Labarbera v. D. & R. Materials Inc.

• Decision Date: 01 December 2008
• Docket Number: Case No. 08-CV-146 (FB)(JMA).
• Parties: Gary LaBARBERA and Frank Finkel Trustees of Local 282 International Brotherhood of Teamsters Welfare, Pension, Annuity, Job Training and Vacation Sick Leave Trust Funds, Plaintiffs, v. D. & R. MATERIALS INC. d/b/a D & R Materials Inc., Defendant.
• Court: U.S. District Court — Eastern District of New York

588 F.Supp.2d 342

Gary LaBARBERA and Frank Finkel Trustees of Local 282 International Brotherhood of Teamsters Welfare, Pension, Annuity, Job Training and Vacation Sick Leave Trust Funds, Plaintiffs, v. D. & R. MATERIALS INC. d/b/a D & R Materials Inc., Defendant.

Case No. 08-CV-146 (FB)(JMA).

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

December 1, 2008.

Avram H. Schreiber, Esq., New York, NY, for the Plaintiff.

MEMORANDUM AND ORDER

BLOCK, Senior District Judge:

I

On January 11, 2008, plaintiffs, in their capacities as fiduciaries of the Local 282 International Brotherhood of Teamsters ("Local 282") Welfare, Pension, Annuity, Job Training and Vacation Sick Leave Trust Funds ("the Funds"), filed suit against D. & R. Materials Inc. ("D & R"). Plaintiffs' complaint alleged that D & R violated the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. §§ 1132 and 1145, and the Labor Management Relations Act ("LMRA"), 29 U.S.C. § 185, by, inter alia, failing to make required contributions to employee benefit plans. As a result of defendant's failure to answer or otherwise defend, see Docket Entry # 9 (Clerk's Entry of Default), a default judgment was entered on March 25, 2008, 2008 WL 824286, and the matter was referred to Magistrate Judge Joan M. Azrack for a determination of the relief to be awarded. See Docket Entry # 10 (Memorandum and Opinion).

On August 11, 2008, the magistrate judge issued a Report and Recommendation ("R & R"), see Docket Entry # 11, recommending that plaintiffs be awarded: (1) $1,186.06 in interest associated with late contributions from December 2006 and May-September 2007, (2) $7,618.33 in liquidated damages in connection with these late contributions, (3) $2,299.70 in attorney's fees, and (4) $477.88 in litigation costs. The R & R also recommended that plaintiffs be denied: (1) recovery of unpaid contributions from October and November 2007, (2) interest and liquidated damages in connection with these contributions, and (3) injunctive relief.

The R & R advised plaintiffs that "[a]ny objections to this Report & Recommendation must be filed with the Clerk of the Court ... within ten (10) days of the date of entry ... [,]" R & R at 15, and that "[f]ailure to file objections within the specified time waives the right to appeal the District Court's order." Id. at 16 (citations omitted). On August 12, 2008, plaintiffs served a copy of the R & R on defendant. See Docket Entry # 12 (Affidavit of Service). Plaintiffs timely filed objections to parts of the R & R, see Docket Entry # 13, arguing that the magistrate judge improperly denied recovery of the unpaid October-November 2007 contributions, together with associated interest and liquidated damages, and that the magistrate judge improperly reduced plaintiffs' attorney's-fee award.

II

"[A] district court evaluating a magistrate judge's recommendation is permitted to adopt those portions of the recommendation to which no specific, written objection is made, as long as those sections are not clearly erroneous." Greene v. WCI Holdings Corp., 956 F.Supp. 509, 513 (S.D.N.Y.1997) (internal quotation marks and citations omitted).

By contrast, "[s]hould either party object to the magistrate's recommendation, ... `[the district court] shall make a denovo determination of those portions of the report or specified proposed findings or recommendations to which objection is made.'" Grassia v. Scully, 892 F.2d 16, 19 (2d Cir.1989) (quoting 28 U.S.C. § 636(b)(1)(B)). Even when exercising de novo review, however, "[t]he district court need not ... specifically articulate its reasons for rejecting a party's objections...." Morris v. Local 804, Bhd. of Teamsters, 167 Fed.Appx. 230, 232 (2d Cir.2006). The district court "may accept, reject, or modify, in whole or in part, the findings or recommendations made by the magistrate. The judge may also receive further evidence or recommit the matter to the magistrate with instructions." Grassia, 892 F.2d at 19 (quoting 28 U.S.C. § 636(b)(1)).

III

The Court finds no clear error with those portions of the R & R to which plaintiffs did not object. Accordingly, the Court adopts them without de novo review. The Court next reviews de novo the two portions of the R & R to which plaintiffs objected.

A. Denial of Relief for Unpaid October and November 2007 Contributions

The Trust Agreement between Local 282 and D & R ("Trust Agreement"), which is incorporated into the operative Collective Bargaining Agreement, specifies that "[d]etailed written reports shall be submitted to the Trustees [of the Funds] by [D & R] together with each monthly payment...." Trust Agreement, Art. IX § 1(c). However, because "[D & R] failed to provide the required monthly payroll reports for [October and November 2007]," the number of hours worked by covered employees, and therefore "the amount of defendant's unpaid contributions [for those months,] is unknown." R & R at 6.

As the magistrate judge observed, Article IX, § 1(e) of the Trust Agreement (" § 1(e)") provides a formula by which the Funds may calculate contributions due when D & R has failed to provide the required documentation of its employees' hours:

In the event the Employer fails to submit the required reports and/or pertinent books and records for audit within twenty (20) days after written demand, the Trustees ... may compute the sum due for any month by adding 10 percent to the number of hours for the month in which the largest number of hours were reported in the previous twelve (12) reports submitted by the Employer.... The total number of hours for the unreported period as determined aforesaid shall be multiplied by the current contribution rate, and the amount of contributions so computed shall be binding on the Employer and shall be deemed the amount due from the Employer for the purpose of any legal proceeding.

Plaintiffs' objection involves the proper interpretation of the first sentence of this paragraph, which states the conditions under which plaintiffs may rely on the § 1(e) formula to compute unpaid contributions. As indicated by the use of "and/or," there are clearly two independent preconditions—one involving the failure to submit "the required reports," and one involving the failure to submit "pertinent books and records." However, the syntax of this sentence admits of two interpretations, due to the potentially ambiguous scope of the phrase "for audit within twenty (20) days after written demand"—specifically, whether this phrase modifies both the phrase "required reports" and the phrase "pertinent books and records," or solely the latter one. Thus, both of these constructions of the sentence at issue are linguistically tenable:

(1) In the event the Employer either (a) fails to submit the required [monthly hours-worked] reports, or (b) fails to submit the pertinent books and records for audit within 20 days after written demand....

(2) In the event the Employer fails to submit for audit within 20 days after written demand, either (a) the required [monthly hours-worked reports], or (b) the pertinent books and records....

The magistrate judge evidently adopted construction (2). In other words, as the magistrate judge construed § 1(e), both the "required reports" precondition and the "pertinent books and records" precondition require a written audit demand that goes unanswered. See R & R at 6-7 ("In the absence of defendant's noncompliance with a written request for an audit, § 1(e) of the Trust Agreement is not triggered and remains inapplicable."). Although D & R failed to submit the required monthly payroll reports for October and November 2007, plaintiffs had not alleged that they had made a written audit demand that went unanswered. Consequently, the magistrate judge "reject[ed] the plaintiffs' use of § 1(e) to calculate contributions owed by D & R for the months October and November 2007." Id. at 6.

The Court disagrees with the magistrate judge's construction of the provision at issue. Reading the Trust Agreement as a coherent whole, see Postlewaite v. McGraw-Hill, Inc., 411 F.3d 63, 67 (2d Cir.2005) ("Contracts must be read as a whole ...."), the Court finds that the phrase "for audit within twenty (20) days after written demand" modifies only the "pertinent books and records" precondition, and not the "required reports" precondition. In other words, the Court adopts the construction labeled (1) above.¹

First of all, as mentioned previously, § 1(c) of the Trust Agreement provides that payroll "reports shall be submitted ... together with each monthly payment ..." (emphasis added). Thus, § 1(c) establishes D & R's mandatory duty to provide the "required reports" that are mentioned later in the disputed § 1(e); this recurring obligation is unvarying and does not depend upon any request or demand on plaintiffs' part. Notably, this section contains no mention of an "audit." The following section of the Trust Agreement, § 1(d), provides that "[t]he Trustees may at any time audit the pertinent books and records of [the] Employer ..." (emphasis added). Thus, § 1(d) establishes D & R's conditional duty to provide "pertinent books and records" for "audit"—but only upon plaintiff's demand. This duty likewise resurfaces in the disputed § 1(e). Consequently, in interpreting § 1(e), it would best harmonize with these earlier sections to construe the phrase "for audit within twenty (20) days after written demand" as connected only to the phrase "pertinent books and records," and not the phrase "required reports."

The Court's conclusion is bolstered by the subsequent § 1(f) of the Trust Agreement, which provides that "[i]n the event the Employer submits the required ... reports, but thereafter ... fails to submit the pertinent books and records for audit within 20 days after written demand, such failure shall be a material breach of the Trust Agreement." (emphasis added). In this provision, it is unmistakably clear that the phrase "for...