Div. 1181 Amalgamated Transit Union—N.Y. Emps. Pension Fund v. D & A Bus Co.

• Decision Date: 12 September 2017
• Docket Number: 16–CV–5014 (DRH)(AKT)
• Citation: 270 F.Supp.3d 593
• Parties: DIVISION 1181 AMALGAMATED TRANSIT UNION—NEW YORK EMPLOYEES PENSION FUND and Its Trustees, Plaintiffs, v. D & A BUS COMPANY, INC. and Anchor Bus Co., Inc., Defendants.
• Court: U.S. District Court — Eastern District of New York

270 F.Supp.3d 593

DIVISION 1181 AMALGAMATED TRANSIT UNION—NEW YORK EMPLOYEES PENSION FUND and Its Trustees, Plaintiffs,

v.D & A BUS COMPANY, INC. and Anchor Bus Co., Inc., Defendants.

16–CV–5014 (DRH)(AKT)

United States District Court, E.D. New York.

Signed September 12, 2017

Owen Marc Rumelt, Slevin & Hart, P.C., West Hempstead, NY, Christopher Leins, Pro Hac Vice, Jeffrey S. Swyers, Slevin & Hart, P.C., Washington, DC, for Plaintiffs.

MEMORANDUM & ORDER

HURLEY, Senior District Judge:

Presently before the Court is the August 25, 2017 Report and Recommendation ("R & R") of Magistrate Judge A. Kathleen Tomlinson recommending that plaintiffs' motion for default judgment be granted in part and denied in part. More particularly, Judge Tomlinson recommended that (1) default judgment be entered against defendant D & A and plaintiffs be awarded (a) $575,545.00 in withdrawal liability; (b) $38,732.30 in accrued interest; (c) $115,109.00 in liquidated damages; (d) $3,806.00 in attorneys' fees; (e) $846.03 in costs: and (f) the requested injunctive relief, to wit an injunction compelling D & A to provide plaintiffs with a complete list of each trade or business under its common control; and (2) the motion for default judgment against Anchor Bus. Co., In. be denied. More than fourteen days have elapsed since service of the R & R and no objections have been filed by defendants. Plaintiffs have filed objections limited to Judge Tomlinson's recommendation regarding Anchor Bus. Co., Inc. Unsure as to whether those claims would remain pending or dismissed under the R & R, Plaintiffs seek dismissal of the claims against Anchor Bus Co., Inc. without prejudice and have in fact filed a notice of voluntary dismissal of the claim against Anchor Bus Co., Inc. pursuant to Fed. R. Civ. P. 41(a)(1)(A)(i).

As Plaintiff's notice of voluntary dismissal is proper, the Court will dismiss the claims against defendant Anchor Bus Co., Inc. without prejudice.

Pursuant to 28 U.S.C. § 636(b) and Fed. R. Civ. P. 72, this Court has reviewed the unobjected to portions of the R & R for clear error, and finding none, now concurs in both its reasoning and its result. The Court therefore adopts the August 25, 2017 R & R of Judge Tomlinson as to defendant D & A as if set forth herein.

Accordingly,

IT IS HEREBY ORDERED that plaintiffs' motion for default judgment against defendant D & A Bus Company, Inc. is granted and plaintiffs are awarded: (1) $575,545.00 in withdrawal liability; (2) $38,732.30 in accrued interest; (3) $115,109.00 in liquidated damages; (4) $3,806.00 in attorneys' fees; (5) $846.03 in costs; and (6) an injunction compelling defendant D & A Bus Company, Inc. to provide plaintiffs with a complete list of each trade or business under its common control within twenty (20) days of service of a copy of the judgment upon it; and

IT IS FURTHER ORDERED plaintiffs' claims against defendant Anchor Bus. Co., Inc. are dismissed without prejudice.

The Clerk of Court is directed to enter judgment accordingly and to close this case.

REPORT AND RECOMMENDATION

A. KATHLEEN TOMLINSON, Magistrate Judge:

I. PRELIMINARY STATEMENT

Plaintiff Division 1181 Amalgamated Transit Union—New York Employees Pension Fund (the "Fund") and its Trustees (the "Trustees") (collectively, the "Plaintiff") commenced this action against Defendants D & A Bus Company, Inc. ("D & A") and Anchor Bus Co., Inc. ("Anchor") (collectively, the "Defendants") pursuant to §§ 502(g)(2), 515 and 4219(c) of the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. §§ 1132(g)(2), 1145 and 1399(c) as amended by the Multiemployer Pension Plan Amendments Act of 1980, 29 U.S.C. §§ 1001, et seq. ("MPPAA"). Plaintiff seeks an award of withdrawal liability, interest, liquidated damages, attorney's fees, costs and injunctive relief due to Plaintiff under ERISA and the governing Collective Bargaining Agreement. See generally Complaint ("Compl.") [DE 1].

After Defendants failed to answer the Complaint, the Clerk of the Court noted their default in the docket on November 15, 2016, pursuant to FED. R. CIV. P. 55(a). See DE 14. Thereafter, Plaintiff filed the instant motion for entry of default judgment. See DE 15. Judge Hurley referred the matter to this Court for a Report and Recommendation as to whether the default judgment should be granted, and, if so, to determine the appropriate amount of damages, costs, and/or fees, if any, to be awarded. See December 27, 2016 Electronic Order. Based upon the information submitted by Plaintiff and for the reasons set forth below, the Court respectfully recommends to Judge Hurley that Plaintiff's motion be GRANTED, in part, and DENIED, in part in accordance with this Report and Recommendation.

II. BACKGROUND

A. Statutory Background

1. ERISA

The Employee Retirement Income Security Act ("ERISA") was created by Congress in order to provide a comprehensive statutory framework for governing the administration of employee retirement plans. Finkel v. Athena Light & Power LLC , No. 14-CV-3585, 2016 WL 4742279, at *1 (E.D.N.Y. Sept. 11, 2016) (quoting Trustees of Local 138 Pension Trust Fund v. F.W. Honerkamp Co. Inc. , 692 F.3d 127, 128 (2d Cir. 2012) ). The statute has the primary purpose of

Protect[ing] interstate commerce and the interests of participants in employee benefit plans and their beneficiaries, by requiring the disclosure and reporting to participants and beneficiaries of financial and other information with respect thereto, by establishing standards of conduct, responsibility, and obligation for fiduciaries of employee benefit plans, and by providing for appropriate remedies, sanctions, and ready access to the Federal courts.

19 U.S.C. § 1001(b). In addition, Congress sought to safeguard "the interests of participants in private pension plans and their beneficiaries by improving the equitable character and the soundness of such plans by requiring them to vest the accrued benefits of employees with significant periods of service, to meet minimum standards of funding, and by requiring plan termination insurance." Id. § 1001(b). Thus, the statute was principally designed "to ensure that employees and their beneficiaries would not be deprived of anticipated retirement benefits by the termination of pension plans before sufficient funds have been accumulated in the plans." Finkel , 2016 WL 4742279, at *1 (quoting Connolly v. Pension Benefit Guaranty Corporation , 475 U.S. 211, 214, 106 S.Ct. 1018, 89 L.Ed.2d 166 (1986) ). "To that end, the statute created an agency, the Pension Benefit Guaranty Corporation ("PBGC"), to administer an insurance system by collecting premiums from covered pension plans and paying out accrued benefits to employees in the event a pension plan has insufficient funds." Finkel , 2016 WL 4742279, at *1 (quoting Trustees of Local 138 Pension Trust Fund , 692 F.3d at 129 ); see 29 U.S.C. § 1302 (creating the PBGC for the purposes of: "(1) encourage[ing] the continuation and maintenance of voluntary private pension plans for the benefit of their participants, (2) to provide for the timely and uninterrupted payment of pension benefits to participants and beneficiaries under plans to which this subchapter applies, and (3) to maintain premiums established by the corporation under section 1306 of this title at the lowest level consistent with carrying out its obligations under this subchapter.").

2. Multiemployer Pension Plan Amendments Act ("MPPAA")

One category of pension plans governed by ERISA is the multiemployer pension plan. See Trustees of Local 138 Pension Trust Fund , 692 F.3d at 129. Multiemployer pension plans require multiple employers to

pool contributions into a single fund that pays benefits to covered retirees who spent a certain amount of time working for one or more of the contributing employers. Plans of this sort offer important advantages to employers and employees alike. For example, employers in certain unionized industries likely would not create their own pension plans because the frequency of companies going into and out of business, and of employees transferring among employers, make single-employer plans unfeasible. Multiemployer plans allow companies to offer pension benefits to their employees notwithstanding these practicalities, and at the same time to share the financial costs and risks associated with the administration of pension plans.

Id. at 129 (citing Concrete Pipe & Prods. of Cal., Inc. v. Constr. Laborers Pension Trust for S. Cal. , 508 U.S. 602, 605–07, 113 S.Ct. 2264, 124 L.Ed. 2d 539 (1993) ); see Finkel , 2016 WL 4742279, at *1. The catalyst underlying the enactment of the MPPAA was the very real threat of widespread employer withdrawal, particularly acute in declining industries. See Trustees of Local 138 Pension Trust Fund , 692 F.3d at 129 ; Finkel , 2016 WL 4742279, at *2 ; Pension Benefit Guar. Corp. v. R.A. Gray & Co. , 467 U.S. 717, 722 n. 2, 104 S.Ct. 2709, 81 L.Ed. 2d 601 (1984). For each employer that withdraws from a multiemployer pension plan, the contribution burden shouldered by the remaining employers increase. Trustees of Local 138 Pension Trust Fund , 692 F.3d at 129 ; Finkel , 2016 WL 4742279, at *2. Therefore, widespread employer withdrawal has the potential to significantly reduce the plan's contribution base which effectively "pushes the contribution rate for remaining employers to higher and higher levels in order to fund past service liabilities, including liabilities generated by employers no longer participating in the plan, so-called inherited liabilities." Trustees of Local 138 Pension Trust Fund , 692 F.3d at 129 (quoting R.A. Gray & Co. , 467 U.S. at 722 n. 2, 104 S.Ct. 2709 ); Finkel , 2016 WL 4742279, at *2. These rising financial burdens may either encourage or force further withdrawals from the plan, "thereby increasing the inherited liabilities to be funded by an ever-decreasing contribution base." Trustees of Local 138 Pension Trust Fund , 692 F.3d at 129 (quoting ...