THE 32BJ NORTH PENSION FUND AND ITS BOARD OF TRUSTEES v. SEDGWICK NORTH HALLS HOUSING DEVELOPMENT FUND COMPANY INC (2025)

REPORT AND RECOMMENDATION

To the Honorable Vernon S. Broderick, United States District Judge:

Plaintiffs The 32BJ Pension Fund and Its Board of Trustees (collectively “Plaintiffs” or the “Pension Fund”) allege that Defendant Sedgwick & North Halls Housing Development Fund Company, Inc. (“Defendant”) defaulted on its Withdrawal Liability payments pursuant to the Employment Retirement Income Security Act of 1974, as amended (“ERISA”), §§ 502(g)(2), 4301(b); 29 U.S.C. §§ 1132(g)(2), 1451(b). Plaintiffs seek payment of the outstanding withdrawal liability, interest, liquidated damages, and attorney's fees and costs.

After the Court ordered that default judgment is entered against Defendant as to liability, this case was referred to me for an inquest into damages. For the reasons set forth below, it is respectfully recommended that Plaintiffs should be awarded damages in the amount of $86,126.00, plus prejudgment interest in an amount to be calculated upon entry of judgment, liquidated damages in the amount of $17,225.20, and attorney's fees and costs in the amount of $12,070.96.

I. BACKGROUND

A. Procedural History

On May 13, 2024, Plaintiffs filed the Complaint in this action seeking recovery of unpaid contributions, interest, liquidated damages, costs, and attorney's fees. Complaint (“Compl.”), ECF No. 1 at 7.

On June 27, 2024, the Clerk of Court entered a Certificate of Default against Defendant. ECF No. 11. On June 28, 2024, Plaintiffs filed a proposed order to show cause, accompanied by an affidavit, and a statement of damages. ECF Nos. 12–15. On July 30, 2024, Judge Broderick held a show cause hearing and on July 31, 2024, in accordance with his comments at that hearing, ordered that default judgment is entered against Defendant as to liability. ECF No. 23.

On July 31, 2024, this action was referred to a Magistrate Judge for an inquest after default, ECF No. 24, and on August 29, 2024, this referral was reassigned to me. On August 21, 2024, Plaintiffs filed Proposed Findings of Fact and Conclusions of Law, accompanied by a Declaration of Meredith B. Golfo (the “Golfo 8/21/24 Decl.”), and a revised statement of damages. ECF Nos. 26–28.

B. Factual Background

The following facts, drawn from Plaintiffs’ complaint and submissions related to this inquest, are deemed established for purposes of determining the damages to which the Pension Fund is entitled. See, e.g., City of New York v. Mickalis Pawn Shop, LLC, 645 F.3d 114, 137 (2d Cir. 2011) (“It is an ‘ancient common law axiom’ that a defendant who defaults thereby admits all ‘well-pleaded’ factual allegations contained in the complaint.”) (quoting Vermont Teddy Bear Co. v. 1-800 Beargram Co., 373 F.3d 241, 246 (2d Cir. 2004)); Au Bon Pain Corp. v. Artect, Inc., 653 F.2d 61, 65 (2d Cir. 1981) (“[the court should accept] as true all of the factual allegations of the [plaintiff's] complaint, except those relating to damages [and plaintiff is] also entitled to all reasonable inferences from the evidence offered.”).

The Pension Fund is a “plan,” an “employee pension benefit plan,” and a “multiemployer plan,” within the meanings of Sections 3(2), (3), and (37), respectively of ERISA. Compl. ¶ 6. The Pension Fund receives contributions from employers that are parties to collective bargaining agreements (“CBAs”) with Local 32BJ of the Service Employees International Union (the “Union”). Id. ¶ 13. The Pension Fund and its participants and beneficiaries are represented in this action by the Board of Trustees. Id. ¶ 7.

Defendant is a not-for-profit corporation organized under the law of the State of New York. Id. ¶ 9; Golfo 8/21/24 Decl. ¶ 2. Defendant was party to one or more CBAs with the Union, pursuant to which it was required to make contributions to the Pension Fund on behalf of its employees. Compl. ¶ 13.

Pursuant to the 32BJ North Pension Plan, Ex. 1 to Golfo 8/21/24 Decl., ECF No. 27-1 (the “Plan”), the Trustees established a “Policy for Collection of Delinquent Contributions.” Ex. 3 to Golfo 8/21/24 Decl., ECF No. 27 (the “Delinquency Policy”). Under the Delinquency Policy, the Trustees have the “legal right to exercise all remedies allowable under the Trust Agreement, [ERISA], and other applicable law” to collect delinquent contributions. Delinq. Pol'y 1.1.C.

Pursuant to the Delinquency Policy, if an employer fails to make contributions to the Pension Fund for two consecutive months after its CBA expires and no successor CBA has been signed, the employer's participation in the Pension Fund ceases. Delinq. Pol'y 2.3.A. If delinquent contributions are not paid within 30 days of the due date, the Pension Fund may elect to send a notice to arbitrate or initiate litigation in federal court to collect the amounts owed. Delinq. Pol'y 2.2.A. The Pension Fund is entitled to interest on any late contribution in the amount of 9% per annum calculated from the day immediately following the missed payment date. Delinq. Pol'y 2.1.B. The Pension Fund may also seek liquidated damages calculated from the due date in an amount equal to the greater of a second assessment of interest or twenty percent of the delinquent contributions. Delinq. Pol'y 6.1. In any collection action, the Pension Fund may also seek attorney's fees. Delinq. Pol'y 6.2.

The Trustees determined that Defendant effected a complete withdrawal from the Pension Fund on or about December 31, 2019. Compl. ¶ 14. On May 8, 2023, the Pension Fund sent an assessment letter to Defendant informing it that the Pension Fund determined that Defendant owed withdrawal liability to the Pension Fund in the amount of $81,126.00. Id. ¶¶ 15–18. Defendant did not raise any dispute as to the amount owed within 90 days of the receipt of the assessment letter. Id. ¶¶ 19–20. Defendant further failed to make its first installment payment on the withdrawal liability by the due date. Id. ¶ 23. The Pension Fund sent a delinquency letter to Defendant, informing it that it had not made its first installment payment, and that failure to cure the delinquency would result in default and accelerated liability of the entire withdrawal liability, plus—in the event the Pension Fund initiated a collection action—interest, attorney's fees and costs, and liquidated damages. Id. ¶ 24. The Pension Fund also sent a default letter and demand letter to Defendant in advance of initiating this lawsuit, informing Defendant of the amount due to the Pension Fund. Id. ¶¶ 26–27. To date, Defendant has failed to make any payment due to the Pension Fund. Id. ¶ 25, 30.

II. DISCUSSION

A. Legal Standards

“Even when a default judgment is warranted based on a party's failure to defend, the allegations in the complaint with respect to the amount of damages are not deemed true. The district court must instead conduct an inquiry in order to ascertain the amount of damages with reasonable certainty.” Credit Lyonnais Sec. (USA), Inc. v. Alcantara, 183 F.3d 151, 155 (2d Cir. 1999). A plaintiff “bears the burden of establishing [its] entitlement to recovery and thus must substantiate [its] claim with evidence to prove the extent of [its] damages.” Dunn v. Advanced Credit Recovery Inc., 2012 WL 676350, at *2 (S.D.N.Y. Mar. 1, 2012) (citing Greyhound Exhibitgroup, Inc. v. E.L.U.L. Realty Corp., 973 F.2d 155, 158 (2d Cir.1992)), adopted by 2012 WL 1114335 (Apr. 3, 2012). To establish damages upon default, a plaintiff must demonstrate that the “compensation sought relate[s] to the damages that naturally flow from the injuries pleaded.” Greyhound Exhibitgroup, 973 F.2d at 159; see also Laboratorios Rivas, SRL v. Ugly & Beauty, Inc., 2013 WL 5977440, at *5 (S.D.N.Y. Nov. 12, 2013), adopted by 2014 WL 112397 (S.D.N.Y. Jan. 8, 2014).

Once liability has been established, as here, the only remaining issue is “whether the plaintiff has provided adequate support for the relief it seeks.” Bleecker v. Zeitan Sys., Inc., 2013 WL 5951162, at *6 (S.D.N.Y. Nov. 1, 2013) (citing Transatl. Marine Claims Agency, Inc. v. Ace Shipping Corp., 109 F.3d 105, 111 (2d Cir. 1997)); see also Greyhound Exhibitgroup, 973 F.2d at 158 (“While a party's default is deemed to constitute a concession of all well pleaded allegations of liability, it is not considered an admission of damages.”).

“Establishing the appropriate amount of damages involves two steps: (1) ‘determining the proper rule for calculating damages on ․ a claim’; and (2) ‘assessing plaintiff's evidence supporting the damages to be determined under this rule.’ ” Begum v. Ariba Disc., Inc., 2015 WL 223780, at *4 (S.D.N.Y. Jan. 16, 2015) (quoting Credit Lyonnais, 183 F.3d at 155). Although Federal Rule of Civil Procedure 55 permits a court to conduct hearings to determine damages, it is not mandatory. See, e.g., Cement & Concrete Workers Dist. Council Welfare Fund v. Metro Found. Contractors, Inc., 699 F.3d 230, 234 (2d Cir. 2012). As discussed below, the Pension Fund's submissions form a “sufficient basis from which to evaluate the fairness” of its request for damages, and thus, a hearing is unnecessary. Fustok v. ContiCommodity Servs. Inc., 873 F.2d 38, 40 (2d Cir. 1989).

B. Assessment of Damages

The Pension Fund seeks to recover withdrawal liability, pre-judgment interest, liquidated damages, and attorney's fees and costs. Compl. at 7; Statement of Damages, ECF No. 28.

1. Unpaid Withdrawal Liability

Plaintiffs have substantiated their request for $86,126.00 in unpaid withdrawal liability. ERISA obligates a court to award “unpaid contributions.” 29 U.S.C. § 1132(g). The Pension Fund notified Defendant that it had determined that Defendant owed a withdrawal liability of $86,126.00, pursuant to 29 U.S.C. § 1399(b)(1), and Defendant did not request review, pursuant to 29 U.S.C. § 1399(b)(2), within 90 days. Compl. ¶¶ 15–20. In the absence of a request for review and arbitration of any dispute, the amounts demanded by a plan sponsor under Section 1399(b)(1) shall be due and owing. See 29 U.S.C. § 1401(b)(1). Additionally, Defendant is subject to personal jurisdiction because it is a New York corporation. See Compl. ¶ 9; Golfo 8/21/24 Decl. ¶ 2. Accordingly, I recommend that Defendant must pay $86,126.00 in withdrawal liability.

2. Pre-Judgment Interest

Plaintiffs have also substantiated their request for pre-judgment interest on the unpaid withdrawal liability. Section 1132(g) obligates a court to award “interest on the unpaid contributions.” 29 U.S.C. § 1132(g). That interest is “determined by using the rate provided under the plan.” Id. The plan provides that any interest owed on delinquent withdrawal liability payments “shall be determined using the interest rates applicable to unpaid contributions to the Fund, as provided in rules adopted by the Trustees.” Golfo 8/21/24 Decl. ¶ 6 & Ex. 1. Section 2.1.B of the Delinquency Policy establishes a 9% interest rate on delinquent contributions. Id. ¶ 7 & Ex. 2.

Defendant's first installment payment of $2,143.25 was due on July 7, 2023. ECF No. 26 ¶ 35. The interest on the first installment payment from that date until November 29, 2023, the Acceleration Date, amounts to $76.62. Id.

Defendant's accelerated liability of $86,126.00 was due on November 29, 2023. Id. ¶ 36. Defendants should be required to pay 9% interest on the accelerated liability from November 29, 2023, the Acceleration Date, until the date that judgment is entered. Id.

I therefore recommend awarding pre-judgment interest to Plaintiffs on $86,126.00 from November 29, 2023, until the date that judgment entered, plus $76.62 of interest on the first installment payment from July 7, 2023, until November 29, 2023.

3. Liquidated Damages

Plaintiffs have substantiated their request for liquidated damages. Section 1132(g) obligates a court to award “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.” 29 U.S.C. § 1132(g). Section 11.8(f)(2) of the Plan states that a withdrawing employer is also liable for “liquidated damages equal to the greater of: (i) a second assessment of interest on the delinquent sum; or (ii) 20 percent ․ of the delinquent sum.” Golfo 8/21/24 Decl. ¶ 10 & Ex. 1.

Plaintiffs should be awarded the greater of (a) twenty percent of the delinquent sum, $86,126.00, which is $17,225.20, or (b) interest on $86,126.00 from November 29, 2023, until the date that judgment is entered. Given that a second assessment of interest on the delinquent sum would not exceed twenty percent of the delinquent sum unless judgment is entered more than two years after the Acceleration Date, I recommend that Plaintiffs be awarded liquidated damages in the amount of $17,225.20.

4. Attorney's Fees

Plaintiffs request $11,459.00 in attorney's fees through August 14, 2024. Where, as here, an employer fails to make any withdrawal liability payment, the court shall award plaintiffs reasonable attorney's fees and costs of the action. See 29 U.S.C. §§ 1132(g)(2), 1145. Courts in this Circuit use a “presumptively reasonable fee” standard to determine the reasonableness of attorney's fees sought in an action. Arbor Hill Concerned Citizens Neighborhood Ass'n v. Cnty. of Albany, 522 F.3d 182, 190 (2d Cir. 2008). This ‘lodestar’ is “the product of a reasonable hourly rate and the reasonable number of hours required by the case.” Millea v. Metro-North R.R. Co., 658 F.3d 154, 166 (2d Cir. 2011).

a. Reasonable Hourly Rates

A reasonable hourly rate is “the rate prevailing in the [relevant] community for similar services by lawyers of reasonably comparable skill, experience, and reputation.” Farbotko v. Clinton Cty. of N.Y., 433 F.3d 204, 208 (2d Cir. 2005).

The timekeepers identified in this matter are Jeffrey Swyers, Meredith Golfo, and Richard Siegel, and various paralegals. ECF No. 26 ¶ 9. Mr. Swyer, a partner with 29 years of experience, billed 2.10 hours at an hourly rate of $480.00. Id.; Golfo 8/21/24 Decl. Ex. 3. Ms. Golfo, a partner with 19 years of experience, billed 4.60 hours at an hourly rate of $450.00. ECF No. 26 ¶ 9; Golfo 8/21/24 Decl. Ex. 3. Mr. Siegel, a senior associate with 17 years of experience, billed 21.10 hours at an hourly rate of $370.00. ECF No. 26 ¶ 9; Golfo 8/21/24 Decl. Ex. 3. The paralegals billed 2.80 hours at an hourly rate of $205.00. ECF No. 26 ¶ 9; Golfo 8/21/24 Decl. Ex. 3.

“[C]ourts in this district have awarded rates in the range of $600 per hour for partners with approximately twenty years of experience in ERISA litigation, with rates and awards increasing over time.” Dimopoulou v. First Unum Life Ins. Co., 2017 WL 464430, at *3 (S.D.N.Y. Feb. 3, 2017). Because Mr. Siegel's $480.00 hourly rate and Ms. Golfo's $450.00 hourly rate requested in this case are well within the range of rates accepted by courts in this district, these rates should be found to be reasonable.

Courts in this district have also awarded rates between $250.00 and $350.00 for associates with approximately five years of experience. Id. Given that Mr. Siegel has 17 years of experience and that rates have likely increased since 2017, the $370.00 hourly rate requested in this case should be found to be reasonable.

Plaintiffs seek a $205.00 hourly rate for work performed by paralegals. In support of this rate Plaintiffs cite Doe v. Unum Life Ins. Co. of Am., in which the court found an hourly rate of $200.00 for paralegal work to be reasonable. 2016 WL 335867 (S.D.N.Y. Jan. 28, 2016). However, other courts in this Circuit typically find an hourly rate between $70.00 and $150.00 to be reasonable for paralegals. See, e.g., Cummings v. Quick Start Day Care Ctr. Inc., 2024 WL 68552, at *5 (S.D.N.Y. Jan. 5, 2024) (finding a paralegal hourly rate of $125 to be reasonable); Rosales v. Gerasimos Enters., Inc., 2018 WL 286105, at *2 (S.D.N.Y. Jan. 18, 2018) (noting that hourly rates of between $100 and $150 have been found to be reasonable for paralegals); Cap. One, N.A. v. Auto Gallery Motors, LLC, 2020 WL 423422 (E.D.N.Y. Jan. 27, 2020) (“For paralegals ․ an hourly rate of $100 appropriate for those with significant experience and an hourly rate of $70 appropriate for those with less or minimal experience.”). Accordingly, I recommend that the hourly rate for work performed by paralegals in this case be reduced to $125.00.

b. Reasonable Number of Hours

The 30.60 hours expended by Plaintiffs’ counsel in this litigation appear to be reasonable in light of a review of the contemporaneous time records and compared to the amount of time normally required in an ERISA litigation where defendants default. See, e.g., Durso v. Store 173 Food Corp., 2018 WL 6268218, at *5–6 (S.D.N.Y. Nov. 30, 2018) (finding 52.5 hours of work reasonable); Trustees of New York City Dist. Council of Carpenters Pension Fund, Welfare Fund, Annuity Fund v. B&L Moving & Installation, Inc., 2017 WL 4277175, at *8 (S.D.N.Y. Feb. 5, 2018) (finding 30.35 hours of work reasonable); Trustees of New York City Dist. Council of Carpenters Pension Fund, Welfare Fund, Annuity Fund & Apprenticeship, Journeyman Retraining, Educ. & Indus. Fund v. Dependable Office Installation, LLC, 2017 WL 934713, at *8 (S.D.N.Y. Mar. 27, 2017) (finding 36 hours of work reasonable).

c. Reasonable Hourly Rate Multiplied by Reasonable Number of Hours

Attorney's fees should be awarded as follows:

Tabular or graphical material not displayable at this time.

Based on the calculations above, I recommend that Plaintiffs be awarded $11,235.00 in attorney's fees.

5. Costs

Lastly, Plaintiffs have substantiated their request for $835.96 in costs. Section 1132(g) obligates a court to award “costs.” 29 U.S.C. § 1132(g). Costs may include “filing fees and reasonable process-server fees.” UNITE HERE Ret. Fund v. Edward Vill. Grp., LLC, 2021 WL 5414972, at *8 (S.D.N.Y. Nov. 16, 2021). The current filing fee is $405.00, and a $430.96 request for service fees is reasonable. I therefore recommend that Plaintiffs be awarded $835.96 in costs.

6. Post-Judgment Interest

By statute, “[i]nterest shall be allowed on any monetary judgment in a civil case recovered in a district court” and “[s]uch interest shall be calculated from the date of the entry of judgment.” 28 U.S.C. 1961(a). Because an award of post-judgment interest is mandatory, see Schipani v. McLeod, 541 F.3d 158, 165 (2d Cir. 2008), it is recommended that post-judgment interest be awarded.

III. CONCLUSION

For the foregoing reasons, Plaintiffs should be awarded:

(i) Unpaid withdrawal liability in the amount of $86,126.00;

(ii) Pre-judgment interest in the amount of $76.62, plus pre-judgment interest on $86,126.00 to be calculated from November 29, 2023, through the entry of judgment;

(iii) Liquidated damages in the amount of $17,225.20;

(iv) Attorney's fees in the amount of $11,235.00;

(v) Costs in the amount of $835.96; and

(vi) Post-judgment interest.

Plaintiffs shall serve by mail upon Defendant a copy of this Report and Recommendation and file proof of service by January 9, 2025.

PROCEDURE FOR FILING OBJECTIONS

Pursuant to 28 U.S.C. § 636(b)(1) and Rule 72(b) of the Federal Rules of Civil Procedure, the parties have fourteen (14) days (including weekends and holidays) from service of this Report and Recommendation to file any objections. See Fed. R. Civ. P. 6(a), (b), (d). Such objections, and any responses to objections, shall be filed with the Clerk of Court, with courtesy copies delivered to the chambers of the Honorable Vernon S. Broderick, United States Courthouse, 40 Foley Square, New York, New York 10007. Any requests for an extension of time for filing objections must be directed to Judge Broderick.

FAILURE TO FILE OBJECTIONS WITHIN FOURTEEN (14) DAYS WILL RESULT IN A WAIVER OF OBJECTIONS AND WILL PRECLUDE APPELLATE REVIEW. 28 U.S.C. § 636(b)(1); Fed. R. Civ. P. 72. See Thomas v. Arn, 474 U.S. 140 (1985); Wagner & Wagner, LLP v. Atkinson, Haskins, Nellis, Brittingham, Gladd & Carwile, P.C., 596 F.3d 84, 9z (2d Cir. 2010).

Henry J. Ricardo United States Magistrate Judge