&R and granted leave to move for attorneys’ fees.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the arbitration award should be confirmed | Award is entitled to confirmation; arbitrator acted within authority and relied reasonably on audit and Collection Policy | Award should not be confirmed because Collection Policy was not agreed to, audit unreliable, and defendants lacked notice/consent | Confirmed: court found a "barely colorable justification" standard satisfied; arbitration not arbitrary and arbitrator had jurisdiction |
| Applicability of Collection Policy / consent to arbitration | CBA binds employers to Funds' agreements/policies; Collection Policy (signed by authorized trustees and employer associations) governs delinquency procedures including arbitration | Collection Policy not signed by MR Drywall, created after dispute, inconsistent with CBA (no arbitration/fees in CBA), and could not be unilaterally imposed | Collection Policy applies: CBA remained in effect year-to-year, incorporated Funds' policies, and employer association signatures made Collection Policy binding |
| Personal liability of Rodrigue | Rodrigue is sole proprietor; as MR Drywall was not a valid corporation, Rodrigue is personally liable for business debts including the award | Rodrigue lacked due process (no personal notice), MR Drywall was a de facto corporation or prior pleadings are judicial admissions, estoppel/laches/waiver apply | Rodrigue personally liable: no evidence of de facto corporation or attempt to incorporate; Rodrigue admitted ownership and managerial control; defenses rejected |
| Entitlement to attorneys' fees and costs | Collection Policy authorizes fees; refusal to comply with award justifies fee award on confirmation motion | Fees cannot be imposed because Collection Policy did not bind defendants or they had colorable basis to resist (business closed; wrong parties sued) | Leave granted to move for fees: Collection Policy and noncompliance support fee claim; defendants may contest reasonableness on fee motion |
Key Cases Cited
- D.H. Blair & Co., Inc. v. Gottdiener, 462 F.3d 95 (2d Cir. 2006) (confirmation of arbitration award is a summary proceeding and courts generally confirm absent vacatur grounds)
- Int'l Chem. Workers Union Local No. 227 v. BASF Wyandotte Corp., 774 F.2d 43 (2d Cir. 1985) (award confirmation may include attorneys' fees where challenger unjustifiably refuses to abide by arbitrator's decision)
- L-Tec Elecs. Corp. v. Cougar Elec. Org., Inc., 198 F.3d 85 (2d Cir. 1999) (reincorporation can affect individual liability; factual comparison regarding reinstatement of corporate status)
- Pizarro v. Bartlett, 776 F. Supp. 815 (S.D.N.Y. 1991) (district court conducts de novo review of contested portions of a magistrate judge's report)