Opinion
No. 09-2005 SC.
December 28, 2010
ORDER GRANTING MOTION FOR DEFAULT JUDGMENT
I. INTRODUCTION
Before the Court is the Motion for Default Judgment ("Motion") submitted by Plaintiffs Board of Trustees of the Cement Masons Health and Welfare Trust, et al. ("Plaintiffs"). ECF No. 28. The Court entered default as to Defendant S L R Concrete Construction, Inc. ("Defendant" or "SLR"). ECF No. 7. The Court ordered SLR to comply with an audit. ECF No. 18 ("Dec. 9, 2009 Order"). Having reviewed the Motion and all supporting papers, the Court GRANTS the Motion.
II. BACKGROUND
SLR is a general building contractor. Hagan Decl. ¶ 8. In 2005, SLR executed an agreement with Plaintiffs, binding it to a collective bargaining agreement ("CBA"). See Hagan Decl. Exs. A ("Trust Agreements"), B ("Mem. of Agreement"). Plaintiffs contend that SLR is bound by the CBA to abide by the Cement Masons Master Agreement, Hagan Decl. Exs. C, D (collectively, "Master Agreements"), and the requirements of the Employee Retirement Income Security Act of 1974 ("ERISA"). Compl., ECF No. 1. SLR is required to make monthly payments to Plaintiffs on behalf of SLR's employees in amounts that are determined according to the hours worked by SLR's employees. Id. at 3.
John Hagan ("Hagan"), Accounts Receivable Manager for the Laborers Funds Administrative Office of Northern California, submitted a declaration in support of the Motion. ECF No. 30.
Plaintiffs allege that SLR missed a number of payments due under the Master Agreements. Id. at 3-4. Plaintiffs filed their Complaint in May 2009, seeking the payments due, liquidated damages, attorneys' fees, and an order that SLR submit to an audit to determine if additional fees were due. Compl. at 6. On December 9, 2009, the Court denied Plaintiff's first motion for default judgment as premature, but required SLR to submit to an audit. See Dec. 9, 2009 Order. The audit was completed on March 24, 2010, covering the period of August 2005 to December 2009. Mot. at 2. Plaintiffs sent the results of the audit to SLR on May 11, 2010. Id. SLR has failed to dispute the amounts, and failed to pay the amounts due. Id. On October 8, 2010, Plaintiffs filed their renewed Motion for Default Judgment. See Mot.
III. LEGAL STANDARD
After entry of default, the Court may enter a default judgment. Fed.R.Civ.P. 55(b)(2). The Court's decision whether to enter a default judgment, while "discretionary," Aldabe v. Aldabe, 616 F.2d 1089, 1092 (9th Cir. 1980), is guided by several factors. First, the Court must "assess the adequacy of the service of process on the party against whom default is requested." Bd. of Trs. of the N. Cal. Sheet Metal Workers v. Peters, No. C-00-0395, 2000 U.S. Dist. LEXIS 19065, at *2 (N.D. Cal. Jan. 2, 2001). If the Court determines that service was sufficient, it may consider the following factors:
(1) the possibility of prejudice to the plaintiff, (2) the merits of plaintiff's substantive claim, (3) the sufficiency of the complaint, (4) the sum of money at stake in the action, (5) the possibility of a dispute concerning material facts, (6) whether the default was due to excusable neglect, and (7) the strong policy underlying the Federal Rules of Civil Procedure favoring decisions on the merits.Eitel v. McCool, 782 F.2d 1470, 1471-72 (9th Cir. 1986). "The general rule of law is that upon default the factual allegations of the complaint, except those relating to the amount of damages, will be taken as true." Geddes v. United Fin. Group, 559 F.2d 557, 560 (9th Cir. 1977).
IV. DISCUSSION
A. Service of Process
Plaintiffs properly served SLR with the Complaint and Summons.See ECF No. 4 ("Proof of Service"). The Proof of Service indicates that the documents were delivered to Laura Romanazzi, who is recorded with the California Secretary of State as SLR's designated agent for service. Id.; Hagan Decl. Ex. E. This service complies with Rule 4(h)(1)(B) of the Federal Rules of Civil Procedure.
B. Default Judgment
Accepting the allegations in the Complaint as true, as it must, the Court finds that the Eitel factors favor default judgment. Section 502(a) of ERISA gives the participants and beneficiaries of an ERISA-governed pension plan a cause of action in federal court where an employer violates the terms of the plan. See 29 U.S.C. § 1132(a)(1)(B), (a)(3). By failing to make timely contributions, SLR has violated the terms of the CBA and Master Agreements. Therefore, Plaintiffs' substantive claims appear solid on the merits, and are pled sufficiently in the Complaint.
SLR's default cannot be said to be the result of excusable neglect. As previously noted, SLR was properly served. Plaintiffs also sent the results of the Court-ordered audit to SLR. Hagan Decl. ¶ 17. Although federal policy favors a decision on the merits, Rule 55(b) allows entry of default judgment in situations where defendants fail to litigate. Courts are less inclined to enter default judgment if there is a large sum of money at stake.See Eitel, 782 F.2d at 1472 (denying default judgment where plaintiff sought almost three million dollars). Here, Plaintiffs seek an award of $154,122.72. See ECF No. 31 ("Proposed Order"). Mot. at 2-3. Although the amount of money at stake is substantial, the Court finds that on balance the Eitel factors favor default judgment.
C. Unpaid Contributions, Liquidated Damages and Interest
Plaintiffs seek an award based on unpaid contributions, liquidated damages, and interest from August 2005 to December 2009. Mot. at 2. Before this litigation began, Plaintiffs conducted an audit of SLR's books and records for the period August 2005 through June 2007. Hagan Decl. ¶ 11. After the Court ordered SLR to submit to an audit, Plaintiffs conducted another audit for the period of August 2005 through December 2009 and found that SLR owed $87,293.95 in delinquent contributions. Id. Plaintiffs have provided the Court with a chart summarizing the results of this audit, and breaking down the amount of contributions that were due to each of the four trusts. Id. Ex. F ("Audit Summary and Statement of Contributions Due"). SLR also self-reported contributions owed to Plaintiffs in the amount of $13,151.50 for the period of December 2008 to February 2009, which were not part of the audit amounts found to be due and owing. Id. ¶ 12, Ex. H ("Statement of Self-Reported Contributions Due").
Based on the amount of delinquent contributions uncovered by the audits, Plaintiffs assessed liquidated damages and interest in the amount of $33,658.67 against SLR. Id. ¶ 11, Ex. G ("Interest and Liquidated Damages on Unpaid Contributions"). Based on the amount of self-reported delinquent contributions, Plaintiffs assessed liquidated damages and interest in the amount of $5786.70 against SLR. Id. ¶ 12, Ex. I ("Interest and Liquidated Damages on Self-Reported Contributions").
Finally, SLR paid contributions for the months of December 2005, and September 2008 through January 2009, but the payments were late. As a result, Plaintiffs assessed liquidated damages and interest in the amount of $4169.75 against SLR. Id. ¶ 13, Ex. J ("Interest and Liquidated Damages on Late Payments").
Both interest and liquidated damages are authorized by statute. 29 U.S.C. § 1132(g)(2). Unpaid contributions must exist at the time of suit for statutory liquidated damages to be awarded.Idaho Plumbers and Pipefitters Health and Welfare Fund v. United Mech. Contractors, Inc., 875 F.2d 212, 215-16 (9th Cir. 1989). Plaintiffs may also recover liquidated damages on contributions that became due after the Complaint was filed. See Roofers Local Union No. 81 v. Wedge Roofing, Inc., 811 F. Supp. 1398, 1401-02 (N.D. Cal. 1992) (finding it would undermine policy goals of deterring ERISA violations to require plaintiff to file multiple lawsuits to recover liquidated damages which came due after complaint was filed).
Here, the first audit was conducted before the Complaint was filed, and based on audits conducted, Plaintiffs found that SLR owed contributions, liquidated damages and interest. SLR was sent a copy of the audit results and did not dispute them. Hagan Decl. ¶ 17. Having failed to respond to this lawsuit, even after its books were audited as a result of this Court's Order, and based on the evidence submitted, the Court finds that Plaintiffs are entitled to $100,445.45 in delinquent contributions ($87,293.95 + $13,151.50), and liquidated damages and interest in the amount of $43,615.12 ($33,658.67 + $5786.70 + $4169.75).
D. Attorneys' Fees and Costs
In addition, under ERISA, Plaintiffs are entitled to recover reasonable attorneys' fees and costs. 29 U.S.C. § 1132(g)(2);Operating Engineers Pension Trust v. Reed, 726 F.2d 513, 514 (9th Cir. 1984). The declaration submitted by Plaintiffs' counsel outlines the billing rates, explains the work performed by attorneys and one paralegal, and describes the experience of the attorneys and paralegal who worked on the case. Lozano-Batista Decl. ¶¶ 4-8. Accordingly, the Court awards Plaintiffs attorneys' fees of $9406.25. Plaintiffs' counsel itemized their incurred costs. Id. ¶ 13. The Court awards costs of $655.90.
Concepción E. Lozano-Batista, attorney for Plaintiffs, filed a declaration in support of the Motion. ECF No. 29.
V. CONCLUSION
For the foregoing reasons, the Court GRANTS the Motion for Default Judgment filed by Plaintiffs Board of Trustees, in their capacities as Trustees of the Cement Masons Health and Welfare Trust Fund for Northern California, Cement Masons Pension Trust Fund for Northern California, Cement Masons Vacation/Holiday Trust Fund for Northern California, and Cement Masons Apprenticeship and Training Trust Fund for Northern California.
IT IS SO ORDERED.
December 28, 2010