Use of CBA’s alternate method for calculating contributions OK when employer fails to provide records

When an employer fails to provide to multiemployer plan funds the necessary records to calculate employer contributions, the funds may utilize an alternative calculation method contained in the collective bargaining agreement without running afoul of the requirement that damage awards be calculated with “reasonable certainty,” the U.S. Court of Appeals in New York City (CA-2) has ruled.

Default judgment

An employer failed to make contributions to several multiemployer funds for May and June 2008. The funds filed suit in district court seeking payment of the unpaid benefit contributions, damages and interest, as well as an order permitting the funds to audit the employer’s books. When the employer failed to respond to the suit, the court entered a default judgment in favor of the funds and referred the case to a magistrate to determine damages.

Further attempts to secure an audit of the employer’s books were unsuccessful. The funds eventually submitted a damage claim of about $22,000 in unpaid contributions and $4,000 in interest and liquidated damages. The funds calculated these amounts pursuant to a CBA provision that set forth an alternative measure of calculating benefit contributions in the event an employer refused to provide access to its records. The magistrate and the district court approved the damage award.

Reasonable certainty

The Second Circuit requires that damage awards be proven with “reasonable certainty.” The employer argued on appeal that the damage calculation, which was based on time records from April 2008 in the funds’ possession, was impermissibly speculative.

The court disagreed. The damage calculation was properly based on the provision for an alternative calculation method contained in the CBA that was agreed to by both parties.

Source: Cement and Concrete Workers v. Metro Foundation Contractors, Inc. (CA-2).

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For more information on this and related topics, consult the CCH Pension Plan Guide, CCH Employee Benefits Management, and Spencer’s Benefits Reports.

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