Board of Trustees of 1199/SEIU Greater New York Benefit Fund v. Amboy Care…

Background

The Boards of Trustees of the 1199/SEIU Greater New York Benefit Fund and the 1199/SEIU Greater New York Education Fund sued Amboy Care Center, Inc. for unpaid contributions. The claims arose under the parties’ collective bargaining agreements and Sections 515 and 502 of the Employment Retirement Income Security Act (ERISA), as well as Section 301 of the Labor Management Relations Act.

The collective bargaining agreement required Amboy to contribute to the Benefit Fund based on the gross payroll of eligible bargaining-unit employees. The agreement excluded wages of employees who opted out of health coverage and “No Frills” employees. It also limited Amboy’s use of No Frills employees to 39% of bargaining-unit employees. The Education Fund contribution rate was 0.5% of gross payroll, calculated using the same inclusions and exclusions as the Benefit Fund.

The Funds audited Amboy’s payroll records for January 1, 2015 through December 31, 2018. A revised audit report calculated $357,347.89 in unpaid Benefit Fund contributions and $10,669.95 in unpaid Education Fund contributions, plus audit costs and interest. The Funds moved for summary judgment, which asks whether the undisputed evidence requires judgment as a matter of law.

Liability

The court read the agreement’s provisions together and found them unambiguous. In the court’s view, Amboy could exclude No Frills wages only up to the 39% limit. Wages of No Frills employees hired beyond that limit had to be included in the gross-payroll calculation for contributions.

The court rejected Amboy’s argument that requiring contributions on those wages imposed a penalty not found in the agreement. It also rejected Amboy’s argument that contributions were improper because the affected employees did not directly receive health insurance or other benefits in exchange for those payments. The court explained that ERISA and the agreement required timely employer contributions and did not require contributions to correspond directly to the number of employees receiving benefits.

The court also found that Amboy had not produced evidence disputing specific entries in the revised audit. The auditor’s corrections to the initial report did not make the revised calculations unreliable, particularly because the revised report accepted Amboy’s objections concerning two opt-out employees and rejected its objection concerning one No Frills employee.

Damages and Disposition

The court awarded the Benefit Fund $357,347.89 in unpaid contributions. It found that the Funds had not adequately supported the full $10,669.95 requested for the Education Fund because that amount was calculated using all unreported No Frills wages, rather than only the wages exceeding the 39% allowance. The court therefore awarded the Education Fund $5,237.66.

The court stated that each Fund was also awarded $500 in audit costs and interest accruing at a 24% annual rate from “December 31, 20618,” as that date appears in the opinion text. The opinion does not clarify whether that printed date is an error. The court said a separate order would set a schedule for submissions concerning interest calculations and a motion for attorneys’ fees.

The plaintiffs’ summary-judgment motion was granted in part.