Citation Codes

Equivalent Citations

citation codes

Docket Number

06-CV-6641 (CPS) (VVP).

Judges

Charles Proctor Sifton

Acts

Labor — General Provisions — Employee Retirement Income Security Program — Protection Of Employee Benefit Rights — Congressional Findings And Declaration Of Policy
Labor — Regulatory Provisions — Employee Retirement Income Security Program — Protection Of Employee Benefit Rights — Administration And Enforcement — Civil Enforcement
Labor — Regulatory Provisions — Employee Retirement Income Security Program — Protection Of Employee Benefit Rights — Administration And Enforcement — Delinquent Contributions
Labor — Labor-Management Relations — Liabilities Of And Restrictions On Labor And Management — Suits By And Against Labor Organizations
Judiciary And Judicial Procedure — United States Magistrate Judges — Court Officers And Employees — Jurisdiction, Powers, And Temporary Assignment

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Smart Summary

Memorandum Opinion and Order — LaBarbera & Finkel v. Rockwala Inc. & Andy Wala (E.D.N.Y., Nov. 8, 2007)

Factual and Procedural Background

Plaintiffs Gary LaBarbera and Frank Finkel, as Trustees and Fiduciaries of the Local 282 International Brotherhood of Teamsters Welfare, Pension, Annuity, Job Training and Vacation and Sick Leave Trust Funds (the "Funds"), brought this action against Rockwala Inc. and Andy Wala to recover unpaid pension contributions and related relief under ERISA (29 U.S.C. § 1001 et seq.), Section 301 of the Labor Management Relations Act (29 U.S.C. § 185), and related statutory provisions. Plaintiffs sought enforcement of a Trust Agreement, collection of unpaid contributions and interest under collective bargaining agreements, liquidated damages, injunctive relief, and attorney's fees and costs.

Defendants failed to appear or otherwise defend; the Clerk entered default on January 26, 2007. The case was referred to Magistrate Judge Pohorelsky for findings on jurisdiction, damages, interest, injunctive relief, and attorney's fees and costs. On September 10, 2007, the Magistrate issued a Report and Recommendation (the "Report") recommending (among other things) dismissal of claims against Andy Wala, denial of a permanent injunction, denial of damages without prejudice to renewal, and postponement of an award of attorney fees until resolution of any renewed damages application.

Plaintiffs objected only to the Report's limitation that attorney fees and costs be recoverable only for work performed on or after December 5, 2006 (the date plaintiffs' counsel commenced the instant action). The District Judge reviewed the Report and now adopts it, overruling the plaintiffs' objection as to attorney fees without prejudice to renewal before the Magistrate if plaintiffs renew their damages application.

Legal Issues Presented

Whether the Magistrate Judge's Report and Recommendation should be adopted as to: dismissal of claims against Andy Wala, denial of a permanent injunction, denial of damages without prejudice, and postponement of attorney fees until disposition of any renewed damages application.
Whether plaintiffs may recover attorney fees and costs incurred prior to December 5, 2006 (pre-filing) under ERISA or under the Trust Agreement provision incorporated into the collective bargaining agreement.
Whether the district court should consider, at this stage, an argument (based on the Trust Agreement) that plaintiffs are contractually entitled to attorney fees irrespective of whether suit has been filed, when that argument was not raised before the Magistrate Judge.

Arguments of the Parties

Plaintiffs' Arguments

Plaintiffs objected to the Magistrate Judge's limitation that attorney fees and costs be recoverable only for time after December 5, 2006. They contend there was an agreement with defendants (the Trust Agreement, incorporated into the collective bargaining agreement) that entitled the Trustees to recover actual attorney fees and costs for collection efforts whether or not an action had been filed in court.
Plaintiffs rely on language in Article IX, Section 3 of the Trust Agreement stating that "attorney fees in collections, whether a suit has been filed or not, shall be equal to the amount to be billed to the Trustees by their counsel for work performed in connection with this matter." They point out that the Trust Agreement was incorporated by reference into the CBA (General Contractor's Association Agreement Section 13(G)).

The opinion notes that plaintiffs did not present this contractual argument to the Magistrate Judge; because it was not made before the Magistrate, the district court declined to consider it at this stage.

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Thomas v. Arn, 474 U.S. 140 (1985)	Standard of review for a district court reviewing a magistrate judge's report under 28 U.S.C. § 636(b)(1) — de novo review for timely objections; uncontested portions may be adopted unless clearly erroneous.	The Court invoked this standard to describe its review methodology: de novo review of parts of the Report to which timely written objections were made and adoption of uncontested portions absent clear error.
Grassia v. Scully, 892 F.2d 16 (2d Cir. 1989)	Second Circuit authority on standards for adopting magistrate reports and handling objections.	Cited as supporting authority for the district court's review framework and its approach to objections and uncontested portions of the Report.
Tapia-Garcia v. United States, 53 F.Supp.2d 370 (S.D.N.Y. 1999)	Support for the standard that uncontested portions of a magistrate judge's report may be adopted unless they show clear error.	Cited in the discussion of the standard of review and the district court's adoption of uncontested recommendations of the Magistrate Judge.
Peterson v. Continental Casualty Co., 282 F.3d 112 (2d Cir. 2002)	Interprets whether the term "action" in 29 U.S.C. § 1132(g) limits fee recovery to work performed after the filing of a complaint; holds that "action" is restricted to formal judicial proceedings and pre-filing work is not recoverable under that statutory provision absent contrary language.	The Court used Peterson to explain that under ERISA's fee-shifting provision a prevailing plan cannot recover pre-filing attorney work as part of "the action." The Court then distinguished that statutory rule from plaintiffs' contractual argument (which plaintiffs did not present earlier to the Magistrate).

Court's Reasoning and Analysis

The Court followed the review standards of 28 U.S.C. § 636(b)(1) and Fed.R.Civ.P. 72(b): it reviews de novo the parts of the Magistrate Judge's Report to which timely written objections were made and adopts uncontested portions absent clear error (citing Thomas v. Arn, Grassia, and Tapia-Garcia). The only timely objection by plaintiffs challenged the Magistrate's limitation on attorney fees and costs to the period after December 5, 2006 (the date counsel commenced the action).

The Court analyzed the legal basis for awarding attorney fees. Under ERISA, 29 U.S.C. § 1132(g)(2)(D) awards "reasonable attorney fees and costs of the action" to a prevailing plan. The Court relied on Peterson v. Continental Casualty Co. for the proposition that the term "action" in § 1132(g) "is restricted to formal judicial proceedings" and thus ordinarily does not encompass pre-filing attorney work; pre-filing work was not recoverable in Peterson.

Plaintiffs did not, however, ask to recover pre-filing fees under ERISA. Instead they argued (in their objection) that the Trust Agreement itself provides for recovery of attorney fees for collections "whether a suit has been filed or not," and that the Trust Agreement was incorporated by reference into the collective bargaining agreement (General Contractor's Association Agreement Section 13(G)). The Trust Agreement language quoted by plaintiffs states that attorney fees in collections, whether a suit has been filed or not, "shall be equal to the amount to be billed to the Trustees by their counsel for work performed in connection with this matter," and that an employer defaulting on payments for five working days must pay interest, attorney's fees, auditor's fees and liquidated damages.

Critically, the Court observed that plaintiffs did not present this contractual argument to the Magistrate Judge. Because that argument was not made before the Magistrate, the Court declined to consider it at this stage. The Court therefore overruled plaintiffs' objection only insofar as it sought consideration of pre-December 5, 2006 fees, doing so without prejudice to plaintiffs' ability to renew the contractual-fees argument before the Magistrate Judge if they renew their application for damages.

The Court also reviewed and agreed with the uncontested portions of the Magistrate Judge's Report — including the recommendations dismissing claims against Andy Wala, denying a permanent injunction, denying damages without prejudice to renewal, and postponing the award of attorney's fees until disposition of any renewed damages application — and adopted those recommendations.

Holding and Implications

Holding: The Court ADOPTS the Report and Recommendation of Magistrate Judge Pohorelsky. The plaintiffs' objection to the Magistrate Judge's limitation on attorney fees is overruled, but without prejudice to plaintiffs' renewing the argument before the Magistrate Judge if they renew their application for damages.

Direct implications and immediate effects:

The Report's recommendations are adopted: the claims against defendant Andy Wala are dismissed; the application for a permanent injunction is denied; the application for damages is denied without prejudice to renewal; and the award of attorney fees is postponed until final disposition of any renewed damages application.
Plaintiffs' objection that they should recover attorney fees and costs incurred prior to December 5, 2006 was overruled because the contractual argument underlying that objection was not presented to the Magistrate. The ruling is without prejudice to plaintiffs' ability to renew that contractual-fees argument before the Magistrate Judge if they again seek damages.
No new legal precedent is announced; the Court applied existing standards of review for magistrate reports and cited existing case law (including Peterson) concerning the interpretation of "action" in ERISA fee-shifting provisions.

Administrative directive: The Clerk was ordered to furnish a copy of the decision to the parties and the Magistrate Judge.

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Gary LaBarbera and Frank Finkel, as Trustees of Local 282 Welfare, Pension, Annuity, Job Training and Vacation Sick Lea v. Trust Funds, Plaintiffs,

MEMORANDUM OPINION AND ORDER

CHARLES SIFTON, Senior District Judge

Plaintiffs Gary LaBarbera and Frank Finkel, the Trustees and Fiduciaries of the Local 282 International Brotherhood of Teamsters Welfare, Pension, Annuity, Job Training and Vacation and Sick Leave Trust Funds (the "Funds") commenced this action against Rockwala Inc. and Andy Wala ("defendants") to recover payments for unpaid pension contributions pursuant to the provisions of the Employee Retirement Income Security Act of 1974 ("ERISA"), as amended, 29 U.S.C. § 1001 et. seq. Plaintiffs seek to enforce the terms of a Trust Agreement entered into between plaintiffs and defendant Rockwala Inc. pursuant to Section 502 of ERISA, 29 U.S.C. §§ 1132 and 1145, and Section 301 of the Labor Management Relations Act of 1947, 29 U.S.C. § 185, and collect payments, along with interest on those payments, alleged to be owed to the Funds under the terms of various collective bargaining agreements between defendant Rockwala Inc. and Local 282 of the International Brotherhood of Teamsters. Plaintiffs also seek liquidated damages pursuant to ERISA, injunctive relief and an award of attorney's fees and costs.

After defendants failed to appear or otherwise defend in this action, the Clerk of the Court noted their default on January 26, 2007. I thereafter referred the matter to Magistrate Judge Pohorelsky for a determination as to jurisdiction, damages, interest, injunctive relief and attorney's fees and costs. On September 10, 2007, Magistrate Judge Pohorelsky issued a Report and Recommendation (the "Report") that the claims against Andy Wala be dismissed, the application for a permanent injunction be denied, the application for damages be denied without prejudice to renewal and the award of attorney fees be postponed until disposition of any renewed application for damages. Now before this Court is plaintiffs' objection to that portion of the Report which recommended that the court not award attorney fees or costs incurred before December 5, 2006, the date plaintiffs' attorney commenced the instant action. For the reasons set forth below, the Magistrate Judge's Report and Recommendation is adopted. The objection to the determination as to attorney fees is overruled without prejudice to its renewal before the Magistrate Judge when and if the plaintiffs renew their application for damages.

DISCUSSION

A district court reviewing a magistrate judge's report follows the standards established in 28 U.S.C. § 636(b)(1) and Fed.R.Civ.P. 72(b). Those parts of the report to which timely written objection has been made by any party are reviewed de novo, but the uncontested portions of the report may be adopted unless they show clear error. See Thomas v. Arn, 474 U.S. 140, 151-52, 106 S.Ct. 466, 88 L.Ed.2d 435 (1985); Grassia v. Scully, 892 F.2d 16, 19 (2d Cir. 1989); Tapia-Garcia v. United States, 53 F.Supp.2d 370, 373 (S.D.N.Y. 1999).

Plaintiffs object to the Report only to the extent that it limits the award of attorney fees and costs to the period of time subsequent to December 5, 2006, the time when plaintiffs' attorney commenced this action. The Report bars any recovery for fees and costs incurred prior to December 5, 2006. In their objection to the Report, plaintiffs claim that there was an agreement in place with defendants whereby plaintiffs were entitled to actual attorney fees and costs whether or not an action to recover owed contributions had been filed in court.

ERISA awards "reasonable attorney fees and costs of the action" to a prevailing benefit plan when there is a judgment in the plan's favor. 29 U.S.C. § 1132(g)(2)(D). In Peterson v. Continental Casualty Co., the Court of Appeals discussed whether Congress intended the term `action' in 29 U.S.C. § 1132(g) to limit recovery to work performed by an attorney after the filing of a complaint. 282 F.3d 112, 119 (2d Cir. 2002). It determined that absent statutory language to the contrary, "the term `action' [is] restricted to formal judicial proceedings . . . and connotes a formal adversarial proceeding under the jurisdiction of a court of law." Id. Accordingly, pre-filing work in Peterson was not recoverable.

Here, however, plaintiffs are not arguing that they should recover pre-litigation attorneys fees and costs pursuant to ERISA. Rather, plaintiffs contend that the Trust Agreement between the parties allows plaintiffs to recover attorney fees and costs for all work performed in efforts to collect monies owed and due to the Funds by defendant Rockwala.

Article IX, Section 3 of the Trust Agreement says that if an employer (as defined under the Trust Agreement) doesn't "pay the contributions required hereunder of the Collective Bargaining Agreement," then the employer is in violation of its obligations. See Pl.'s Affirmation Support of Default J. and Permanent Inj., Ex. E ("Restated Agreement and Declaration of Trust"). Section 3(a) of Article IX then states, "[a]ttorney fees in collections, whether a suit has been filed or not, shall be equal to the amount to be billed to the Trustees by their counsel for work performed in connection with this matter. . . ." Id. A payment is timely if it is made on the date established in the CBA. Id. If, however, an employer defaults on the payments for five working days after the date the payment is due, the employer must pay interest, attorney's fees, auditor's fees and liquidated damages. The Trust Agreement was subsequently incorporated by reference into the CBA in Section 13(G).

According to the General Contractor's Association Agreement Section 13(G), "[t]he Trust Agreements governing the Local 282 Welfare, Pension, Annuity and Job Training Trust Funds, as they shall be amended from time to time, are hereby made a part of this Agreement with the same force and effect as if fully incorporated herein, and the Employer and the Union hereby agree that upon the execution of this Agreement they shall be deemed parties to said Trust Agreements." The General Contractor's Association Agreement was effective as of July 1, 2002.

To all appearances, plaintiffs made no such argument before the Magistrate Judge. Accordingly, it will not now be considered. The plaintiffs do not offer any additional objections to any other portions of Magistrate Judge Pohorelsky's Report. I have reviewed these uncontested portions and agree with their recommendations. I therefore adopt them.

CONCLUSION

For the reasons set forth above the Report and Recommendation of Magistrate Pohorelsky is adopted.

The Clerk is directed to furnish a copy of the within to the parties and to the Magistrate Judge.

SO ORDERED.

LaBARBERA v. ROCKWALA INC