United Plant & Prod. Workers Local 175 Pension Fund v. J. Pizzirusso Landscaping Corp.
| Decision Date | 09 August 2022 |
| Docket Number | 20 CV 2527 (RJD) (CLP) |
| Parties | UNITED PLANT AND PRODUCTION WORKERS LOCAL 175 PENSION FUND, by James Kilkenny in his capacity as Trustee, Plaintiff, v. J. PIZZIRUSSO LANDSCAPING CORP., Defendant. REPORT AND RECOMMENDATION |
| Court | U.S. District Court — Eastern District of New York |
REPORT AND RECOMMENDATION
On June 5, 2020, plaintiff United Plant and Production Workers Local 175 Pension Fund (“plaintiff” or “the Fund”), by its trustee James Kilkenny, commenced this action against defendant J. Pizzirusso Landscaping Corp. (“defendant” or “Pizzirusso”) seeking to collect interim withdrawal liability payments pursuant to 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 (“MPPAA”), 29 U.S.C §§ 1381, et seq., and to stay an arbitration proceeding, initiated by defendant, challenging the withdrawal liability assessment. (See Compl.[1]). Currently pending before this Court is plaintiff's motion for attorney's fees and costs associated with the arbitration proceeding and this federal action. (See Pl.'s Mem.[2]).
For the reasons set forth below, the Court respectfully recommends that plaintiff's motion be granted, and plaintiff be awarded $146,394.05 in fees and costs.
Although the background to the parties' dispute is set forth in the October 2, 2020 Order of the Honorable Raymond H. Dearie and in the decision of Arbitrator Judith A. LaManna, certain facts and some procedural history are necessary to determine the appropriate standard for considering plaintiff's fee request. [4]).
James Kilkenny, trustee of plaintiff, filed the Complaint in this action on June 5, 2020, seeking to collect interim withdrawal liability payments based on Pizzirusso's partial withdrawal from the Fund in October 2017. (See Compl. ¶¶ 1, 6, 13-15, 18). As alleged in the Complaint, plaintiff is an employee benefit plan within the meaning of 29 U.S.C. § 1002(3), established pursuant to various collective bargaining agreements between the Construction Council 175, Utility Workers of America, AFL-CIO (the “Union”), and various employers, including Pizzirusso. (Id. ¶¶ 6, 7). On October 1 2017, Pizzirusso's employees ceased to be represented by the Union and thus Pizzirusso had no future obligation to make contributions to the Fund. (Id. ¶¶ 14-15).
Upon determining that Pizzirusso had withdrawn from the Fund, plaintiff made an estimated assessment of withdrawal liability in the amount of $123,835 (the “First Assessment”), and informed defendant of its obligation to pay on October 23, 2018. (Def.'s Mem.[5] at 3; Pl.'s Mem. at 1). Defendant objected to the First Assessment, noting that it was based on “estimated” contribution data rather than “actual” contribution data. (Def.'s Mem. at 4; Pl.'s Mem. at 1).
Neither party initiated arbitration and plaintiff subsequently withdrew the First Assessment. (Def.'s Mem. at 4; Pl.'s Mem. at 1).
Thereafter, plaintiff made a Second Assessment based on the actual contribution data in the amount of $232,536 and notified defendant of that revised amount on November 15, 2019. (Compl. ¶¶ 16-17; see Pl.'s Mem. at 1; Def.'s Mem. at 4-5). Defendant requested that plaintiff review the Second Assessment, and plaintiff responded on December 6, 2019, declining to alter the Second Assessment. (See Compl. ¶¶ 20-21). Thereafter, defendant continued to dispute the Second Assessment, resulting in several communications between the parties, but plaintiff maintained that the Second Assessment was correct. (See id. ¶ 24). Plaintiff took the position that since the Fund had responded to defendant's request for review on December 6, 2019, defendant was required to initiate arbitration within 60 days thereafter, or by February 4, 2020. (Id. ¶ 27).
On April 22, 2020, defendant initiated arbitration, arguing that due to the parties' various communications surrounding the First and Second Assessments, the deadline to initiate arbitration had not run. (Id. ¶ 31; Def.'s Mem. at 4-5). Although defendant had paid the first installment of its interim withdrawal liability, defendant failed to make its second interim withdrawal liability payment, which was due on April 14, 2020. (Compl. ¶¶ 39-43).
As a consequence, on June 5, 2020, plaintiff brought this action to recover the interim withdrawal liability payments that defendant had not yet paid and to enjoin the April 22, 2020 employer-initiated arbitration challenging the assessment of withdrawal liability, arguing that the arbitration demand was untimely and defective. . Plaintiff alleged that defendant had failed to make interim withdrawal liability payments, which are due “whether or not” defendant adequately challenged the assessment in arbitration. (Id. ¶¶ 79-82); see 29 U.S.C. § 1401(d).
Plaintiff also sought a declaratory judgment that defendant was liable for all future interim withdrawal liability payments. (Compl. ¶¶ 85-87).
On June 1, 2020, plaintiff filed a motion for a preliminary injunction, seeking to enjoin the arbitration proceeding. (See ECF No. 6). Defendant subsequently filed a motion on July 21, 2020, seeking to dismiss plaintiff's Complaint on the grounds that the District Court did not have jurisdiction because plaintiff's claims were subject to mandatory arbitration. (See ECF No. 10).
On October 2, 2020, the Honorable Raymond J. Dearie issued an Order, denying both motions, staying proceedings in the federal action pending further Order of the court, and referring to arbitration the question of whether defendant timely demanded arbitration. (See Dearie Ord.). The question of whether defendant sought arbitration in a timely fashion was referred to Arbitrator La Manna consistent with the court's preference for having arbitrators decide issues arising under the MPPAA in the first instance. .
While the question of the timeliness of the arbitration demand was pending before the arbitrator, defendant made all of its withdrawal liability payment installments, with the exception of one.[6] The final payment was made on March 12, 2021, after the arbitrator's decision was issued and after plaintiff issued a 60-day Notice letter which notified defendant that the payment had been due on January 14, 2021. (See Def.'s Mem. at 10; ECF Nos. 35-2, 35-11).
On February 12, 2021, Arbitrator Judith A. La Manna issued her decision (“the Decision”) in favor of plaintiff, finding that the demand filed by defendant was “neither timely nor adequate” and dismissing the arbitration. (Arb. Dec. at 20). On March 9, 2021, after plaintiff notified the court of the Decision, plaintiff thereafter sought enforcement of the Decision[7] and an award of attorney's fees. (See ECF Nos. 26-27). Plaintiff's motion for attorney's fees was fully briefed on September 6, 2021. (See Pl.'s Mem.; Def.'s Mem.; Pl.'s Reply[8]). On September 7, 2021, Judge Dearie referred the motion for fees to the undersigned for a Report and Recommendation.[9]
In this fee application, plaintiff requests a total of $207,987.95 in attorney's fees and costs, consisting of $183,616.00 in attorney's fees and $24,371.95 in costs. (Smith Decl.[10] ¶ 55; Pl.'s Reply at 2; Smith Reply Decl.[11] ¶ 21). Before assessing the reasonableness of plaintiff's fee request, the Court must determine the appropriate standard to be applied. Plaintiff argues that 29 U.S.C. § 1132(g)(2), in conjunction with 29 U.S.C. § 1451(b), provides the standard that governs a fee award in this case, while defendant argues that the standard set forth in 29 C.F.R. § 4221.10, which is applied in the context of an arbitration proceeding, is appropriate and would require a finding that defendant's arguments were frivolous or made in bad faith before fees can be awarded. (Compare Pl.'s Reply at 3, with Def.'s Mem. at 2). Plaintiff asserts that, should the court find that Section 1132(g)(2) does not apply, plaintiff would still be entitled to fees under either the arbitration standard argued for by defendant, or the standards set forth in 29 U.S.C. §§ 1132(g)(1) & 1451(e). (Pl.'s Reply at 6).
The MPPAA was designed to deal with the problem of employer withdrawal from multiemployer plans, which had the effect of “reduc[ing] a plan's contribution base,” pushing “the contribution rate for remaining employers to higher and higher levels in order to fund past service liabilities.” Connolly v. Pension Ben. Guar Corp., 475 U.S. 211, 216 (1986) (citations and quotations omitted). Under the MPPAA, an employer who withdraws from participation in a multiemployer pension plan is required to pay its proportionate share of the plan's unfunded vested benefits. 29 U.S.C. §§ 1381(a), 1399; see I.L.G.W.U. Nat'l Ret. Fund v. ESI Grp., Inc., No. 92 CV 0597, 2002 WL 999303, at *3 , aff'd sub nom. I.L.G.W.U. Nat'l Ret. Fund v. Meredith Grey, Inc., 94 Fed.Appx. 850 (2d Cir. 2003). As the Second Circuit noted in ILGWU National Retirement Fund v. Levy Bros. Frocks, Inc., “[t]he purpose of withdrawal liability ‘is to relieve the funding burden on remaining employers and to eliminate the incentive to pull out of a plan which would result if liability were imposed only on a mass withdrawal by all employers.'” 846 F.2d 879, 881 (2d Cir. 1988) (quoting H.R. Rep. No. 96-869, Part I, 96th Cong., 2d Sess. 51 (1980) reprinted in 1980 U.S.C.C.A.N. 2918, 2935). A withdrawal liability...
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