United States District Court, D. New Jersey
NEW JERSEY REGIONAL COUNCIL OF CARPENTERS; NEW JERSEY CARPENTERS FUNDS AND THE TRUSTEES THEREOF, Plaintiffs,
AG CONSTRUCTION CORP., Defendant.
KEVIN MCNULTY, District Judge.
I have spent considerable time and effort cleaning up a slipshod arbitration award rendered by J.J. Pierson. Even where a petition is unopposed, key figures - interest rates, for example, or "liquidated damages" - cannot simply be plucked from the air; they must conform to the CBA. The difference is not trivial. I now enter judgment in the amount of $475, 726.56, some $237, 000 lower than the figure calculated by the arbitrator. If I had not authorized a motion for reconsideration, that figure would have been even lower.
This case arises from a construction company's alleged failure to make contributions to a union fund for employee "fringe" benefits. The union brought the matter to arbitration and obtained an award. The union then filed a motion before this Court to confirm that award. I granted that motion in part and denied it in part. With respect to three categories of damages that the arbitrator had awarded, I held that the arbitrator had erred, or at least had not adequately explained how those damages were calculated. I allowed, however, that the Union could file a motion for reconsideration within fourteen days explaining the arbitrator's calculations. The union has filed such a motion. They ask that I confirm the arbitrator's award with respect to two of the three categories of damages I had previously declined to confirm. After reviewing the union's submissions, I will modify the arbitrator's award to reduce the amount of damages in those two categories. See 9 U.S.C. § 11(a) (court may modify award to correct an "evident material miscalculation of figures"). I will confirm the Award as modified.
AG Construction Corp. entered into a contract with a labor union called the New Jersey Regional Council of Carpenters ("Union"). Under the contract, AG would hire members of the Union to perform work on construction projects that AG was completing. (Opinion,  2) As part of the agreement, AG was required to make contributions to various union funds for employee "fringe benefits." (Opinion, 1) The Union alleged that AG failed to make some of these contributions and initiated an arbitration proceeding. AG did not defend itself in the arbitration proceeding. The arbitrator awarded the Union $713, 200.27 in damages, interest, attorneys' fees, and costs. (Award, 4)
The New Jersey Regional Council of Carpenters (the "Council") filed a motion to confirm that arbitration award. (Dkt. 2) AG did not answer or otherwise appear. I granted that motion in part and denied it in part. (Dkt. 4) Specifically, the arbitrator had awarded actual damages, interest, liquidated damages, attorneys' fees, and arbitration costs. (Opinion, 4) I confirmed the arbitration award with respect to actual damages and arbitration costs, but did not confirm the award with respect to interest, liquidated damages, or attorneys' fees. (Opinion, 4) The arbitration award, I held, had not adequately explained how those portions of the award were calculated. (Opinion, 4-5) I did, however, invite the Union to file a motion for reconsideration within fourteen days in which it could explain how the arbitrator arrived at his figures. The Union has now filed that motion for reconsideration. With respect to the interest portion of the award, the motion requests that I now confirm the arbitrator's original award. (Mot., 2-3) With respect to attorneys' fees, the motion requests that I modify the amount that the arbitrator awarded. (Mot., 3) With respect to liquidated damages, however, the Union concedes that I should not confirm that portion of the arbitrator's award.
The arbitrator awarded actual damages of $361, 649.85, and awarded interest in the amount of $188, 057.92. (Award, 3) According to the arbitrator's Order, the interest award represented "interest at the rate of 1% above the current prime rate per annum... on the unpaid balance of contributions for the period such monies remain outstanding." (Award, 3) In my prior opinion, I held that this was not a sufficient explanation of how the interest award was calculated. Without the start dates and end dates for the period for which interest was charged, I could not make even an approximate recalculation of the interest award. (Opinion, 4-5) Additionally, I observed that the rate the arbitrator reported using, "1% above the current prime rate, " comes out to 4.25%. To generate almost $190, 000 of interest on a principal balance of nearly $362, 000 at a rate of 4.25%, the time period would have to be very long - so long that it seemed impossible that there wasn't some error in either the interest calculation or the explanation of that calculation. (Opinion, 5)
The Union has provided an explanation of how the arbitrator calculated the interest amount. Based on that explanation, it seems that the interest award is erroneous on its face. I will therefore modify the interest award to reflect a more conservative estimate of the interest due.
The Union's explanation for the interest award
In its motion for reconsideration, the Union has explained how the arbitrator arrived at his interest calculation. I note that this appears to be the Union's reconstruction of what must have been the arbitrator's thought process. As noted in my prior Opinion, it does not flow naturally or easily from the text of the Award itself. Here is what the Union says the arbitrator did:
The arbitrator began with a principal amount of $361, 649.85 (representing the total actual damages awarded). (Mot., 2)
He then used an interest period of 52 months. The Union says this represented the period from January 1, 2010 (the date of the "accrual of AG Construction's delinquency") to April ...