Opinion
3:23-cv-00378-SB
12-05-2023
TRUSTEES OF THE GLAZIERS, ARCHITECTURAL METAL AND GLASS WORKERS JOINT APPRENTICESHIP AND JOURNEYMAN TRAINING FUND et al., Plaintiffs, v. DON'S A-1 GLASS INC., Defendant.
FINDINGS AND RECOMMENDATION
HON. STACIE F. BECKERMAN, United States Magistrate Judge.
Plaintiffs filed this action against Don's A-1 Glass Inc. (“Defendant”), alleging breach of a collective bargaining agreement, violation of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), and conversion. After Defendant failed to appear or otherwise defend, the clerk entered default against Defendant. Plaintiffs now move for default judgment. See FED. R. CIV. P. 55(b).
The Court has jurisdiction over Plaintiffs' claims pursuant to 29 U.S.C. § 1132(e)(1) (§ 502 of ERISA), 29 U.S.C. § 185(a) (the Labor-Management Relations Act (“LMRA”)), and 28 U.S.C. §§ 1331 and 1367. The Court has personal jurisdiction over Defendant, an Oregon corporation. (First Am. Compl. (“FAC”) ¶ 6, ECF No. 4.) For the reasons explained below, the Court recommends that the district judge grant Plaintiffs' motion for default judgment.
BACKGROUND
This case arises from an employer's failure to comply with the terms of a collective bargaining agreement and to pay certain benefits into trust accounts.
Plaintiffs are the (1) Trustees of the Glaziers, Architectural Metal and Glass Workers Joint Apprenticeship and Journeyman Training Fund (“Training Fund”), (2) Trustees of the Western Glaziers Retirement Fund (“Pension Fund”), (3) Trustees of the Glazing Industry Promotion Fund (“Promotion Fund”), (4) Trustees of the Finishing Trades Institute (“FTI”), (5) Trustees of the Finishing Industries Labor-Management Partnership (“LMP”), and (6) the Glaziers, Architectural Metal and Glass Workers Local 740 (“the Union”). (Id. ¶ 1.) The Training Fund and Pension Fund are “employee welfare benefit plans” as that term is defined in 29 U.S.C. § 1002(1) of ERISA. (Id. ¶ 2.) The Pension Fund is an “employee pension benefit plan” as that term is defined in 29 U.S.C. § 1002(2)(A) of ERISA. (Id.) Both the Training Fund and Pension Fund are “multiemployer plans” as that term is defined in 29 U.S.C. § 1002(37)(A) of ERISA. (Id.) The Trustees of the Training Fund and Pension Fund have discretionary authority and control over the management of said funds and are “fiduciaries” as that term is defined in 29 U.S.C. § 1002(21)(A) of ERISA. (Id.) The FTI is a Trust Fund established under Section 302(c)(6) and the LMP is a Trust Fund established under Section 302(c)(9) of the Taft-Hartley Act, 29 U.S.C. § 186. (Id. ¶¶ 3-4.)
Defendant is an Oregon corporation, an “employer,” and has been engaged in an “industry or activity affecting commerce” as those terms are defined in the LMRA and ERISA. (Id. ¶ 6.) At all relevant times, Defendant was bound by a collective bargaining agreement with the Union. (Id. ¶ 10.) Under the collective bargaining agreement, Defendant agreed to be bound by the terms of the Trust Agreements that created the trust funds, to pay fringe benefit contributions and union dues on behalf of its employees performing work covered by the collective bargaining agreement by the 20th day of the following month, and to file monthly remittance report forms. (Id.)
Defendant did not timely pay fringe benefit contributions and union dues from August 2021 through September 2022. (Id. ¶ 21.) Defendant did not file remittance report forms from October 2022 through January 2023 and did not pay all fringe benefit contributions and union dues over the same period. (Id. ¶ 17.) Further, a payroll examination of Defendant's books and records revealed that it failed to pay all contractually required fringe benefit contributions to the trust funds for work that its employees performed during the period of October 2020 through March 2022. (Id. ¶ 25.)
Based on the foregoing events, Plaintiffs filed the present action against Defendant, alleging breach of the collective bargaining agreement pursuant to the LMRA, violation of 29 U.S.C. §§ 1132(a)(3) and 1145 of ERISA, and conversion. (See generally FAC.) After Defendant failed to appear or otherwise defend, the clerk entered default against Defendant on May 15, 2023. (ECF No. 10.) Plaintiffs' motion for default judgment followed on October 13, 2023. (Pls.' Mot. Default J. (“Pls.' Mot.”), ECF No. 11.)
Plaintiffs seek the following in damages: $1,797.08 in interest and $7,972.74 in liquidated damages for failure timely to pay fringe benefit contributions for the months of August 2021 through September 2022; $847.48 in interest and $2,602.99 in liquidated damages for failure timely to pay fringe benefit contributions for the months of October 2022 through February 2023; $431.88 in fringe benefit contributions, $79.76 in liquidated damages, $60.07 in interest for failure timely to pay fringe benefit contributions for October 2020 through March 2022, calculated through May 31, 2022, with interest continuing to accrue on the unpaid fringe benefit contributions owed to the Training Fund, Pension Fund, and Promotion Fund ($428.72) at the rate of 12% per annum from June 1, 2022, until paid, and interest continuing to accrue on the unpaid fringe benefit contributions owed to the LMP and FTI ($3.16) at the rate of 5% per annum from June 1, 2022, until paid; and $1,161.50 in payroll examination fees. (Pls.' Mot. at 12.) Plaintiffs further request the right to conduct a future payroll examination of Defendant's books and records and to institute legal proceedings if examination reveals deficiency. (Id. at 2.) Plaintiffs also request $2,040.00 in attorney's fees and $553.48 in costs. (Id.)
DISCUSSION
I. LEGAL STANDARDS
“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. Grp., 559 F.2d 557, 560 (9th Cir. 1977) (citing, inter alia, Pope v. United States, 323 U.S. 1, 12 (1944)). “However, a defendant is not held to admit facts that are not well-pleaded or to admit conclusions of law.” DIRECTV, Inc. v. Hoa Huynh, 503 F.3d 847, 854 (9th Cir. 2007) (simplified).
Although “default judgments are ordinarily disfavored” and “[c]ases should be decided upon their merits whenever reasonably possible,” NewGen, LLC v. Safe Cig, LLC, 840 F.3d 606, 616 (9th Cir. 2016) (quoting Eitel v. McCool, 782 F.2d 1470, 1472 (9th Cir. 1986)), a court has the discretion to enter a default judgment. See Aldabe v. Aldabe, 616 F.2d 1089, 1092 (9th Cir. 1980) (“The district court's decision whether to enter a default judgment is a discretionary one.”) (citations omitted). A court's decision should be guided by these seven factors (the “Eitel” 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.NewGen, 840 F.3d at 616 (quoting Eitel, 782 F.2d at 1471-72).
II. ANALYSIS
The Court accepts as true the well-pleaded factual allegations in Plaintiffs' complaint because the clerk has entered Defendant's default. Accepting those allegations as true, the Court concludes that the Eitel factors, on balance, support granting Plaintiffs' motion for default judgment.
A. Possibility of Prejudice to Plaintiffs
The first factor “considers whether a plaintiff would suffer prejudice if default judgment is not entered, and any potential prejudice to the plaintiff favors granting a default judgment.” Progressive Universal Ins. Co. v. Johnson, No. 21-cv-00263-JR, 2021 WL 4163987, at *2 (D. Or. Aug. 13, 2021) (citation omitted), findings and recommendation adopted, 2021 WL 4165370 (D. Or. Sept. 11, 2011). The first factor favors granting Plaintiffs' motion because Defendant has failed to appear or participate in this action and thus Plaintiffs have no other means to prevent Defendant from causing them further harm. See Bd. of Trs. of Laborers Health & Welfare Tr. Fund for N. Cal. v. Hazard, No. 20-cv-05016-TSH, 2021 WL 7448620, at *4 (N.D. Cal. Feb. 25, 2021) (concluding that the first factor weighs in favor of default judgment on the plaintiffs' breach of collective bargaining agreement and ERISA claims), report and recommendation adopted, 2021 WL 7448613 (N.D. Cal. Mar. 12, 2021). /// ///
B. Merits of Plaintiffs' Claims and Sufficiency of Plaintiffs' Complaint
Plaintiffs allege that Defendant breached the collective bargaining agreement and violated various ERISA provisions. (FAC at 1, 6-8.) The factual allegations in the complaint, which the Court must take as true upon default, establish the elements of Plaintiffs' claims and weigh in favor of default judgment.
Plaintiffs also allege a conversion claim, but do not appear to seek damages in connection with the conversion claim in their motion for default judgment. See Trs. of S. Cal. Pipe Trades Health & Welfare Tr. Fund, 2018 WL 4173648, at *3 n.1 (“The Complaint also included claims against [defendant] for . . . conversion. Plaintiffs do not seek damages under th[at] claim[] in their motion for default judgment.”).
“The LMRA provides that breaches of collective bargaining agreements are actionable in federal court.” Trs. of S. Cal. Bakery Drivers Sec. Fund v. Middleton, 474 F.3d 642, 647 (9th Cir. 2007) (citing 29 U.S.C. § 185(a)). The claim is a “a straightforward breach of contract” claim. DelCostello v. Int'l Bhd. of Teamsters, 462 U.S. 151, 165 (1983) (citing Int'l Union, United Auto., Aerospace & Agr. Implement Workers of Am. (UAW), AFL-CIO v. Hoosier Cardinal Corp., 383 U.S. 696 (1966)). Here, Plaintiffs adequately state a claim for breach of the collective bargaining agreement, pleading the existence and the terms of the agreement, that Defendant is obligated to file monthly reports and make contributions to the plans, that Defendant has failed to fulfill those obligations, and that as a result Plaintiffs have suffered damages. (FAC ¶¶ 10-31); see Dirs. of Motion Picture Indus. Pension & Health Plans v. Big Stone Gap Prods., LLC, No. 20-cv-1602-DMG-AGRX, 2020 WL 11421250, at *2 (C.D. Cal. Aug. 31, 2020) (concluding that the plaintiff's pleading established the elements of a breach of collective bargaining agreement claim, weighing in favor of default judgment); Bd. of Trs., I.B.E.W. Loc. 332 Pension Plan Part A v. Delucchi Elec., Inc., No. 5:19-cv-06456-EJD, 2020 WL 2838801, at *2 (N.D. Cal. June 1, 2020) (“Plaintiffs' Complaint sufficiently alleges a contractual obligation to make contributions and a breach of that obligation.”).
Under ERISA, “[e]very 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.” 29 U.S.C. § 1145. “In order to successfully assert this claim, Plaintiffs must prove: (1) the Trusts are multiemployer plans under 29 U.S.C. § 1002(37); (2) the collective bargaining agreement obligated Defendants to make the employee benefit contributions; and (3) Defendants failed to make the contribution payments pursuant to the collective bargaining agreement.” Bd. of Trs. of Laborers Health & Welfare Tr. Fund for N. Cal., 2021 WL 7448620, at *4 (citation omitted).
Here, Plaintiffs have established violations of 29 U.S.C. § 1145 (section 515 of ERISA), alleging that the Training Fund and the Pension Fund are multiemployer plans, that the collective bargaining agreement obligated Defendant to make employee benefit contributions pursuant to the terms of the Trust Agreements, and that Defendant failed to make such contribution payments. (See FAC ¶¶ 2, 10, 17-25); Bd. of Trs. of Cement Masons Health & Welfare Tr. Fund for N. Cal. v. PDB Servs. LLC, No. 21-cv-03383-DMR, 2022 WL 2289062, at *4 (N.D. Cal. Feb. 22, 2022) (concluding that the plaintiffs sufficiently alleged an ERISA claim under 29 U.S.C. § 1145), report and recommendation adopted, 2022 WL 2288917 (N.D. Cal. Apr. 15, 2022); Trs. of S. Cal. Pipe Trades Health & Welfare Tr. Fund v. Cyphertech Mech. Corp., No. 2:18-cv-3260-CAS-KSX, 2018 WL 4173648, at *3 (C.D. Cal. Aug. 27, 2018) (same).
C. Sum of Money at Stake
Plaintiffs have also established that they have suffered damages resulting from Defendant's violations. Plaintiffs have alleged the terms of the Trust Agreements, which provide Defendant's obligations to make contributions and the interest and liquidated damages to be assessed in the event of nonpayment. (FAC ¶¶ 11-16.) Plaintiffs have further submitted evidence documenting each month of Defendant's nonpayment and the associated interest and liquidated damages. (See Decl. Cary Cadonau (“Cadonau Decl.”) Exs. 1-3, ECF No. 12.) “This accounting establishes that the sum of money at stake is reasonable, and thus this factor weighs in favor of granting default judgment.” Bd. of Trs. of Cement Masons Health & Welfare Tr. Fund for N. Cal., 2022 WL 2289062, at *4.
D. Possibility of a Dispute as to Material Facts, Excusable Neglect, and Policy Favoring Decisions on the Merits
The fifth, sixth, and seventh factors also favor granting Plaintiffs' motion for default judgment. Given Defendant's failure to appear or defend against Plaintiffs' suit, the fifth Eitel factor favors entry of default judgment. See id. (concluding the same); Dirs. of Motion Picture Indus. Pension & Health Plans, 2020 WL 11421250, at *3 (same).
The sixth factor considers whether Defendant's default was due to excusable neglect, and here the record demonstrates that Defendant's registered agent accepted service of Plaintiffs' summons on Defendant's behalf. (ECF No. 5.) It is therefore unlikely that Defendant's default resulted from excusable neglect. See Progressive, 2021 WL 4163987, at *3 (“[D]efendant was served with the summons and complaint ....Thus, it is clear defendant is aware of the suit, and it is unlikely the failure to respond resulted from excusable neglect.”) (citation omitted).
As to the seventh factor, “default judgments are disfavored because cases should be decided on their merits whenever reasonably possible[,] . . . [but] the policy . . . favoring decisions on the merits does not weigh against default judgment because [the defendant's] failure to appear makes a decision on the merits impractical.” id. (simplified). Accordingly, the fifth, sixth, and seventh factors favor entry of default judgment here.
E. Summary
In sum, the Court concludes that the Eitel factors, on balance, support granting Plaintiffs' motion for default judgment. See Trs. of Glaziers, Architectural Metal & Glass Workers Joint Apprenticeship & Journeyman Training Fund v. Highland Glass LLC, No. 3:17-cv-01446-YY, 2018 WL 1710440, at *2 (D. Or. Apr. 6, 2018) (granting motion for default judgment on breach of collective bargaining agreement and ERISA claims); Trs. of S. Cal. Pipe Trades Health &Welfare Tr. Fund v. IPS Plumbing Corp., No. 12-cv-04404-RGK-PJWX, 2012 WL 13014606, *1 (C.D. Cal. Dec. 18, 2012) (granting motion for default judgment on claims for breach of collective bargaining agreement, ERISA violations, and conversion).
F. Remedies
“Generally, default judgment is a two-step process: first, the court determines that a default judgment should be entered; then, it determines the amount and character of the relief that should be awarded.” Waters v. Mitchell, 600 F.Supp.3d 1177, 1182 (W.D. Wash. 2022) (citing Tele Video Sys., Inc. v. Heidenthal, 826 F.2d 915, 917-18 (9th Cir. 1987)). Having found that Plaintiffs have “demonstrate[d] to the Court that the complaint is sufficient on its face and that the Eitel factors weigh in favor of granting default judgment[,]” Plaintiffs bear the burden of demonstrating entitlement to damages in the requested amount. Szabo v. Sw. Endocrinology Assocs. PLLC, No. 20-cv-01896-PHX-DWL, 2021 WL 3411084, at *1 (D. Ariz. July 27, 2021) (citing Assaf v. Carp, No. 17-cv-01883-CJC-GJSX, 2018 WL 6051514, at *1 (C.D. Cal. June 5, 2018)); see also Waters, 600 F.Supp.3d at 1182 (“The court must ensure that the amount of damages is reasonable and demonstrated by the plaintiff's evidence.”) (citations omitted). A plaintiff must “prov[e] up their damages” by providing “detailed affidavits and supporting exhibits.” Assaf, 2018 WL 6051514, at *1.
ERISA provides for a mandatory award if the following requirements are satisfied: “(1) the employer must be delinquent at the time the action is filed; (2) the district court must enter a judgment against the employer; and (3) the plan must provide for such an award.” Nw. Adm'rs,Inc. v. Albertson's, Inc., 104 F.3d 253, 257 (9th Cir. 1996) (citation omitted). Here, Plaintiffs submitted evidence that Defendant owed unpaid contributions. (See Cadonau Decl. Exs. 1-3.) Further, under the Trust Agreements, the amounts requested correspond to Plaintiffs' recoverable interest and liquidated damages. (Cadonau Decl. ¶¶ 5-10.)
The Court finds that Plaintiffs have provided evidence to demonstrate that they are entitled to recover: $1,797.08 in interest and $7,972.74 in liquidated damages for the period of August 2021 through September 2022; $847.48 in interest and $2,602.99 in liquidated damages for the period of October 2022 through February 2023; and $431.88 in fringe benefit contributions, $79.76 in liquidated damages, and $60.07 in interest calculated through May 31, 2022, with interest continuing to accrue on the unpaid fringe benefit contributions owed to the Training Fund, Pension Fund, and Promotion Fund ($428.72) at the rate of 12% per annum from June 1, 2022, until paid, and interest continuing to accrue on the unpaid fringe benefit contributions owed to the LMP and FTI ($3.16) at the rate of 5% per annum from June 1, 2022, until paid.
Plaintiffs request $1,161.50 in payroll examination fees. (Pls.' Mot. at 2.) The Trust Agreements provide for payment of payroll examination fees in the event of examination and a finding of overdue fringe benefits, and the payroll examination fees here totaled $1,161.50. (Cadonau Decl. ¶¶ 19, 22.) Accordingly, the Court recommends that the default judgment include an award for payroll examination fees in the amount of $1,161.50. See Trs. of Or.-Wash. Carpenters-Emps. Health & Welfare Tr. Fund v. Pro. Lath & Plaster LLC, No. 3:18-cv-01270-SB, 2019 WL 2939249, at *2 (D. Or. June 18, 2019) (awarding audit fees as part of default judgment), findings and recommendation adopted, 2019 WL 2929503 (D. Or. July 8, 2019).
Plaintiffs further request entry of a judgment providing that Plaintiffs retain the right to conduct a future payroll examination of Defendant's books and records for any period other than October 2020 through March 2022 and the right to institute legal proceedings if examination reveals deficiency. (Pls.' Mot. at 2.) Other judges in this district have included the requested relief in similar default judgments, and the Court finds that the relief is appropriate here. See, e.g., Trs. of Plumbers & Pipefitters Nat'l Pension Fund v. Redside Plumbing LLC, No. 3:22-cv-01989-AR, 2023 WL 6850234, at *1 (D. Or. Oct. 17, 2023) (ordering “[t]he right to conduct future payroll examination of [the defendant's] books and records to ensure compliance with fringe benefit and union due payment compliance, and to institute legal proceedings to recover any delinquent contributions and union dues, plus attorney fees and costs”); Trs. of the Glaziers,Architectural Metal & Glass Workers Local Union No. 740 Welfare Fund v. All City Glass of Or. LLC, No. 3:21-cv-01084-AR, 2022 WL 1912102, at *1 (D. Or. June 2, 2022); cf. Trs. of the Plumbers & Pipefitters Nat'l Pension Fund v. John Craig Plumbing LLC, No. 3:11-cv-1325-HU, 2012 WL 1969046, at *1 (D. Or. May 25, 2012) (declining to award similar relief but only “because the [c]omplaint did not request as relief that plaintiffs retained the right to conduct a future payroll examination of defendant's books and records to ensure that all required fringe benefit contributions and union dues have been paid, and to institute legal proceedings if they find evidence of unpaid contributions or dues”).
Plaintiffs requested this relief in their complaint. (See FAC at 9-10.)
Finally, Plaintiffs request $2,040.00 in attorney's fees and $553.48 in costs. (Pls.' Mot. at 2.) The terms of the Trust Agreements authorize Plaintiffs to recover reasonable attorney's fees. (Cadonau Decl. ¶ 14.) Additionally, “ERISA requires the Court to award reasonable attorneys' fees and the costs of suit.” Dirs. of Motion Picture Indus. Pension & Health Plans, 2020 WL 11421250, at *4 (citing, inter alia, 29 U.S.C. § 1132(g)(2)).
The law is well established that a reasonable hourly rate is determined by looking at the prevailing rate in the relevant community for similar work performed by attorneys of comparable skill, experience, and reputation. See Barjon v. Dalton, 132 F.3d 496, 502 (9th Cir. 1997). The best evidence of the prevailing billing rates in Portland, Oregon, is the Economic Survey conducted by the Oregon State Bar. See McElmurry v. U.S. Bank Nat'l Assoc., No. 04-cv-00642-HA, 2008 WL 1925119, at *3 (D. Or. Apr. 30, 2008) (finding that the Oregon State Bar's Economic Survey “is a bellwether for the market price of attorney services in Portland, and the court affords it significant weight in at least establishing a starting point for reasonable rates”). Cadonau has been practicing for twenty-two years and, here, billed eight and a half hours at the hourly rate of $240 per hour. (Cadonau Decl. ¶¶ 16-18.) A $240 hourly rate is well below the mean hourly rate for Portland area attorneys with 21-30 years' experience. See Oregon State Bar 2022 Economic Survey: Report of Findings, (Mar. 2023), https://www.osbar.org/docs/ resources/Econsurveys/22EconomicSurvey.pdf. The Court finds that Cadonau's hourly rate and the time billed are reasonable. See Trs. of Or.-Wash. Carpenters-Emps. Health & Welfare Tr. Fund, 2019 WL 2939249, at *3-4 (concluding that 6.6 hours of the attorney's time and 6.9 hours of the legal assistant's time was reasonable leading up to a motion for default judgment).
CONCLUSION
For the reasons stated, the Court recommends that the district judge GRANT Plaintiffs' motion for default judgment (ECF No. 11).
SCHEDULING ORDER
The Court will refer its Findings and Recommendation to a district judge. Objections, if any, are due within fourteen (14) days. If no objections are filed, the Findings and Recommendation will go under advisement on that date. If objections are filed, a response is due within fourteen (14) days. When the response is due or filed, whichever date is earlier, the Findings and Recommendation will go under advisement.