“[W]here . . . an ERISA plaintiff has pursued a colorable (albeit unsuccessful
How later courts described this case
- “[W]here . . . an ERISA plaintiff has pursued a colorable (albeit unsuccessful
- reasoning “[p]rivate market attorney fee rates reflect overhead costs like electronic research, just as they would reflect the cost of case reporters and other necessary books purchased for a law firm’s library”
- “[T]he ‘lack of evidentiary support’ for [plaintiff’s] central arguments does not amount to culpability or bad faith.”
- “As for the ability of the offending party to satisfy an award, ‘it is only a party’s inability to pay an award that weighs in its favor while its ability to pay is generally neutral in effect.’” (quoting Tedesco, 2019 WL 140649, at )
Written by the judges who cited it.
The opinion
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF NEW YORK
--------------------------------X
DR. GERALD FINKEL, as Chairman of
the Joint Industry Board of the
Electrical Industry, MEMORANDUM & ORDER
12-CV-4108 (JS)(ARL)
Plaintiff,
-against-
ZIZZA & ASSOCIATES CORP.; BERGEN
COVE REALTY INC.; and SALVATORE
J. ZIZZA,
Defendants.
--------------------------------X
APPEARANCES
For Plaintiff: Peter D. Chiara, Esq.
Michael S. Adler, Esq.
Dan M. Nesbitt, Esq.
Cohen, Weiss, and Simon LLP
900 Third Avenue, Suite 2100
New York, New York 10022
For Defendants: Ira S. Sacks, Esq.
Benjamin R. Joelson, Esq.
Akerman LLP
1251 Avenue of the Americas
New York, New York 10020
SEYBERT, District Judge:
Dr. Gerald Finkel, as Chairman of the Joint Industry
Board of the Electrical Industry (“Plaintiff” or the “Joint
Board”), moves, pursuant to Rules 54 and 58 of the Federal Rules
of Civil Procedure, seeking “issuance of a judgment holding Bergen
Cove Realty Inc. (“Bergen Cove”) liable in the total amount of
$1,453,195.361, consisting of $273,209.00 in withdrawal principal,
$830,666.10 in attorney’s fees, $30,284.92 in costs, $159,517.67
in prejudgment interest and $159,517.67 in the additional
statutory amount.” (Pl.’s Motion, ECF No. 241, at 1; see also
Pl.’s Support Memo.) Plaintiff also seeks issuance of a judgment
holding Defendant Salvatore J. Zizza (“Zizza”) “liable in the total
amount of $762,891.56, consisting of $358,862.05 in damages and
$404,029.51 in pre-judgment interest.” (Id.) Zizza & Associates
Corp. (“Zizza & Associates”) and Bergen Cove (collectively the
“Moving Defendants”) likewise seek an Order: “(1) awarding the
Moving Defendants attorneys’ fees in the amount of $422,851.72 and
costs/expenses in the amount of $11,854.34, pursuant to 29 U.S.C.
1132(g)(1) and/or 29 U.S.C. 1451(e), and
(2) granting Moving Defendants “such other and further relief as
the Court may deem just and proper.” (Defs.’ Motion, ECF No. 242;
see also Defs.’ Support Memo, ECF No. 242-5, attached to Defs.’
Motion.) For the reasons that follow, Plaintiff’s Motion is
GRANTED and Defendant’s Motion is DENIED.
BACKGROUND
The factual history of this action, as well as the record
evidence, is recounted in detail in the Court’s March 31, 2022,
Memorandum & Order granting in part and denying in part the Moving
1 Zizza & Associates is no longer in business. (See Pl.’s Support
Memo, ECF No. 241-3, at 4 n.1.)
Defendants’ Motion for Judgment as a Matter of Law (the “Post-
Trial Order”). See Finkel v. Zizza & Assocs. Corp., No. 14-CV-
4108, 2022 WL 970670 (E.D.N.Y. Mar. 31, 2022).2 The Court refers
the reader to the Post-Trial Order for a thorough recitation of
the factual and procedural history of this case.
RELEVANT PROCEDURAL HISTORY
On March 31, 2022, in its Post-Trial Order, the Court
granted the Moving Defendants’ request for judgment as a matter of
law (the “JMOL Motion”) as to “Plaintiff’s control group claim
against Bergen Cove, and Plaintiff’s evade-or-avoid liability
claim.” See Finkel, 2022 WL 970670, at *13. The Court denied the
Moving Defendants’ JMOL Motion “with respect to Plaintiff’s alter
ego claim against Zizza & Associates and Bergen Cove, and
Plaintiff’s NY BCL[3] claim against Mr. Zizza.” (Id.) As part of
its ruling on the JMOL Motion, the Court further struck “the jury’s
award of attorney’s fees under the NY BCL.” (Id.) Thereafter,
the Court directed Plaintiff to file any motion for reasonable
2 The Court’s Memorandum & Order is also available on the Case
Docket at ECF No. 238. Going forward, the Court will refer to
this Memorandum & Order by its Reporter citation.
Additionally, Magistrate Judge (now District Judge) Brown’s
January 7, 2020, Report and Recommendation (the “R&R”) also
contains a detailed summary of the factual and procedural history
of this case. The R&R is available either on the docket at ECF
No. 193, or via its reporter citation at Finkel v. Zizza & Assocs.
Corp., No. 12-CV-4108, 2020 WL 9812922 (E.D.N.Y. Jan. 7, 2020).
3 NY BCL refers to the New York Business Corporation Law.
attorney’s fees and costs “on or before May 2, 2022.” (Id.
(emphasis in original).) The Court added:
Should Plaintiff elect to file such a motion,
Plaintiff is directed to assert the statutory
(or other) basis which entitles it to such
fees and costs. Plaintiff is warned that if
it does not file a motion for attorney’s fees
by the above deadline, judgment will enter and
this case will be marked [] CLOSED.
(Id.)
Upon docketing the Post-Trial Order, the Moving
Defendants filed a letter with the Court stating, “[i]n light of
the Court’s rulings on the control group and evade-or-avoid claims,
Defendants intend to seek recovery of their attorneys’ fees and
costs as the prevailing party.” (Letter re: Briefing on Attorney’s
Fees, ECF No. 239, at 1.) Subsequently, a briefing schedule was
set on the Parties’ respective motions. (See May 2, 2022, Elec.
Order.) Both motions were filed on May 2, 2022. (See Case Docket.)
The Parties’ respective Opposition Memoranda were filed on June 2,
2022 (see Pl.’s Opp’n, ECF No. 243; Def.’s Opp’n, ECF No. 244-2,
attached to Sacks Decl.); likewise, both parties filed Reply
Memoranda on June 23, 2022 (see Pl.’s Reply, ECF No. 245; Def.’s
Reply, ECF No. 246).4
4 On March 31, 2023, this Court administratively terminated the
Moving Defendants’ Motion, determining that, in the interests of
judicial economy, both motions should be decided as part of a
single Memorandum & Order. (See March 31, 2023 Elec. Order.)
DISCUSSION
I. Legal Standards
A. Mandatory Attorney’s Fees Pursuant to 29 U.S.C.
§ 1132(g)(2)
Section 1132(g)(2) of ERISA contains a mandatory fee
provision which applies when a plan fiduciary successfully brings
an action to collect delinquent contributions. See 29 U.S.C.
§ 1132(g)(2). Section 1132(g)(2) provides:
[i]n any action under this subchapter by a
fiduciary for or on behalf of a plan to enforce
section 1145 of this title in which a judgment
in favor of the plan is awarded, the court
shall award the plan-- (A) the unpaid
contributions, (B) interest on the unpaid
contributions, (C) an amount equal to the
greater of-- (i) interest on the
contributions, or liquidated damages provided
for under the plan in an amount not in excess
of 20 percent . . . (D) reasonable attorney's
fees and costs of the action, to be paid by
the defendant, and (E) such other legal or
equitable relief as the court deems
appropriate.
29 U.S.C. § 1132(g)(2). “[C]ourts have cited these provisions in
stating that ERISA provides for mandatory attorney’s fees in
actions brought by a fund to ‘compel an employer to pay withdrawal
liability.’” United Plant and Prod. Workers Local 175 Pension
Fund by Kilkenny v. J. Pizzirusso Landscaping Corp., No.
20-CV-2572, 2022 WL 4139160, at *5 (E.D.N.Y. Aug. 9, 2022) (quoting
Sofco Erectors, Inc. v. Tr’s. of Ohio Operating Eng’rs Pension
Fund, 15 F.4th 407, 434 (6th Cir. 2021) (collecting cases)).
Indeed, courts within this District have “uniformly applied the
Section 1132(g)(2) mandatory fee provision in awarding fees where
the fund commences an action to compel the payment of withdrawal
liability.” Id. at *6 (collecting cases); see also Bakery and
Confectionary Union v. Mrs. Maxwell’s Bakery, Inc., No. 21-CV-
0308, 2022 WL 18107257, at *10 (E.D.N.Y. Dec. 6, 2022) (“because
withdrawal liability is ‘treated in the same manner as a delinquent
contribution,’ . . . ERISA provides for recovery of interest,
liquidated damages, and reasonable attorney’s fees and costs on
withdrawal liability payments” (citations omitted)); Demopoulos v.
Advance Transit Co. Inc., No. 20-CV-5186, 2021 WL 6424599, at *3
(E.D.N.Y. Dec. 17, 2021) (“[I]n addition to the amount of
withdrawal liability due and owing, the plaintiffs are entitled to
damages under 29 U.S.C. § 1132(g)(2), consisting of interest,
liquidated damages and attorneys’ fees and costs. In fact, ‘[s]uch
award is a mandatory remedy.’” (quoting UNITE Nat. Ret. Fund v.
Veranda Mktg. Co., No. 04-CV-9869, 2009 WL 2025163, at *4 (S.D.N.Y.
July 13, 2009))).
B. Discretionary Fees Pursuant to Section 1132(g)(1)
Section 1132(g)(1) of ERISA provides, “[i]n any action
under this subchapter (other than an action described in paragraph
(2)) by a participant, beneficiary, or fiduciary, the court in its
discretion may allow a reasonable attorney’s fee and costs of
action to either party.” 29 U.S.C. § 1132(g)(1). Notwithstanding
the broad discretion afforded to the district court in determining
whether to award discretionary fees and costs under this section,
in Hardt v. Reliance Standard Life Insurance Company, the Supreme
Court held that “a fees claimant must show ‘some degree of success
on the merits’ before a court may award attorney’s fees under
1132(g)(1)[.]” 560 U.S. 242, 255 (2010); see also Donachie v.
Liberty Life Assur. Co. of Bos., 745 F.3d 41, 46 (2d Cir. 2014)
(“The Supreme Court has . . . cautioned that a district court’s
discretion to award attorneys’ fees under ERISA ‘is not unlimited,’
inasmuch as it may only award attorneys’ fees to a beneficiary who
has obtained ‘some degree of success on the merits.’” (quoting
Hardt, 560 U.S. at 254-55)). “A party satisfies this standard if
the court can fairly call the outcome of the litigation some
success on the merits without conducting a lengthy inquiry into
the question whether a particular party’s success was substantial
or occurred on a central issue.” Empire State Carpenters Welfare
v. Conway Constr. of Ithaca, Inc., 366 F. Supp. 3d 371, 376
(E.D.N.Y. 2019) (quoting Dist. Photo Inc. Health Care Plan v.
Pyrros, No. 13-CV-4285, 2017 WL 2334027, at *3 (E.D.N.Y. May 30,
2017) (internal quotation and citation omitted)). “[W]hether a
[party] has obtained some degree of success on the merits is the
sole factor that a court must consider in exercising its
discretion.” Donachie, 745 F.3d 46 (emphasis in original).
Notwithstanding the Supreme Court’s holding in Hardt,
district courts in the Second Circuit may also consider the
following five factors in deciding whether to award discretionary
legal fees and costs:
(1) the degree of the offending party's
culpability or bad faith, (2) the ability of
the offending party to satisfy an award of
attorney's fees, (3) whether an award of fees
would deter other persons from acting
similarly under like circumstances, (4) the
relative merits of the parties' positions, and
(5) whether the action conferred a common
benefit on a group of pension plan
participants.
Chambless v. Masters, Mates & Pilots Pension Plan, 815 F.2d 869,
871 (2d Cir. 1987) abrogation recognized by Levitian v. Sun Life
& Health Ins. Co., 486 F. App’x 136 (2d Cir. 2012) (internal
citations omitted); see also Scarangella v. Grp. Health, Inc., 678
F. App’x 7, 9-10 (2d Cir. 2017) (“Hardt . . . did not foreclose
the possibility that once a claimant has satisfied [a showing of
some degree of success on the merits], and thus becomes eligible
for a fees award under § 1132(g)(1), a court may also consider the
five factors outlined in Chambless” (internal quotations and
citation omitted)). “Although the Chambless test applies to both
plaintiffs and defendants in ERISA actions, courts have cautioned
that the five factors ‘very frequently suggest that attorney’s
fees should not be charged against ERISA plaintiffs.’” Salovaara
v. Eckert, 222 F.3d 19, 28 (2d Cir. 2000) (quoting West v.
Greyhound Corp., 813 F.2d 951, 956 (9th Cir. 1987)).
C. Discretionary Fees Pursuant to Section 1451(e)
Pursuant to Section 1451(e) of ERISA, “[i]n any action
under this section, the court may award all or a portion of the
costs and expenses incurred in connection with such action,
including reasonable attorney’s fees, to the prevailing party.”
29 U.S.C. § 1451(e). “The decision to award fees under this
section ‘is committed to the discretion of the district court.’”
Pizzirusso, 2022 WL 4139160, at *6 (quoting Laborers’ Pension Fund
v. W.R. Weis Co. Inc., 879 F.3d 760, 768 (7th Cir. 2018)).
Additionally, “[a]lthough the fee-shifting provisions are
available in withdrawal liability actions, when the prevailing
party is the employer, ‘courts exercise cautiously the
discretionary power to award fees.’” Id. (quoting Sigmund Cohn v.
Dist. No. 15 Machinists Pension, 804 F. Supp. 490 (E.D.N.Y. 1992)).
“Both Section 1132(g)(1) and Section 1451(e) are governed by the
same five-factor standard” outlined in Chambless. Id. (citing
Anita Foundations, Inc. v. ILGWU Nat’l Ret. Fund, 902 F.2d 186,
191 (2d Cir. 1990)). “In Farrar v. Hobby, 506 U.S. 103 (1992),
the Supreme Court held that ‘a plaintiff “prevails” when actual
relief on the merits of his claim materially alters the legal
relationship between the parties by modifying the defendant’s
behavior in a way that directly benefits the plaintiff.’” Vetrone
v. Holt Cos. Inc., No. 09-CV-1350, 2012 WL 4006327, at *3 (N.D.N.Y.
Sept. 12, 2012) (quoting Farrar, 506 U.S. at 111-12). Similarly,
in determining whether a defendant is the “prevailing party” such
inquiry “is not limited to whether a defendant prevailed on the
merits, but also considers whether the district court’s decision—
‘a judicially sanctioned change in the legal relationship of the
parties’—effects or rebuffs a plaintiff’s attempt to effect a
‘material alteration in the legal relationship between the
parties.’” Raniere v. Microsoft Corp., 887 F.3d 1298, 1306 (Fed.
Cir. 2018) (quoting CRST Van Expedited, Inc. v. E.E.O.C., 578 U.S.
419 (2016)).
II. Analysis
A. Plaintiff is Entitled to Mandatory Attorney’s Fees and
Costs Pursuant to 1132(g)(2)
Plaintiff argues it is entitled to mandatory attorney’s
fees and costs pursuant to Section 1132(g)(2) “because the instant
suit is an action under Section 1451 to collect withdrawal
liability.” (Pl.’s Support Memo at 5.) Specifically, Plaintiff
states its Second Amended Complaint (the “SAC”) “rested in part on
Section 1451.” (Id.) Plaintiff avers “[t]he Court’s dismissal of
the controlled group and ‘evade-or-avoid’ claims against Bergen
Cove do not change that conclusion[,]” since “[c]ase law makes
clear that Section 1132(g)(2) applies to a defendant . . . that is
liable only on an ERISA alter ego claim.” (Id. (emphasis in
original).) Plaintiff continues, arguing Defendant was found
“liable for the withdrawal liability” and that this liability
“exists only by virtue of ERISA.” (Id. at 7.) Plaintiff contends
the Court, by holding that the federal Kombassan standard applies
to the Plaintiff’s alter ego claims, “left no doubt that those
claims arose in the ERISA context and that ERISA standards apply.”
(Id. (internal quotations and citations omitted).) Similarly,
Plaintiff maintains:
Bergen Cove is, for purposes of ERISA
liability, indistinguishable from Zizza & Co.
The jury found Zizza & Associates to be an
alter ego of Zizza & Co., and Bergen Cove to
be an alter ego of Zizza & Associates. Since
Section 1132(g)(2) remedies attached to Zizza
& Co.’s withdrawal liability, they attach to
Bergen Cove as well, since Bergen Cove is
liable for the same liability.
(Id.)
Finally, Plaintiff asserts awarding the Joint Board
“mandatory attorney’s fees under Section 1132(g)(2) would further
the purpose of ERISA’s alter ego doctrine[,]” since “[p]reventing
such evasion does not happen automatically [but] . . . requires a
determined plaintiff . . . willing to incur substantial legal fees
on behalf of a pension fund.” (Id. at 8.)
The Moving Defendants demur, arguing Plaintiff’s “alter
ego claim . . . is not a claim under ERISA.” (Defs.’ Opp’n at 3.)
They rely upon the Supreme Court’s holding in Peacock v. Thomas
for this proposition. (See id. at 4-6.) The Moving Defendants
explain that, in Peacock, the Supreme Court “held that the federal
court did not have subject matter jurisdiction over the lawsuit”
because: (1) “the lawsuit did not arise under ERISA [since] it
alleged no violation of ERISA or of the plan” (id. at 4 (emphasis
in original)); (2) “there is no provision of ERISA that provides
for imposing liability for an extant ERISA judgment against a third
party” (id. (emphasis in original) (internal quotations and
citations omitted)); and (3) “federal courts do not possess
ancillary jurisdiction over new actions in which a federal judgment
creditor seeks to impose liability for a money judgment on a person
not otherwise liable for the judgment.” (Id. at 5.) Similarly,
Defendant highlights that “[t]hroughout this action, the parties
and the Court have repeatedly recognized and agreed that the alter
ego claims are state law claims and that the Court exercised
supplemental jurisdiction over those claims.” (Id. at 7-8.)
Defendant distinguishes Plaintiff’s alter ego caselaw by
highlighting, inter alia, “[i]n those cases, the parties held
liable were determined to be the alter ego of the actual employers,
which were also parties to the lawsuit.” (Id. at 9.) The Moving
Defendants contend that in those cases “the alter ego entities
were deemed to be “‘employers’ responsible for the actual
withdrawal liability.” (Id.)
In response, Plaintiff highlights “Defendants cite no
case” where a court denied “Section 1132(g)(2) remedies to an ERISA
plan that prevailed on an alter ego claim for withdrawal
liability.” (Pl.’s Reply at 1.) Regarding Peacock, Plaintiff
argues that case “says nothing about the availability of Section
1132(g)(2) remedies to plaintiffs who bring a successful alter ego
claim to collect withdrawal liability” and, if it did, “the alter
ego decisions granting such remedies would have discussed the
case.” (Id. at 2.)
Here, the Moving Defendants’ argument that the alter
ego claim is not a claim arising under ERISA has been raised and
adjudicated repeatedly throughout this litigation; the Court
declines to entertain it again.5 See Hensley v. Eckerhart, 461
U.S. 424, 437 (1983) (“A request for attorney’s fees should not
result in a second major litigation.”). Regardless, and as noted
by Plaintiff, Peacock is a case which discusses subject-matter
jurisdiction, not the availability of ERISA remedies after a
plaintiff has prevailed on an alter ego claim arising under ERISA.
As highlighted by Plaintiff, Defendant provides no case law in
which a court has denied a prevailing ERISA Plaintiff mandatory
5 (See e.g., Support Memo, ECF No. 235-1, attached to Motion for
Judgment as a Matter of Law, at 20-23 (arguing the Court should
apply state law test for alter ego liability because Kombassan is
inapplicable to Plaintiff’s alter ego claims since such claims did
not arise under ERISA); Reply, ECF No. 237, at 10-13 (arguing the
Court should not have instructed the Jury on the Kombassan standard
for ERISA liability because “the claims for alter-ego liability
are plainly not ERISA claims” (emphasis in original)); Support
Memo, ECF No. 183, at 18-21 (arguing “[u]nder Peacock, Plaintiff’s
evade or avoid and alter-ego claims do not arise under ERISA.”).)
fees and costs pursuant to Section 1132(g)(2), notwithstanding
such liability was proven solely through alter ego liability.
Likewise, this Court has found none.6 Conversely, Plaintiff cites
caselaw in which courts in this Circuit have determined that alter
ego defendants can be found liable for remedies pursuant to Section
1132(g)(2), notwithstanding the fact the sole basis for imposing
liability is an alter ego claim. See Ret. Plan of UNITE HERE Nat.
Ret. Fund v. Kombassan Holding A.S., 629 F.3d 282, 287-89 (2d Cir.
2010) (affirming district court’s findings that defendant was:
(1) the alter ego of an acquired corporation and, as such, was
“responsible for [the acquired corporation’s] withdrawal
liability[,]” and (2) further liable for prejudgment interest,
6 On the contrary, caselaw from outside this Circuit, while not
binding, supports Plaintiff’s argument that ERISA remedies are
available to prevailing ERISA plaintiffs even where the basis for
defendant’s liability rests solely on an alter ego cause of action.
See Cent. Ill. Carpenters Health and Welfare Tr. Fund v. S & S
Fashion Floors, Inc., No. 05-CV-1094, 2009 WL 1064914, at *2 (C.D.
Ill. Apr. 20, 2009) (“[F]rom the time the alter ego claim was first
[pled], there has been no question that this claim was not a
traditional state law alter ego claim. Rather, it was an effort
to impose individual ERISA liability for delinquent contributions
on a corporate officer[.] . . . Defendant . . . argues that an
alter ego claim is an equitable claim, so that the extent of any
remedy is committed to the court's discretion. Thus, according to
Defendant, an award of attorney's fees is discretionary. I
disagree. That might be the case if the liability that attached
to Helen Struben by virtue of her status as an alter ego derived
from state common law, but that is not the situation here.
Struben's liability is ERISA liability. Remedies under ERISA
therefore are available to the Plaintiffs. ERISA provides that an
award of attorney's fees is mandatory in actions under § 1145. As
noted above, that is the proper description of Count III.”).
attorney’s fees, and costs pursuant to Section 1132(g)(2)); Burke
v. Hamilton Equip. Installers, Inc., No. 02-CV-0519, 2007 WL
9776820, at *1-2 (W.D.N.Y. Feb. 20, 2007) (finding where court had
“issued an order finding that Hamilton Equipment Installers, Inc.
was an alter ego of Hamilton Installers, Inc.”, the alter ego was
“obligated to pay Hamilton Installers’ withdrawal liability
contributions” as well as mandatory remedies pursuant to Section
1132(g)(2)); Bd. of Trs. of the Heat & Frost Insulators Local No.
33 Pension Fund v. D&N Insulation, No. 11-CV-1998, 2015 WL 5121458,
at *9 (D. Conn. Aug. 31, 2015) (finding, where defendant was the
“alter ego” of various entities liable for withdrawal liability,
defendant became liable to plaintiff for the unpaid withdrawal
liability and statutory damages pursuant to section 1132(g)(2)).
Moving Defendants’ arguments that these cases are inapposite is
unconvincing and, regardless, has been raised and adjudicated
previously. See Finkel, 2022 WL 970670, at *11-12.
B. The Moving Defendants’ Assertion They Achieved “Some
Success on the Merits” is Specious Considering the
Outcome of the Litigation
Turning to the Moving Defendants’ Motion, the Moving
Defendants argue they “were entirely successful on all ERISA claims
asserted by Plaintiff in this action” and, consequently, “Moving
Defendants’ total victory on the ERISA claims . . . renders them
‘prevailing parties’ for purposes of 29 U.S.C. § 1451(e).” (Defs.’
Support Memo at 11.) The Moving Defendants contend this qualifies
them “for an award of attorneys’ fees and costs under both
§ 1132(g)(1) and § 1451(e).” (Id. at 12.)
Plaintiff counters “an examination of the ‘outcome of
the litigation,’ shows that Defendants achieved no success.”
(Pl.’s Support Memo at 11. (internal citation omitted).) Plaintiff
highlights, “[s]uccess would have been avoiding the withdrawal
liability.” (Id.) Additionally, notwithstanding the Moving
Defendants’ victory on the evade-or-avoid and controlled group
claims, Plaintiff notes the result here is “exactly what it would
have been if Defendants had lost” those claims, characterizing the
Moving Defendants’ successes as “purely procedural” victories.
(Id. (emphasis in original).) Plaintiff emphasizes “Defendants
lost on the ultimate issue, namely, whether they are liable for
the withdrawal liability,” and, as such, are not “prevailing”
parties for purposes of § 1451(e). (Id. at 13.) As to the Moving
Defendants’ contentions that they prevailed on all of their ERISA
claims, Plaintiff highlights that the alter ego claim arose in the
ERISA context and that the Court, “in resolving the alter ego
claims, . . . applied the Kombassan ERISA alter ego standard.”
(Id. at 12.)
Here, the Court finds Defendants’ success in refuting
Plaintiff’s evade-or-avoid and controlled group claims was a
pyrrhic victory when considering the outcome of the litigation.
Defendants were found liable for the withdrawal liability under
Plaintiff’s alter ego theory, which, as the Court has previously
found, was a claim under ERISA to which the Kombassan ERISA
standard applied.7 See Finkel, 2022 WL 970670, at *11-12. The
Moving Defendants’ argument that they achieved “far more than some
degree of success on the merits” because they prevailed upon all
the ERISA claims in this action, (see Defs.’ Reply at 2-5), is
therefore erroneous.8
C. The Chambless Factors Counsel Against Awarding the
Moving Defendants’ Attorney’s Fees and Costs
Even assuming arguendo, the Moving Defendants were
eligible for discretionary fees and costs, the Court finds that an
analysis of the Chambless factors, which the Court may consider
under either Section 1132(g)(1) or 1451(e), does not favor granting
an award.9
7 For the same reasons, the Court finds Defendant is likely not a
“prevailing party” for purposes of Section 1451, since, despite
refuting two of the Joint Board’s theories of liability, losing on
the alter ego claim effects a material alteration in the legal
relationship of the parties in the same way it would have had the
Moving Defendants lost those claims.
8 Even if the Moving Defendants were entitled to a discretionary
award of attorney’s fees and costs, as detailed infra at Part II.C,
the Court would decline to award them.
9 On the contrary, given Plaintiff’s success in establishing the
Moving Defendants’ responsibility for the withdrawal liability,
the Court finds Plaintiff’s degree of success on the merits would
qualify it for a discretionary award under Section 1132(g)(1).
Consequently, even if Plaintiff was not entitled to mandatory fees,
the Court would exercise its discretion and award attorney’s fees
and costs pursuant to 1132(g)(1). (See infra at Part II.C.)
1. The Degree of Culpability Factor Weighs
in Favor of the Joint Board, Not the
Moving Defendants
“[A] party is only culpable when its conduct is
intentional, blameworthy, and results in the breach of a legal
duty.” Tedesco v. I.B.E.W. Local 1249 Ins. Fund, No. 14-CV-3367,
2019 WL 140649, at *6 (S.D.N.Y. Jan. 9, 2019) (quoting Vangas v.
Montefiore Med. Ctr., No. 11-CV-6722, 2014 WL 5786720, at *6
(S.D.N.Y. Nov. 5, 2014)); see also Benesowitz v. Metro. Life Ins.
Co., No. 04-CV-0805, 2009 WL 2196785, at *9 (E.D.N.Y. July 9, 2009)
(“In a civil context, culpable conduct is commonly understood to
mean conduct that is ‘blameable; censurable; . . . at fault;
involving the breach of a legal duty or the commission of a
fault. . . . Such conduct normally involves something more than
simple negligence. . . . [B]ut not that it involves malice or
guilty purpose’.” (quoting McPherson v. Emps.’ Pension Plan of Am.
Re-Ins. Co., Inc., 33 F.3d 253, 256-57 (3d Cir. 1994))). “[C]ourts
have found that the ‘culpability’ of a losing plaintiff
‘significantly differs’ from that of a losing defendant.’” Caccavo
by Caccavo v. Reliance Standard Life Ins. Co., No. 19-CV-6025,
2022 WL 16631101, at *5 (S.D.N.Y. Nov. 2, 2022) (quoting Salovaara,
222 F.3d at 28). As explained by the Second Circuit, “‘[a] losing
defendant must have violated ERISA, thereby depriving plaintiffs
of rights under a pension plan and violating a congressional
mandate. A losing plaintiff, on the other hand, will not
necessarily be found ‘culpable,’ but may be only in error or unable
to prove his case.’” (Id.)
The Moving Defendants argue the first factor weighs in
their favor. (Defs.’ Support Memo at 12.) Specifically, the
Moving Defendants contend, “Plaintiff contrived its evade or avoid
and control group claims against the Moving Defendants, knowing
that they were unsupported in both fact and law at the time each
claim was asserted, and throughout the case thereafter.” (Id. at
13.) Moving Defendants assert, “Plaintiff’s pursuit of its evade
or avoid and control group claims ‘was culpable because there was
no colorable basis for the plaintiff’s claim’ in view of the facts
known to Plaintiff at the time it commenced this action.” (Id.)
The Moving Defendants aver that, at various stages of this
litigation, they argued:
(1) [m]erely ceasing business operations is
not a “transaction” for purposes of § 4212(c),
(2) no assets, equipment, contracts, stocks,
money or clients were sold or transferred from
Zizza & Company to Zizza & Associates, and
(3) the unilateral incorporation of Zizza &
Associates did not involve any transaction
with Zizza & Company.
(Id. at 13-14 (internal quotations omitted).) Regarding the Joint
Board’s control group theory, Moving Defendants argue, “Plaintiff
knew when it filed its motion for summary judgment that it did not
have evidence to support that the stock held in trust for the
benefit of Mr. Zizza’s children could be attributed to Mr. Zizza.”10
(Id. at 14.) The Moving Defendants elaborate: “Plaintiff could
have and should have abandoned the control group claim” when it
realized it “did not have the trust documents.” (Id. at 15.)
Plaintiff counters the Moving Defendants are the
culpable parties, “having refused for years to pay the withdrawal
liability that they owed as alter egos, requiring the Joint Board
to undertake a decade of intense litigation to obtain a judgment
against them.” (Pl.’s Opp’n at 14.) Similarly, Plaintiff avers
that, while it “ultimately failed to persuade the Court on two of
its three legal claims against Defendant[,]” a party does not act
in bad faith or with culpability “merely because it has pursued an
unsuccessful legal theory.” (Id. (citation omitted).) Plaintiff
further highlights, regarding its controlled group and “evade or
avoid” claims, “the Court repeatedly determined” Plaintiff’s
claims “were not frivolous.”11 (Id. at 15.) Likewise, Plaintiff
10 The Moving Defendants further state that in its summary judgment
decision, “the Court expressly noted that ‘the relevant trust
documents are not part of the record.’” (Defs.’ Support Memo at
14-15.)
11 Specifically, Plaintiff emphasizes:
In denying Defendants’ motion to dismiss,
Judge Bianco concluded that the Joint Board’s
“evade-or-avoid” count against Zizza &
Associates alleged a “plausible claim.” He
reached the same conclusion when the Joint
Board moved to assert an “evade-or-avoid”
claim against Bergen Cove. When Defendants
argues the Moving Defendants’ assertion that Plaintiff lacked
evidence to support its claims does not support its bad faith
argument since “under the Joint Board’s reading of the law,
evidence of a direct transaction between the companies was
unnecessary because it was undisputed that Zizza [had] shifted his
advisory business, first transacting it at Zizza & Associates and
then at Bergen Cove.” (Id. at 16.) Further, Plaintiff asserts
“[t]hat the Court ultimately accepted Defendants’ reading of the
law does not mean the Joint Board’s reading was culpable or in bad
faith.” (Id. at 17.) Plaintiff continues, “it would be impossible
to conclude that the Joint Board’s reading of the law applicable
to its ‘evade-or-avoid’ claim was culpable or bad faith because,
until the Court’s post-trial ruling, the Court had repeatedly
accepted that reading.” (Id. (emphasis in original).) Regarding
argued in their sanctions motion that the
“evade-or-avoid” claims were frivolous, Judge
Bianco denied the motion. In denying
Defendants’ summary judgment motion, Judge
Bianco reaffirmed that, on the facts the Joint
Board alleged, “a reasonable fact finder can
conclude” that Zizza acted to avoid
liability . . . The same is true for the
controlled group claim. In his summary
judgment ruling, Judge Bianco did not find
that the absence of trust documents was fatal
to the Joint Board’s claim, but allowed the
claim to proceed.
(Pl.’s Opp’n at 15-16 (emphasis in original).)
the lack of any trust documents, Plaintiff argues that, based on
its reading of the law, “undisputed evidence that Zizza ran Bergen
Cove, and the absence of evidence that other shareholders ever
cast a vote, sufficed to establish an implicit agreement that the
trustees would not vote their shares.” (Id. at 18 (emphasis in
original).)
Here, the Court finds no bad faith or culpability on the
part of Plaintiff; similarly, it rejects Defendants’ argument that
the Joint Board’s failure to adduce evidence sufficient to prove
its evade-or-avoid and controlled group claims weighs in favor of
awarding Defendant discretionary fees and costs. See T & M Meat
Fair, Inc. v. United Food and Com. Workers, Local 174,
No. 00-CV-7968, 2002 WL 31202711, at *4 (S.D.N.Y. Oct. 3, 2001)
(“There is no requirement . . . that plaintiffs be successful on
every cause of action—or even one claim—in order to avoid a finding
of bad faith.”); see also Salovaara, 222 F.3d at 29-30 (“[T]he
‘lack of evidentiary support’ for [plaintiff’s] central arguments
does not amount to culpability or bad faith.”); United Union of
Roofers, Waterproofers, and Allied Workers, Local No. 210, AFL-CIO
v. A.W. Farrell & Son, Inc., No. 07-CV-0224, 2013 WL 140101, at
*3-4 (W.D.N.Y. Jan. 10, 2013) (finding “plaintiffs’ ultimate
failure to present evidentiary support at trial for their
claims . . . does not automatically lead to a finding that the
claims were brought in bad faith”). Similarly, the Court rejects
Defendants’ contention that there was no colorable basis for
Plaintiff’s control group and/or evade-or-avoid claims. Indeed,
each of these claims was subject to, and survived, a Rule 12(b)(6)
motion to dismiss and a Rule 56 summary judgment motion.12
Specifically, regarding the evade-or-avoid claim, in his summary
judgment ruling, Judge Bianco determined:
If all the plaintiff’s evidence is credited
and all reasonable inferences are drawn in its
favor, I conclude a rational fact finder could
conclude that a principal purpose was to avoid
withdrawal liability. Defendants further
argue that plaintiff cannot identify a
transaction undertaken to evade ERISA
liability . . . Although the defendants
argue that Mr. Zizza merely ceased to work for
Zizza & Company, which they claim was not a
transaction, plaintiff points to evidence in
records that show that Zizza & Associates was
paid $260,000 by BAM after Mr. Zizza began
working for them and that Zizza & Company had
12 Defendant also filed a motion for sanctions arguing Plaintiff’s
evade-or-avoid and alter ego claims were frivolous. (See Sanctions
Mot., ECF No. 54; Sanctions Support Memo, ECF No. 57.) In ruling
on the sanctions motion, Judge Bianco found:
There is not a sufficient basis for this Court
to conclude at this juncture that the
plaintiff’s claims against Bergen Cove Realty
lack a basis in fact or, as we’ve just heard,
a basis in law. . . . There’s not conclusive
proof at this point that the claim is
factually frivolous and there’s certainly
insufficient proof that the time, even if it
turned out to factually be incorrect, that at
the time the plaintiffs filed the allegation
they knew it to be factually incorrect or had
no reasonable basis from investigation to make
such a good faith allegation.
(Sanctions Tr., ECF No. 73, at 15:5-8; 17:16-21.)
been paid over $100,000 by BAM in the two prior
years. . . . Although defendants cite cases
for the proposition that ceasing business
operations is not a transaction[,] here,
plaintiff has pointed to more than simply
ending Zizza & Company’s operation. Again, if
plaintiff’s evidence is credited and all the
reasonable inferences from the record drawn in
plaintiff’s favor, a reasonable fact finder
can conclude that Mr. Zizza redirected the
business from BAM, that that is a transaction,
and again could conclude potentially
that . . . it was done to avoid paying
withdrawal liability.
(Summ. J. Tr., ECF No. 110, at 11:17-12:24.) Likewise, Judge
Bianco found “there[] [is] a disputed issue of fact as to Bergen
Cove’s membership in Zizza & Company’s alleged control group”,
which precluded granting Defendants’ summary judgment motion.
(Id. at 14:13-18.) This ruling alone is sufficient to support
Plaintiff’s position in opposition to Defendants’ fee application.
See A.W. Farrell & Son, Inc., 2013 WL 140101, at *3 (finding, where
court had previously denied defendants’ motion for partial summary
judgment, “[t]his ruling alone provide[d] ample support for
plaintiffs’ position in opposition to [the] fee application
[because] a reasonable basis existed for them to pursue their ERISA
claims”); cf. Div. 1181, Amalgamated Transit Union - N.Y. Emps.
Pension Fund v. N.Y. Dep’t of Educ., No. 13-CV-9112, 2018 WL
4757938, at *3 (S.D.N.Y. Oct. 2, 2018) (finding plaintiff’s alter
ego-based withdrawal liability claim was potentially meritorious
where “the claim survived the [defendant’s] Rule 12(b)(6) motion”
but, nevertheless, did not survive summary judgment).
Additionally, Defendant’s argument that Plaintiff pursued “bogus”
ERISA claims against the Moving Defendants, in bad faith, is
spurious considering the Moving Defendants were ultimately found
liable for the withdrawal liability through proof of Plaintiff’s
alter ego claim.13
2. The Court Ascribes Little Weight to
Plaintiff’s Ability to Pay a Fee Award
“A party’s ability to satisfy an award of attorney’s
fees is not dispositive.” Mahoney v. J.J. Weiser & Co., 646 F.
Supp. 2d 582, 593 (S.D.N.Y. 2009); see also Empire State Carpenters
Welfare v. Conway Constr. of Ithaca, Inc., 366 F. Supp. 3d 371,
377 (E.D.N.Y. 2019) (“As for the ability of the offending party to
satisfy an award, ‘it is only a party’s inability to pay an award
that weighs in its favor while its ability to pay is generally
neutral in effect.’” (quoting Tedesco, 2019 WL 140649, at *7)).
The Moving Defendants assert that “Plaintiff . . . has
a clear ability to pay a reasonable fee and cost award in this
action.” (Defs.’ Support Memo at 16.) The Moving Defendants argue
the Joint Board’s ability to pay is “confirmed by the Plaintiff’s
latest filing with the IRS, which indicates over $575 million in
total assets, over $500 million in net assets or fund balances,
13 The Joint Board’s success in establishing the Moving Defendants’
liability in this regard supports a finding that the Moving
Defendants are in fact a culpable party.
and over $480 million in total revenue.” (Id. at 16-17 (emphasis
in original).) Notwithstanding its ability to pay a fee award,
Plaintiff emphasizes the second Chambless factor favors it or is,
at worst, neutral, “[b]ecause money paid in a fee award would be
money not paid to pensioners.” (Pl.’s Opp’n at 20.)
While the Court finds Plaintiff can satisfy a potential
fees and costs award, the Court ascribes this factor little weight
in its analysis, finding it to be neutral in effect.
3. Awarding Attorney’s Fees and Costs to the
Moving Defendants Could Have a Chilling
Effect on ERISA Plaintiffs Bringing
Colorable ERISA Claims
“It is the general rule that ‘attorney’s fees should not
be charged against ERISA plaintiffs.’” Celardo v. GNY Auto.
Dealers Health & Welfare Tr., 318 F.3d 142, 147 (2d Cir. 2003)
(quoting Salovaara, 222 F.3d at 28); see also Seitzman v. Sun Life
Assurance Co. of Can., Inc., 311 F.3d 477 (2d Cir. 2002) (“The
deterrence factor should be used ‘as a shield, to protect
beneficiaries from the fear of having to pay to pursue an important
ERISA claim in the event of failing to prevail,’ and not ‘as a
sword to discourage beneficiaries’ from pursuing certain meritless
claims.” (quoting Gibbs v. Gibbs, 210 F.3d 491, 505 (5th Cir.
2000))); Mahoney, 646 F. Supp. 2d at 586 (“[G]iven ERISA’s policy
of protecting plan beneficiaries, colorable claims pursued in good
faith, even if ultimately unsuccessful, should not be discouraged
by awards of attorney’s fees to prevailing defendants”) (citing
Seitzman, 311 F.3d at 485). The general rule applies to the
“typical unsuccessful ERISA plaintiff, who fails to show
defendant’s culpability but is not himself a culpable party.”
Sewell v. 1199 Nat’l Ben. Fund for Health and Human Servs.,
No. 04-CV-4474, 2007 WL 1434952, at *1 (S.D.N.Y. May 15, 2007)
(finding, where ERISA plaintiffs were “clearly culpable parties
operating in bad faith”, such plaintiffs fell “outside the scope
of [the] general rule”).
The Moving Defendants argue “an award of attorneys’ fees
against a culpable or bad faith claimant ‘will not have any
chilling effect on good faith claimants but rather will simply
serve to discourage bad faith claimants from filing meritless
suits.’” (Defs.’ Support Memo at 18 (citation omitted).) Plaintiff
counters this factor heavily disfavors awarding the Moving
Defendants a fee award because, as stated by the Second Circuit,
such an award would “deter suits to protect employee benefits.”
(Id. at 20-21.)
Considering: (1) the foregoing general policy
considerations; (2) Plaintiff’s success in proving its alter ego
claim, and (3) the Court’s determination Plaintiff had a colorable
basis for pursuing its control group and evade-or-avoid claims,
the Court finds this factor heavily favors the Joint Board. See
Salovaara, 222 F.3d at 31 (“[W]here . . . an ERISA plaintiff has
pursued a colorable (albeit unsuccessful) claim, the third
Chambless factor likely is not merely neutral, but weighs strongly
against granting fees to the prevailing defendant. Awarding fees
in such a case would likely deter beneficiaries and trustees from
bringing suits in good faith for fear that they would be saddled
with their adversary’s fees in addition to their own in the event
they failed to prevail; this, in turn, would undermine ERISA’s
essential remedial purpose of protecting beneficiaries of pension
plans.”).
4. Since the Degree-of-Culpability Factor
Favors the Joint Board, So Too Does the
Relative Merits Factor
“The degree-of-culpability and relative-merits factors
are closely related.” Slupinksi v. First Unum Life Ins. Co., 554
F.3d 38, 48 (2d Cir. 2009). Indeed, the Second Circuit had “found
it useful in some circumstances to consider them together.” Id.
Plaintiff asserts that since “the first Chambless factor weighs
decisively in the Joint Board’s favor, the fourth factor does too.”
(Pl.’s Opp’n at 21.) The Court agrees. (See supra Part II.C.1.)
5. The Common Benefit Factor
“[T]he fifth factor [is] . . . inapplicable to an ERISA
defendant.” Salovaara, 222 F.3d at 28-29; see also Mahoney, 646
F. Supp. 2d at 594 (“[T]he fifth Chambless factor, whether the
action conferred a common benefit on a group of plan participants,
is generally regarded as either inapplicable or neutral where an
ERISA defendant is seeking attorney’s fees.”).
Plaintiff argues this factor likewise weighs in its
favor since, “[b]y holding Defendants liable for the withdrawal
liability that they owe, this action will bring money into the
pension plan that can and will be used to provide pensions to
eligible pension plan participants.” (Pl’s. Opp’n at 21.) The
Moving Defendants highlight this factors inapplicability “where an
ERISA defendant is seeking attorneys’ fees.” (Defs.’ Support Memo
at 11 (citation omitted).)
For purposes of its discretionary fees analysis, the
Court finds this factor is neutral as to Defendant’s application
but favors the Joint Board to the extent the Court would have
awarded it discretionary fees had it not awarded mandatory ones.
In sum, and for the reasons articulated above, the Court
finds the Chambless factors do not support awarding Moving
Defendants discretionary fees and costs pursuant to either
§ 1132(g)(1) or 1451(e). Rather, the Chambless factors weigh
decidedly in favor of awarding fees and costs to the Joint Board.
D. Reasonableness of Attorney’s Fees
1. Joint Board’s Counsels’ Hourly Rates Are Excessive
Compared to Rates Generally Found to be Reasonable
in this District
Having determined the Joint Board is entitled to an award
of mandatory attorney’s fees pursuant to Section 1132(g)(2), the
Court must now determine whether the amount of fees sought by
Plaintiff is reasonable.
In determining whether attorney’s fees are reasonable
the Second Circuit has held “that the lodestar—the product of a
reasonable hourly rate and the reasonable number of hours required
by the case—creates a ‘presumptively reasonable fee.’” Millea v.
Metro-North R.R. Co., 658 F.3d 154, 166 (2d Cir. 2011) (quoting
Arbor Hill Concerned Citizens Neighborhood Assoc. v. County of
Albany, 522 F.3d 182, 183 (2d Cir. 2008)). “The party seeking
reimbursement of attorneys’ fees must demonstrate the
reasonableness and necessity of hours spent and rates charged.”
Finkel v. Omega Comm’n Servs., Inc., 543 F. Supp. 2d 156, 164
(E.D.N.Y. 2008) (citing N.Y. State Ass’n for Retarded Children,
Inc. v. Carey, 711 F.2d 1136 (2d Cir. 1983)). “The reasonableness
of hourly rates are guided by the market rate ‘[p]revailing in the
community for similar services by lawyers of reasonably comparable
skill, experience and reputation[.]’” Sheet Metal Workers’ Nat’l.
Pension Fund v. RHB Installations Inc., No. 12-CV-2981, 2015 WL
1509498, at *5 (E.D.N.Y. Mar. 31, 2015) (quoting Blum v. Stenson,
465 U.S. 886, 895 n.11 (1984)). “The relevant community is
generally the ‘district in which the court sits[.]’” Id. (quoting
Polk v. N.Y.S. Dep’t of Corr. Servs., 722 F.2d 23, 25 (2d Cir.
1983)). In ERISA cases, courts in this District have approved
hourly rates “ranging from $300-$450 per hour for partners, $200
to $300 per hour for senior associates, $100 to $200 per hour for
junior associates, and $70 to $100 per hour for paralegals.” Ret.
Fund of Local 1482 Paint and Allied Prods. Manufacturers v. N.
Adhesives, Inc., No. 19-CV-5609, 2020 WL 6370060, at *4 (E.D.N.Y.
May 27, 2020) (citing Div. 1181 Amalgamated Transit Union-N.Y.
Emps.’ Pension Fund v. D & A Bus. Co., Inc., 270 F. Supp. 3d 593,
618-19 (E.D.N.Y. 2017) (collecting cases)), Report &
Recommendation adopted, 2020 WL 5587271 (E.D.N.Y. Sept. 17, 2020).
Here, Plaintiff requests an award of $830,666.10 in
attorney’s fees and $40,284.93 in costs against the Moving
Defendants. (See Adler Decl., ECF No. 241-1, attached to Pl.’s
Mot.) Counsel’s billing rates and hours billed per attorney are
as follows:
Attorney Name Position Hours Hourly Total
Billed Rate ($)
Rachelson, Partner 0.3 390 117.00
Jani
Rachelson, Partner 2.5 430 1,075.00
Jani
Abram, Michael Partner 1.3 390 507.00
Ciantra, Partner 1 430 430.00
Thomas
Vitale, Joseph Partner 0.1 430 43.00
Hock, David Partner 7 375.00 2,625.00
Hock, David Partner 251.6 390 98,124.00
Hock, David Partner 304.8 410 124,968.00
Hock, David Partner 59 430 25,370.00
Leeds, Zachary Partner 0.3 410 123.00
Leeds, Zachary Partner 0.8 430 344.00
Adler, Michael Partner 495.2 430 212,936.00
Adler, Michael Partner 132.4 452 59,844.80
Attorney Name Position Hours Hourly Total
Billed Rate ($)
DeChiara, Partner 165.9 430 71,337.00
Peter
DeChiara, Partner 179.60 452 81,179.20
Peter
Harmon, Associate 2.2 390 858.00
Richard
Harmon, Associate 5.4 410 2,214.00
Richard
Harmon, Associate 2.8 430 1,204.00
Richard
Adler, Michael Associate 0.3 285 85.50
Adler, Michael Associate 1.2 315 378.00
Nesbitt, Associate 93.7 331 31,014.70
Daniel
Malloy, Kelly Associate 5.3 331 1,754.30
Medina, Erika Associate 7.5 347 2,602.50
Mackson, Tzvi Associate 1.9 330 627.00
Mackson, Tzvi Associate 19.5 347 6,766.50
Hurtado, Associate 74.1 285 21,118.50
Noelia
Hurtado, Associate 135.1 315 42,557.60
Noelia
Hurtado, Associate 5.1 330 1,683.00
Noelia
Berger, Paralegal 1.2 90 108.00
Benjamin
Berger, Paralegal 5.4 95 513.00
Benjamin
Ellis, Paralegal 56.6 95 5,377.00
Elizabeth
Tsuckerman, Paralegal 0.8 95 76.00
Lev.
Fitzgerald, Paralegal 20.5 95 1,947.50
Caitlin
Ellis, Peter Paralegal 25.4 95 2,413.00
Kramer, George Paralegal 3.2 95 304.00
Kramer, George Paralegal 25.1 100 2,510.0
Kramer, George Paralegal 52 105 5,460.00
McDaniels, Paralegal 22 95 2,090.00
Kelly
Viera, Clara Paralegal 34.7 95 3,296.50
Lore, Matthew Paralegal 2.2 100 220.00
Attorney Name Position Hours Hourly Total
Billed Rate ($)
Morrisey, Paralegal 14.5 100 1,450.00
Nycol
Brack, Katelyn Law Clerk 11.5 95 1,092.50
Hart, Nicholas Law Clerk 0.9 95 85.50
Cartwright, Law Clerk 47.4 95 4,503.00
Briana
Heydemann, Law Clerk 7.3 95 693.50
Sarah
Lynch, Michael Law Clerk 6 95 570.00
Ettinger, Lori Law Clerk 17.9 100 1,790.00
Malloy, Kelly Law Clerk 7.3 100 730.00
Turner, Wes Law Clerk 4.6 100 460.00
Brooks, Law Clerk 8.8 100 880.00
Zachary
Spwight, Law Clerk 3.9 100 390.00
Montene
Stevens, Jake Law Clerk 18.2 100 1,820.00
Total 2,353.3 830,666.10
(Id. ¶ 4-5.) Counsel affirms “the fees charged in this matter are
comparable to rates charged by other attorneys in this District
for similar work.” (Id. at ¶ 5.) To aid the Court in its
determination of the reasonableness of the hourly rates, Plaintiff
has provided the Court with biographies for each attorney,
paralegal, and law clerk who billed to this matter. (See id. at
¶¶ 7-27.)
Upon review of Plaintiff’s attorneys’ experience and
expertise, and considering the cases articulated herein, the Court
finds, with the exception of those hourly rates exceeding the
$450.00-per-hour upper limit approved in this District, Counsel’s
fees for its partners are reasonable considering their levels of
experience and expertise. Plaintiff offers no reasoning as to why
partners are entitled to rates above this District’s $450.00-per-
hour-for-partners cap, and the Court sees no reason to depart from
this limitation. Consequently, to the extent any partner’s hourly
rate exceeds $450.00 per hour, it is reduced to said $450-per-hour
cap. Likewise, to the extent an associate’s rate exceeds $300.00
per hour, such rate shall be reduced to conform to that figure.14
Regarding paralegals, the Court finds no hourly rate charged by
such professional shall exceed $100.00 per hour; similarly,
regarding Law Clerks, the Court finds a $75.00 per hour rate to be
fair and reasonable.
2. The Fee Award Will Not be Reduced Based on the
Unsuccessful ERISA Claims
The Supreme Court has observed that “the extent of a
plaintiff’s success is a crucial factor in determining the proper
amount of an award of attorney’s fees[.]” Hensley, 461 U.S. at
439.15 In Hensley, the Supreme Court held that “[w]here [a]
14 In reviewing the biographies provided by Plaintiff regarding the
associates that worked on this case, the Court finds they each
possess the requisite skill and experience to be classified as
“senior associates” and so awards them a rate in keeping with such
status. (See Adler Decl. ¶¶ 16-20.)
15 “Though Hensley deals with attorney’s fees pursuant to the Civil
Rights Attorney’s Fees Awards Act of 1976, 42 U.S.C. § 1988, courts
have applied the same standards when determining the
reasonableness of fees sought pursuant to” ERISA. Caban v. Emp.
Sec. Fund of the Elec. Prods. Indus. Pension Plan, No. 10-CV-0389,
2015 WL 7454601, at *6 n.3 (E.D.N.Y. Nov. 23, 2015) (citing
Scarangella, 731 F.3d at 156 n.14).
plaintiff has failed to prevail on a claim that is distinct in all
respects from his successful claims, the hours spent on the
unsuccessful claim should be excluded in considering the amount of
a reasonable fee.” Id. For example, in cases where a plaintiff
pursues “distinctly different claims for relief that are based on
different facts and legal theories. . . . even where the claims
are brought against the same defendants . . . counsel’s work on
one claim will be unrelated to his work on another claim”; as such,
the work on the unsuccessful claim “cannot be deemed to have been
expended in pursuit of the ultimate result achieved.” Id. at 434-
35 (quotation marks and citation omitted). Conversely, “[w]here
a lawsuit consists of related claims, a plaintiff who has won
substantial relief should not have his attorney’s fee reduced
simply because the district court did not adopt each contention
raised.” Id. at 439; see also Murphy v. Lynn, 118 F.3d 938, 952
(2d Cir. 1997) (“A plaintiff’s lack of success on some of his
claims does not require the court to reduce the lodestar amount
where the successful and the unsuccessful claims were interrelated
and required essentially the same proof”); Lunday v. City of
Albany, 42 F.3d 131, 134 (2d Cir. 1994) (finding reduction not
required so long as the unsuccessful claims were not “wholly
unrelated to the plaintiff’s successful claims” (internal
quotation marks and citation omitted)). There is “no certain
method of determining when claims are ‘related’ or ‘unrelated.’”
Hensley, 461 U.S. at 437 n.12. However, claims may be considered
related where they “involve a common core of facts or [are] based
on related legal theories,’ and are therefore not severable[.]”
Green v. Torres, 361 F.3d 96, 98 (2d Cir. 2004) (quoting Hensley,
461 U.S. at 435.)
Plaintiff avers that “[b]ecause the Joint Board achieved
its goal of holding Bergen Cove liable for the withdrawal
liability, the Court’s dismissal of the Joint Board’s alternative
ERISA claims provide no basis for reducing the Joint Board’s
attorney’s fee award.” (Pl.’s Support Memo at 11.) Plaintiff
highlights that even if the Joint Board had prevailed on the
controlled group and/or evade-or-avoid claims they “would have
obtained nothing more than the withdrawal liability that the Joint
Board obtained on the alter ego claims.” (Id.) Similarly,
Plaintiff argues all of its claims “arose from the same common
core of fact, namely, the withdrawal liability judgment against
Hall-Mark and Zizza & Co.” (Id. at 12; see also Pl.’s Reply at 9-
10.) Specifically, Plaintiff notes “[a]ll three ERISA claims
rested on the theory that Zizza’s conduct created links between
the judgment debtors and Bergen Cove that made Bergen Cove liable.”
(Id.) The interrelatedness of its claims, according to Plaintiff,
would make it “practically impossible to separate out what time
the Joint Board’s attorneys spent on one claim versus another”
since “the litigation was one overall effort.” (Id.)
The Moving Defendants counter that the controlled group
and evade-or-avoid claims were “factually and legally unrelated”
to the alter-ego claim “and required completely different evidence
to be collected during discovery and introduced at trial.” (Defs.’
Opp’n at 12.)16 Defendant proposes the Court apply a percentage
decrease of Plaintiff’s total hours to account for the work done
on the unsuccessful claims.
Here, the Court finds no reduction warranted based upon
Plaintiff’s unsuccessful claims because they shared with
Plaintiff’s alter ego claim a common core of fact. That is, each
claim arose from the withdrawal liability judgment against
16 Specifically, Defendant argues:
The controlled group claim was based on Mr.
Zizza’s and certain trusts’ ownership
interests in Hall-Mark and Bergen Cove.
The evade or avoid claims were based on Mr.
Zizza purportedly transferring assets from
Zizza & Company to Zizza & Associates, and
then from Zizza & Associates to Bergen Cove.
The alter ego claims, on the other hand, were
based on the theory that Zizza & Company,
Zizza & Associates and Bergen Cove had similar
management, business purposes, operations,
equipment, customers, supervision and
ownership. The alter ego claims did not rely
on any ownership structure of Hall-Mark or any
transfers of assets between Zizza & Company,
Zizza & Associates and Bergen Cove.
(Id. at 12.)
Hall-Mark and Zizza & Co., and the subsequent actions taken by
Zizza to avoid paying that withdrawal liability, including the
transfer of his business from Zizza & Co. to Zizza & Associates
and then to Bergen Cove. As highlighted at trial, there also
existed overlap in Plaintiff’s claims such that the common core of
facts relevant to one claim were also relevant to others.17
Regarding the degree of success obtained: Prevailing on the alter
ego claim provides a total recovery for Plaintiff since all its
claims sought identical relief -- i.e., to hold the Moving
Defendants liable for the withdrawal liability. As such, failure
to prevail on the evade-or-avoid, or controlled group claims does
not warrant a reduction in fees.
3. A Percentage Cut is Necessary However to “Trim the
Fat” From Plaintiff’s Fee Application
“To enable a court to determine the reasonableness of
the hours expended, a party seeking an award of attorneys’ fees
must submit contemporaneous time records indicating the number of
hours expended and the nature of the work done.” Taaffe v. Life
Ins. Co. of N. Am., 769 F. Supp. 2d 530, 543 (S.D.N.Y. 2011)
(collecting cases). When reviewing the overall reasonableness of
a fee application, “a district court is not required to ‘set forth
item-by-item findings concerning what may be countless objections
to individual billing items[.]’” Reiter v. Metro. Transp. Auth.
17 (See e.g., Tr. 263:3-264:23; 265:4-267:13.)
of State of N.Y., No. 01-CV-2762, 2007 WL 2775144, at *13 (S.D.N.Y.
Sept. 25, 2007) (quoting Lunday, 42 F.3d at 134); see also Kirsch
v. Fleet St., Ltd., 148 F.3d 149, 173 (2d Cir. 1998) (recognizing
“the court has discretion simply to deduct a reasonable percentage
of the number of hours claimed ‘as a practical means of trimming
fat from a fee application’” (quoting Carey, 711 F.2d at 1146));
Congregation Rabbinical Coll. Of Tartikov, Inc. v. Vill of Pomona,
188 F. Supp. 3d 333, 344 (S.D.N.Y. 2016) (“It is common practice
in this Circuit to reduce a fee award by an across-the-board
percentage where a precise hour-for-hour reduction would be
unwieldy or potentially inaccurate” (quoting Ass’n of Holocaust
Victims for Restitution of Artwork & Masterpieces v. Bank of
Austria Creditanstalt AG, No. 04-CV-3600, 2005 WL 3099592, at *7
(S.D.N.Y. Nov. 17, 2005))).
The Moving Defendants argue “the fees and costs incurred
in this matter were escalated because of Plaintiff’s and
Plaintiff’s counsel’s own conduct.” (Defs.’ Opp’n at 15.) They
elaborate, asserting “Plaintiff repeatedly amended its pleading,
thereby causing the parties to incur additional fees and costs on
motions to dismiss those pleadings.” (Id.) Likewise, Defendants
highlight “the parties [also] expended significant time and money
on the issues of whether Defendants were entitled to a jury trial,
whether Plaintiff could obtain the trust documents through a
discovery request disguised as a trial subpoena, and the
Plaintiff’s refusal to produce a witness for deposition.” (Id.)
The Moving Defendants highlight these were issues upon which they
prevailed. (Id.)18 The Moving Defendants argue courts in this
district countenance “fees should not be awarded where incurred
for unjustified tasks” and, thus, where necessary, “the district
court should exclude excessive, redundant or otherwise unnecessary
hours.” (Id. (citations omitted).) Similarly, since Plaintiff is
not entitled to attorney’s fees on the BCL claim, Defendant asserts
any time attributable to this claim must be excised from the fee
award. See Finkel, 2022 WL 970670, at *13 (striking jury’s award
of attorney’s fees and litigation costs incurred after October 23,
2009 and pursuant to New York Business Corporation Law).
In reply, the Joint Board highlights its time entries
are fully compliant with Second Circuit requirements since “they
are contemporaneous time records specifying the date, hours
expended and the nature of the work done.” (Pl.’s Reply at 11.)
Moreover, Plaintiff contends, like its own time entries, the Moving
Defendants’ time entries do not break down the time worked on each
individual claim but, rather, detail work done on the litigation
as whole.
18 Defendants also argue Plaintiff cannot seek reimbursement of
costs caused by any delay associated with the resignation from the
bar of Plaintiff’s former counsel, though they do not expound upon
what costs were associated with that resignation or how they were
adversely impacted by the resignation.
Having conducted a thorough review of Plaintiff’s
billing records, the Court finds a twenty percent (20%) across-
the-board reduction is appropriate to mitigate instances of
duplicative and/or unnecessary billing, as well as instances where
tasks could have been conducted by personnel billing at lower
rates. Additionally, the Court observes Plaintiff’s billing
entries do not separate time worked on individual claims; as such,
the Court is unable to accurately determine the precise amount of
time Plaintiff’s counsel spent exclusively on BCL-related issues
for which they are not entitled to recover attorney’s fees.19 As
such, a percentage decrease which also takes into consideration
the time spent on this non-ERISA claim is appropriate. See
Marshall v. Deutsche Post DHL, No. 13-CV-1471, 2015 WL 5560541, at
*13 (E.D.N.Y. Sept. 21, 2015) (“In lieu of a line item review and
reduction of counsel’s time, the Court will impose an across-the-
board percentage cut in hours . . . in order to trim the excess
from these billing entries.”).
Accordingly, the Court awards Plaintiff’s Counsel
attorneys’ fees as follows:
19 While the Joint Board argued no reduction was warranted based
upon its failure to prove either the evade-or-avoid or controlled
group claims, it makes no such argument regarding the BCL claims.
(See Pl.’s Support Memo, in toto; Pl.’s Reply, in toto.)
Attorney Name Position Adjusted Adjusted Total
Hours Hourly ($)
(reduced Rate
20%)
Rachelson, Partner 0.24 390 389.76
Jani
Rachelson, Partner 2.0 430 860.00
Jani
Abram, Michael Partner 1.04 390 388.96
Ciantra, Partner 0.8 430 344.00
Thomas
Vitale, Joseph Partner 0.08 430 $34.40
Hock, David Partner 5.6 375.00 2,100.00
Hock, David Partner 201.28 390 78,499.20
Hock, David Partner 243.84 410 99,974.40
Hock, David Partner 47.2 430 20,296.00
Leeds, Zachary Partner 0.24 410 98.40
Leeds, Zachary Partner 0.64 430 275.20
Adler, Michael Partner 396.2 430 170,366.00
Adler, Michael Partner 105.92 450 47,664.00
DeChiara, Partner 132.72 430 57,069.60
Peter
DeChiara, Partner 143.68 450 64,656.00
Peter
Harmon, Associate 1.76 300 528.00
Richard
Harmon, Associate 4.32 300 1,296.00
Richard
Harmon, Associate 2.24 300 672.00
Richard
Adler, Michael Associate 0.24 300 $72.00
Adler, Michael Associate 0.96 300 288.00
Nesbitt, Associate 74.96 300 22,488.00
Daniel
Malloy, Kelly Associate 4.24 300 1,272.00
Medina, Erika Associate 6.0 300 1,800.00
Mackson, Tzvi Associate 1.52 300 456.00
Mackson, Tzvi Associate 15.6 300 4,680.00
Hurtado, Associate 59.28 285 16,894.80
Noelia
Hurtado, Associate 108.08 300 32,424.00
Noelia
Attorney Name Position Adjusted Adjusted Total
Hours Hourly ($)
(reduced Rate
20%)
Hurtado, Associate 4.08 300 1,224.00
Noelia
Berger, Paralegal 0.96 90 86.40
Benjamin
Berger, Paralegal 4.32 95 410.40
Benjamin
Ellis, Paralegal 45.28 95 4,301.60
Elizabeth
Tsuckerman, Paralegal 0.64 95 60.80
Lev.
Fitzgerald, Paralegal 16.4 95 1,558.00
Caitlin
Ellis, Peter Paralegal 20.32 95 1,930.40
Kramer, George Paralegal 2.56 95 243.20
Kramer, George Paralegal 20.08 100 2,008.00
Kramer, George Paralegal 41.6 100 4,160.00
McDaniels, Paralegal 17.6 95 1,672.00
Kelly
Viera, Clara Paralegal 27.76 95 2,637.20
Lore, Matthew Paralegal 1.76 100 176.00
Morrisey, Paralegal 11.6 100 1,160.00
Nycol
Brack, Katelyn Law Clerk 9.2 75 690.00
Hart, Nicholas Law Clerk 0.72 75 54.00
Cartwright, Law Clerk 37.92 75 2,844.00
Briana
Heydemann, Law Clerk 5.84 75 438.00
Sarah
Lynch, Michael Law Clerk 4.8 75 360.00
Ettinger, Lori Law Clerk 14.32 75 1,074.00
Malloy, Kelly Law Clerk 5.84 75 438.00
Turner, Wes Law Clerk 3.68 75 276.00
Brooks, Law Clerk 7.04 75 528.00
Zachary
Spwight, Law Clerk 3.12 75 234.00
Montene
Stevens, Jake Law Clerk 15.16 75 1,137.00
Attorney Name Position Adjusted Adjusted Total
Hours Hourly ($)
(reduced Rate
20%)
Total 1883.28 655,587.72
4. Plaintiff’s Costs Must be Reduced
In addition to an award of attorneys’ fees, the Joint
Board seeks reimbursement of its Counsels’ incurred costs and
expenses, which are recoverable under ERISA. See 1132(g)(2)(d);
1132(g)(1). “Costs are defined by 28 U.S.C. § 1920, and include
filing and subpoena fees, as well as costs of transcripts,
printing, making copies, and disbursements for witnesses.” King
v. JCS Enters., Inc., 325 F. Supp. 2d 162, 171 (E.D.N.Y. 2004)
(citing 28 U.S.C. § 1920). Courts in the Second Circuit will also
“generally award ‘those reasonable out-of-pocket expenses incurred
by the attorney and which are normally charged fee paying
clients.’” DeVito v. Hempstead China Shop, Inc., 831 F. Supp.
1037, 1045 (E.D.N.Y. 1993) (quoting Reichman v. Bonsignore,
Brignati & Mazzotta, P.C., 818 F.2d 278, 283 (2d Cir. 1987)).
“This excludes amounts that constitute an attorney’s overhead,
since those are not typically charged to a client.” King, 325 F.
Supp. 2d at 171 (citing LeBlanc-Sternberg v. Fletcher, 143 F.3d
748, 763 (2d Cir. 1998)). However, “[i]t is well settled that
online legal research, general document delivery, and telephone
charges are not recoverable costs under § 1920.” LeBombard v.
Winterbottom, No. 14-CV-0071, 2015 WL 9450838, at *1 (N.D.N.Y.
Dec. 3, 2015) (collecting cases); see also King, 325 F. Supp. 2d
at 171-72 (reasoning “[p]rivate market attorney fee rates reflect
overhead costs like electronic research, just as they would reflect
the cost of case reporters and other necessary books purchased for
a law firm’s library”); Torres v. Gristede’s Operating Corp., No.
04-CV-3316, 2012 WL 3878144, at *5 (S.D.N.Y. Aug. 6, 2012).
Indeed, costs associated with electronic research are “routinely
disallowed in the Eastern District of New York.” United States v.
City of N.Y., No. 07-CV-2067, 2013 WL 5542459, at *12 (E.D.N.Y.
Aug. 30, 2013) (quoting Coated Fabrics Co. v. Mirle Corp.,
No. 06-CV-5415, 2008 WL 163598, at *9 (E.D.N.Y. Jan. 16, 2008)).
Plaintiff’s counsel seeks a total costs award of
$30,284.92, broken down as follows: (1) Filing Fees ($350.00);
(2) Service Costs ($540.00); (3) Transcripts ($4,288.15);
(4) Electronic Research ($15,566.17); (5) Postage Costs ($55.12);
(6) Overnight Delivery Costs ($374.25); (6) Copies ($5,193.30);
(7) Overtime Costs ($533.01); (8) Plane Fare ($41.19);
(9) Transportation ($1,515.10); (10) Meals ($449.30);
(11) Printer Costs ($887.47); (12) Mileage ($108.36); and
(13) hotel costs ($382.80). (See Adler Decl. at ¶¶ 31-45; see
also Exs. A-D, ECF No. 241-2, attached to Pl.’s Motion.) In view
of the case law articulated above, the Court finds costs associated
with electronic research should be disallowed since they are
expected to be reflected in the attorneys’ hourly rates. However,
the remainder of the costs are allowable; moreover, the Court is
satisfied with the documentation the Joint Board has provided to
substantiate them. (Id.) As such, the Court awards Plaintiff’s
$14,718.75 in costs.
E. Plaintiff is Entitled to Prejudgment Interest at the
IRC Section 6621 Rate
ERISA’s mandatory fee provision further provides a court
shall award, in addition to reasonable attorney’s fees and costs,
“interest on the unpaid contributions,” and “an amount equal to
the greater of-- (i) interest on the unpaid contributions, or (ii)
liquidated damages provided for under the plan in an amount not in
excess of 20 percent.” 29 U.S.C. § 1132(g)(2)(B)-(C). “For
purposes of [Section 1132(g)], interest on unpaid contributions
shall be determined by using the rate provided under the plan, or,
if none, the rate prescribed under section 6621 of Title 26.” Id.
Interest on withdrawal liability runs from the initial date the
withdrawal liability was due. See Ferrara v. Heavy Constr. Lumber,
Inc., No. 21-CV-2562, 2022 WL 1085380, at *5 (E.D.N.Y. Jan. 5,
2022) (calculating prejudgment interest due under § 1132(g)(2) and
stating “[p]ursuant to ERISA, plaintiffs are entitled to an award
of interest on unpaid withdrawal liability calculated from the
date that the first liability payment was due until the date of
final judgment” (citing 29 U.S.C. § 1132(g)(2)(B)).
“Like an award of attorney’s fees for a successful ERISA
claim by an employee benefit plan participant, prejudgment
interest is an element of [the plaintiff’s] complete
compensation.” Slupinski v. First Unum Life Ins. Co., 554 F.3d
38, 53-54 (2d Cir. 2009) (internal quotations and citation
omitted). Indeed, “[a]s the Supreme Court has explained, ‘a
monetary award does not fully compensate for an injury unless it
includes an interest component.’” Id. (quoting Kansas v. Colorado,
533 U.S. 1, 10 (2001) (emphasis in original)). Likewise, “an award
of prejudgment interest may be needed in order to ensure that the
defendant [does] not enjoy a windfall as a result of its
wrongdoing.” Id.; see also Algie v. RCA Glob. Comms’ns, Inc., 891
F. Supp. 875, 899 (S.D.N.Y. 1994) (“[A]n award [of prejudgment
interest] is particularly appropriate as a means of ensuring that
plaintiffs are made whole and that defendants do not profit by
their failure to comply with their ERISA obligations.”) (emphasis
in original); but see Slupinski, 554 F.3d at 54 (“[T]here may be
circumstances in which an award of prejudgment interest should not
be made, such as where the funds at issue have been placed in an
interest-bearing account and the judgment orders that the entire
account be paid to the plaintiff . . . or where the funds have
been deposited with the court and the plaintiff could have, but
did not, seek a court order requiring that they be held in an
interest-bearing account . . . [a]nd if the record revealed that
the plaintiff had engaged in tactics that were dilatory.” (citing
Mendez v. Tchrs. Ins. & Annuity Assoc. & Coll. Ret. Equities Fund,
982 F.2d 783, 790 (2d Cir. 1992)).
To the extent Defendant argues Plaintiff is not entitled
to an award of prejudgment interest because it is only “liable for
the default judgment entered in the Prior Action” together with
post-judgment interest, (Defs.’ Opp’n at 18), this argument was
raised previously and adjudicated by Judge Bianco in his July 31,
2017 oral ruling denying Moving Defendants’ Motion for
Interlocutory Appeal. Specifically, in that ruling Moving
Defendants sought leave to file an immediate interlocutory appeal
on four issues, the second being “[w]hether Zizza Associates and
Bergen allegedly evaded or avoided ERISA withdrawal liability or
merely a judgment.” (Mot. for Interlocutory Appeal, ECF No. 121,
at 1.) In denying said Motion, Judge Bianco stated he was “aware
of no case law that suggests that when a judgment is
entered . . . somehow the fact of withdrawal liability ceases to
exist.”20 (See Interlocutory Appeal Tr., ECF No. 128, at 8:8-14.
20 Additionally, the Court again determined:
[O]verall with respect to the raising of the
Peacock decision . . . it’s the court’s view
that Peacock has no application here for the
following reasons . . . Peacock, as well as
(citing Cent. State Se. and Sw. Areas Pension v. Lloyd SZTANYO
Tr., 693 F. Supp. 531 (E.D. Mich. 1988).) Since the Court finds
Plaintiff is entitled to mandatory attorney’s fees and costs
pursuant to Section 1132(g)(2), as part of that section, Plaintiff
is also entitled to prejudgment interest measured at the IRC
Section 6621 rate, as well as an additional amount equal to
prejudgment interest.
Upon review of Plaintiff’s prejudgment interest
calculations, (see Interest Calculations, Ex. C), together with
the published IRC Section 6621 rates,21 the Court finds Plaintiff’s
calculations to be accurate; therefore, Plaintiff is awarded
$159,517.67 in prejudgment interest pursuant to Section
1132(g)(2)(B), together with an additional amount equal to the
the Second Circuit precedent applying
Peacock[,] made clear that district court’s
[sic] do not have subject magisterial
jurisdiction over claim[s], based on theories
of alter ego or successor liability that
involved another entity’s ERISA violation, --
and I emphasize this part -- unless some
independent ground for federal jurisdiction
exists.
(Interlocutory Appeal Hr’g Tr., ECF No. 128, at 8:20-9:9.) Since
Judge Bianco determined there were two independent bases of
original jurisdiction asserted in this case, the Court found it
had jurisdiction over Plaintiff’s ERISA based Alter Ego claim.
(Id. at 9:9-15.)
21 See EMPLOYEE BENEFITS SECURITY ADMINISTRATION,
https://www.dol.gov/agencies/ebsa/employers-and-advisers/plan-
administration-and-compliance/correction-programs/vfcp/table-of-
underpayment-rates (last visited Dec. 4, 2023).
amount of interest owed for a total sum of $319,035.34. See
1132(g)(2)(C); (see also Adler Decl., ¶ 55.) Moreover, from May
3, 2022, until the date of judgment is entered prejudgment interest
on the withdrawal liability continues to accrue at a per-diem rate
of $29.94. See Gesualdi v. Seacost Petroleum Prods., Inc., 97 F.
Supp. 3d 87 (E.D.N.Y. 2015) (finding prevailing ERISA plaintiffs
were entitled to “$4,160.16 in accrued interest on the outstanding
withdrawal liability, through the filing of the instant motion,
together with daily interest . . . for each day until judgment is
entered” pursuant to § 1132(g)(2)(B)); Bd. of Trs. Of the UFCW
Local 50 Pension Fund v. Baker Hill Packing Inc., No. 13-CV-1888,
2015 WL 867013, at *11 (E.D.N.Y. Feb. 27, 2015) (“[S]ince
[d]efendant’s withdrawal liability remains delinquent, daily
interest continues to accrue until judgment is entered”); (Adler
Decl., ¶ 53.)
F. NY BCL Prejudgment Interest
Pursuant to Section 5001 of the C.P.L.R:
[i]nterest shall be recovered upon a sum
awarded because of a breach of performance of
contract, or because of an act or omission
depriving or otherwise interfering with title
to, or possession or enjoyment of, property,
except that in an action of an equitable
nature, interest and the rate and date from
which it shall be computed shall be in the
court’s discretion.
C.P.L.R. § 5001(a). “Pre-judgment interest attaches to [a]
fiduciary duty breach where . . . the damages awarded [are]
compensatory for property damage.” J. Barrows, Inc. v. Uvino, 514
F. App’x 23, 23 (2d Cir. 2013) (citing Lewis v. S.L. & E., Inc.,
831 F.2d 37, 39 (2d Cir. 1987)); see also Action S.A. v. Marc Rich
& Co., Inc., 951 F.2d 504, 508-09 (2d Cir. 1991) (“[E]ven on a
claim with equitable underpinnings, such as one for breach of
fiduciary duty, [the statutory rate of] prejudgment interest would
be mandatory where the only relief sought was compensatory
damages.”) (quoting United Bank Ltd. v. Cosmic Int’l, Inc., 542
F.2d 868, 878 (2d Cir. 1976)). Interest is to be computed “from
the earliest ascertainable date the cause of action existed, except
that interest upon damages incurred thereafter shall be computed
from the date incurred.” C.P.L.R. § 5001(b). Pursuant to C.P.L.R.
§ 5004(a), the statutory rate of interest in “nine per centum per
annum.”
Plaintiff avers “[u]nder New York law, prejudgment
interest is mandatory on damages paid on a breach-of-fiduciary-
duty claim.” (Pl.’s Support Memo at 18.) Moving Defendants
counter that such an award is discretionary because “Plaintiff
brought his claim for breach of fiduciary duty against Mr. Zizza
under BCL § 720, seeking an ‘accounting’ from Mr. Zizza.” (Defs.’
Opp’n at 20.) Defendant expounds, “New York law recognizes an
‘accounting’ as a distinctly ‘equitable remedy . . . designed to
require a person in possession of financial records to produce
them, demonstrate how money was expended and return pilfered funds
in his or her possession.’” (Id. (citation omitted).)
Additionally, Moving Defendants contend Plaintiff had previously
argued that it sought equitable and restitutionary relief before
the Court. Plaintiff demurs, highlighting that Judge Bianco
previously ruled its BCL claim was not a claim for equitable relief
when he found Defendant was entitled to a jury trial on that cause
of action. (Pl.’s Reply at 12-13.)
The Court agrees with the Joint Board in that whether
the BCL claim was equitable in nature, or sought monetary relief,
was an issue previously determined by Judge Bianco. (See Req. for
Jury Trial Hr’g Tr., ECF No. 159 at 6-7 (“The Court notes that
although Plaintiffs point out that they use the word equitable and
seek equitable relief, . . . the case law is clear that to simply
characterize something as equitable if in reality it is seeking
monetary damages does not somehow bind the Court. . . . [T]he
Court should not just look at the label that a plaintiff chooses
in their pleading, but look at the type of relief that in reality
is being sought. And I believe that is the situation here.”).)
Therefore, the Court determines prejudgment interest at the
statutory rate on Plaintiff’s BCL claim is mandatory. Having
reviewed Plaintiff’s calculations on this issue, the Court finds
such calculations accurate. (See Adler Decl. at ¶¶ 58-61.) As
such, the Court awards prejudgment interest on Plaintiff’s BCL
claim; such interest (1) equates to $404,029.51 through May 2,
2022, and (2) accrues at a per-diem rate of $88.49 from May 3,
2022, until the date of entry of Judgment.
To the extent not explicitly addressed, the Court has
considered the remainder of the Moving Defendants’ arguments and
finds them to be without merit.
CONCLUSION
Accordingly, IT IS HEREBY ORDERED that:
I. Plaintiff’s Motion for Issuance of Judgment (ECF
No. 241) is GRANTED to the extent that:
A. As to Bergen Cove Realty Inc., Plaintiff is
entitled to entry of judgment consisting of:
1. $273,209.00 in withdrawal liability
principal;
2. Mandatory attorney’s fees pursuant to
Section 1132(g)(2)(D) in the sum of
$655,587.72;
3. Costs pursuant to Section 1132(g)(2)(D)
in the sum of $14,718.75;
4. Prejudgment interest at the applicable
IRC Section 6621 rate pursuant to Section
1132(g)(2)(B) in the sum of $159,517.67.
Prejudgment interest shall continue to
accrue at a per-diem rate of $29.94 from
May 3, 2022, until the date of entry of
Judgment; and
5. A sum equal to the prejudgment interest
awarded pursuant to Section
1132(g)(2)(C)(i), equating to
$159,517.67.
B. As to Salvatore J. Zizza Plaintiff is entitled
to entry of Judgment consisting of:
1. $358,862.05 in damages; and
2. Mandatory prejudgment interest on its New
York Business Corporation Law claim
pursuant to C.P.L.R Section 5001 at the
statutory rate (9%), through May 2, 2022,
for a sum equating to $404,029.51.
Prejudgment interest shall continue to
accrue at a per-diem rate of $88.49 from
May 3, 2022, until the date of entry of
Judgment; and
II. The Moving Defendants’ Motion for Attorney’s Fees
(ECF No. 242) is DENIED IN ITS ENTIRETY.
SO ORDERED.
/s/_JOANNA SEYBERT______
Joanna Seybert, U.S.D.J.
Dated: December 6, 2023
Central Islip, New York