Opinion
CV 16-5771-RSWL-KSx
12-15-2016
BOARD OF DIRECTORS OF THE MOTION PICTURE INDUSTRY PENSION PLAN et al. Plaintiffs, v. S&L TRAMONDO, INC.; ALTERNATIVE METAL SUPPLY - STUDIO DIVISION, INC., Defendants.
ORDER re PLAINTIFFS' MOTION FOR ENTRY OF DEFAULT JUDGMENT AGAINST DEFENDANTS S&L TRAMONDO, INC. & ALTERNATIVE METAL SUPPLY - STUDIO DIVISION, INC. [21-1]
Currently before the Court is Plaintiffs' Motion for Entry of Default Judgment [21-1] ("Motion" or "Motion for Default Judgment") against Defendants S&L Tramondo, Inc. ("S&L Tramondo") and Alternative Metal Supply - Studio Division ("Alternative Metal Supply") (collectively, "Defendants") as to all claims. The Court NOW FINDS AND RULES AS FOLLOWS: the Court GRANTS Plaintiffs' Motion and awards $18,149.41 in damages to Plaintiffs, plus interest, at the rate of one percent (1%) per month, commencing when payment was due beginning October 25, 2006 and continuing until payment is made. The Court also ORDERS Defendants submit to an audit of its financial records by Plaintiffs for the period July 15, 2012 to May 21, 2016.
I. BACKGROUND
A. Factual Background
Plaintiffs are The Boards of Directors of the Motion Picture Industry Pension Plan, the Motion Picture Industry Account Plan, and the Motion Picture Industry Health Plan ("the Plans"). Compl. ¶ 3, ECF No. 1. The Plans were established pursuant to collective bargaining agreements between entertainment industry employers and IATSE. Compl. ¶ 4.
International Alliance of Theatrical Stage Employees and Moving Picture Machine Operators of the United States and Canada is an unincorporated labor organization.
The Plans are employee welfare benefit and pension plans within the meaning of the Employee Retirement Income Security Act of 1974 ("ERISA") § 3(1)(29 U.S.C. § 1002(1)) and § (3)(2)(29 U.S.C. § 1002(2)), and are multiemployer plans within the meaning of ERISA § 3(37)(A)(29 U.S.C. § 1002(37)(A)) and § 515 (29 U.S.C. § 1145). Id. at ¶ 4. The Plans are subject to the provisions of section 302(c)(5) of the Labor-Management Relations Act of 1947 ("LMRA"). Id. at ¶ 3.
Defendant S&L Tramondo is a business entity, form unknown, doing business in Los Angeles County under the name "Alternative Metal Supply, Studio Division." Id. at ¶ 5. S&L Tramondo has falsely held itself out as a California corporation, entity number C2868919. Id. State of California Entity Number C2868919 belongs to Alternative Metal Supply. Id.
In March 2006, S&L Tramondo entered into a Memorandum of Agreement with IATSE, agreeing to pay contributions to the Plans for all employees from the date of hire. Id. at ¶ 10; Compl. Ex. 1. Between March 2006 and February 2007, S&L Tramondo and Alternative Metal Supply executed various agreements to pay contributions to the Plans for all employees from the date of hire. Id. at ¶¶ 11-14; Exs. 2-5. Alternative Metal Supply executed Consent Agreements with IATSE agreeing to be bound by the 2003 Music Video Production Agreement ("MVPA"), the 2004 Television Commercial Agreement ("Commercial Agreement"), and the 2004-2007 Low Budget Theatrical Agreement. Id. at ¶¶ 11-13. S&L Tramondo executed the 2007-2009 Low Budget Theatrical Agreement. Id. at ¶ 14.
Defendants also executed Trust Acceptances, agreeing to be bound by all terms and conditions of the Trust Agreements establishing the Plans ("Trust Agreements"). Id. at ¶ 15; Compl. Ex. 6. The Trust Agreements obligated Defendants to submit a report and pay contributions on a weekly basis to the Plans for each hour worked by or guaranteed to employees. Id. at ¶ 17; Decl. of Chris Tashchyan ("Tashchyan Decl.") Ex. 1, p. 11; Ex. 2, p. 18; Ex. 3, p. 24, ECF No. 21-2. 21-3.
The Trust Agreements set forth payment procedures for delinquent contributions to the Plans. Contributions are delinquent if they are not received within ten days from the date such contributions become due. Tashchyan Decl. Ex. 1, p. 11; Ex. 2, p. 18; Ex. 3, p. 24. The Trust Agreements provide for the assessment at an interest rate of one percent (1%) per month on delinquent contributions, commencing when payment was due and continuing to the date when payment is made. Compl. ¶ 18; Tashchyan Decl. Ex. 1, p. 11; Ex. 2, p. 18; Ex. 3, p. 24. In addition, the Trust Agreements require payment of liquidated damages for delinquent contributions. Compl. ¶ 18; Tashchyan Decl. Ex. 1, p. 12; Ex. 2, p. 19; Ex. 3, p. 26. Finally, in the event of a delinquency, employers are liable for all expenses of collection/enforcement, including all costs, reasonable accountant's fees, auditor's fees, and attorney's fees. Compl. ¶ 18; Tashchyan Decl. Ex. 1, p. 11; Ex. 2, p. 19; Ex. 3, p. 26.
The amount of liquidated damages is the greater of either: (1) twenty percent (20%) of all unpaid contributions; or (2) interest calculated at a rate of one percent (1%) per month from the due dates until the date when payment is made. Id.
Moreover, the Trust Agreements provide that the Board of Directors may, "at reasonable times and during normal business hours of any Employer," audit any employer's records that may be pertinent to the status of plan contributions or reports. Compl. ¶ 19; Tashchyan Decl. Ex. 1, pp. 14-15; Ex. 2, p. 21; Ex. 3, p. 28. If the audit reveals a delinquency, underpayment, or erroneous reporting, the Employer bears costs of the audit or inspection. Id. And if Defendants fail to make records available for audit and the Plans file a lawsuit to compel document production, Defendants are liable for enforcement expenses, reasonable accountants' fees, auditors' fees, attorneys' fees and costs, delinquent contributions, liquidated damages, interest, attorneys' fees and costs (regardless of whether the audit identifies delinquent contributions). Compl. ¶ 20.
In 2014, Plaintiffs completed an audit of Defendants' records for the period of October 25, 2006 to May 4, 2010 (the "Audit"). Compl. ¶ 24; Tashchyan Decl. ¶ 11, Ex. 10, ECF No. 21-5. The Audit revealed for the first time that Defendants failed to properly report and pay contributions due to the Plans in the amount of $9,523.58. Compl. ¶ 24; Tashchyan Decl. ¶ 11. In March 2016, Defendants agreed to pay the audit delinquency in monthly installments, but only made partial payment of $1,584.80. Id. at ¶ 25. A total of $7,938.78 is still owed in contributions. Id.
Defendants also currently have failed to make available for inspection records from July 15, 2012 to May 21, 2016. Compl. ¶ 27. Plaintiffs ask the Court to order Defendants to make said records available for an audit so that they can ascertain whether contributions were properly reported and paid to the Plans from July 15, 2012 to May 21, 2016. Id. at ¶ 29. B. Procedural Background
Plaintiffs filed a Complaint against all Defendants on August 3, 2016, alleging three claims: (1) breach of contract for failure to pay the audit delinquency pursuant to the Trust Agreements; (2) failure under ERISA § 502(a)(3)(29 U.S.C. § 1132(a)(3)), ERISA § 502(g)(2)(E)(29 U.S.C. § 1132(g)(2)(E)) to make records available for audit as set forth in the Plans; and (3) violation of ERISA § 515 (29 U.S.C. § 1145) for failure to accurately report and pay contributions to the Plans; Compl. ¶¶ 24-25, 30, 31.
Plaintiffs seek the following damages from Defendants: (1) $7,938.78 for unpaid contributions from 10/25/06-05/04/10; (2) $7,704.08 interest (through October 31, 2016); (3) $7,704.08 liquidated damages (through October 31, 2016); (4) attorneys' fees of $2,000.81; and (5) litigation costs of $505.74. Tashchyan Decl. ¶ 15; Notice of Mot. for Default Judgm. 3:4-9, ECF No. 21. Plaintiffs also seek an order from this Court compelling Defendants to make available all books and records for the period of July 15, 2012 through May 21, 2016. Compl. ¶ 4A. If Defendants cannot produce all records, Plaintiffs ask the Court to Order Record Reconstruction directing Defendants to make available all copies of its periodic reports to the Federal and State agencies and to provide auditors' fees, reasonable attorneys' fees, and costs of suit. Id. at ¶¶ 5B, 6-8.
Defendants were served with the summons and complaint on August 16, 2016. Proof of Service, ECF Nos. 12, 13. Neither appeared or otherwise responded to the Complaint. On September 14, 2016, Plaintiffs requested the Clerk to enter default against Defendants. ECF Nos. 16, 17. The Clerk entered default against Defendants on September 15, 2016, ECF Nos. 18, 19. On October 26, 2016, Plaintiffs filed this Motion. ECF No. 21-1. The Opposition was due on November 8, 2016 but none was filed.
II. DISCUSSION
A. Legal Standard
The granting of Default Judgment is within the discretion of the district court. Aldabe v. Aldabe, 616 F.2d 1089, 1092 (9th Cir. 1980); see Fed. R. Civ. P. 55. Procedural and substantive requirements must be met.
Procedurally, the requirements set forth in Federal Rules of Civil Procedure 54(c) and 55(b), and Local Rule 55-1 must be met. See Vogel v. Rite Aid Corp., 992 F. Supp. 2d 998, 1006 (C.D. Cal 2014). Local Rule 55-1 provides: "When an application is made to the Court for a default judgment, the application shall be accompanied by a declaration in compliance with F.R.Civ.P. 55(b)(1) and/or (2) and include the following: (a) When and against what party the default was entered; (b) The identification of the pleading to which default was entered; (c) Whether the defaulting party is an infant or incompetent person, and if so, whether that person is represented by a general guardian, committee, conservator or other representative; (d) That the Service Members Civil Relief Act, 50 U.S.C. App. § 521, does not apply; and (e) That notice has been served on the defaulting party, if required by F.R.Civ.P. 55(b)(2)." L.R. 55-1.
Courts should also consider the following factors in determining whether to grant a motion for default judgment: "(1) the possibility of prejudice to plaintiff, (2) the merits of plaintiff's substantive claims, (3) the sufficiency of the complaint, (4) the sum of money at stake in the action, (5) the possibility of a dispute concerning the material facts, (6) whether defendant's default was the product of excusable neglect, and (7) the strong public policy favoring decisions on the merits." Eitel v. McCool, 782 F.2d 1470, 1471-72 (9th Cir. 1986).
If the court determines that the defendant is in default, "'the factual allegations of the complaint, other than those relating to damages, are taken as true.'" Televideo Sys., Inc. v. Heidenthal, 826 F.2d 915, 917-18 (9th Cir. 1987) (quoting Geddes v. United Fin. Group, 559 F.2d 557, 560 (9th Cir. 1977)). Additionally, "[w]hen entry of judgment is sought against a party who has failed to plead or otherwise defend, a district court has an affirmative duty to look into its jurisdiction over both the subject matter and the parties." In re Tuli, 172 F.3d 707, 712 (9th Cir. 1999).
If the Court determines that the allegations in the complaint are sufficient to establish liability, the plaintiff must provide proof of all damages sought in the complaint, and the Court must determine the "amount and character" of the relief that should be awarded. Id. at 1005-06 (citations omitted); PepsiCo, 238 F. Supp. 2d 1172, 1175 (C.D. Cal. 2002). "A default judgment must not differ in kind from, or exceed in amount, what is demanded in the pleadings." Fed. R. Civ. P. 54(c). B. Discussion
1. Jurisdiction and Service of Process
In considering whether to enter default judgment against Defendants, the Court must first determine whether it has jurisdiction over the subject matter and the parties to the case. In re Tuli, 172 F.3d at 712.
a. Subject Matter Jurisdiction, Personal Jurisdiction, and Service of Process are Proper
The Court has subject matter jurisdiction over the case, as Plaintiffs' claims allege violations of federal claims for unpaid contributions under ERISA, failure to comply with audits under the Plan terms and ERISA, and breach of the Trust Agreements under LMRA § 301(a) (29 U.S.C. § 185(a)). Bd. of Trustees of Cement Masons Health & Welfare Trust Fund for N. Cal. v. C&C Concrete, Inc., No. C 10-03343 LB, 2013 WL 2456560, at *3 (N.D. Cal. June 6, 2013) (subject matter jurisdiction satisfied in motion for default judgment for nearly-identical ERISA and LMRA type claims).
29 U.S.C. § 185(a) allows any district court of the United States jurisdiction over "suits for violation of contracts between an employer and a labor organization representing employees in an industry affecting commerce . . . ." The Plans are subject to the provisions of section 302(c)(5) of the Labor-Management Relations Act of 1947 ("LMRA"). Compl. ¶ 4.
Here, the Court has personal jurisdiction over Defendants. S&L Tramondo has been doing business in Los Angeles County as a California Corporation using a falsely represented Entity Number C2868919. Compl. ¶ 5. The State of California Entity Number C2868919 actually belongs to Alternative Metal Supply - Studio Division, which is a suspended California corporation. Id. Both entities have minimum contacts with California, as they conducted business here, held themselves out as California corporations, and entered into the Trust Agreements giving rise to the present claims in California. Tashchyan Decl. Exs. 1-3.
Lastly, service of process is met because Plaintiffs properly served the summons and the Complaint on Defendants on August 16, 2016 [12] [13] in conformance with Federal Rules of Civil Procedure 4(e)(2) and 4(h)(1)(A),(B).
2. Procedural Requirements
Plaintiffs have satisfied the procedural requirements for default judgment pursuant to Federal Rules of Civil Procedure 55 and Local Rule 55-1. Under Federal Rule of Civil Procedure 55(a), the Court Clerk properly entered default against Defendants. ECF Nos. 18, 19. Plaintiffs properly moved pursuant to Rule 55(b) for entry of default judgment. ECF No. 21.
Local Rule 55-1 asks Plaintiff to provide the following in an application for default judgment: (1) when and against what party the default was entered; (2) the identification of the pleading to which default was entered; (3) whether the defaulting party is an infant or incompetent person; (4) that the Servicemembers Civil Relief Act does not apply; and (5) notice has been served on the defaulting party.
Plaintiffs have satisfied these requirements. The Clerk of Court entered default judgment against Defendants as to the Complaint on September 15, 2016 [18, 19]. Decl. of Elizabeth Rosenfeld ("Rosenfeld Decl.") ¶ 6. Neither Defendants are an infant, incompetent person, or exempted under the Soldiers' and Sailors' Civil Relief Act of 1940, the predecessor to the Servicemembers Civil Relief Act. Id. at ¶¶ 2, 3. Lastly, Defendants were served with notice of this Motion on October 26, 2016. ECF No. 22.
3. Eitel Factors
The Court must also determine whether granting Plaintiffs' Motion is appropriate under the Eitel factors.
a. Risk of Prejudice to Plaintiff
The first Eitel factor considers whether a plaintiff will suffer prejudice if a default judgment is not entered. Vogel, 992 F. Supp. 2d at 1007. Plaintiffs contend that they have been damaged to the tune of the delinquent contributions, associated interest, liquidated damages, attorneys' fees, costs, and separate attorneys' fees and costs incurred in compelling the audit. Mot. 6:24-26. Given Defendants' refusal to pay the sums due or provide records, Plaintiffs will suffer prejudice because they "will likely be without other recourse for recovery" if default judgment is not entered. Id. at 6:26-28. Moreover, if the Court does not hold Defendants accountable for unpaid contributions, future beneficiaries may face risk if the Plan is underfunded. Bd. Of Trustees of the Clerks & Lumber Handlers Pension Fund v. Piedmont Lumber & Mill Co., No. C 10-1757 MEJ, 2010 WL 4922677, at *4 (N.D. Cal. Nov. 29, 2010). And allowing Defendants to avoid submitting to an audit would prevent Plaintiffs from ascertaining even more unpaid contributions. See Gen. Emps. Trust Fund v. Victory Bldg. Maint., Inc., No. C 06-6654 CW (MEJ), 2007 WL 1288393, at *3 (N.D. Cal. Apr. 11, 2007). This factor favors entry of default judgment.
b. Sufficiency of the Complaint and Likelihood of Success on the Merits
The second and third Eitel factors consider the merits of the plaintiff's substantive claims and the sufficiency of the complaint. "Under an [Eitel] analysis, [these factors] are often analyzed together." Dr. JKL Ltd. v. HPC IT Educ. Ctr., 749 F. Supp.2d 1038, 1048 (N.D. Cal. 2010). Plaintiffs have pled meritorious claims for violation of the Trust Agreements, violation of ERISA § 515 (29 U.S.C. § 1145), and the ability to audit Defendants' records under the Trust Agreements.
i. Breach of Trust Agreements
As a threshold matter, Plaintiffs have standing to enforce Labor Management Relations Act section 301(a) (29 U.S.C. § 185(a)) and ERISA § 515 (29 U.S.C. § 1145). Section 301 of the Labor Management Relations Act ("LMRA") allows for third party beneficiaries, like the Board of Directors of the Plans, to enforce an employer-labor organization agreement. See Audit Servs., Inc. v. Rolfson, 641 F.2d 757, 760 (9th Cir. 1981). Additionally, Plaintiffs have standing to assert their claim under ERISA. See Laborers Health & Welfare Trust Fund v. Advanced Lightweight Concrete Co., 484 U.S. 539, 547 (1988) ("The liability created by [ERISA] § 515 may be enforced by the trustees of a plan by bringing an action in federal court[.]"). Thus, Plaintiffs are entitled to enforce the Trust Agreements against Defendants.
"Suits for violation of contracts between an employer and a labor organization representing employees in an industry affecting commerce as defined in this chapter, or between any such labor organizations, may be brought in any district court of the United States having jurisdiction of the parties, without respect to the amount in controversy or without regard to the citizenship of the parties."
Plaintiffs have also demonstrated that Defendants breached the Trust Agreements through audit delinquency. They were bound by the Memorandum of Agreement to the terms and conditions of the Trust Agreements, including the obligation to pay contributions to the Plan for employees, Compl. ¶ 17, the weekly remittance report and contributions, and the associated fees for delinquent payments. Compl. ¶ 18; Taschyan Decl. ¶ 8A. The Trust Agreements also allow for enforcement expenses, should a permissible audit inspection of the employer's records reveal unpaid contributions. Compl. ¶ 19. Defendants breached these terms when the audit revealed $9,523.58 unpaid contributions to the Plans, and Defendants failed to pay the audit delinquency in its entirety. Compl. ¶¶ 24-25; Tashchyan Decl. ¶¶ 11-12, 14. Plaintiffs have sufficiently alleged a contractual obligation to make contributions and a subsequent breach.
ii. Violation of ERISA § 515
From the evidence and four corners of the Complaint, Plaintiffs have demonstrated meritorious claims for violation of ERISA § 515 (29 U.S.C. § 1145).
Section 1145 provides: "Every employer who is obligated to make contributions to a multiemployer plan under the terms of the plan or under the terms of a collectively bargained agreement shall, to the extent not inconsistent with law, make such contributions in accordance with the terms and conditions of such plan or such agreement."
Section 515 allows plan fiduciaries to enforce obligations created under the collective bargaining agreement against employers who fail to make contributions to employee benefit plans. Bd. Of Trustees of U.A. v. RT/DT, Inc., No. C 12-05111 JSW, 2013 WL 2237871, at *4 (N.D. Cal. May 21, 2013). To successfully assert this claim, Plaintiffs must prove: (1) the Trust Agreements are multi-employer plans; (2) the collective bargaining agreement obligated Defendants to make employee benefit contributions; and (3) Defendants failed to make the contribution payments. Id. at *4.
Plaintiffs have made a threshold demonstration that Defendants violated section 515 because the Plans are multiemployer plans, Compl. ¶ 4, and the Trust Agreement establishing the Plans obligated Defendants to make contributions for total hours worked by or guaranteed to all employees covered by the agreements by the last day of the week following the week in which work was performed. Compl. ¶ 17; Tashchyan Decl. ¶ 7A. Lastly, Defendants failed to make the contribution payments between October 25, 2006 and May 4, 2010, which was discovered through a 2014 audit. Compl. ¶ 24; Tashchyan Decl. ¶¶ 11-12. They also failed to pay the total balance of the unpaid contributions, and have remaining unpaid contributions, liquidated damages, interest, and audit fees due and owing. Compl. ¶ 24; Tashchyan Decl. ¶¶ 11-12, 14.
Plaintiffs also demonstrate that they are entitled to remedies associated with a violation of ERISA § 515. When judgment is entered in favor of a plan under ERISA § 515, ERISA § 502(g)(2) (29 U.S.C. § 1132(g)(2)) requires the Court to award unpaid contributions, interest on unpaid contributions, an amount equal to the greater of interest on unpaid contributions or liquidated damages provided under the plan, reasonable attorney's fees and costs, and other such legal or equitable relief as the Court deems appropriate. The Trust Agreements mirror ERISA § 502(g)(2)'s language and obligate a delinquent employer to pay for delinquent contributions, liquidated damages, interest accruing at the rate of 1% per month on all unpaid contributions, and all expenses of collection, including costs, reasonable accountants' fees, auditors' fees and attorneys' fees. Compl. ¶ 18; Tashchyan Decl. ¶ 7B-7E, Exs. 1-3. As such, the Court can conclude that Plaintiffs have properly stated a claim for and are entitled to remedies under ERISA § 502(g)(2). ///
iii. Injunctive Relief: Audit
Plaintiffs also seek injunctive relief compelling specific performance of Defendants' obligation to allow Plaintiffs to audit the period of July 15, 2012 to May 21, 2016. Compl. ¶ 27. Because Defendants have thus far refused, Plaintiffs request the Court grant an audit so it can ascertain whether contributions have been paid for this time period. Id. at ¶ 29.
"Where a collective bargaining agreement gives the Trustees of an employee benefit plan the right to audit an employer's books and records, it will be enforced." Bd. of Trustees v. LML Enters., Inc., No. C 13-3117 RS, 2014 WL 2880023, at *7 (N.D. Cal. June 24, 2014) (citing Cent. States, Se. & Sw. Areas Pension Fund v. Cent. Transp., Inc., 472 U.S. 559, 569 (1985)). Pursuant to ERISA § 502(a)(3) (29 U.S.C. § 1132(a)(3)), Plaintiffs may seek an injunction enforcing the Plan's audit provisions. Here, the Trust Agreement allows the Directors to "audit . . . the records of any Employer which may be pertinent in connection with the said contributions . . . ." Because the Trust Agreement expressly provides for audits like this one, and "[t]he right of employee benefit plans to enforce such power to audit is well-established," the court finds the "specific performance" claim—effectively, one for injunctive relief—has merit. Bd. of Trustees v. Protech Servs., Inc., No: C 12-01047 MEJ, 2014 WL 122702, at *6 (N.D. Cal. Jan. 14, 2014)(merits and sufficiency of complaint factors weighed towards allowing audit to proceed, in order to allow plaintiffs to discover additional amounts due and owing.)
Section 1132(a)(3) provides: "A civil action may be brought [ ] by a participant, beneficiary, or fiduciary (A) to enjoin any act or practice which violates any provision of this title or the terms of the plan, or (B) to obtain other appropriate equitable relief (i) to redress such violations or (ii) to enforce any provisions of this title or the terms of the plan."
c. Sum of Money at Stake in the Action
"Under the [fourth] Eitel factor, the court must consider the amount of money at stake in relation to the seriousness of Defendant's conduct." PepsiCo, 238 F. Supp. 2d at 1176. "While the allegations in a complaint are taken to be true for the purposes of default judgment, courts must make specific findings of fact in assessing damages." Moroccanoil, Inc. V. Allstate Beauty Prod., Inc., 847 F. Supp. 2d 1197, 1202 (C.D. Cal. 2012).
For the breach of ERISA and Trust Agreement claims, Plaintiffs request $7,938.78 for payment of the owed contributions, $7,704.08 for liquidated damages, $7,704.08 for interest, $2,000.81 for attorneys' fees, and $505.74 for litigation costs. These amounts are all authorized under the Trust Agreements and "appropriately tailored to [Defendants'] specific misconduct in failing to make timely contribution payments." RT/DT, Inc., 2013 WL 2237871, at *5. And because costs associated with failure to comply with an audit are clearly set forth in the Trust Agreements, that amount can be better discerned at a later time, as can the total amount of damages following the audit. Bd. of Trustees v. RBS Washington Blvd, LLC, No. C 09-00660 WHA, 2010 WL 145097, at *3 (N.D. Cal. Jan. 8, 2010) ("The Court can evaluate the reasonableness of the total amount requested once the audit has been completed . . . [t]he undetermined amount of total damages does not disfavor granting default judgment.")
d. Possibility of a Dispute Concerning a Material Fact
The fifth Eitel factor examines the likelihood of dispute between the parties regarding the material facts surrounding the case. A defendant is "deemed to have admitted all well-pleaded factual allegations" in the Complaint upon entry of default. DirecTV, Inc. v. Hoa Huynh, 503 F.3d 847, 851 (9th Cir. 2007). Defendants have had sufficient time since the Complaint was served in August 2016 to answer or at least oppose this Motion. Considering this with the fact that ERISA § 502(g)(2) (29 U.S.C. § 1132(g)(2)) and the Trust Agreements are clear as to both parties' obligations in the event of a breach of the collective bargaining agreements, the Court finds that any material factual disputes are unlikely and this factor weighs towards granting default judgment. /// ///
e. The Possibility of Excusable Neglect
This factor examines whether Defendants' failure to respond to Plaintiffs' Complaint was the result of excusable neglect. Eitel, 782 F.2d at 1472. Defendants were properly served with the summons, Complaint, and instant Motion, which indicates that they had adequate notice of the action. See Shanghai Auto. Instrument Co. v. Kuei, 194 F. Supp. 2d 995, 1005 (N.D. Cal. 2001) (finding no excusable neglect because defendants were properly served with the complaint, notice of entry of default, and papers in support of motion for default judgment).
f. Policy Favoring Deciding a Case on its Merits
The Ninth Circuit stated that "[c]ases should be decided upon their merits whenever reasonably possible." Eitel, 782 F.2d at 1472. However, "this preference, standing alone, is not dispositive." PepsiCo, 238 F. Supp. 2d at 1177. Because Defendants have failed to participate meaningfully in this litigation, a decision on the merits is not "reasonably possible" at this juncture. Nevertheless, this factor weighs against granting default judgment.
3. Character and Amount of Plaintiffs' Recovery
The Court now turns to the damages Plaintiffs request.
a. Unpaid Contributions
Plaintiffs seek unpaid contributions of $7,938.78 from October 25, 2006 to May 4, 2010, after an audit revealed $9,523.58 in unpaid contributions and Defendants only paid $1,584.80 of the outstanding balance. Compl. ¶¶ 24-25. To substantiate this amount, Plaintiffs submit the Declaration of Chris Tashchyan, the Manager of Audit and Collections. Tashchyan Decl. ¶ 2. Mr. Tashchyan is tasked with auditing and collecting employer contributions to the Plans. Id. The declaration and attached exhibits establish that Defendants allowed an audit in 2014 pursuant to the Trust Agreements, which revealed the relevant employees and time periods for which they were unpaid. Tashchyan Decl. ¶ 12; Ex. 10. Mr. Tashchyan also furnishes a schedule of over reported and underreported contributions to the Plans indicating how Plaintiffs calculated the $9,523.58 total and the remaining $7,938.78 owed. Tashchyan Decl. Ex. 10, ECF No. 21-5. Plaintiffs have demonstrated they are entitled to this amount in unpaid contributions.
b. Interest and Liquidated Damages
Plaintiffs also seek interest and liquidated damages on unpaid contributions of $7,704.08 each. ERISA § 502(g)(2) (29 U.S.C. § 1132(g)(2)) permits a plan fiduciary to collect interest on all delinquent contributions once they have prevailed on an ERISA § 515 (29 U.S.C. § 1145) claim, allowing for an interest rate provided under the Plans.
The Ninth Circuit has clearly stated that an award of liquidated damages under ERISA § 502(g)(2) (29 U.S.C. § 1132(g)(2)) is "mandatory and not discretionary." Operating Eng'rs Pension Trust v. Beck Engineering & Surveying Co., 746 F.2d 557, 569 (9th Cir. 1984). A plaintiff is entitled to a mandatory award under § 1132(g)(2) if the following requirements are met: (1) the fiduciary obtains a judgment in favor of the plan; (2) unpaid contributions exist at the time of the suit; and (3) the plan provides for liquidated damages. Idaho Plumbers & Pipefitters Health & Welfare Fund v. United Mech. Contractors, Inc., 875 F.2d 212, 215 (9th Cir. 1989). Plaintiffs satisfy these requirements, as the Court has found that the Plan was violated, Defendants had unpaid contributions of $7,938.78 as of the time this suit was filed, and the Trust Agreements allow for liquidated damages. Tashchyan Decl. ¶ E; Ex. 1, at 12; Ex. 2, at 19; Ex. 3, at 26. Plaintiffs are therefore entitled to interest and liquidated damages.
c. Attorneys' Fees and Litigation Costs
Plaintiffs lastly seek attorneys' fees of $2,000.81 and costs of suit, of $505.74. Central District Local Rule 55-3 delineates a schedule of attorneys' fees in the event of default judgment, if the applicable statute provides for recovery of reasonable attorneys' /// /// /// fees. Vogel, 992 F. Supp. 2d at 1016. If the judgment, exclusive of costs, falls between $10,000 to $50,000, the court is to award attorneys' fees of $1,200 plus 6% of the amount over $10,000. Rosenfeld Decl. ¶ 8. Here, the judgment exclusive of costs is $23,346.93. Id. at ¶ 8. Applying the attorneys' fees schedule, Plaintiffs are entitled to $2,000.81. Id. The Court likewise finds the litigation costs for service of process, $105.74, and filing fees of $400.00 accurately reflect the $505.74 total in costs. Id. at ¶ 9; ECF Nos. 12-13.
Here, the applicable statute ERISA § 502(g)(2)(29 U.S.C. § (g)(2)) allows for "reasonable attorneys' fees," rendering Local Rule 55-3 applicable.
d. Injunctive Relief: Audit
Plaintiffs request that the Court issue an Order requiring Defendants to submit to an audit of their records from July 15, 2012 through May 21, 2016 so that Plaintiffs may discern additional unpaid contributions. Plaintiffs also ask the Court to amend the damages amount once further unpaid contributions are determined through the audit. Compl. ¶ 29.
"In ERISA cases, courts may retain jurisdiction to adjust the damages award following an audit." Protech Services, 2014 WL 122702, at *13. Under the Trust Agreements, the Board of Directors may "audit or cause the audit or an inspection of the records of any Employer which may be pertinent in connection with the said Contributions and/or reports and insofar as same may be necessary to accomplish the purposes of this plan." Compl. ¶ 20; Tashchyan Decl. ¶ 7B, Ex. 1, pp. 14-15; Ex. 2, p. 21; Ex. 3, p. 28. On June 23, 2016, Mr. Tashchyan sent a letter to Defendants attaching the relevant Trust Agreement language and requesting that Defendants submit to an audit. Tashchyan Decl. Ex. 11. Moreover, the attached Trust Agreements put Defendants on notice that they would bear the expenses of enforcement related to the audit. Id. Based on the submitted exhibit and the plain terms of the Trust Agreements, Plaintiffs have the right to audit "and demand payment of properly substantiated additional delinquencies." Protech Services, 2014 WL 122702, at *13. Once Plaintiffs make a proper showing as to delinquencies, the Court may proceed to amend the Judgment.
The Court awards Plaintiffs' requested damages, and permits Plaintiffs to conduct an audit for the Plans for the period of July 15, 2012 to May 21, 2016.
III. CONCLUSION
The Court GRANTS Plaintiffs' Motion for Default Judgment [21-1]. The Court enters default judgment as to all Defendants, S&L Tramondo and Alternative Metal Supply.
The Court awards $18,149.41 in damages: $7,938.78 for delinquent contributions; $7,704.08 in liquidated damages; $2,000.81 in attorneys' fees; $505.74 in litigation costs; plus interest, at the rate of one percent (1%) per month, commencing when payment was due beginning on October 25, 2006, and continuing until payment is made.
The Court also HEREBY ORDERS Defendants submit to an audit of its financial records by Plaintiffs for the period July 15, 2012 to May 21, 2016. In the event Defendants cannot produce all of the records which the Plans are required to examine, Defendants are ordered to participate in record reconstruction, where Defendants shall have 14 days to: (1) apply to the Federal and State agencies with which Defendants previously filed periodic reports pertaining to employees for copies of the Defendants' reports to them for all of the periods for which Defendant cannot produce records; and (2) subsequently make available to the Plans all such copies of Defendants' periodic reports to the Federal and State agencies under the conditions set forth above. The Court shall retain jurisdiction over the parties and the subject matter to enforce its mandatory injunction and to entertain a motion for further money judgment, should the audit disclose amounts that Defendants may owe.
IT IS SO ORDERED.
DATED: December 15, 2016
s/ RONALD S.W. LEW
HONORABLE RONALD S.W. LEW
Senior U.S. District Judge