Bd. of Trs. of 1199/SEIU Greater N.Y. Benefit Fund v. Amboy Care Ctr.

Decision Date27 June 2022
Docket Number20cv6932 (DLC)
PartiesBOARD OF TRUSTEES OF 1199/SEIU GREATER NEW YORK BENEFIT FUND and BOARD OF TRUSTEES OF 1199/SEIU GREATER NEW YORK EDUCATION FUND, Plaintiffs, v. AMBOY CARE CENTER, INC., Defendant.
CourtU.S. District Court — Southern District of New York

For plaintiffs Board of Trustees of 1199/SEIU Greater New York Benefit Fund and Board of Trustees of 1199/SEIU Greater New York Education Fund Patricia McConnell Levy Ratner, PC

For defendant Amboy Care Center, Inc. David F. Jasinski Jasinski P.C.

OPINION AND ORDER

DENISE COTE, DISTRICT JUDGE

The Boards of Trustees of 1199/SEIU Greater New York Benefit Fund (“Benefit Fund”) and Education Fund (“Education Fund,” together, the “Funds”), have sued Amboy Care Center, Inc. (Amboy), a nursing home employer in Perth Amboy, New Jersey, for contributions to the Funds. The Funds allege that Amboy failed to pay contributions for the period January 1, 2015 through December 31, 2018, according to the terms of a series of collective bargaining agreements with 1199/SEIU United Healthcare Workers East (the “CBA”). Through their April 15, 2022 motion for summary judgment, the Funds seek $357,347.89 for the Benefit Fund and $10,669.95 for the Education Fund, plus interest, costs, and attorneys' fees. The motion became fully submitted on June 10. For the following reasons, the motion is granted in part.

Background

The following facts are taken in the light most favorable to the defendant. This action arises from the alleged nonpayment of health and education benefits to a bargaining unit of employees represented by 1199/SEIU United Healthcare Workers East (the “Union”).

On July 6, 2005, the Union executed the CBA with Amboy, who is defined as the “Employer.” With renewals, the CBA was extended to June 30, 2020. Pursuant to Article 36 of the CBA, Amboy agreed to make contributions to the Benefit Fund “for each eligible employee covered by this Agreement at the rate of 22.33% of gross payroll of all bargaining unit employees who have completed one hundred twenty (120) days of employment or more and regularly work more than twenty-two and one-half (1/2) hours per week.” That Article explains that [g]ross payroll' for the purpose of [the Benefit Fund] provision shall exclude . . . wages of employees who opt out of the health insurance coverage or are no frills.” Amendments to the CBA increased the rate of contributions for the Benefit Fund to 34.5% of the gross payroll by January 1, 2017.

As explained in Article 36, the term gross payroll excludes the wages of two classes of Union employees from Benefit Fund contribution calculations. Those two classes are known as the Opt-Out and the No Frills employees. The Opt-Out employees are defined in Article 36.7 as those employees who voluntarily elect not to receive health insurance upon written proof of other coverage.

The Article addressing “No Frills” employees, Article 15, is entitled “Per Diem/No Frills and Temporary Employees.” It requires Amboy to schedule the work hours of No Frills employees after it sets the schedule for its full and part-time employees and explains that Amboy does not have to make either pension fund or health benefit contributions for No Frills employees. No Frills employees are “paid a differential of one dollar ($1.00) above their regular rate of pay for all hours paid.”

The CBA caps the number of No Frills employee hours that Amboy may utilize per year at a percentage of all bargaining unit employees. Article 15.3 provides:

The Employer shall reduce the utilization of Per diem/no frills or temporary (including Agency) employees by a cumulative amount of five percent (5%) by January 1, 2006 of bargaining unit employees (reduce from 66% to 61% of the bargaining unit employees), and an additional reduction of six percent (6%) by July 1, 2006 and continuing reductions pursuant to the following schedule: By January 1, 2007 -- five percent (5%); By July 1, 2007 -- six percent (6%); and by January 1, 2008 -- five percent (5%).

This percentage, or “allowance,” decreased every year until it reached 39% by January 1, 2008. When Amboy agreed to amend the CBA in 2012, it again agreed to cap its utilization of No Frills employees to no greater than 39% of bargaining unit employees.

Article 38[1] of the CBA set a contribution rate for the Education Fund at 0.5% of gross payroll. Article 38.2 of the CBA provides that with respect to the Education Fund, [c]alculations of gross payroll shall be based on the same formula (inclusions/exclusions) utilized to calculate Employer contributions to the [Benefit Fund].”

The CBA required Amboy to submit reports on all employees, including No Frills employees. Article 15.5 of the CBA requires the Employer to “supply to the Union and Funds on a quarterly basis a report showing the date and shift in which each Per Diem/no frills employee” worked. Article 36.4 requires monthly statements of covered employees' wages and provides that each Employer “agree[s] to make available for inspection to the Trustees of the [Benefit] Fund all payroll records that may be required for the sound and efficient operation of the Fund.”

The Trustees of the Funds are authorized through two Trust Agreements to recover delinquent contributions due under the CBA. The Trustees are “empowered to seek all damages, including, but not limited to, liquidated damages, interest at such rate the Trustees shall from time to time determine, and the costs and legal fees incurred.” The Benefit Fund Trust Agreement was adopted in 1958 and was most recently amended and restated as of July 14, 2011. The Education Fund Trust Agreement became effective in 1994 and was most recently amended and restated as of June 23, 2015. The Benefit Fund Trust Agreement provides that when an audit report indicates a “deficiency or delinquency, the Employer shall pay such deficient or delinquent amount . . . with interest at the rate of twelve (12%) per annum.”[2] In November 2018, the Funds began an audit of Amboy's payroll records for the period January 1, 2015 through December 31, 2018. On March 20, 2019, the Funds sent Amboy an audit report that assessed unpaid contributions in the amounts of $994,779.52 owed to the Benefit Fund and $14,913.42 owed to the Education Fund, plus costs and interest. Responding to Amboy's objections, the Funds sent a revised audit report to Amboy on September 13, 2019. The revised report demanded unpaid contributions in the amounts of $357,347.89 to the Benefit Fund and $10,669.95 to the Education Fund, plus $500 in audit costs and $84,270.08 in accrued interest based on a 12% interest rate.

The audit concluded that Amboy had failed to make adequate contributions because Amboy had reported none of the wages of its No Frills employees. In calculating the benefits owed, the audit excluded the wages for No Frills employees up to 39% of the gross No Frills payroll figure of $2.1 million.[3] The report additionally showed that one No Frills employee whose inclusion had been challenged by Amboy had earned $49,361.64 between 2016 and 2018. This constituted 4.7% of the No Frills employee wagehours exceeding 39% of the gross payroll, which was $1,047,532.15.

Amboy did not pay the demanded sums. The Funds commenced this action on August 27, 2020, alleging that, by failing to pay contributions owed to the Benefit and Education Funds pursuant to its CBA with the Union, Amboy violated the terms of the CBA, § 515 of the Employment Retirement Income Security Act (ERISA), 29 U.S.C. § 1145, and § 301 of the of the Labor Management Relations Act of 1947 (LMRA), 29 U.S.C. § 185.

On July 29, 2021, Amboy moved pursuant to Rule 12(b)(1), Fed. R. Civ. P., to dismiss the complaint and compel arbitration on the ground that the CBA limits the Funds' remedy to arbitration. The motion was denied in an Order of October 21, which incorporated by reference an Opinion of the same date in a related case. See Bd. of Trustees of 1199/SEIU Greater New York Benefit Fund v. Manhattanview Nursing Home, No. 20CV6936 (DLC), 2021 WL 4942768 (S.D.N.Y. Oct. 22, 2021); Bd. of Trustees of 1199/SEIU Greater New York Benefit Fund v. Amboy Care Center, Inc., No. 20CV6936 (DLC), Order of October 22, 2021.

Discussion

The Funds seek summary judgment on two claims for the payment of alleged delinquent contributions owed to the Benefit and Education Funds. They seek to recover unpaid contributions pursuant to the findings of the revised audit report, plus statutory double interest, attorney's fees and costs, and the cost of the audit pursuant to § 502(g)(2) of ERISA.

Summary judgment may only be granted when “the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a). “To present a genuine issue of material fact sufficient to defeat a motion for summary judgment, the record must contain contradictory evidence such that a reasonable jury could return a verdict for the nonmoving party.” Horror Inc. v. Miller, 15 F.4th 232, 241 (2d Cir. 2021) (citation omitted). Material facts are facts that “might affect the outcome of the suit under the governing law.” Choi v. Tower Rsch. Cap. LLC, 2 F.4th 10, 16 (2d Cir. 2021) (citation omitted). In considering a motion for summary judgment, a court “construe[s] the facts in the light most favorable to the non-moving party and must resolve all ambiguities and draw all reasonable inferences against the movant.” Kee v. City of New York, 12 F.4th 150, 158 (2d Cir. 2021) (citation omitted).

I. ERISA Liability

Section 515 of ERISA covers delinquent contributions[4] to plans made under “the terms of a collectively bargained agreement” and requires that

[e]very employer who is obligated to make
...

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