Trs. of the Local 531 Pension Fund v. Flexwrap Corp.

• Decision Date: 02 August 2011
• Docket Number: No. 09–CV–1439 (RRM) (RML).,09–CV–1439 (RRM) (RML).
• Citation: 818 F.Supp.2d 585
• Parties: TRUSTEES OF the LOCAL 531 PENSION FUND, Plaintiffs, v. FLEXWRAP CORP., Defendant.
• Court: U.S. District Court — Eastern District of New York

818 F.Supp.2d 585

TRUSTEES OF the LOCAL 531 PENSION FUND, Plaintiffs,

v.FLEXWRAP CORP., Defendant.

No. 09–CV–1439 (RRM) (RML).

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

Aug. 2, 2011.

Rachel S. Paster, Charles Pergue, Oriana Vigliotti, Cary Kane LLP, New York, NY, for Plaintiffs.

Thomas J. Fellig, Fellig Feingold, Hackensack, NJ, for Defendant.

MEMORANDUM & ORDER

MAUSKOPF, District Judge.

The Board of Trustees of the Local 531 Pension Fund (“Plaintiffs”) move for summary judgment against Flexwrap Corp. (“Defendant”) on its claim for withdrawal liability arising under the Employee Retirement Income Security Act (“ERISA”), 29 U.S.C. § 1001, et seq., as amended by the Multiemployer Pension Plan Amendments Act of 1980, 29 U.S.C. § 1381, et seq. (Doc. No. 18.) Defendant has not opposed that motion. For the reasons set forth below, Plaintiffs' motion is GRANTED.

BACKGROUND

The following facts are drawn from Plaintiffs' Rule 56.1 Statement (“Pls.' 56.1 Stmt.”) and have not been disputed by Defendant. Because Defendant has not disputed Plaintiffs' statement of facts, those facts are deemed admitted for purposes of the motion. See E.D.N.Y. Local Civil Rule 56.1(c); Giannullo v. City of New York, 322 F.3d 139, 140 (2d Cir.2003) (“If the opposing party ... fails to controvert a fact so set forth in the moving party's Rule 56.1 statement, that fact will be deemed admitted.”).

The Local 531 Pension Fund (the “Fund”) is both an “employee pension benefit fund” and an “employee benefit fund” as defined, respectively, in Sections 3(2) and 3(3) of ERISA, 29 U.S.C. §§ 1002(2), (3). (Pls.' 56.1 Stmt. ¶ 1.) The Fund is administered at 2137–2147 Utica Avenue, Brooklyn, New York, 12234. ( Id. ¶ 2.) The Fund is operated pursuant to its Trust Agreement, as well as rules and regulations concerning the administration of the Local 531 Pension Plan (“Plan Rules”). ( Id. ¶ 3.) Defendant entered into a series of collective bargaining agreements with Local 531, International Brotherhood of Teamsters, requiring Defendant to make monthly contributions to the Fund. ( Id. ¶¶ 4, 5.) In December 1997, the collective bargaining agreements were amended, relieving Defendant, and other contributing employers, of the obligation to make monthly contributions to the Fund. ( Id. ¶ 6.) As a result of these amendments, the Fund was terminated by a mass withdrawal of the employers. ( Id. ¶ 7.) On December 1, 1997, Defendant ceased to have an obligation to make monthly contributions to the Fund, causing its complete withdrawal from the Fund. ( Id. ¶ 8.)

Plaintiffs' former actuary, Milliman & Robertson, then determined the withdrawal liability of all employers that had been contributing to the Fund, including Defendant. ( Id. ¶ 9.) On or about March 27, 1998, Plaintiffs notified Defendant of the amount of its estimated withdrawal liability and provided it with a quarterly payment schedule. ( Id. ¶ 10.) On or about January 27, 1999, after Plaintiffs had reassessed the liability of the withdrawing employers, it notified Defendant that its total withdrawal liability was $513,998.79. ( Id. ¶ 11.) The payment schedule set forth in the January 27, 1999 demand for payment, which Defendant admits it received, required 56 quarterly payments of $12,761.51 each, beginning May 1, 1998, and a final payment of $663.56. ( Id. ¶ 12.) Neither party initiated arbitration proceedings under Section 4221(a) of ERISA, 29 U.S.C. § 1401(a) with regard to Plaintiffs' determination of the amount of withdrawal liability owed by the Defendant. ( Id. ¶ 14.)

Defendant admits that it failed to pay in full each of the required quarterly payments that were due beginning on May 1, 2008. ( Id. ¶ 15.) In November 2008, February 2009, and April 2009, Plaintiffs notified Defendant of its demand for unpaid quarterly payments. ( Id. ¶ 16.) Defendant has failed to make a single full payment after Plaintiffs issued their April 2009 demand, although it tendered some partial payments of $500. ( Id. ¶ 17.) On April 20, 2009, Defendant admitted its debt to the Fund in a letter to the Court. ( Id. ¶ 18.) As of January 2010, Defendant ceased operations. ( Id. ¶ 19.)

Under the Plan Rules, if an employer fails to pay its withdrawal liability quarterly payment when due, and such failure is not cured within 60 days after the employer receives notice of such failure, the employer is deemed to be in default of its withdrawal liability obligation, making the total unpaid withdrawal liability immediately payable. ( Id. ¶ 20–21.) When it is has defaulted, the employer is also liable for interest on the total unpaid withdrawal liability from the due date of the first payment that was not timely made. ( Id. ¶ 22.) The Plan Rules further provide that should Plaintiffs utilize proceedings to enforce the collection of withdrawal liability, the Plan shall be entitled to reasonable attorneys' fees, litigation costs, and any and all other costs of the proceeding. ( Id. ¶ 23.) If judgment is entered in favor of Plaintiffs, the Plan Rules require the employer to pay, in addition to the principal and interest due, liquidated damages equal to the greater of 20% of the amount due or the interest due. ( Id.) At a meeting of the Board of Trustees of the Fund held on September 21, 2006, the Trustees adopted an interest rate of 5.6% on unpaid withdrawal liability. ( Id. ¶ 24; Reich Aff., Ex. F.)

Under the Plan Rules, Defendant has defaulted on its withdrawal liability obligation and Plaintiffs are entitled to accelerate the balance of withdrawal liability payments due. (Pls.' 56.1 Stmt. ¶¶ 25–26.) Plaintiffs' actuary, O'Sullivan Associates, has provided a final report of outstanding principal withdrawal liability. ( Id. ¶¶ 32–33.) According to the actuary's report, the total amount of outstanding withdrawal liability due as of May 1, 2010 was $270,161.33. ( Id.) Interest continues to accrue at a rate of 5.6% per year. ( Id. ¶ 34.)

Plaintiffs commenced this case on April 8, 2009. ( See Compl. (Doc. No. 1).) Plaintiffs seek the following in this action: (1) the unpaid withdrawal liability, which as of May 1, 2010 was $270,161.33; (2) interest on the unpaid withdrawal liability, accumulating from May 1, 2010 at a rate of 5.6%; (3) liquidated damages of $54,032.27; (4) attorneys' fees of $19,593.75; and (5) costs of $524.43. (Pls.' 56.1 Stmt. ¶¶ 38–40; Pls.' Br. in Supp. of Summ. Judg. at 12.) On April 20, 2009, Defendant's Chief Financial Officer wrote to this Court and acknowledged its debt to the Fund, stating that the “bad economy” made it “impossible” for Defendant to make its required quarterly withdrawal liability payments. (Doc. No. 3.) Defendant has not taken nor sought to take any discovery in this case, nor has it raised objection to any of Plaintiffs' actuarial reports. (Pls.' 56.1 Stmt. ¶¶ 35–36.) Defendant has also opted not to depose Plaintiffs' actuary or proffer an expert report of its own. ( Id. ¶ 37.) Plaintiffs moved for summary judgment on October 6, 2010. (Doc. No. 18.)

STANDARD OF REVIEW

Summary judgment is appropriate when the pleadings, depositions, interrogatories, admissions, and affidavits demonstrate that there are no genuine issues of material fact in dispute and that one party is entitled to judgment as a matter of law. See Fed. R. Civ. R 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). A genuine issue of material fact exists “if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).

In deciding a summary judgment motion, a district court must draw all reasonable inferences in favor of the nonmoving party. See id. at 249, 106 S.Ct. 2505 (citing Adickes v. S.H. Kress & Co., 398 U.S. 144, 158–59, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970)); Castle Rock Entm't, Inc. v. Carol Publ'g Grp., Inc., 150 F.3d 132, 137 (2d Cir.1998). Thus, the court must not “weigh the evidence but is instead required to view the evidence in the light most favorable to the party opposing summary judgment, to draw all reasonable inferences in favor of that party, and to eschew credibility assessments.” Amnesty Am. v. Town of W. Hartford, 361 F.3d 113, 122 (2d Cir.2004) (quoting Weyant v. Okst, 101 F.3d 845, 854 (2d Cir.1996)). Any evidence in the record of any material fact from which an inference could be drawn in favor of the non-moving party precludes summary judgment. See Castle Rock Entm't, 150 F.3d at 137.

Once the movant has demonstrated that no genuine issue of material fact exists, such that it is entitled to judgment as a matter of law, then “the nonmoving party must come forward with ‘specific facts showing that there is a genuine issue for trial.’ ” Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986) (quoting Fed.R.Civ.P. 56(e)) (emphasis in original). However, there must exist more than mere “metaphysical doubt as to the material facts” to defeat a summary judgment motion. Id. at 586, 106 S.Ct. 1348. Instead, the non-moving party must present “concrete evidence from which a reasonable juror could return a verdict in his favor.” Anderson, 477 U.S. at 256, 106 S.Ct. 2505. Only disputes over material facts “that might affect the outcome of the suit under the governing law” will properly preclude the entry of summary judgment. Id. at 248, 106 S.Ct. 2505; see also Matsushita, 475 U.S. at 586, 106 S.Ct. 1348.

“Even when a motion for summary judgment is unopposed, the district court is not relieved of its duty to decide whether the movant is entitled to judgment as a matter of law.” Vt. Teddy Bear Co. v. 1–800 BEARGRAM Co., 373 F.3d 241, 242 (2d Cir.2004); Amaker v. Foley, 274 F.3d 677, 681 (2d Cir.2001) ( “[W]hen a nonmoving party chooses the perilous path of failing to submit a response to a summary judgment motion, the district court may not grant the motion without first...