Opinion ID: 2782336
Heading Depth: 2
Heading Rank: 3

Heading: default judgment: damages

Text: “’[W]hile a party’s default is deemed to constitute a concession of all well pleaded allegations of liability, it is not considered an admission of damages.’” Cement & Concrete Workers Dist. Council Welfare Fund v. Metro Found. Contractors, Inc., 699 F.3d 230, 234 (quoting Greyhound Exitgroup, Inc. v. E.L.U.L. Realty Corp., 973 F.2d 155, 158 (2d Cir. 1992)). “Rule 55(b)(2) of the Federal Rules of Civil Procedure provides that on the matter of damages ‘the court may conduct such hearings or order such references as it deems necessary and proper . . . .’ That rule allows but does not require the district judge to conduct a hearing.” Action S.A. v. Marc Rich & Co., 951 F.2d 504, 508 (2d Cir. 1991) (emphasis omitted). The district court here did not hold a hearing on damages. Instead, it relied on plaintiffs’ thorough submissions (including briefs, audits, and affidavits) and defendants’ limited evidence in opposition to conclude that “plaintiffs have 16 established their entitlement to a judgment in the total amount requested.” Special App. 5. We review this decision for abuse of discretion. Cement & Concrete Workers Dist. Council Welfare Fund, 699 F.3d at 233. The defendants first challenge the damages entered against them for failing to account for “out of trade hours”—that is, hours worked for which contributions were not required. Though defendants assert that the contract envisions the possibility of “out of trade hours,” their analysis ends there. The defendants’ submissions fail to identify even a single piece of documentary evidence that out of trade hours were worked and, if so, how many and by whom. Absent such documentary evidence (or even an allegation that such evidence exists), there is no justification for reversing the district court, nor is there any justification for requiring a hearing on this issue. The individual defendant also contends that the district court erroneously awarded liquidated damages, excessive interest, and attorney’s fees against him. On this point, we agree with the individual defendant. While it is clear that under 29 U.S.C. § 1132, the corporate defendant is liable for unpaid contributions, interest, liquidated damages provided under the plan, attorney’s fees and costs, and any other legal or equitable relief the court deems 17 appropriate, the same is not true for the individual defendant. As a fiduciary, the individual defendant can only be required under ERISA to “make good to [the] plan any losses to the plan resulting from [his] breach, and . . . [provide] such other equitable or remedial relief as the court may deem appropriate.” 29 U.S.C. § 1109(a). The fiduciary’s liability would certainly include the $451,300.52 in withheld fringe benefit contributions and deductions. Whether it would also include liquidated damages, prejudgment interest, and attorney’s fees, however, is a different matter. As we have previously explained, liquidated damages do not serve to make good to the plan any losses and do not “constitute ‘appropriate equitable relief’ as recognized by the common law of trusts.” Diduck v. Kaszycki & Sons Contractors, Inc., 974 F.2d 270, 285 (2d Cir. 1992), abrogated on other grounds by Gerosa v. Savasta & Co., Inc., 329 F.3d 317 (2d Cir. 2003). Accordingly, the district court erred by awarding liquidated damages against the individual defendant. Prejudgment interest, on the other hand, can constitute appropriate equitable or remedial relief under 29 U.S.C. § 1109(a). Yet, in order for the district court to grant such relief against a fiduciary in his individual capacity, it is required to articulate the reasons justifying such an award and the interest rate 18 chosen. See Henry v. Champlain Enters., Inc., 445 F.3d 610, 622–23 (2d Cir. 2006); Diduck, 974 F.2d at 286 (“One must look to the return on investments held by the plan to determine the appropriate interest rate to be applied under § 409.”). As then‐Judge Sotomayor explained in Henry, “[t]he issue of ‘whether or not to award prejudgment interest [in ERISA cases] is ordinarily left to the discretion of the district court.’ The court must, however, explain and articulate its reasons for any decision regarding prejudgment interest.” 445 F.3d at 622–23 (internal citation omitted). Absent such findings, “’meaningful review is forestalled.’” Id. at 623 (quoting Jones v. UNUM Life Ins. Co. of Am., 223 F.3d 130, 140 (2d Cir. 2000)). Because the district court failed to engage in this analysis, we have no choice but to vacate and remand. Similarly, while the district court may award attorney’s fees, see 29 U.S.C. 1132(g)(1), absent any specific analysis from the district court explaining why attorney’s fees are justified against the individual defendant in this case, a meaningful review is forestalled. See Henry, 445 F.3d at 622. On remand, therefore, the district court is also directed to analyze whether attorney’s fees are justified in this case. 19