Building Service 32BJ Pension Fund v. 1180 AOA Member LLC

Background

Building Service 32BJ Pension Fund (the Fund) sued 1180 AOA Member LLC and “ABC Companies 1-10,” described in the complaint as other businesses under common control with 1180 AOA. The Fund operates as a multiemployer employee-benefit plan under the Employee Retirement Income Security Act (ERISA). 1180 AOA had participated in a collective bargaining agreement requiring contributions to the Fund and previously owned a commercial building at 1180 Avenue of the Americas. It sold that building in February 2018.

The Fund notified 1180 AOA that the sale caused a complete withdrawal from the plan and assessed withdrawal liability. The Fund stated that a lump-sum payment or installment payments were due beginning August 12, 2018, and advised 1180 AOA that it could seek arbitration within 90 days. 1180 AOA did not begin making payments, did not cure its default, and did not timely request arbitration. The Fund therefore accelerated the payment obligation.

The Fund also asked 1180 AOA to provide information about businesses allegedly under common control with it. 1180 AOA did not respond. Although a law firm identifying itself as 1180 AOA’s corporate counsel sent an unsworn letter disputing service, the collective bargaining agreement, and receipt of the notices, 1180 AOA never formally appeared or filed evidence responding to the case or the default-judgment motion.

Default Judgment Standard

The court considered whether 1180 AOA’s failure to respond was willful, whether it had a potentially valid defense, and whether denying default judgment would prejudice the Fund. The court found all three factors favored the Fund. It then examined whether the Fund’s pleaded facts and supporting evidence established liability on each count and, where appropriate, the amount of damages.

Count One: Withdrawal Liability

The court held that the Fund established 1180 AOA’s liability for withdrawal payments. Under ERISA, an employer incurs withdrawal liability when it completely withdraws from a multiemployer plan. The court found that 1180 AOA’s sale of the building ended its obligation to contribute and therefore caused a complete withdrawal.

The court also found that the Fund followed the required procedures: it determined the liability, notified 1180 AOA of the amount and payment schedule, demanded payment, notified 1180 AOA of its default, and properly accelerated the unpaid obligation after the default remained uncured. Because 1180 AOA did not seek arbitration, the assessed withdrawal-liability amount could not be contested in this action.

The court awarded the Fund $287,404 in withdrawal liability, $28,913.63 in prejudgment interest through entry of judgment, $57,480.80 in liquidated damages, $17,765 in attorneys’ fees, and $465 in costs. Interest would continue to accrue at the legal rate after judgment. The court also ordered 1180 AOA to provide, within 14 days after judgment, an affidavit and supporting documents identifying each business under common control with 1180 AOA and supplying the other information requested by the Fund.

Count Two: Request for Information

The court held that 1180 AOA violated ERISA’s requirement that an employer provide information reasonably needed by a plan sponsor to administer withdrawal liability. The Fund had requested information about whether the alleged ABC Companies were under common control with 1180 AOA, and 1180 AOA had not responded within 30 days or by the time of the decision.

The court granted the Fund’s request for an injunction requiring 1180 AOA to provide the requested information. The monetary awards and information requirement were entered against 1180 AOA.

Count Three: Alleged Common-Control Liability

Count Three sought to hold 1180 AOA and the alleged ABC Companies jointly and separately responsible for the withdrawal liability and other damages. The court found that the Fund had not provided enough evidence to establish that the alleged ABC Companies existed, were under common control with 1180 AOA, or were subject to the court’s jurisdiction.

The court denied the Fund’s default-judgment motion as to Count Three and dismissed Count Three without prejudice.

Disposition

The court granted the Fund’s motion for default judgment as to Counts One and Two, awarded the specified monetary relief against 1180 AOA, ordered 1180 AOA to provide the requested common-control information, denied the motion as to Count Three, dismissed Count Three without prejudice, directed the Clerk to enter judgment, and closed the case.