Cement & Concrete Workers Dist. Council Welfare Fund, Pension Fund, Annuity Fund, Educ. & Training Fund & Other Fund v. Metro Found. Contractors Inc.

• Decision Date: 25 October 2012
• Docket Number: No. 11–1214.,11–1214.
• Citation: 699 F.3d 230
• Parties: CEMENT AND CONCRETE WORKERS DISTRICT COUNCIL WELFARE FUND, PENSION FUND, ANNUITY FUND, EDUCATION AND TRAINING FUND AND OTHER FUNDS, Alfred G. Gerosa, in his fiduciary capacity as Trustee of the Cement and Concrete Workers District Council Welfare Fund, Pension Fund and Annuity Fund, Pension Fund and Annuity Fund, Alexander J. Castaldi, as President of the Cement and Concrete Workers District Council and in his fiduciary capacity as Trustee of the Education and Training Fund, Plaintiffs–Appellees, v. METRO FOUNDATION CONTRACTORS INC., Defendant–Appellant.
• Court: U.S. Court of Appeals — Second Circuit

699 F.3d 230

54 Employee Benefits Cas. 1839

CEMENT AND CONCRETE WORKERS DISTRICT COUNCIL WELFARE FUND, PENSION FUND, ANNUITY FUND, EDUCATION AND TRAINING FUND AND OTHER FUNDS, Alfred G. Gerosa, in his fiduciary capacity as Trustee of the Cement and Concrete Workers District Council Welfare Fund, Pension Fund and Annuity Fund, Pension Fund and Annuity Fund, Alexander J. Castaldi, as President of the Cement and Concrete Workers District Council and in his fiduciary capacity as Trustee of the Education and Training Fund, Plaintiffs–Appellees,

v.METRO FOUNDATION CONTRACTORS INC., Defendant–Appellant.

No. 11–1214.

United States Court of Appeals,Second Circuit.

Submitted: March 28, 2012.

Decided: Oct. 25, 2012.

Bryan Ha, New York, NY, for Defendant–Appellant Metro Foundation Contractors, Inc.

Joseph Kaming, Kaming & Kaming, New York City, for Plaintiffs–Appellants Cement and Concrete Workers District Council Welfare Fund, Pension Fund, Annuity Fund, Education and Training Fund and other Funds, Alfred G. Gerosa, in his fiduciary capacity as Trustee of the Cement and Concrete Workers District Council Welfare Fund, Pension Fund and Annuity Fund, Alexander Castaldi, as President of the Cement and Concrete workers District Council and in his fiduciary capacity as a Trustee of the Education and Training Fund.

Before: JOHN M. WALKER, JR., STRAUB, and POOLER, Circuit Judges.

POOLER, Circuit Judge.

Plaintiffs—related employee benefit funds—sued Metro Foundation Contractors Inc. (“Metro”) to recover contributions owed pursuant to the Employer Retirement Income Security Act of 1974 (“ERISA”). When Metro refused to produce the necessary records to compute the amount of delinquent contributions owed, plaintiffs utilized an alternate method of calculation set forth in the collective bargaining agreement (“CBA”) between the parties. The district court awarded plaintiffs $26,328.11 in unpaid contributions, liquidated damages and costs, based on the alternate method of calculating delinquent contributions. Metro challenges the damages award, arguing the method set forth in the CBA results in an impermissibly speculative damages award. We disagree, and hold that parties are free to agree to an alternate method of calculating damages without offending the requirement that damages be proven with “reasonable certainty.” Credit Lyonnais Sec. (USA), Inc. v. Alcantara, 183 F.3d 151, 155 (2d Cir.1999).

BACKGROUND

Plaintiffs–Appellees—the Cement and Concrete Workers District Council Welfare Fund, Pension Fund, Annuity Fund, Education and Training Fund and other Funds, Alfred G. Gerosa, in his fiduciary capacity as Trustee of the Cement and Concrete Workers District Council Welfare Fund, Pension Fund and Annuity Fund, Alexander Castaldi, as President of the Cement and Concrete Workers District Council and in his fiduciary capacity (together, the “Funds”) filed a complaint in the United States District Court for the Eastern District of New York on November 13, 2008, seeking recovery of unpaid benefit contributions, statutory and contractual damages, attorneys' fees, costs and interest from Metro. The Funds also sought an order permitting the Funds to audit Metro's books. After Metro failed to enter an appearance, the Funds moved for a default judgment, which was entered on March 4, 2010. The district court referred the matter to Magistrate Judge Andrew Gold to determine damages.

Numerous unsuccessful attempts were made by plaintiffs to secure an audit of Metro's books and records. Without access to Metro's books, the Funds eventuallysubmitted a claim for damages based on provisions in the CBA between the parties that set forth an alternate measure of calculating benefit contributions in the event the employer refused to provide access to its books and records:

In the event, after the Trustees have made a reasonable request, the Employer fails to produce its books and records necessary for a proper audit, the Trustees, in their sole discretion, may determine that the Employer's weekly hours subject to the contributions for each month of the requested audit period are the highest number of Employee hours for any month during the twelve (12) preceding months audited, or paid, or during the last twelve (12) months for which reports were filed, whichever monthly number of hours is greater.

Using the records for April 2008, the Funds calculated that Metro owed $21,615.09 in delinquent contributions for May and June 2008. The CBA also provided for interest at the rate of 18 percent per annum on unpaid contributions and for liquidated damages in the amount of 20 percent of the unpaid contributions. CBA Art. XI, Section 10(f). The magistrate recommended awarding both, for additional damages of $4,232.02. Finally, the magistrate recommended that Metro pay the Funds' attorneys' fees and costs, in accordance with ERISA.

Metro objected to the magistrate's report and recommendation on two grounds: (1) the amount of unpaid contributions claimed was “clearly erroneous” because the Funds failed to provide proper evidentiary support for their request; and (2) the Funds failed to support their request for attorneys' fees with contemporaneous time records. The district court found the auditor's affidavit calculating damages in accordance with the CBA adequate to establish damages. However, it determined the affidavit submitted in support of the Funds' application for attorneys' fees lacked any indication that the request was based on contemporaneously kept time records, and struck the proposed award of attorneys' fees.

Metro appealed from the award of damages, however, the Funds took no appeal from the denial of attorneys' fees.

ANALYSIS

When a party moves for a default judgment, Rule 55(b) of the Federal Rules of Civil Procedure permits a district court to “conduct hearings or make referrals” in order to, among other things, “determine the amount of damages[,] establish the truth of any allegation by evidence[,] or investigate any other matter.” Fed.R.Civ.P. 55(b)(2)(B)-(D). “Rule 55(b) commits this decision to the sound discretion of the district court.” Finkel v. Romanowicz, 577 F.3d 79, 88 (2d Cir.2009) We therefore review the District Court's decision for abuse of discretion. See In re Sims, 534 F.3d 117, 132 (2d Cir.2008) (“A district court has abused its discretion if it based its ruling on an erroneous view of the law or on a clearly erroneous assessment of the evidence, ... or rendered a decision that cannot be located within the range of permissible decisions.” (internal quotation marks and citations omitted)).

ERISA provides that

Every employer who is obligated to make contributions to a multi-employer plan under the terms of the plan or 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 plan or such agreement.29 U.S.C. § 1145. Metro defaulted as to the liability for unpaid contributions to the Funds for May and June 2008. However, it is well established that “[w]hile 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.” Greyhound Exhibitgroup, Inc. v. E.L.U.L. Realty Corp., 973 F.2d 155, 158 (2d Cir.1992). Upon entry of a default, a plaintiff's claims for damages generally must be established in an evidentiary proceeding at which the defendant is afforded the opportunity to contest the amount claimed. See Fustok v. ContiCommodity Servs., Inc., 873 F.2d 38, 40 (2d Cir.1989). There must be an evidentiary basis for the damages sought by plaintiff, and a district court may determine there is sufficient evidence either based upon evidence presented at a hearing or upon a review of detailed affidavits and documentary evidence. SeeFed.R.Civ.P. 55(b)...