Opinion
No. C 09-6064 RS.
July 2, 2010
ORDER GRANTING PLAINTIFF'S MOTION FOR DEFAULT JUDGMENT
I. INTRODUCTION
Plaintiffs move for default judgment against the John D. Baker Construction Company ("Baker") pursuant to Federal Rule of Civil Procedure 55(b)(2). This is an ERISA action for unpaid contributions owed to the Operating Engineers Health and Welfare Trust Fund and to F.G. Croshwaite as beneficiary. Defendant has not responded to plaintiffs' motion, answered the Complaint or, for that matter, appeared in this case at all. Plaintiffs seek to recover contributions owed for nine months in 2009, liquidated damages and interest thereon, attorney fees, and costs. After considering their motion and declarations in support, plaintiffs' motion for default judgment is granted.
On June 30, 2010, plaintiffs submitted a declaration indicating that the defendant may or may not also owe contributions stemming from several months in 2010. This Order addresses only defendant's failure to pay to the Trust contributions owed for the nine months in 2009 discussed in the Complaint.
II. RELEVANT FACTS
Baker became a member of the Engineering Utility Contractors Association (EUCA) in December of 2006. EUCA and the Operating Engineers Local Union No. 3 agreed to be bound by consecutive Collective Bargaining Agreements (the "Agreement"). The agreement specifies that Baker must make timely contributions to the plaintiff Trust Funds at a specified rate for each hour worked by, or paid to, covered employees. It further requires that Baker maintain reports of the number of covered hours worked by each employee and any amounts owed to the Trust. Under the Agreement, contribution payments are due on the 15th day of each month (following the month in which the employees worked) and become "delinquent" if not received before midnight of the 25th day. The Agreement also provides that liquidated damages shall be assessed on any delinquent payment in an amount of $35 or 15 percent of the amount due and unpaid, whichever is greater. Liquidated damages are assessed and become due on the day immediately following the delinquent date. Thereafter, these damages are added to the total amount due and unpaid, and the entire sum bears interest at a rate of 12 percent.In their Complaint, plaintiffs contend that Baker failed to pay contributions for work performed by its employees during the period of February of 2009 to October of 2009. They explain that they are entitled to liquidated damages and interest for unpaid contributions owed for this period as well as for the period of December 2008 to January 2009. In their motion, in contrast, plaintiffs note that the relevant time period runs instead from March of 2009 to November of 2009, though presumably the difference arises only insofar as the former refers to the months for which contributions were owed, and the latter refers to the months on which payments were due (substantively, then, the requests are identical). The motion also does not appear to incorporate the December/January damages. Accordingly, the relief plaintiffs now request is somewhat less than originally pleaded. In sum, plaintiffs seek to recover unpaid contributions for nine months in 2009, liquidated damages in the amount of either $35 or 15 percent of the contribution owed arising from delinquency, and interest levied at a rate of 12 percent per annum on the entire balance owed. With interest calculated on May 25, 2010 (roughly two days prior to the motion's filing), this figure amounted to $43,377.66. Plaintiffs also seek attorney's fees and costs totaling $6,768.83. They seek a total recovery of $50,146.59.
III. LEGAL STANDARD
Following entry of default, a district court may in its discretion grant default judgment. See Fed.R.Civ.P. 55; Aldabe v. Aldabe, 616 F.2d 1089, 1092 (9th Cir. 1980). Factors that a district court may consider in exercising its discretion include: (1) the possibility of prejudice to the plaintiff; (2) the merits of the 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).
Moreover, factual allegations detailed in the complaint are taken as true, except for those allegations relating to damages. See TeleVideo Sys., Inc. v. Heidenthal, 826 F.2d 915, 917 (9th Cir. 1987). "A party seeking default judgment must state a claim upon which it may recover." Philip Morris USA, 219 F.R.D. 494, 501 (C.D. Cal. 2003). A plaintiff must also prove all damages sought in the complaint. Id. at 498; see also Fed.R.Civ.P. 55(b)(2) ("In determining damages, a court can rely on the declarations submitted by the plaintiff.").
IV. DISCUSSION
A. Merits of the Claim, Sufficiency of the Complaint and Prejudice to Plaintiff
ERISA section 1145 provides that every employer who is obligated to make contributions under the terms of a collective bargaining agreement must make them in accordance with that agreement. 29 U.S.C. § 1145. In their Complaint, plaintiffs contend Baker failed to make contributions for work performed by its employees for the period of March 2009 through November 2009 as required by their Agreement. Accordingly, they have adequately pleaded that Baker violated its statutory duty under ERISA. Failure to impose a judgment here would risk prejudice to the plaintiffs as it is not at all clear how the Trust can otherwise recover the unpaid contributions.
Section 1132(g), in turn, states that in an action to enforce payment of delinquent contributions, the court shall award the plan: (a) the unpaid contributions; (b) interest on the unpaid contributions; (c) an amount equal to the greater of (i) interest on the unpaid contributions, or (ii) liquidated damages provided for under the plan in an amount not in excess of 20 percent of the amount determined by the court under section (a); (d) reasonable attorney's fees and costs. 29 U.S.C. § 1132(g)(2). A plaintiff is entitled to an award of liquidated damages under 1132(g)(2) if the following requirements are satisfied: (1) the employer is delinquent at the time the action is filed; (2) the district court enters a judgment against the employer; and (3) the plan provides for such an award. Plumbers Pipefitters Nat'l Pension Fund v. Eldridge, 232 Fed. Appx. 680, 683 (9th Cir. 2007).
Here, plaintiffs have alleged that Baker failed to make contributions at the time the Complaint was filed and also that the Agreement contemplated an award of liquidated damages. Specifically, the Agreement provides that liquidated damages in an amount of $35 or 15 percent of the unpaid contribution shall be levied for delinquent payments. Moreover, these damages are added to unpaid contributions; the Agreement provides that the entire amount is subject to interest at a rate of 12% per annum until paid in full. Here, plaintiffs provide detailed charts of the contributions owed each month. The liquidated damages they request as well as their calculations with interest follow the formulas provided for in the Agreement. As the 15 percent figure falls below the maximum level allowed under ERISA (20 percent), it is consistent with the statute.
B. Potential Disputes of Material Fact, Excusable Neglect, Sum of Money at Stake
The greatest cause for concern in a case like this is surely that defendants would wish to contest the listed amounts of unpaid contributions. Although the plaintiffs did cite the exact months where contributions were owing and did refer to the provisions in the Agreement outlining the liquidated damage and interest formulas, plaintiffs did not include in the Complaint the numerical contribution figures detailed in the motion and supporting documents. That said, plaintiffs do contend that, prior to filing the Complaint, they mailed to Baker a graphic table detailing the precise relief requested in the Complaint. They submit a copy of this letter with their motion. It is nearly identical to the table plaintiffs submit in their motion but actually demands a higher total figure (in light of the December and January contributions mentioned in the Complaint but excised from the relief ultimately requested). This notification also suggests defendants' failures to appear or defend the case do not arise from excusable neglect. Not only is it clear from the record that they were duly served with both the Complaint and the instant motion, plaintiffs also apparently gave advance warning of their intent to pursue the litigation to recover the unpaid contributions. Finally, defendants were required to maintain reports of all monthly contributions owed and presumably were aware even before the filing of the Complaint of the amounts plaintiffs would request.
A related concern, though, arises with respect to the sum requested for attorney's fees. Although both the relevant ERISA section and the Agreement contemplate an award of reasonable attorney fees, the sheer number of hours plaintiffs' attorneys claim to have spent on this case raises a question of reasonableness. Plaintiffs request $6,019.50 in exchange for roughly 40.6 hours of attorney work employed in the development of the seven-page Complaint and the instant motion and two declarations that accompany it. One of these declarations explains and calculates the requested attorney fees. This declaration does not detail exactly how these 40.6 hours were allocated.
In light of the substance and context of the work involved, 40.6 hours seems unreasonable. See, e.g., Bay Area Painters v. Alta Specialty, No. 06-06996, 2008 WL 114931, at *6 (N.D. Cal. Jan. 10, 2008) (rejecting as excessive plea for roughly 14 hours of legal work in factually and procedurally similar default judgment in ERISA contribution case). In light of the Complaint's length and the legal issues involved, it would not seem to require more than several hours of legal work, with the motion and associated investigation similarly quite limited. Calculated at Mr. Williams' hourly rate ($180), 20 hours seems more appropriate, thereby resulting in a recovery of $3,600. Plaintiffs' estimate of costs totals $749.33. The figure represents filing fees and costs associated with service of process and appears reasonable.
C. Strong Policy Favoring Decisions on the Merits
The Federal Rules espouse a preference for resolving cases on their merits. See Eitel, 782 F.2d at 1472. Here, defendants have been aware of this litigation from at least the date the Complaint was filed. As plaintiffs indicate, they were made fully aware of the recovery plaintiffs request before that date. Even so, defendants have failed to respond meaningfully in any way. A decision on the merits is likely impossible.
V. CONCLUSION
With the exception of a policy favoring decisions on the merits, all other Eitel factors favor entry of default and it should therefore be granted. As to damages, interest shall be calculated as requested by plaintiffs up to May 25, 2010 and attorney's fees shall be reduced to $3,600. Plaintiffs' recovery is therefore awarded in the amount of $47,726.99.
IT IS SO ORDERED.
JUDGMENT
Based on the order issued herewith, granting defendant's motion for default judgment, the Court enters judgment in favor of plaintiffs and against defendant in the above-entitled action.