Group v. Capital One, N.A., 14-CV-0097 (SJF)(GRB)

Decision Date26 March 2015
Docket Number14-CV-0097 (SJF)(GRB)
PartiesUTILITY AUDIT GROUP, JOHN L. O'KELLY, and CHRISTINE O'KELLY, Plaintiffs, v. CAPITAL ONE, N.A., DESIGNS FOR FINANCE, INC., POINTE BENEFIT CONSULTANTS, LLC, MICHAEL SONNENBERG, and JACK R. BROESAMLE, JR., Defendants.
CourtUnited States District Courts. 2nd Circuit. United States District Court (Eastern District of New York)
ORDER

FEUERSTEIN, District Judge:

Pending before the Court are objections by plaintiffs Utility Audit Group ("UAG"), John L. O'Kelly and Christine O'Kelly (collectively, "plaintiffs") and defendants Designs for Finance, Inc. ("Designs") and Capital One ("Capital One") to a Report and Recommendation of the Honorable Gary R. Brown, United States Magistrate Judge, dated February 4, 2015 ("the Report"), recommending that the motions of Designs and defendant Michael Sonnenberg ("Sonnenberg") seeking dismissal of plaintiff's claims against them in the amended complaint pursuant to Rule 12(b)(6) of the Federal Rules of Civil Procedure, and the motion of defendant Capital One, N.A. ("Capital One") for judgment on the pleadings pursuant to Rule 12(c) of the Federal Rules of Civil Procedure or, in the alternative, for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure, be granted to the extent of dismissing (a) plaintiffs' state law claims in their entirety as preempted by the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1144(a); (b) all of plaintiffs' claims against Sonnenberg; and (c) plaintiffs' "breach of contractual obligations under ERISA" claim against Designs and CapitalOne, and that the motions otherwise be denied. For the reasons stated herein, the Report is accepted in part and rejected in part.

I. DISCUSSION
A. Standard of Review

Rule 72 of the Federal Rules of Civil Procedure permits magistrate judges to conduct proceedings on dispositive pretrial matters without the consent of the parties. Fed. R. Civ. P. 72(b); see Marcella v. Capital Dist. Physicians' Health Plan, Inc., 293 F.3d 42, 46 (2d Cir. 2002). Any portion of a report and recommendation on dispositive matters to which a specific, timely objection has been made is reviewed de novo. 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 72(b); see Arista Records, LLC v. Doe 3, 604 F.3d 110, 116 (2d Cir. 2010). However, the court is not required to review the factual findings or legal conclusions of the magistrate judge as to which no proper objections are interposed. See Thomas v. Arn, 474 U.S. 140, 150, 106 S.Ct. 466, 88 L.Ed.2d 435 (1985); Wagner & Wagner, LLP v. Atkinson, Haskins, Nellis, Brittingham, Gladd & Carwile, P.C., 596 F.3d 84, 92 (2d Cir. 2010) ("[A] party waives [judicial] review of a decision in a magistrate judge's report and recommendation if the party fails to file timely objections designating the particular issue."); Cephas v. Nash, 328 F.3d 98, 107 (2d Cir. 2003) ("As a rule, a party's failure to object to any purported error or omission in a magistrate judge's report waives further judicial review of the point.")

General objections, or "objections that are merely perfunctory responses argued in an attempt to engage the district court in a rehashing of the same arguments set forth in the original papers will not suffice to invoke de novo review * * * [because] [s]uch objections would reducethe magistrate's work to something akin to a meaningless dress rehearsal." Owusu v. New York State Ins., 655 F. Supp. 2d 308, 313 (S.D.N.Y. 2009) (alterations, quotations and citations omitted); see also Phillips v. Reed Group, Ltd., 955 F. Supp. 2d 201, 211 (S.D.N.Y. 2013) (accord); Butto v. Collecto, Inc., 290 F.R.D. 372, 379 (E.D.N.Y. 2013) ("In a case where a party makes only conclusory or general objections, or simply reiterates his original arguments, the Court reviews the Report and Recommendation only for clear error." (quotations and citation omitted)). To accept the report and recommendation of a magistrate judge to which such general or perfunctory objections are made, or to which no specific, timely objection has been made, the district judge need only be satisfied that there is no clear error apparent on the face of the record. See Fed. R. Civ. P. 72(b); Spence v. Superintendent, Great Meadow Corr. Facility, 219 F.3d 162, 174 (2d Cir. 2000) (a court may review a report to which no timely objection has been interposed to determine whether the magistrate judge committed "plain error."); Libbey v. Village of Atlantic Beach, 982 F. Supp. 2d 185, 199 (E.D.N.Y. 2013) ("[I]f a party makes only conclusory or general objections, or simply reiterates his original arguments, the Court reviews the Report and Recommendation only for clear error." (quotations and citation omitted)); 7-Eleven, Inc. v. Khan, 977 F. Supp. 2d 214, 219 (E.D.N.Y. 2013) (accord).

Whether or not proper objections have been filed, the district judge may, after review, accept, reject, or modify any of the magistrate judge's findings or recommendations. 28 U.S.C. § 636(b)(1); Fed.R.Civ.P. 72(b); see Sentry Ins. A Mut. Co. v. Brand Mgmt., Inc., 295 F.R.D. 1, 2 (E.D.N.Y. 2013); North Shore-Long Island Jewish Health Care Sys., Inc. v. MultiPlan, Inc., 953 F. Supp. 2d 419, 424 (E.D.N.Y. 2013).

B. Objections
1. Plaintiffs' Objections
a. Claims against Sonnenberg and "Breach of Contractual Obligations under ERISA" claim against Designs and Capital One

Plaintiffs request that in considering their objections to the Report, I consider documents "newly provided to the[m]" by Wiss & Company, LLP ("Wiss")1, ("Plaintiffs [sic] Rule 72(b) Objections to Magistrate Judge Brown's February 4, 2015 Report and Recommendations" ["Plf. Obj."], ¶ 4), as relevant, inter alia, to the issues (1) of Sonnenberg's liability, "both in his own, personal capacity, and/or as the alter ego of the defendant Designs[,]" (id., ¶ 6; see also id., ¶¶ 8, 20, 25-27); and (2) of whether Capital One resigned as Trustee for the Plan in 2007, as it claims to have done, (id., ¶ 9).

Sonnenberg contends, inter alia, that plaintiffs' objections should be dismissed because they improperly "attempt to expand the record that was before Magistrate Judge Gary Brown." (Defendant Michael Sonnenberg's Response to Plaintiffs' Objections to the Report and Recommendation of Magistrate Judge Gary R. Brown ["Sonnenberg Response"] at 1). According to Sonnenberg, plaintiffs admittedly received the documents from Wiss ("the Wiss Documents") no later than January 23, 2015, i.e., before Magistrate Judge Brown issued the Report, but "made no attempt to inform the Magistrate Judge of the alleged 'new evidence,' nor ** * seek a stay of the pending motion to dismiss before the Magistrate, in utter disregard of the Magistrate's undertaking in this dispute, nor * * * seek to amend their complaint for a second time." (Id. at 7-8).

Similarly, Designs contends that the Wiss Documents "are beyond the scope of the record that was before Magistrate Brown and should not be considered by this Court in its review of the Objections." (Defendants Designs for Finance, Inc.'s Response to Plaintiffs' Objections to the Report and Recommendation ["Design Response"] at 1, 2). Designs further contends, inter alia, that since the Wiss Documents "were neither referenced by plaintiffs in the Amended Complaint, nor integral to the claims alleged by plaintiffs[,] * * * [they are] outside the scope of consideration on a motion to dismiss." (Id. at 2).

Although, upon de novo review of a report and recommendation, the district court has "discretion to consider evidence that had not been submitted to the magistrate judge," Hynes v. Squillace, 143 F.3d 653, 656 (2d Cir. 1998); see also 28 U.S.C. § 636(b)(1) ("The judge may * * * receive further evidence" upon de novo review of a report and recommendation (emphasis added)); Fed. R. Civ. P. 72(b)(3) (accord), it also has discretion to "refus[e] to allow supplementation of the record upon [its] de novo review." Hynes, 143 F.3d at 656. "Considerations of efficiency and fairness militate in favor of a full evidentiary submission for the magistrate judge's consideration." Id. "[A]bsent a most compelling reason, the submission of new evidence in conjunction with objections to the report and recommendations should not be permitted." Housing Works v. Turner, 362 F. Supp. 2d 434, 438 (S.D.N.Y. 2005); see also Berbick v. Precinct 42, 977 F. Supp. 2d 268, 273 (S.D.N.Y. 2013). In the well-reasoned words of Judge Kaplan:

"While there may be cases in which the receipt of further evidence is appropriate, there are substantial reasons for declining to do so as a general matter. First, permitting such piecemeal presentation of evidence is exceptionally wasteful of the time of both the magistrate and district judges, the former having been compelled to write an arguably useless report based on less than the universe of relevant evidence and the latter being deprived of the benefit of the magistrate judge's considered view of the entire record. Second, opposing parties would be put to the burden of proceedings which, to a considerable degree, would be duplicative. Third, there would be instances in which parties would be encouraged to withhold evidence, particularly evidence which might be embarrassing as well as helpful on the merits, in the expectation of using it before the district judge only if they failed to prevail before the magistrate judge on a more abbreviated showing. Finally, the routine consideration of evidence in support of objections which could have been presented before the magistrate judge would reward careless preparation of the initial papers."

Morris v. Amalgamated Lithographers of Am., Local One, 994 F. Supp. 161, 163 (S.D.N.Y. 1998). The first two (2) justifications are particularly compelling in this case.

According to plaintiffs, the Wiss Documents "were first produced [to them] by Wiss, pursuant to subpoena, between November, 2014-January, 2015." (Plf. Response, ¶ 3). Thus, although the Wiss Documents may not have been available to plaintiffs when they initially served their...

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