Trustees of the Bricklayers Local 1 Connecticut Health Fund, et al., Plaintiffs, v. J.J. Concrete Floors, Inc., et al., Defendants. (2023)

REPORT AND RECOMMENDATION ON PLAINTIFFS’ MOTION FOR DEFAULT JUDGMENT [Doc. No. 17]

I. Introduction

This is an action by the International Union of Bricklayers and Allied Craftworkers, Local 1 Connecticut (“Union”) and the trustees of several Union benefit funds (“Trustees” and, together with Union, “Plaintiffs”) to recover delinquent contributions from J.J. Concrete Floors, Inc. (“JJ”) and S&S Concrete Pumping, LLC (“S&S”) under two collective bargaining agreements. (Compl., Doc. No. 1.) After the defendants failed to appear and respond to the complaint, the Clerk of the Court entered a default against them. (Doc. No. 9.) The Plaintiffs then moved for entry of a default judgment against JJ. (Mot. for Default J., Doc. No. 17) (“Motion” or “Mot.”). The presiding District Judge, the Honorable Charles S. Haight, Jr., referred the motion to me, Magistrate Judge Thomas O. Farrish. (Doc. No. 12.) For the reasons that follow, I recommend that a default judgment enter against JJ on Count One of the complaint in the amount of $425,097.84, plus pre-judgment interest of $121.98 for each day between October 15, 2021, and the date that judgment enters. I further recommend that the common law contract breach claim in Count Two be dismissed. My recommendation is set forth more fully in Section IV below.

II. Factual and Procedural Background

This case arises out of a pair of collective bargaining agreements between two construction industry groups on the one hand, and the Union on the other hand. (Ex. A to Mot., Doc. Nos. 17-3, 17-4.)¹ The two industry groups were the AGC/CCIA Building Contractors Labor Division of Connecticut, Inc., and the Mason Contractors Association of Connecticut. (Id.) The first of the two agreements ran from April 1, 2012, to December 31, 2018. (Doc. No. 17-3, at 33) (“First CBA”). The second became effective on January 1, 2019, and it is scheduled to expire on December 31, 2025. (Doc. No. 17-4, at 38) (“Second CBA”).²

JJ was a party to both agreements. On July 27, 2018, it executed a document entitled “Bricklayers Local 1 Agreement Acceptance of Agreement and Declarations of Trust,” under which it bound itself “to all obligations of an Employer as set forth in the” First CBA. (Doc. No. 17-3, at 50.) JJ also bound itself to “any successor agreements” that the two industry groups might reach with the Union, and thus it became a party to the Second CBA as well. (Id.) (stating that JJ “accept[s]” “any successor agreement between the parties,” and “becomes one of the parties thereto and agrees to abide by all its terms and conditions”).

The agreements required employers like JJ to contribute to several Union benefit funds. (Id. at 26-30; see also Doc. No. 17-4, at 30-34.) Under the agreements, participating employers promised to file monthly reports, listing the Union members who had worked for them in the preceding month and “the number of hours worked by each” member. (Doc. No. 17-3, at 27; Doc. No. 17-4, at 31.) For each hour worked, the employer was required to contribute to the benefit funds “in the amounts specified in Schedule A.” (Doc. No. 17-3, at 26; Doc. No. 17-3, at 30.) Schedule A then listed the hourly amount for each fund, which varied from year to year over the life of the agreements – for example, the hourly contribution due to the Union Health Fund in 2012 was $10.35, increasing to $10.89 in 2018; the hourly contribution to the Union Pension Fund in 2012 was $6.22, rising to $7.87 in 2018; and so forth. (Compare Doc. No. 17-3, at 34, with id. at 51.) The Plaintiffs characterize some of the funds supported by these arrangements as “International Funds,” and others as “Local Funds.” (See Exs. G & H to Mot., Doc. Nos. 17-10, 17-11.)

The agreements required employers to make their contributions monthly (Doc. No. 17-3, at 27; Doc. No. 17-4, at 31), and they explained the potential consequences of failing to do so. If a participating employer did not “make the required contributions to any Fund by the end of the month following the month in which the work was performed,” it would “be considered a delinquent Employer for that Fund.” (Id.) Delinquent employers could then be charged eighteen percent interest on unpaid contributions.³ (See id.) (“If so determined by the Trustees of any Fund, delinquent employers shall pay to each Fund for which it is a delinquent Employer interest charges at the rate of one and one-half percent computed on the entire sum owed each Fund for each thirty (30) day period or fraction thereof that it is a delinquent Employer.”). Delinquents could also be charged “reasonable attorney's fees, court costs, audit fees and other expenses incurred incidental to collection of contributions due the Fund.” (Doc. No. 17-3, at 28; Doc. No. 17-4, at 32.)

According to the Plaintiffs, JJ did not pay its required contributions with respect to the Union members it hired from August 2018 to December 2020. (Compl., Doc. No. 1, ¶ 9; see also Ex. G to Mot., Doc. No. 17-10, ¶ 5 (Decl. of R. Poulaino).) The Plaintiffs audited JJ's books, and “[t]hese audits revealed work performed in covered employment under the Collective Bargaining Agreement that was not properly reported to the Funds during the time period of August 2018 through September 2020.” (Id. ¶ 6.) After JJ submitted reports for October through December 2020, the Plaintiffs’ auditors concluded that JJ had paid “some, but not all, benefits owed” for this period as well. (Id. ¶ 8.) The Plaintiffs therefore filed this lawsuit on December 4, 2020. (Compl., Doc. No. 1.)

In their lawsuit, the Plaintiffs sued S&S as well as JJ. (Id. ¶¶ 20-26.) They alleged “[u]pon information and belief” that JJ and S&S “share an alter ego and/or single employer and/or double breasted relationship,” “based upon their common management, centralized control of labor relations, common ownership, common address of business, and common employees.” (Id. ¶ 21.) They asserted that this relationship bound S&S “to the terms and conditions of the Collective Bargaining Agreement between the Union and” JJ, and rendered S&S equally liable for “benefit payments on all employees performing work covered by the Collective Bargaining Agreement.” (Id. ¶ 22.)

The Plaintiffs’ complaint asserted three causes of action. In Count One, they alleged that JJ's “failure to pay the amounts owed to the Funds and the Union is a violation of” the Employee Retirement Income Security Act (“ERISA”), 29 U.S.C. § 1145, enforceable through 29 U.S.C. § 1132(g)(2). (Id. ¶¶ 13, 15.) In Count Two, they alleged a common law claim for contract breach – that is, breach of the two collective bargaining agreements. (Id. ¶¶ 16-19.) And in Count Three, they asserted a claim for “alter ego/single employer liability” against S&S. (Id. ¶¶ 20-26.)

The Plaintiffs then arranged for the complaint to be served on both JJ and S&S. State Marshal David J. Salafia served JJ's agent for service of process, Lizabett Mercado, in hand on January 25, 2021. (Return of Serv., Doc. No. 6, at 3; see also Annual Rpt. for J.J. Concrete Floors, Inc., Nov. 13, 2020, available at https://portal.ct.gov/SOTS (identifying Lizabett Mercado as corporation's agent for service of process as of the date of the report)); Found. Capital Res., Inc. v. Prayer Tabernacle Church of Love, Inc., No. 3:17-cv-135 (JAM) (TOF), 2021 WL 3863428, at *7 n.2 (D. Conn. Apr. 30, 2021) (“The Court may take judicial notice of incorporation records from the Secretary of the State's ‘C.O.N.C.O.R.D.’ website.”). Marshal Salafia also served S&S on January 20, 2021 ⁴ by leaving the complaint at the company's agent's abode. (Return of Serv., Doc. No. 6, at 1 (stating that marshal left the complaint at Jose Sandoval's abode in Meriden); Annual Rpt. for S&S Concrete Pumping LLC, available at https://portal.ct.gov/SOTS (identifying Jose Sandoval as agent for service of process and listing the Meriden address as his residence address)); Conn. Gen. Stat. § 34-243r (“A limited liability company ․ may be served with any process” by “leaving a true and attested copy with such company's registered agent, or at his or her usual place of abode in this state.”).

The Federal Rules of Civil Procedure required JJ and S&S to answer or respond to the complaint within twenty-one days of service. Fed. R. Civ. P. 12(a)(1)(A)(i) (“In [g]eneral ․ [a] defendant must serve an answer ․ within 21 days after being served with the summons and complaint.”) When they failed to do so, the Plaintiffs filed a motion for entry of default pursuant to Rule 55(a). (Mot. for Default Entry, Doc. No. 8.) The Clerk of the Court entered the defendants’ default on September 16, 2021. (Doc. No. 9.) In the same order, the Plaintiffs were directed to file any motions for default judgment by October 16, 2021, “or this action will be dismissed ․ pursuant to” Rule 41(a). (Id.)

On October 15, 2021, the Plaintiffs moved for a default judgment against JJ only. (Doc. No. 10.) Judge Haight referred the motion to me. (Doc. No. 11.) After an initial scheduling conference (Doc. No. 14), I held a hearing at which the Plaintiffs presented no witnesses but instead indicated that they wished to proceed on their affidavits and other documentary evidence. (Doc. No. 16.) I noted some deficiencies in the submissions (see, e.g., Ex. A to initial Mot. for Default J., Doc. No. 10-3) (copy of First CBA, omitting JJ's participation slip), and Plaintiffs’ counsel requested an opportunity to correct them.

The Plaintiffs then filed a second motion for default judgment with additional, supporting documentation. (Mot., Doc. No. 17.) The second motion was likewise directed to JJ only, and did not encompass the claims against S&S. (Id.) (moving the Court “to enter judgment by default against” JJ “as to liability on Counts I and II”). Judge Haight denied the first motion as moot (Doc. No. 20), and the second is now ripe for decision.

III. Discussion

A. Legal Standards for Granting Default Judgments

When a defendant defaults, its liability is ordinarily deemed resolved and the Court proceeds to the question of damages. “[A] party's default is deemed to constitute a concession of all well pleaded allegations of liability[.]” Greyhound Exhibitgroup, Inc. v. E.L.U.L. Realty Corp., 973 F.2d 155, 158 (2d Cir. 1992). “A default also effectively constitutes an admission that damages were proximately caused by the defaulting party's conduct; that is, the acts pleaded in a complaint violated the laws upon which a claim is based and caused injuries as alleged.” Santillan v. Henao, 822 F. Supp. 2d 284, 290 (E.D.N.Y. 2011) (citing Greyhound Exhibitgroup, 973 F.2d at 159). A default is not, however, “considered an admission” of the amount of the plaintiff's damages. Greyhound Exhibitgroup, 973 F.2d at 158 (citing Flaks v. Koegel, 504 F.2d 702, 707 (2d Cir. 1974) and Fed. R. Civ. P. 8(d)). Instead, damages are calculated in subsequent proceedings. Cement & Concrete Workers Dist. Council Welfare Fund v. Metro. Found. Contractors Inc., 699 F.3d 230, 234 (2d Cir. 2012).

District courts have discretion in choosing a procedure for quantifying damages, provided that the chosen procedure is sufficient to ensure that the award has an evidentiary basis, and further provided that the defendant is given an opportunity to oppose the plaintiff's claims. “Generally, ‘damages, which are neither susceptible of mathematical computation nor liquidated as of the default, usually must be established by the plaintiff in an evidentiary proceeding.’ ” Andrade v. Kwon, No. 3:08-cv-479 (SRU), 2012 WL 3059616, at *3 (D. Conn. Mar. 26, 2012) (quoting Greyhound Exhibitgroup, 973 F.2d at 158). “A court may forgo an evidentiary hearing,” however, if it otherwise “ ‘ensures that there is a basis for the damages specified.’ ” Id. (quoting Fustok v. ContiCommodity Servs., Inc., 873 F.2d 38, 40 (2d Cir. 1989)) (brackets omitted). It may, for example, “rel[y] upon detailed affidavits and documentary evidence” when the damages are “capable of mathematical calculation.” See Fustok, 873 F.2d at 40. In this case, the damages are indeed capable of such calculation, so the Plaintiffs have elected to proceed on the strength of their affidavits and other documentary submissions. (See Mot. & Exs. A-K thereto.)

B. Legal Sufficiency of the Plaintiffs’ Claims

“Because default is only an admission of well-pleaded allegations, it ‘is not treated as an absolute confession by the defendant of his liability and of the plaintiff's right to recover.’ ” Trs. of the I.B.E.W. v. Norland Elec., Inc., No. 3:11-cv-709 (CSH), 2015 U.S. Dist. LEXIS 193752, at *5 (D. Conn. Feb. 19, 2015) (“Norland I”) (quoting Evanauskas v. Strumpf, No. 3:00-cv-1106 (JCH), 2001 WL 777477, at *1 (D. Conn. June 27, 2001)). “Therefore, before judgment can be entered, the court must determine whether plaintiff's factual allegations are sufficient to state a claim for relief on each of the causes of action for which the plaintiff seeks judgment by default.” Evanauskas, 2001 WL 777477, at *1 (citing Au Bon Pain Corp. v. Artect, Inc., 653 F.2d 61, 65 (2d Cir. 1981)). Put differently, “[w]hile a default constitutes an admission of all the facts ‘well pleaded’ in the complaint, it does not admit any conclusions of law alleged therein, nor establish the legal sufficiency of any cause of action.” In re Indus. Diamonds Antitrust Litig., 119 F. Supp. 2d 418, 420 (S.D.N.Y. 2000) (citing 10A Charles Alan Wright et al., Fed. Prac. & Procedure, Civil § 2688 (3d ed. 1988)); accord Norland I, 2015 U.S. Dist. LEXIS 193752, at *5-6 (citing cases). Thus, before proceeding to damages, I must consider whether the Plaintiffs have pled legally sufficient causes of action in their complaint.

1. Count One – Delinquent Contributions Under ERISA

In Count One, the Plaintiffs allege that JJ violated Section 515 of ERISA, 29 U.S.C. § 1145, by “fail[ing] to pay the amounts owed to the Funds and the Union” under the two collective bargaining agreements. (Compl., Doc. No. 1, ¶ 13.) Section 515 provides that “[e]very employer who is obligated to make contributions ․ under the terms of a collectively bargained agreement shall, to the extent not inconsistent with law, make such contributions in accordance with the terms and conditions of such ․ agreement.” 29 U.S.C. § 1145. ERISA Section 502 provides that, in actions to enforce Section 515, “the court shall award” unpaid contributions, interest or liquidated damages, reasonable attorney's fees, and costs. 29 U.S.C. § 1132(g)(2)(A)-(E).

In this case, the Plaintiffs alleged that JJ “entered into a Collective Bargaining Agreement with the Union on July 27, 2018 establishing the terms and conditions of employment for bricklayers employed by [JJ].” (Compl., Doc. No. 1, ¶ 7.) They further alleged that among these terms and conditions was an obligation “to make contributions to the Funds for each hour worked by its covered employees at the rate and in the manner specified in the Collective Bargaining Agreement” and related trust agreements. (Id. ¶ 10.) And they alleged that JJ “failed to submit reports and payment as required by the Collective Bargaining Agreement.” (Id. ¶ 12.) These allegations state a legally sufficient claim under 29 U.S.C. §§ 1145 and 1132(g). Norland I, 2015 U.S. Dist. LEXIS 193752, at *9-10 (holding that “Plaintiffs have stated a valid claim for relief under Section 515 of ERISA” because they “alleged ․ the existence of the CBA between the parties and the Defendants’ failure to make requisite contributions ․ in accordance with the terms of the plan”).

2. Count Two – Breach of the Collective Bargaining Agreements

In Count Two, the Plaintiffs alleged a common law contract claim for breach of the collective bargaining agreements. Incorporating paragraph 10 from Count One, Count Two alleges that JJ was “required to make contributions to the Funds for each hour worked by its covered employees at the rate and in the manner specified in the Collective Bargaining Agreement.” (Compl., Doc. No. 1, at Count One ¶ 10, Count Two ¶ 16.) The second count adds that JJ's “failure to pay the amounts owed to the Funds and the Union is a breach of the Collective Bargaining Agreement.” (Id. ¶ 17.)

“A common law ‘breach of contract’ claim is, however, preempted by ERISA, which provides for an exclusive civil enforcement scheme.” Norland I, 2015 U.S. Dist. LEXIS 19352, at *10-11 (citing Pilot Life Ins. Co. v. Dedeaux, 481 U.S. 41, 43, 47-48, 56-57 (1987)). ERISA Section 514 provides that the enforcement scheme “supersede[s] any and all State laws insofar as they may ․ relate to any employee benefit plan ․ not exempt under this title.” 29 U.S.C. § 1144(a). Thus, “a party may not enforce an obligation that arises under ERISA through imposition of a common law contract claim, for such a common law claim ‘relates to’ an employee benefit plan.” Plumbing Indus. Bd., Plumbing Local Union No. 1 v. L & L Masons, Inc., 927 F. Supp. 645, 649 (S.D.N.Y. 1996) (citing Pilot Life, 481 U.S. at 41, 47-48); see also Bricklayers & Allied Craftworkers Local No. 3 v. Precision Concrete & Masonry, Inc., No. 16-cv-6035 (FPG), 2018 WL 4090331, at *4 (W.D.N.Y. Aug. 28, 2018) (holding that common law claim for breach of contract was preempted by ERISA and, therefore, “invalid” for consideration on a motion for default judgment); Norland I, 2015 U.S. Dist. LEXIS 193752, at *12-13 (dismissing common law claim for breach of contract on ERISA preemption grounds). The common law contract breach claim in Count Two is therefore legally insufficient, and in Section IV I will recommend that it be dismissed.

C. Damages

When a plaintiff pleads a legally sufficient claim for violations of ERISA Section 515 and a legally insufficient common law contract claim, upon a properly presented motion for default judgment, courts typically dismiss the latter claim and proceed to damages on the former. E.g., Norland I, 2015 U.S. Dist. LEXIS 193752, at *12-13; see also Trs. of Drywall Tapers and Pointers Local Union 1974 Benefit Funds v. Plus K Constr., Inc., No. 20-cv-1643 (AJN), 2021 WL 1199566, at *4-5 (S.D.N.Y. Mar. 30, 2021). In actions under Section 515, “the court shall award the plan unpaid contributions, interest on the unpaid contributions, an amount equal to the greater of interest on the unpaid contributions or liquidated damages under the plan (not to exceed 20% of the unpaid contributions), reasonable attorney's fees and costs, and ‘such other legal or equitable relief as the court deems appropriate.’ ” Norland I, 2015 U.S. Dist. LEXIS 193752, at *13. I will address each of these elements of damage in turn.

1. Unpaid contributions

ERISA Section 502 provides that, in actions to recover delinquent contributions under Section 515, “the court shall award the plan ․ the unpaid contributions.” 29 U.S.C. § 1132(g)(2)(A). “Courts have determined that audit reports represent sufficient proof of the amount owed in unpaid fringe benefit contributions.” Trs. of the Drywall Tapers and Pointers Local Union No. 1974 Benefit Funds, 2021 WL 1199566, at *5 (citing New York City Dist. Council of Carpenters v. Rock-It Contracting, No. 09-CV_9479 (JGK) (AJP), 2010 WL 1140720, at *2 (S.D.N.Y. Mar. 26, 2010), report and recommendation adopted, 2010 WL 1558568 (S.D.N.Y. Apr. 19, 2010)).

In this case, the Plaintiffs claim unpaid contributions totaling $310,868.14. (Mot., Doc. No. 17, at ¶ 7.) They explain that, for the August 2018-September 2020 period, audits revealed shortfalls of $245,026.94 for the International Funds and $96,731.90 for the Local Funds. (Id. at ¶ 6.) And they note that the records JJ submitted in late 2020 revealed additional shortfalls for the October 2020-December 2020 period. This second group of shortfalls included $1,103.04 for the International Funds and $428.16 for the Local Funds. (Id.) Finally, the Plaintiffs say that JJ “has been granted a credit in the amount of $32,421.90 by the Local Funds.” (Id. at ¶ 7.) Adding the four deficits and deducting the one credit, they arrive at a net figure of $310,868.14. (Id.)

After a thorough review of the record, I conclude that the Plaintiffs have properly supported these claims. They have submitted three audit reports – one for the Local Funds for the August 2018-September 2020 period (Ex. D to Mot., Doc. No. 17-7); a second for the International Funds for the same period (Ex. E to Mot., Doc. No. 17-8); and a third for both the Local and International Funds for October-December 2020. (Ex. F to Mot., Doc. No. 17-9; see also Decl. of D. Stupar, Ex. H to Mot. for Default J., Doc. No. 17-11, ¶¶ 8-9 (describing audit and audit reports).) As reflected in each report, the auditor's analysis began with a list of the employees hired by JJ and a statement of the number of hours they worked in each month. (Ex. D to Mot., Doc. No. 17-7, at 5-8, 13-16; Ex. E to Mot., Doc. No. 17-8, at 4, 8, 10, 18, 22, 24; Ex. F to Mot., Doc. No. 17-9, at 6, 10.) The auditor then multiplied the number of hours times the per-hour contribution rate applicable to each Fund in the corresponding time period. (Ex. D to Mot., Doc. No. 17-7, at 5-8, 13-16; Ex. E to Mot., Doc. No. 17-8, at 5, 7, 9, 11, 19, 21, 23, 25; Ex. F to Mot., Doc. No. 17-9, at 6, 11.) The per-hour contribution rates used by the auditor are all supported by the copies of the collective bargaining agreements submitted as Exhibit A. For example, the auditor used a rate of $11.03 per hour for the Local Health Fund in the first quarter of 2020 (Ex. D. to Mot., Doc. No. 17-7, at 16), and a figure of $5.20 per hour for the International Pension Fund (Ex. E to Mot., Doc. No. 17-8, at 25), and both figures are confirmed by the Wage & Benefit Rate Sheet that forms a part of the Second CBA. (Ex. A to Mot., Doc. No. 17-4, at 60.) Finally, each audit report contains summary sheets with the product of the hours-times-rate calculation for each Fund. (Ex. D to Mot., Doc. No. 17-7, at 3, 11; Ex. E to Mot., Doc. No. 17-8, at 12-14, 26-28; Ex. F to Mot., Doc. No. 17-9, at 4-6, 12-13.) These reports confirm the sums claimed by the Plaintiffs, and accordingly I recommend that the Court include in its default judgment an award of $310,868.14 for unpaid contributions under 29 U.S.C. § 1132(g)(2)(A).

2. Interest

ERISA Section 502 provides that, in actions to recover unpaid contributions, “the court shall award the plan ․ interest on” those contributions. 29 U.S.C. § 1132(g)(2)(B). The statute adds that, “for purposes of this [provision], interest on unpaid contributions shall be determined by using the rate provided under the plan, or, if none, the rate prescribed under section 6621 of Title 26.” 29 U.S.C. § 1132(g); see also Local 1922 Pension Fund v. Broadway Elec. Supply Co., Inc., No. CV-19-2344 (JS) (AKT), 2020 WL 1931635, at *10 (E.D.N.Y. Mar. 18, 2020). “Employing the applicable rate, such interest accrues (1) during the period of the delinquency; (2) from the date of the commencement of the action through the date of judgment; and (3) from the date of judgment until the entire amount is paid.” Trs. of the I.B.E.W. Local Union No. 488 Pension Fund v. Norland Elec., Inc., No. 3:11-cv-709 (CSH), 2015 WL 3581011, at *6 (D. Conn. June 5, 2015) (“Norland II”) (citing Finkel v. Millennium Fire Servs., LLC, No. 09-CV40 (RRM), 2011 WL 866995, at *10 (E.D.N.Y. Feb. 16, 2011)).

As noted in Section II above, both collective bargaining agreements allow the Plaintiffs to recover interest at a rate of eighteen percent. (Doc. No. 17-3, at 27; Doc. No. 17-4, at 31.) Yet as the Plaintiffs’ declarants explain, the Trustees of each Fund adopted collection procedures that contemplated lower rates. (Decl. of D. Stupar, Ex. H to Mot., Doc. No. 17-11, ¶ 4; Decl. of R. Poulaino, Ex. G to Mot., Doc. No. 17-10, ¶ 10.) In the case of the International Funds, the procedures authorized a rate of fifteen percent. (Ex. C to Mot., Doc. No. 17-6, at 5 § IV.A) (stating that, in collection actions, “[a]ny such lawsuit shall seek recovery of the delinquent contributions, plus interest calculated at the rate of 15% per annum from the Due Date of each monthly payment[.]”). And in the case of the Local Funds, the “Collection, Delinquency and Audit Policy” provided that “[t]he established rate of interest to be paid by employers on delinquent contributions shall be 12% per annum[.]” (Ex. B to Mot., Doc. No. 19, at 3 § D.6.)

Using these rates, the Plaintiffs have calculated their interest claim at $55,759.00. (Ex. I to Mot., Doc. No. 17-12.) This figure represents the sum of the International Funds’ $40,645.17 claim, and the Local Funds’ $15,113.83 claim. (Id.) Using the monthly balances and due dates listed in their Exhibit I, and applying the formula Interest = ((Principal × Rate) × (Days Late/365)), I have confirmed the correctness of the Plaintiffs’ math. (Id.) I also note that the Local Funds have been conservative in applying the $32,421.90 credit to the oldest balances. (See id. at 1.) Had they applied the credit to the newest balances, their interest claim would have been higher. (See id. at 1.)

Yet the Plaintiffs only calculated their interest claim through the date of their first, now-mooted motion. (See id.) (calculating interest through the October 15, 2021, date of the first default judgment motion at Doc. No. 10). In the case of the International Funds, interest has been accumulating since then at a rate of $100.70 per day.⁵ And in the case of the Local Funds, the daily increase is $21.28.⁶ I therefore recommend that the Court include in its default judgment an interest award of $55,759.00 – the sum of the Plaintiff's interest calculations for the International Funds and the Local Funds through October 15, 2021 – plus $121.98 ($100.70 + $21.28) per day from that date to the date of the judgment.

3. Liquidated damages

Fiduciaries of ERISA plans may recover more than just delinquent contributions under ERISA Section 502(g)(2)(A) and interest under Section 502(g)(2)(B). They may also recover “an amount equal to the greater of ․ interest on the unpaid contributions, or ․ liquidated damages provided for under the plan in an amount not in excess of 20 percent” of the unpaid contributions. 29 U.S.C. § 1132(g)(2)(C). The defaulting employer's liability under Section 502(g)(2)(C) is in addition to, and not in lieu of, an award of interest under Section 502(g)(2)(B). Norland II, 2015 WL 3581011, at *6 (“[T]he amount of interest to be awarded under 1132(g)(2)(B) is in addition to the amount of liquidated damages described in § 1132(g)(2)(C) as ‘the greater of’ interest or liquidated damages.”) (emphasis in original).

In Norland II, the plaintiffs initially invoked the second of Section 502(g)(2)(C)’s two options – that is, they sought an award of twenty percent liquidated damages rather than “double interest.” Id. at *8. Noting, however, that the “statute mandates ․ the ‘greater’ of the two amounts,” Judge Haight considered himself obliged to “compare the amount of interest owed with respect to unpaid contributions under § 1132(g)(2)(B) with 20% liquidated damages.” Id. at *8-9. Calculating that “the total amount of interest on the unpaid contribution ․ far exceeds the amount of liquidated damages provided for under the plan,” he concluded that he “must award Plaintiffs ․ interest pursuant to § 1132(g)(2)(C)(i) – ‘double interest’ – instead of liquidated damages under § 1132(g)(2)(C)(ii).” Id. at *9.

“Double interest” is greater than twenty percent liquidated damages in this case as well. As noted above, the Plaintiffs’ interest claims stood at $55,759.00 as of October 15, 2021. (See discussion, Section III.C.2 supra.) Since then, additional interest has been accumulating at a rate of $121.98 per day. There have been 514 days since the Plaintiffs’ calculation, and accordingly their interest claim would be $118,456.72 ⁷ if judgment entered on the date of this report and recommendation. This sum greatly exceeds the $62,173.63 they would receive under Section 502(g)(2)(C)(ii)’s twenty percent liquidated damages option.⁸ I therefore recommend that their default judgment include an award of “double interest” under 29 U.S.C. § 1132(g)(2)(C)(i).

4. Attorney's fees

The Plaintiffs seek $2,062.50 in attorneys’ fees. (Mot. ¶ 11.) In support of this request, they submitted an affidavit from their attorney, Alexander S. Lovejoy. (Aff. of A. Lovejoy, Ex. J to Mot., Doc. No. 17-13, ¶ 5.) In his affidavit, Attorney Lovejoy explains that his firm's practice is “limited primarily to the representation of multi-employer, Taft-Hartley Funds and labor law.” (Id. ¶ 1.) He adds that he has “been employed by the firm for over four (4) years,” and has “devoted [his] practice almost exclusively to the representation of Taft-Hartley and ERISA Funds and labor unions such as the Plaintiffs.” (Id.) He says that his firm charges $250.00 per hour “for attorney time with clients, the Funds, and for the performance of this type of legal representation.” (Id. ¶ 4.) He adds that the firm “expended 8.25 hours ․ on behalf of Plaintiffs” in this case (id. ¶ 3), and he supported this claim with time records that appear to have been contemporaneously maintained. (Ex. K to Mot., Doc. No. 17-14.)

ERISA authorizes district courts to award successful plaintiffs “reasonable attorney's fees.” 29 U.S.C. § 1132(g)(2)(D). Where, as here, the plaintiff's suit is an enforcement action to recover unpaid contributions and accrued interest under Section 515, “the statute renders fees and costs mandatory.” Labarbera v. Clestra Hauserman, Inc., 369 F.3d 224, 226 (2d Cir. 2004) (citing 29 U.S.C. § 1132(g)(2)). To take advantage of this rule, however, the requested fees must be both reasonable and properly documented. See, e.g., Trs. of the Pavers & Rd. Builders Dist. Council Welfare, Pension, Annuity & Apprenticeship, Skill Improvement & Safety Funds v. Shelbourne Constr. Corp., No. 19-CV-2312 (ARR) (PK), 2020 WL 1668041, at *8 (E.D.N.Y. Mar. 5, 2020) (“The attorneys’ fees and costs awarded to Plaintiffs by the Court must be ‘reasonable.’ ”); Norland I, 2015 U.S. Dist. LEXIS 193752, at *19 (disallowing claim for attorney's fees because the record contained “an insufficient factual basis upon which to determine whether the proposed attorneys’ fees in the amount of $2,875.00 are ‘reasonable’ ”).

As a general matter, the starting point in assessing the reasonableness of a fee claim is the “lodestar.” See Millea v. Metro-North R.R. Co., 658 F.3d 154, 166 (2d Cir. 2011)) (stating that the lodestar “creates a presumptively reasonable fee”) (citation and quotation marks omitted). The lodestar is “the product of a reasonable hourly rate and the reasonable number of hours required by the case.” Id. at 166. While the Second Circuit has suggested that the term is outdated, see Arbor Hill Concerned Citizens Neighborhood Ass'n v. Cnty. of Albany, 522 F.3d 182, 190 (2d Cir. 2008) (“The meaning of the term ‘lodestar’ has shifted over time, and its value as a metaphor has deteriorated to the point of unhelpfulness.”), it has also held that district courts must calculate the figure. Ortiz v. City of N.Y., 843 F. App'x 355, 358 (2d Cir. 2021) (summary order) (“We have explained that district courts evaluating a request for attorneys’ fees must conduct a lodestar analysis, which calculates reasonable attorneys’ fees by multiplying the reasonable hours expended on the action by a reasonable hourly rate[.]”) (citation and quotation marks omitted). This calculation “results in a presumptively reasonable fee,” id., which may then be adjusted up or down depending on several factors, including “the degree of success obtained.” Parris v. Pappas, 844 F. Supp. 2d 262, 270 (D. Conn. 2012) (citing Farrar v. Hobby, 506 U.S. 103, 114 (1992)). Thus, the process of determining a reasonable fee “is really a four-step one, as the court must: (1) determine the reasonable hourly rate; (2) determine the number of hours reasonably expended; (3) multiply the two to calculate the presumptively reasonable fee; and (4) make any appropriate adjustments to arrive at the final fee award.” Id. at 266 (quoting Adorno v. Port Auth. of N.Y & N.J., 685 F. Supp. 2d 507, 511 (S.D.N.Y. 2010)).

In performing the first step – that is, in determining the reasonable hourly rate – the Second Circuit has directed district courts to “bear in mind all of the case-specific variables that [it] and other courts have identified as relevant to the reasonableness of an attorney's fees.” Arbor Hill, 522 F.3d at 190 (emphasis in original). “The reasonable hourly rate is the rate a paying client would be willing to pay,” and in determining that rate, district courts should consider (among other things) the factors identified in Johnson v. Georgia Highway Express, Inc., 488 F.2d 714 (5th Cir. 1974).⁹ Id. Courts should also “bear in mind that a reasonable, paying client wishes to spend the minimum necessary to litigate the case effectively.” Id. A reasonable, paying client also “presum[ably] ․ would in most cases hire counsel from within his district, or at least counsel whose rates are consistent with those charged locally.” Id. Accordingly, “[i]n determining what constitutes a reasonable hourly rate, courts in this Circuit generally adhere to the forum rule, which states that a district court should generally use the prevailing hourly rates in the district where it sits.” Kindle v. Dejana, 308 F. Supp. 3d 698, 730 (E.D.N.Y. 2018) (citing, inter alia, Restivo v. Hesseman, 846 F.3d 547, 590 (2d Cir. 2017)).

In performing the second step – the determination of the reasonable number of hours required by the case – courts consider, among other things, the quality of the representation and the complexity of the work. “In determining whether an excessive amount of time was expended on the matter, the Court may consider, inter alia, the nature and quality of the work submitted by counsel in connection with the litigation, and whether the work was complicated or straightforward.” Yuajian Lin v. La Vie en Schezuan Rest. Corp., No. 15-cv-09507 (DF), 2020 WL 1819941, at *2 (S.D.N.Y. Apr. 9, 2020); see also Wei v. Sichuan Pepper, Inc., No. 3:19-cv-00525 (JBA) (TOF), 2022 WL 385226, at *16 (D. Conn. Jan. 17, 2022), report and recommendation adopted, 2022 WL 382019 (D. Conn. Feb. 7, 2022) (same). Stated another way, “[i]n assessing whether the hours worked were reasonable, courts ․ often take into account the straightforward nature of the work performed and the relative simplicity of the issues involved.” Castellanos v. Mid Bronx Cmty. Housing Mgmt. Corp., No. 13-Civ.-3061 (JGK), 2014 WL 2624759, at *6 (S.D.N.Y. June 10, 2014) (citation and brackets omitted).

In this case, I conclude that the claimed hourly rate of $250 is reasonable. “[C]ase precedent in the Second Circuit and this District reflects that [a $250] rate falls within the range of hourly fees deemed reasonable in ERISA cases.” Norland II, 2015 WL 3581011, at *5 (citing cases). Indeed, over fifteen years ago the Second Circuit declined an invitation to hold that an hourly rate of $325 was unreasonable in the context of ERISA benefits litigation. McDonald ex rel. Pendergast v. Pension Plan of the NHSA-ILA Pension Tr. Fund, 450 F.3d 91, 97-98 (2d Cir. 2006). It is therefore unsurprising that courts in this district have approved Attorney Lovejoy's firm's $250 hourly rate on more than one occasion. E.g., Norland II, 2015 WL 3581011, at *4-5; Trustees of Local 478 Annuity Fund v. J.A.M. Constr. Co., LLC, No. 3:18-cv-1115 (JBA) (RMS), 2019 WL 2191796, at *4 (D. Conn. Jan. 11, 2019), report and recommendation adopted, 2019 WL 2188912 (D. Conn. Mar. 6, 2019). Considering all the Johnson factors, including the firm's experience in ERISA matters and awards in similar cases, I conclude that a rate of $250 per hour is merited in this case as well.

I also conclude that the number of hours claimed is reasonable. Attorney Lovejoy drafted a thorough complaint and prepared a detailed motion for default judgment – supported by multiple exhibits and two witness declarations – in only 8.25 hours. (Ex. K to Mot. for Default J., Doc. No. 17-14.) To be sure, there was nothing especially complex about either submission, and the initial motion for default judgment did contain some deficiencies that needed to be corrected. (See discussion, Section II supra.) But Attorney Lovejoy has not included the time he spent making those corrections in his fee application. In fact, his application includes no claim for any work done after October 15, 2021, and thus does not charge for his appearance at the scheduling conference; his drafting and submission of the second motion for default judgment and supporting exhibits; or his appearance at the ultimate hearing. (Exs. J and K to Mot., Doc. Nos. 17-13, 17-14.) In short, both elements of the lodestar analysis are reasonable, and I therefore conclude that their product ($250/hour × 8.25 hours = $2,062.5) is reasonable as well.

“Of course, the product of a reasonable hourly rate and a reasonable number of hours establishes only a ‘presumptively reasonable’ fee.” Found. Capital Res., Inc. v. Udo-Okon, No. 3:21-cv-1278 (JAM) (TOF), 2022 WL 17413950, at *7 (D. Conn. Dec. 5, 2022). “[I]t is still within the court's discretion to adjust the amount upward or downward based on case-specific factors.” Id. (quoting Tyco Healthcare Grp. LP v. Ethicon Endo-Surgery, Inc., No. 3:10-cv-60 (JBA), 2012 WL 4092515, at *1 (D. Conn. Sept. 17, 2012). Here, however, I observe no reason to make any adjustments to the presumptively reasonable fee. I recommend that the Plaintiffs’ default judgment include an award of attorneys’ fees in the amount of $2,062.50.

5. Costs

The Plaintiffs also seek an award of $649.20 in costs. (Mot. ¶ 11.) “In a successful action under ERISA to recover delinquent contributions, courts award ‘reasonable and identifiable out-of-pocket disbursements ordinarily charged to clients.’ ” Trs. of the Plumbers Local Union No. 1 Welfare Fund v. Temperini Mech., Inc., No. 18-cv-2596 (AMD) (LB), 2018 WL 8452493, at *8 (E.D.N.Y. Dec. 28, 2018), report and recommendation adopted, 2019 WL 2301613 (quoting Trs. of the Rd. Carriers Local 707 Welfare Fund v. Goldberg, No. 08-CV-0884, 2009 WL 3497493, at *10 (E.D.N.Y. Oct. 28, 2009)). Here, the Plaintiffs’ counsel paid the $402.00 court filing fee, along with $247.20 in service of process fees. (Ex. J to Mot., ¶ 6; Ex. K to Mot., at 1.) I find these costs reasonable, and I recommend that they be included in the Plaintiffs’ default judgment.

6. Audit costs

Finally, the Plaintiffs seek an award of $10,752.52 in audit fees. (Mot. ¶ 9.) “Requests for audit fees are generally determined by utilizing the same standards the court applies in awarding attorneys’ fees.” Int'l Ass'n of Sheet Metal, Air, Rail & Transp. Workers, Local Union No. 71 v. Lovejoy Metals, Inc., 495 F. Supp. 3d 174, 193 (W.D.N.Y. 2020) (citation and quotation marks omitted). “A party requesting audit fees must provide sufficient information to allow a court to determine the reasonableness of the fees requested.” Id. (quoting Bd. of Trs. of the Laborers Pension Fund v. Casale Constr. Servs., No. 1:18-cv-00583 (MAD/DJS), 2018 WL 4935731, at *3 (N.D.N.Y. Oct. 11, 2018)). When a request for audit fees is unaccompanied by information on “the number of hours expended by the auditor, the hourly rates(s), or what work was performed,” it is properly denied. Id.; see also Upstate N.Y. Eng'rs Health Fund v. Oneidaview Pile Driving, Inc., No. 5:15-cv-0512 (LEK/TWD), 2017 WL 1483446, at *4 (N.D.N.Y. Apr. 25, 2017); Eng'rs Joint Welfare Fund v. C. Destro Dev. Co., 178 F. Supp. 3d 27, 36 (N.D.N.Y. 2016).

In this case, the Plaintiffs have not sufficiently supported their claim for audit fees. Their declarants state that two audits were conducted by the firm of Novak Francella LLC (Decl. of R. Poulaino, Ex. G to Mot., Doc. No. 17-10, ¶ 6; Decl. of D. Stupar, Ex. H to Mot., Doc. No. 17-11, ¶ 8), but they say nothing about the number of hours expended by the auditor, his or her hourly rate, or the work s/he performed. The Plaintiffs cite the audit reports that they submitted as Exhibits D and E (Mot. ¶ 9), but they do not explain how those reports supply the necessary information. Exhibit D does contain some information about the number of hours and hourly rate for the Local Funds’ audit (Ex. D to Mot., Doc. No. 17-7, at 4, 12), but in the case of the International Funds, there is not even that much. (See Ex. E to Mot., Doc. No. 17-8.) Because I am unable to determine the reasonableness of the audit fee claim from the information provided, I recommend that it be disallowed.

IV. Conclusion

For the foregoing reasons, I recommend that the Court grant in part and deny in part the Plaintiffs’ motion for default judgment. (Doc. No. 17.) Specifically, I recommend that the Court (a) grant the motion to the extent that it seeks awards of unpaid contributions, interest, “double interest” under 29 U.S.C. § 1132(g)(2)(C)(i), attorneys’ fees, and costs, but (b) deny the motion to the extent that it seeks an award of audit fees, and to the extent that it seeks judgment in the Plaintiffs’ favor on Count Two, which should be dismissed for the reasons stated in Section III.B.2 above. Summing up, I recommend that the Court enter default judgment against J.J. Concrete Floors, Inc., and award the following amounts:

A. $310.868.14 for unpaid contributions pursuant to 29 U.S.C. § 1132(g)(2)(A);

B. $55,759.00 in interest on the unpaid contributions from the date on which they were due to October 15, 2021, plus $121.98 in additional interest for each day from October 15, 2021, to the date on which the judgment enters, pursuant to 29 U.S.C. § 1132(g)(2)(B);

C. $55,759.00 in “double interest” on the unpaid contributions from the date on which they were due to October 15, 2021, plus $121.98 in additional “double interest” for each day from October 15, 2021, to the date on which the judgment enters, pursuant to 29 U.S.C. § 1132(g)(2)(C)(i);

D. Attorneys’ fees of $2,062.50, pursuant to 29 U.S.C. § 1132(g)(2)(D); and

E. Costs of $649.20, pursuant to 29 U.S.C. § 1132(g)(2)(D).

Finally, I note that the Plaintiffs did not seek judgment against S&S or on Count Three of the complaint, despite having been directed to file any default judgment motions by October 16, 2021. (Doc. No. 9.) Consideration should therefore be given to dismissing the claims against S&S.

This is a recommended ruling by a magistrate judge. See Fed. R. Civ. P. 72(b)(1). Any objections to this recommended ruling must be filed with the Clerk of the Court within fourteen days of being served with this order. See Fed. R. Civ. P. 72(b)(2). Failure to object within fourteen days “operates as a waiver of any further judicial review of the [Magistrate Judge's] decision[,]” including by the Court of Appeals. Small v. Sec'y of H.H.S., 892 F.2d 15, 16 (2d Cir. 1989) (per curiam); see also Impala v. United States Dep't of Justice, 670 F. App'x 32 (2d Cir. 2016) (summary order) (holding that failure to file timely objection to Magistrate Judge's recommended ruling precluded review by the Second Circuit).

Entered at Hartford, Connecticut this 13th day of March, 2023.

FOOTNOTES

1.   The Plaintiffs have confusingly labeled both collective bargaining agreements as “Exhibit A.” I will therefore refer to them not by their exhibit designation but rather by their CM/ECF document number.

2.   Not all pages of the Plaintiffs’ exhibits are numbered. All page citations in this report and recommendation are therefore to the page number affixed by the CM/ECF system.

3.   Although the collective bargaining agreements entitled the Funds to as much as eighteen percent interest, the Local Funds adopted a “Collection, Delinquency and Audit Policy” stating that they would claim only twelve percent interest in the event of a delinquency. (Ex. B to Mot., ECF No. 19, at 3.) The International Funds adopted a similar policy, but with a fifteen percent rate. (Ex. C to Mot., ECF No. 17-6, a 3.) (See discussion, Section III.C.2 infra.)

4.   His return says January 21, 2020, but this is obviously a scrivener's error because the Plaintiffs’ complaint is dated December 4, 2020. (Compl., Doc. No. 1.)

5.   The International Funds’ principal balance of $245,026.94, times an interest rate of 0.15, yields annual interest of $36,754.04. Dividing $36,754.04 by 365 produces a daily interest figure of $100.70.

6.   The Local Funds’ principal balance of $64,738.16, times a rate of 0.12, yields annual interest of $7,768.58. Dividing $7,768.58 by 365 produces a daily figure of $21.28.

7.   $55,759.00 + (514 × $121.98) = $118,456.72.

8.   $310,868.14 × .20 = $62,173.63

9.   The Johnson factors are: “(1) the time and labor required; (2) the novelty and difficulty of the questions; (3) the level of skill required to perform the legal service properly; (4) the preclusion of employment by the attorney due to the acceptance of the case; (5) the attorney's customary hourly rate; (6) whether the fee is fixed or contingent; (7) the time limitations imposed by the client or the circumstances; (8) the amount involved in the case and the results obtained; (9) the experience, reputation, and ability of the attorneys; (10) the ‘undesirability’ of the case; (11) the nature and length of the professional relationship with the client; and (12) awards in similar cases.” Lilly v. City of N.Y., 934 F.3d 222, 228 (2d Cir. 2019).

Thomas O. Farrish, USMJ