Opinion
98 CV 5895 (ARR)
March 12, 2002
REPORT AND RECOMMENDATION
In September 1998, plaintiffs Trustees of the Bakery Confectionary Workers International Union of America, Local 3 Welfare Fund, and Trustees of the Bakery Confectionary Union Industry International Pension Fund (collectively, the "Funds"), filed two complaints against Zaro's Bake Shop, Inc., seeking to collect unpaid and delinquent benefit fund contributions, pursuant to Sections 502 and 515 of ERISA, 29 U.S.C. § 1132 and 1145. (See Case Nos. 98 CV 5895 (ARR) and 98 CV 5986 (NG)). On December 13, 1999, the two complaints were ordered consolidated under the earlier case number and referred to court-annexed arbitration.
Hearings were then held before arbitrator Richard M. Gaba, Esq., who issued an award in favor of plaintiffs in the amount of $31,243.18 in unpaid contributions and interest through the date of the award — March 19, 2001. Plaintiffs also sought attorney's fees and costs, pursuant to 29 U.S.C. § 1132 (g)(2)(D).
The amount of fees and costs to be awarded is to be determined by the court. See Local Rule 83.10(g)(2)(A); see also Jones v. UNUM Life Ins. Co. of America, 223 F.3d 130, 139 (2d Cir. 2000); Trustees of Bldg. Services 32B-J, Pension, Health and Annuity Funds v. Linden Realty Assocs., No. 94 CV 1358, 1995 WL 302454, at *7 (E.D.N.Y. May 8, 1995).
On March 21, 2001, the arbitrator's award was entered on the court's docket. By April 20, 2001, the final date for seeking a trial de novo. neither party had requested a trial de novo. Almost two weeks later, on May 2, 2001, the award was entered as a final judgment.
On that same date, May 2, 2001, plaintiffs filed and served upon defendant an attorney's fee application in which plaintiffs indicated that they understood that judgment had been entered. Defendant was also served with a copy of Judge Ross's order of May 2, 2001. setting a briefing schedule for the fee application.
By order dated May 25, 2001, the plaintiffs' fee application was referred to the undersigned.
On May 18, 2001, defendant submitted a letter. indicating that it "always intended" to request a trial de novo but that it never received notice from the Clerk of Court that the award had been docketed. (Letter of Michael J. Volpe, Esq., dated May 18, 2001). Defendant's request for trial de novo was thereafter referred to the undersigned.
DISCUSSION
A. Local Rule 83.10
Pursuant to 28 U.S.C. § 651 (a), district courts listed in Section 658 of the chapter, including the Eastern District of New York are authorized to establish local rules for the referral of civil cases to court-annexed arbitration. In accordance with the statute, the Eastern District of New York has adopted Local Rule 83.10 which allows the Clerk of Court to designate for compulsory arbitration all civil cases where the only relief sought is money damages in an amount not in excess of $150,000.00, exclusive of costs and interests. Local Rule 83.10(d).
The Local Rule excludes from mandatory arbitration, among others, certain categories of cases, such as prisoners' civil rights cases, tax matters social security cases and certain constitutional claims. Local Civil Rule 83.10(d)(1).
Consistent with 28 U.S.C. § 655, the Eastern District of New York's Local Rule provides: "within 30 days after the arbitration award is entered on the docket, any party may demand in writing a trial de novo in the district court." Local Rule 83.10(h)(1); see also 28 U.S.C. § 655 (a). The Local Rule further provides:
The arbitration award shall be filed with the court promptly after the hearing is concluded and shall be entered as the judgment of the court after the 30 day period for requesting a trial de novo pursuant to Section (g) has expired, unless a party has demanded a trial de novo.
Local Rule 83.10(g)(1).
In this case, the Arbitration Award signed by the arbitrator, Richard M. Gaba, Esq., and dated March 19, 2001, contains a specific notice that warns: "this arbitration award will become a final judgment of this Court, without the right to appeal, unless a party files with this Court a demand for a trial de novo within 30 days after entry of this arbitration award." (Arbitration Award dated March 19, 2001) (emphasis in original). A copy of the arbitrator's award was sent by mail and received by plaintiffs' counsel on March 22, 2001. (Letter of Adrienne L. Saldana, Esq., dated Mar. 4, 2002 at 1).
See n. 5, infra.
The Award was entered by the Clerk of the Court on the docket sheet on March 21 2001; thus, the filing of any request for trial de novo was required by the Local Rule to be made by April 20, 2001. Indeed, to eliminate any questions as to the expiration date, the docket sheet explicitly reflects the deadline for filing the request for trial de novo as "4/20/01." When judgment was subsequently entered by the Clerk of Court on May 2, 2001. there was a specific notation made on the docket sheet that no request for trial de novo had been filed.
B. Excusable Neglect
There is no dispute that defendant failed to make a timely demand for a trial de novo within the 30 days set by the statute and by the Local Rule. Under similar circumstances, courts in this and other districts have denied belated requests for a new trial. See, e.g., Perez v. N Y City Health Hosps. Corp., No. 86 CV 0925, 1987 WL 9673. at *1 (E.D.N.Y. Apr. 13, 1997) (denying plaintiff's Rule 60 motion seeking a trial de novo based on the attorney's miscalculation of the time period within which a demand must be made because the arbitration procedures were "new and unfamiliar"'); see also Bazaar v. Peck, No. Civ A 96-3613, 1996 WL 755404, at *1 (E.D. Pa. Dec. 30, 1996) (entering judgment based on the arbitration award and noting that the time for filing a demand for a trial de novo was November 22, 1996 and plaintiff's demand was filed three days late and not within the prescribed period); cf. Pizzichil v. Motors Ins. Corp., 90 F.R.D. 119, 121-22 (E.D. Pa. 1981) (noting that the running of the time for filing a demand for trial de novo is triggered by the date the award is filed and not by the date plaintiff received notice, but authorizing a late request where counsel relied on prompt delivery of the mail and the request was received two days late).
Although the Second Circuit has not specifically addressed the issue of the time limit for filing in the context of a demand for a trial de novo. some courts have held that this time limit under Section 655, like the limits on causes of action in federal statutes generally, "are presumed to be subject to extension on equitable grounds — in other words, if 'the ends of justice' so require — unless Congress specifically states otherwise. . . . [and] there is no reason to believe that Congress intended strict application of the 30-day time limit, especially in light of the experimental nature of court-annexed arbitration." CNA Financial Corp. v. Brown, 162 F.3d 1334, 1336 (11th Cir. 1998); see also Esteves v. Bondy, 189 F.R.D. 148, 149 (E.D. Pa. 1999) (noting that the 30 day period "is subject to enlargement under Federal Rule of Civil Procedure 6(b), which allows the court at its discretion. . . [to] 'permit the act to be done where the failure to act was the result of excusable neglect'"); Rush v. United States, No. CV A 91-3887, 1992 WL 334035, at *1 (E.D. Pa. Nov. 6, 1992) (permitting trial de novo where demand was late by one day and was entered "to avoid an unjust forfeiture").
In defining what constitutes excusable neglect sufficient to justify the exercise of the court's discretion to permit a trial de novo after arbitration, the Third Circuit has enumerated certain factors which have been applied in these circumstances: "1) whether the inadvertence reflected professional incompetence such as ignorance of rules of procedure; 2) whether an asserted inadvertence reflects an easily manufactured excuse incapable of verification by the court; 3) counsel's failure to provide for a readily foreseeable consequence; 4) a complete lack of diligence; 5) whether the inadvertence resulted despite counsel's substantial good faith efforts toward compliance." and whether the enlargement of time causes prejudice to the opposing party. Esteves v. Bondy, 189 F.R.D. at 149 n. 1 (citing Dominic v. Hess Oil V.I. Corp., 841 F.2d 513, 517 (3d Cir. 1998)). The Eleventh Circuit considers similar factors such as the length of delay, the reason for the delay, including whether it was in the control of the moving party, the good faith of the delaying party, and the danger of prejudice. CNA Financial Corp. v. Brown, 162 F.3d at 1336.
In arguing that defendant should not be permitted :o request a :rial de novo because it failed to make a timely demand under the Local Rule, plaintiffs rely on Rule 60(b) of the Federal Rules of Civil Procedure, which provides relief from judgment where there has been "mistake, inadvertence, surprise or excusable neglect." Fed.R.Civ.P. 60(b)(1). Courts have held that such "extraordinary judicial relief' may be invoked "only upon a showing of exceptional circumstances." Rand Int'l Leisure Prod., Ltd. v. Teksource L.C., No. 97 CV 0319, 1998 WL 372356, at *1 (E.D.N.Y. July 2, 1998) (quoting Nemaizer v. Baker, 93 F.2d 58, 61 (2d Cir. 1986)). To ensure that vacating the judgment "will not be an empty exercise or futile gesture," courts have required a showing that the claim will be of merit if relief is granted. Cabbo v. Adelphi Univ., 179 F.R.D. 381, 386 (E.D.N.Y. 1998) (quoting Owens v. United States, No. 96 CV 5928, 1997 WL 177863, at *2 (E.D.N.Y. Apr. 3, 1997)).
Defendant argues that it is seeking relief in this case not under Rule 60. but rather, its request for a trial de novo should be granted pursuant to Rule 6(b) of the Federal Rules of Civil Procedure, which allows a court to permit an act to be done where the failure to act was the result of excusable neglect. (See Letter of Daniel W. Morris, Esq., dated Mar. 4, 2002 at 2). Although some courts apply Rule 6(b) when considering extensions of time relating to arbitration awards. see, e.g., Esteves v. Bondy, 189 F.R.D. 148, and other courts apply Rule 60 (b). see, e.g., Perez v. N Y City Health Hosps. Corp., 1987 WL 9673, the same standard of "excusable neglect" applies under either Rule. See In re prudential Securities Inc. Ltd. Partnerships Litig., 164 F.R.D. 362, 368-69 (S.D.N.Y.) (citing Supermarkets General Corp. v. Grinnell Corp., 490 F.2d 1183, 1186 (2d Cir. 1974)), aff'd, 107 F.3d 3 (2d Cir. 1996), cert. denied, 521 U.S. 1119 (1997). Under either rule, "[a] moving party must show both good faith and a reasonable basis for not acting within the specified period. . . . Even upon a finding of excusable neglect. it remains within the district court's sole discretion whether or not to grant the extension." In re Prudential Securities Inc. Ltd. Partnerships Litig., 164 F.R.D. at 369 (citations omitted).
C. Application
In this case, defendant has failed to present any basis on which to excuse its failure to demand a trial de novo within the specified 30 day period. In his initial letter to the court dated May 18, 2001, defendant's counsel stated: "I have never received any notification from the Clerk of Court that an award was docketed. To my surprise, last week I was notified that the Clerk of the Court had already entered judgment. Defendant has always intended in filing a demand to have a trial de novo." (Letter of Michael J. Volpe. Esq., dated May 18, 2001).
More recently, however, in a letter dated March 4, 2002, another attorney from defendant's counsel's firm represented that "[i]t was only after the judgment was entered that Defendant learned about the Arbitrator's decision." and that "Defendant requested the trial de novo as soon as it was clear that the arbitrator had awarded a decision adverse to Defendant." (Letter of Daniel W. Morris, Esq., dated Mar. 4, 2002 at 1, 2). In a letter dated March 4, 2002, plaintiffs' counsel disputes the accuracy of these statements. representing that after she received a copy of the arbitrator's award by mail on March 22, 2001. she spoke with defendant's counsel by telephone and, during that conversation, he indicated that he had also received the award and "we discussed it briefly." (Letter of Adrienne L. Saldana, Esq., dated Mar. 4, 2002 at 1). Since the time that this Court received Ms. Saldana's March 4th letter this Court has not received any further communications from defendant disagreeing with Ms. Saldana's letter. Accordingly. subject to a further submission from defendant disputing Ms. Saldana's assertion that defendant's counsel had prior knowledge of the arbitrator's award, this Court has evaluated defendant's claim of excusable neglect based on the lack of notification of the docketing of the award, as set forth in defendant's initial letter of May 18, 2001.
Although defendant relies on lack of notice to excuse its failure to make a timely demand for a new trial, a review of Local Rule 83.10 demonstrates that there is no provision in the Local Rules for service of the notice of the award upon the parties or their counsel. Local Rule 83.10; see also Pizzichil v. Motors Ins. Co., 90 F.R.D. at 121. Moreover, unlike some statutorily defined time periods which start to run from the date of receipt of notice. see, e.g., 42 U.S.C. § 2000e-5 (f)(1) (requiring a plaintiff to file a complaint under Title VII within 90 days of receiving a right to sue letter from the EEOC), under the Local Rule here. "[i]t is the filing of the arbitrators' award which triggers the running of the time for filing the demand for Trial de novo." Pizzichil v. Motors Ins. Corp., 90 F.R.D. at 121.
Rule 77 of the Federal Rules of Civil Procedure requires the clerk of court [i]mmediately upon the entry of an order or judgment" to serve notice of the entry upon each party by mail. Fed.R.Civ.P. 77(d). The Rule explicitly states. however, "lack of notice of the entry by the clerk does not affect the time to appeal or relieve or authorize the court to relieve a party for failure to appeal within the time allowed." (Id.) The Second Circuit has consistently held that "the mere failure of the clerk to give the parties notification that judgment has been entered does not provide grounds for a finding of excusable neglect nor warrant an extension of time to appeal." Mennen Co. v. Gillette Co., 719 F.2d 568, 570 (2d Cir. 1983) (citing Fase v. Seafarers Welfare Pension Plans, 574 F.2d 72, 76-77 (2d Cir. 1978); Nichols-Morris Corp. v. Morris, 279 F.2d 81, 82-83 (2d Cir. 1960)); see also Radack v. Norwegian America Line Agency, 318 F.2d 538, 542 (2d Cir. 1963) (holding that "lack of notice does not ipso facto mean that a judgment must, can or should be reopened"); Orshan v. Macchiarola, 105 F.R.D. 534, 537 (E.D.N.Y. 1985) (holding that "a Rule 77(d) clerical mistake alone is probably insufficient to secure a Rule 4(a) extension").
Indeed, the courts have generally required "a showing that counsel has diligently attempted to discharge the duty implicit in Fed.R.Civ.P. 77 (d) by making inquiries to discover the status of the case." Mizell v. Attorney General of New York, 586 F.2d 942, 945 n. 2 (2d Cir. 1978), cert. denied, 440 U.S. 967 (1979). As the court noted in Mennen Co. v. Gillette Co., "it is customarily the duty of trial counsel to monitor the docket and to advise himself when the court enters an order against which he wishes to protest." 719 F.2d at 570 (citations omitted). "In sum, a party must show an affirmative if ultimately fruitless effort to track the progress of its litigation, not merely an acceptable excuse for failure to do." (Id. n. 5).
Nowhere in its submissions in this case has defendant explained why it was unable to check the docket sheet of the Court to determine if the award had been entered, see e.g., United States v. City of New York, 248 F.3d 48, 53 (2d Cir. 2001) (noting in the context of a motion under Rule 4(a) that "parties have an obligation to monitor the docket sheet to inform themselves of the entry of orders"), nor does defendant explain why it had reason to believe that the award would not be entered promptly so as to justify a failure to inquire for 45 days. Moreover, there has been no showing in this case of any action on the part of the court or its officers to mislead defendant or impede its ability to ascertain the status of the case. See Mennen Co. v. Gillette Co., 719 F.2d at 570. Certainly, plaintiffs' counsel was aware of the filing of the award, the date by which the time to request a new trial was to expire. and the entry of the judgment.
Furthermore, even after learning of the entry of judgment, defendant did not promptly move for relief. Not only was there a failure to check with the Clerk of Court to determine if the award had been entered, but once counsel discovered that judgment had been entered, he nevertheless waited, by his own admission, for at least one week before sending a short letter to the Court requesting a trial de novo. Since that time, defendant has never filed a Rule 60(b) motion, nor has it deposited with the Clerk of Court the amount equal to the arbitration fees as provided in Local Rule 83.10(h)(4). as a condition for proceeding with a trial de novo.
Although more than two weeks actually expired between the date of the entry or judgment and defendant's May 18, 2001 letter, counsel represented in his letter of May 18, 2001, that "last week I was notified" of the entry of judgment. (Letter of Michael J. Volpe, Esq., dated May 18, 2001). By contrast, plaintiffs represent that they received notice of the entry of judgment on May 2, 2001, and on May 7, 2001 sent by telecopier a copy of the May 2, 2001 Order of Judge Ross approving plaintiffs' proposed briefing schedule on the fee application. (Pls.' Mem. of Law in Sup. of Their Mot. to Deny Defs. Req. for Trial De Novo, Ex. B).
Unlike some cases where an extension of the time to file has been granted in part because the delay was negligible, see, e.g., Pizzichil v. Motors Ins. Corp., 90 F.R.D. at 121-22 (delay of two days); Wolfsohn v. Raab, 11 F.R.D. 254, 255 (E.D. Pa. 1951) (delay of one day); but see Bazaar v. Peck, 1996 WL 755404, at *1 (denying extension where delay of three days, here, the delay between the expiration of the date for filing the request for trial de novo and defendants letter requesting relief was just two days short of a month. This additional delay, coupled with counsel's lack of diligence in monitoring the docket. does not merit an exercise of the court's discretion to extend the time to request a new trial.
In summary, defendant has failed to provide any basis on which the court could exercise its discretion and find "excusable neglect." Indeed, "[n]eglect by counsel, 'without a further showing of extenuation.' does not constitute excusable neglect within the meaning of Fed.R.Civ.P. 60(b)(1)." Rush v. United States, 1992 WL 33035, at *1 (quoting Frank v. New Amsterdam Casualty Co., 27 F.R.D 258 261 (E.D. Pa. 1961)); see also Esteves v. Bondy, 189 F.R.D. at 149 (holding that counsel's misunderstanding as to his client's decision to accent the arbitration was not excusable neglect); but see Pizzichil v. Motors Ins. Corp., 90 F.R.D. at 122 (finding excusable neglect where the attorney represented in a sworn affidavit that he placed the demand for trial de novo in the mail six days prior to the filing deadline and the request arrived two days late due to delays by the postal service). Where a final judgment has been entered against a client "due to the mistake or omission of his attorney by reason of the latter's ignorance of the law or of the rules of the court, or his inability to efficiently manage his caseload," the Second Circuit has "rather consistently refused to relieve a client" of the final judgment. Cabbo v. Adelphi Univ., 179 F.R.D. at 386-87 (quoting United States v. Cirami, 535 F.2d 736, 741 (2d Cir. 1976)).
As previously discussed. the fact that counsel did not receive notice of the docketing of the award, apparently failed to check the docket, and then failed for over a week to seek relief from the Court after learning of the entry of the judgment, does not constitute a basis for finding excusable neglect under either Rule 60 or Rule 6(b).
Accordingly, it is respectfully recommended that defendant's motion for leave to file a request for a trial de novo be denied.
D. Attorneys' Fees and Costs
On May 2, 2001, plaintiffs filed an application for attorneys' fees and costs pursuant to Section 502(g)(2) of ERISA, 29 U.S.C. § 1132 (g)(2), seeking $34,706.50 in fees incurred through April 30, 2001. along with $635.32 in costs and disbursements related to the litigation.
With respect to the plaintiffs' request for attorneys' fees, Section 1 132(g)(2)(D) provides for an award of reasonable attorneys' fees and costs expended by plaintiff seeking to collect delinquent contributions. In support of their request for fees, plaintiffs have submitted the Declaration of Elizabeth Orfan, Esq. ("Orfan Decl."), along with the required contemporaneous time records indicating a breakdown by date of the hours expended and the nature of the work performed. See New York State Ass'n for Retarded Children, Inc. v. Carey, 1 F.d 1136, 1148 (2d Cir. 1983). The total amount of fees requested — $34,706.50 — represents 175 hours of work by four attorneys and one law clerk, charging at rates ranging from $80.00 per hour for the law clerk, to $200.00 per hour for the associates and $250.00 per hour for the partners. (Orfan Decl. ¶¶ 6(a), 7).
According to Ms. Orfan's Declaration, she is a partner with the firm of Spivak, Lipton, Watanabe, Spivak Moss LLP, practicing since her 1985 graduation from law school first for the National Labor Relations Board and then exclusively in the areas of labor employment and employment benefits law. (Orfan Decl. ¶¶ 1-2). A second partner, Franklin Moss a 1978 law school graduate, also offered some assistance in the matter. ( Id. ¶ 2). The associate who spent the most time on the cases Adrienne Saldana has been practicing since 1994 in the area of employee, employee benefits and labor law. (Id. ¶ 3). Two other individuals Thomas Murray, a 1998 graduate of law school and an associate of the firm and Denis Duffy, also a 1998 law school graduate who was working as a law clerk at the time, worked on the matter as well. (Id.)
With respect to the services rendered. plaintiffs argue that their request for attorneys' fees is reasonable and appropriate under the circumstances. Specifically, plaintiffs contend that while this should have been "a routine collection action," defendant interposed eight affirmative legal defenses that raised complicated legal issues. requiring extensive briefing on the part of counsel. (Orfan Decl. ¶¶ 4-5). Counsel also drafted two sets of settlement papers only to have the settlement terms ultimately rejected by defendant. (Id. ¶ 5). Finally, plaintiffs had to file a motion to amend, engage in discovery and produce a Fund Trustee to appear a: the hearing, all of which required an expenditure of attorneys time. Id.) indeed, in an effort to keep fees down. counsel assigned work to the associates and law clerk wherever possible. (Id. ¶ 6(b)). She also excluded time spent at Board of Trustees' meetings. (Id. ¶ 6(c)).
Defendant failed to respond to plaintiffs' fee request, arguing that such a request is premature until a decision is rendered on its request for a trial de novo. Thus, it is unclear whether there is any objection to the amount of fees sought. However, in their recently submitted papers. plaintiffs request not only an award of post-judgment interest but also seek leave to supplement the fee application to add a request for fees and costs incurred since the May 2001 application. Similarly, with respect to counsel's request for disbursements, plaintiffs have requested an opportunity to supplement their initial request for $635.32.
Given plaintiffs' request for leave to supplement their application, this Court declines to recommend an award of fees and costs at this time and instead respectfully recommends that plaintiffs' motion for leave to supplement be granted, and that any amended application be filed within two weeks of the adoption of this Order, with defendant to be given two weeks to respond.
CONCLUSION
Accordingly, this Court respectfully recommends that defendant's request for a trial de novo be denied; that plaintiffs' request to file a supplemental fee application be granted; that any supplemental application be filed within two weeks of any Order adopting this Report and Recommendation; and that defendant be given two weeks thereafter to object to plaintiffs' fee request and request for post-judgment interest.
SO ORDERED.