Opinion
21-CV-04716-TSH
08-11-2022
DISTRICT COUNCIL 16 NORTHERN CALIFORNIA HEALTH AND WELFARE TRUST FUND, et al., Plaintiffs, v. ADVANTAGE COMMERCIAL SERVICES, INC., Defendant.
REQUEST FOR REASSIGNMENT WITH REPORT & RECOMMENDATION RE: MOTION FOR DEFAULT JUDGMENT
RE: DKT. NO. 28
THOMAS S. HIXSON UNITED STATES MAGISTRATE JUDGE
I. INTRODUCTION
In this ERISA enforcement action, Plaintiffs seek to compel Defendant Advantage Commercial Surfaces, Inc. to comply with an audit of its payroll records. Plaintiffs now move for default judgment, seeking an order (1) requiring Advantage Commercial to provide documents to allow them to complete the audit and (2) an award $6,549.87 in attorneys' fees and costs. ECF No 28. Advantage Commercial has neither appeared nor opposed the motion. The undersigned finds this matter suitable for disposition without oral argument under Civil Local Rule 7-1(b) and VACATES the September 1, 2022 hearing. As not all parties have consented to magistrate judge jurisdiction pursuant to 28 U.S.C. § 636(c), the undersigned requests this case be reassigned to a district judge for disposition. After carefully reviewing the motion and controlling authorities, the undersigned RECOMMENDS the District Court GRANT the motion for the following reasons
II. BACKGROUND
A. The Parties
Plaintiffs are employee benefit plans and their respective trustees (collectively “Trust Funds” or “Plaintiffs”). Minser Decl., ¶ 2, ECF No. 31. The Plaintiff Trust Funds are funds organized under and pursuant to the provisions of Section 302(c)(5), 302(c)(6) and 302(c)(9) of the Labor Management Relations Act of 1947, as amended, 29 U.S.C. §§ 186(c)(5), 186(c)(6), 186(c)(9). Id. The principal offices of the Trust Funds are in the City of Dublin, County of Alameda, State of California. Id.
Advantage Commercial is an employer within the meaning of the Employee Retirement Income Security Act (“ERISA”) Section 3(5), 29 U.S.C. § 1002(5)), and National Labor Relations Act Section 2(2), 29 U.S.C. § 152(2). Id. ¶ 3.
B. Collective Bargaining Agreement and Trust Agreements
On December 13, 2018, Jake Christophe, on behalf of Advantage Commercial, entered into the Northern California Floor Covering Master Agreement (“Bargaining Agreement”) between the Union and the Floor Covering Association Central Coast Counties. Christophersen Decl. ¶ 2 & Ex. A, ECF No. 29. The Plaintiff Trust Funds are third party beneficiaries of the Bargaining Agreement. Id. The Bargaining Agreement was in effect from July 1, 2015 to June 30, 2019. Id. ¶ 3. If not properly terminated, the terms of the Bargaining Agreement specify that it will continue thereafter from year to year beginning July 1, 2019, unless a party to the agreement gives notice to the other party of their desire to effect changes to the agreement. Id. & Ex. B. The Bargaining Agreement was renewed from July 1, 2019 to June 30, 2022. Id.
According to Plaintiffs' records, Advantage Commercial inactivated its account in or around May 20, 2020, effective December 2019, but it has not terminated the Bargaining Agreement to date. Id. ¶ 4. The effect of Advantage Commercial deactivating its account is that it will no longer have an obligation to report the hours worked by its employees on a monthly basis, because it indicated that it no longer has an intention to employ District Council 16 members. Id. However, Advantage Commercial is still subject to audit by the Plaintiff Trust Funds and remains bound to the Bargaining Agreement. Id.
Advantage Commercial also entered into a Memorandum of Understanding (“MOU”) with the Union on or about January 2, 2019. Id. ¶ 5. The MOU defines who will perform work covered by the Bargaining Agreement and what subcontracting is permissible. Id. & Ex. C. The MOU also specifically states that the “Employer agrees that they will make all contributions to the fringe benefit funds as required by the Northern California Floor Covering Master Agreement.” Id., Ex. C ¶ 3.
The Bargaining Agreement requires employer contributions to the Trust Funds, to the Union for union dues, and to other plans more fully described in the Bargaining Agreement. Id. ¶ 7. Under the terms of the Bargaining Agreement, Plaintiffs' Trustees have been authorized to collect and distribute the contributions due under the Bargaining Agreement. Id. & Exs. A, B, Art. 19.
The Bargaining Agreement incorporates the terms of the Trust Agreements for the Plaintiff Trust Funds establishing the Trust Funds (“Trust Agreements”), which also require Advantage Commercial to pay contributions to Plaintiffs. Id. ¶ 8 & Exs. A, B, Art. 19 §§ 2, 4. The Bargaining Agreement and the Trust Agreements for the Plaintiff Trust Funds require Advantage Commercial to make contributions to Plaintiffs' Trust Funds based on the hours worked by its employees. Id. & Exs. A, B, Art. 19 §§ 2, 4; Ex. D, Art. III.
C. Advantage Commercial's Obligation to Make Contributions and Comply with Audit
Each month, employers are sent Contribution Report Forms to self-report the hours worked by their employees for the month. Id. ¶ 10. The employer must fill out the form with all hours worked by its employees during the month and return it to the Trust Funds with payment. Id. The Bargaining Agreement and the Trust Agreements for the Plaintiff Trust Funds provide that all benefit contributions are due on or before the 15th day of the month following the month in which hours were worked and are delinquent if not received by the last day of that month. Id. & Exs. A, B, Art. 19, § 4(B); Ex. D, Art. III, § A. If contributions are delinquent, the Bargaining Agreement and Trust Agreements mandate that Advantage Commercial pay liquidated damages and interest assessed on the delinquent contributions. Id. & Exs. A, B, Art. 19, § 4(c); Ex. D, Art. III § C. Pursuant to the Bargaining Agreement and the Trust Agreements for the Plaintiff Trust Funds, the amount of liquidated damages shall be the greater of 20% of the delinquent contributions or $150.00 per month. Id. ¶ 11 & Exs. A, B, Art. 19 § 4(c); Ex. D, Art. III § C(2). However, if the delinquencies are paid prior to the filing of a lawsuit, liquidated damages shall be the greater of 10% of the delinquent contributions or $150.00, not to exceed $750.00 per month. Id.
Pursuant to the Bargaining Agreement and the Trust Agreements for the Plaintiff Trust Funds, amounts due in interest are assessed at rates determined by the Trustees of the Trust Funds. Id. ¶ 12 & Exs. A, B, Art. 19 § 4(c); Ex. D, Art. III § C(3). The Trustees have determined that interest is to be assessed at 5% of the delinquent contributions, from the date an employer becomes delinquent until the contributions are paid. Id. & Ex. D, Art. I § D.
The Bargaining Agreement and the Trust Agreements for the Plaintiff Trust Funds also provide for reimbursement of attorneys' fees and any other expenses, including costs and audit fees, incurred in connection with the collection of delinquent contributions. Id. ¶ 13 & Exs. A, B, Art. 19 § 4(c); Ex. D, Art. III § E; Ex. E, Art. I § E.
Pursuant to the terms of the Trust Agreements for the Plaintiff Trust Funds, the Board of Trustees is authorized to adopt uniform, specific, reasonable and diligent collection procedures to deal with delinquent employers, including special rules for repeatedly delinquent employers and formulas to be applied where an employer's records are not adequate to precisely determine the amount of required contributions. Id. ¶ 9 & Ex. D, Art. VI § D(16). The Board of Trustees therefore has adopted the “Restated Collection Procedures for Bargaining Unit Employees,” which state that attorneys' fees and costs “shall apply to legal fees incurred by Employer's failure to comply with a requested payroll inspection of the Employer's records and/or the failure to pay amounts found due on payroll inspection. Id. ¶¶ 9, 13 & Ex. E.
The Bargaining Agreement and the Trust Agreements for the Plaintiff Trust Funds require Advantage Commercial to maintain time records or time cards, and to submit any and all relevant records to Plaintiffs for examination to determine whether it is making full and prompt payment of all sums required to be paid by it to Plaintiffs. Id. ¶ 14. If, upon audit, Advantage Commercial's records reveal that it has failed to provide full and prompt payment of all sums due, it must reimburse Plaintiffs for the amounts due, including audit fees, in addition to any other obligations pursuant to the Bargaining and Trust Agreements. Id. & Exs. A, B, Art. 19 §§ 4(h), 4(i), 4(k), 4(1), & 5; Ex. D, Art. III § D.
With regard to attorneys' fees in audit compliance matters, the Trust Agreements for the Plaintiff Trust Funds also specifically state:
The Employer shall reimburse the Trust, or its assignee, for all reasonable attorneys' fees, audit fees, court costs, collection agency fees, and all other reasonable expenses or contributions of whatever nature incurred in connection with such suit or claim, including any and all appellate proceedings therein. It is recognized that the extent of legal services necessarily incurred in the collection of required Employer contributions, or to compel an Employer's compliance on audit to determine proper payment of required Employer contributions may in certain cases have no relation to the fact that the amount of the delinquency is relatively small, or that no delinquencies were found due on audit. The Employer shall reimburse the Trust for all reasonable attorneys' fees and costs incurred in legal action brought to compel an audit of Employer's records, notwithstanding that no underpayments were determined due on audit.Id. & Ex. D, Art. III § E.
D. Advantage Commercial's Failure to Comply with Audit
On February 18, 2020, the Trust Funds' auditors sent a notification letter to Advantage Commercial requesting it contact them to schedule an audit of its payroll records. Hallenbeck Decl. ¶ 4 & Ex. A, ECF No. 30. Advantage Commercial failed to respond to the notification letter and provide any documents. Id. On March 27 the Trust Funds' auditors sent an email to Advantage Commercial regarding the option to upload the requested documents electronically in light of the “Shelter-in-Place” orders during the pandemic. Id. ¶ 5. On April 9 Advantage Commercial responded that it was unable to provide the documents and that the inspection would need to be scheduled in May 2020. Id. On August 12 the Trust Funds' auditors followed up but received no response. Id. & Ex. B.
On or about November 19, 2020, the Trust Funds' auditors' office referred Advantage Commercial to Saltzman & Johnson, the Trust Funds' legal counsel to obtain the documents required to complete the inspection. Id. ¶ 6; see also Minser Decl. ¶ 4. On November 25 Plaintiffs' counsel sent a demand letter requesting that Advantage Commercial comply with the audit of its payroll records for the audit period. Minser Decl. ¶ 7 & Ex. C. On December 14 Plaintiffs' counsel sent another demand letter requesting compliance. Id. ¶ 8 & Ex. D. Advantage Commercial failed to respond. Id. ¶ 9.
After Plaintiffs filed the present complaint, Advantage Commercial expressed its intent to comply with the audit. Id. ¶ 14. In particular, on July 16, 2021, Plaintiffs' counsel received a call from Andrew Shalauta stating that he represented Advantage Commercial. Id. Mr. Shalauta then sent Plaintiffs' counsel a confirming e-mail that same day, indicating that his colleague Jonathan Wong would be taking lead on the case. Id. & Ex. E. Mr. Shalauta also requested the audit demand letters previously sent to Advantage Commercial. Id. Additionally, Plaintiffs' counsel received an e-mail from attorney Jonathan Wong indicating that he stipulated to the filing of a First Amended Complaint and that he would accept service of the same. Id. ¶ 15 & Ex. F.
On August 16, 2021, Mr. Wong sent Plaintiffs' counsel a zip file with audit data, which Plaintiffs' counsel uploaded to the auditors' sharefile. Id. ¶ 19 & Ex. K. On or about November 23 Plaintiffs' counsel provided Advantage Commercial's counsel a list of the additional documents requested by the auditors. Id. ¶ 20. After not receiving a response, Plaintiffs' counsel reached out by e-mail on December 29. Id. ¶ 21 & Ex. M. Advantage Commercial's counsel responded that same day and indicated that the documents would be provided. Id. ¶ 21 & Ex. N. Having received no further communication, Plaintiffs' counsel followed up again on March 9, 2022. Id. ¶ 22. Advantage Commercial's counsel responded the next day and attached a zip file. Id. & Ex. O.
On March 24, 2022, Plaintiffs' counsel emailed Advantage Commercial's counsel and relayed the auditors' position that the essential documents still had not been provided. Id. ¶ 23 & Ex. P. Plaintiffs' counsel also provided a list of the required documents. Id. After Plaintiffs did not receive a response, on April 14 they issued a letter to Advantage Commercial's counsel outlining the additional documents needed with a due date of April 19. Id. ¶ 24 & Ex. Q. Advantage Commercial's counsel responded on April 20 that it had provided all records it had. Id., Ex. R. To date, no additional documents have been received by the Trust Funds auditors to complete the payroll inspection. Id. ¶ 44; Hallenbeck Decl. ¶ 8.
E. Procedural Background
On June 21, 2021, Plaintiffs filed the present complaint to compel Advantage Commercial's compliance with an audit of its records. Plaintiffs filed a First Amended Complaint on July 2 to correct the name of defendant. ECF No. 10. Plaintiffs served Advantage Commercial on July 7, and a Proof of Service of Summons was filed with this Court on July 8, 2021. ECF No. 13. After Advantage Commercial failed to appear or otherwise respond, the Clerk of Court entered default against it on May 9, 2022. ECF No. 24. Plaintiffs filed the present motion on July 20, 2022.
III. LEGAL STANDARD
Federal Rule of Civil Procedure 55(b)(2) permits a court, following default by a defendant, to enter default judgment in a case. “The district court's decision whether to enter default judgment is a discretionary one.” Aldabe v. Aldabe, 616 F.2d 1089, 1092 (9th Cir. 1980).
At the default judgment stage, the factual allegations of the complaint, except those concerning damages, “together with other competent evidence submitted” are deemed admitted by the non-responding parties. Shanghai Automation Instrument Co. v. Kuei, 194 F.Supp.2d 995, 1000 (N.D. Cal. 2001); see also Fair Hous. of Marin v. Combs, 285 F.3d 899, 906 (9th Cir. 2002) (“With respect to the determination of liability and the default judgment itself, the general rule is that well-pled allegations in the complaint regarding liability are deemed true.”). “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) (citation and quotation omitted)). Therefore, “necessary facts not contained in the pleadings, and claims which are legally insufficient, are not established by default.” Cripps v. Life Ins. Co. of N. Am., 980 F.2d 1261, 1267 (9th Cir. 1992) (citing Danning v. Lavine, 572 F.2d 1386, 1388 (9th Cir. 1978)); accord DIRECTV, 503 F.3d at 854. Further, the scope of relief is limited by Federal Rule of Civil Procedure 54(c), which states that a “default judgment must not differ in kind from, or exceed in amount, what is demanded in the pleadings.”
In determining whether default judgment is appropriate, the Ninth Circuit has enumerated the following factors for courts to consider:
(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).
IV. DISCUSSION
A. Jurisdiction and Service of Process
In considering whether to enter default judgment, a district court must first determine whether it has jurisdiction over the subject matter and the parties to the case. In re Tuli, 172 F.3d 707, 712 (9th Cir. 1999). “[T]he district court is not restricted to the face of the pleadings, but may review any evidence, such as affidavits and testimony, to resolve factual disputes concerning the existence of jurisdiction.” McCarthy v. United States, 850 F.2d 558, 560 (9th Cir. 1988) (considering subject matter jurisdiction on a 12(b)(1) motion).
1. Subject Matter Jurisdiction
Federal courts are courts of limited jurisdiction and are presumptively without jurisdiction. Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994). A federal court may dismiss an action on its own motion if it finds that it lacks subject matter jurisdiction. Fiedler v. Clark, 714 F.2d 77, 78-79 (9th Cir. 1983); see also Fed.R.Civ.P. 12(h)(3) (“If the court determines at any time that it lacks subject-matter jurisdiction, the court must dismiss the action.”). Here, the Court has subject matter jurisdiction pursuant to 29 U.S.C. § 1132 (empowering ERISA plan fiduciaries to bring civil actions to enforce plan terms).
2. Personal Jurisdiction
To enter default judgment, the Court must have a basis for the exercise of personal jurisdiction over the defendants in default. In re Tuli, 172 F.3d at 712. “Without a proper basis for [personal] jurisdiction, or in the absence of proper service of process, the district court has no power to render any judgment against the defendant's person or property unless the defendant has consented to jurisdiction or waived the lack of process.” S.E.C. v. Ross, 504 F.3d 1130, 1138-39 (9th Cir. 2007). Here, the Court can exercise personal jurisdiction under ERISA section 502(e)(2), which provides that an action may brought against a defendant “. . . in the district where the plan is administered, where the breach took place, or where a defendant resides or may be found, and process may be served in any other district where a defendant resides or may be found.” 29 U.S.C. § 1132(e)(2). “[S]ervice on a defendant in an ERISA case anywhere in the United States is sufficient to establish personal jurisdiction, and there is no need to engage in the ‘minimum contacts' analysis.” Schuett v. FedEx Corp. Retirement Appeals Comm., 2015 WL 4484153, at *5 (N.D. Cal. July 22, 2015) (citing Cripps, 980 F.2d at 1267). Further, Advantage Commercial was properly served with the summons and complaint under California law. ECF Nos.13, 22, 24; see Cal. Code Civ. Proc. § 416.10(a) (service on corporation). Thus, because the Trust Funds are administered in the Northern District of California, the breach took place here, and Advantage Commercial was properly served, jurisdiction is proper.
Federal Rule of Civil Procedure 4(e) provides that service in accordance with California law is proper.
B. Eitel Factors
Applying the seven Eitel factors, the undersigned finds default judgment is warranted in favor of Plaintiffs.
1. The Possibility of Prejudice
The first factor the Court considers is the possibility of prejudice if a default judgment is not entered. Eitel, 782 F.2d at 1471-72. This factor weighs in favor of default judgment “when a defendant has failed to appear or defend against a suit, and the plaintiffs could not otherwise seek relief.” Vietnam Reform Party v. Viet Tan - Vietnam Reform Party, 416 F.Supp.3d 948, 962 (N.D. Cal. 2019) (citations omitted); IO Grp., Inc. v. Jordon, 708 F.Supp.2d 989, 997 (N.D. Cal. 2010) (prejudice exists where denying the requested default judgment would leave the plaintiff without a proper remedy). This factor favors Plaintiffs because “if the Court were to deny their request, Plaintiffs would have no other avenue for recovery, and further delay in securing a judgment would only increase the chan[c]es that Plaintiffs will be unable to recover the amounts owed.” Bd. of Trs. of U.A. Local No. 159 Health & Welfare Tr. Fund v. RT/DT, Inc., 2013 WL 2237871, at *4 (N.D. Cal. May 21, 2013) (granting default judgment in ERISA case) (citing Bd. of Trs. of Laborers Health & Welfare Tr. Fund for N. Cal. v. C & L Coatings, Inc., 2012 WL 7748318, at *4 (N.D. Cal. Dec. 18, 2012) (same)). “Because ERISA provides that federal courts have exclusive jurisdiction for claims of this nature, denial of Plaintiffs' Motion would leave them without a remedy.” Id.
2. Substantive Claims and the Sufficiency of the Complaint
The second and third Eitel factors focus on the merits of the substantive claims and the sufficiency of the complaint. Eitel, 782 F.2d at 1471-72. “These two factors are often analyzed together and require courts to consider whether a plaintiff has ‘state[d] a claim on which [it] may recover.'” Vietnam Reform Party, 416 F.Supp.3d at 962 (quoting PepsiCo, Inc. v. Cal. Sec. Cans, 238 F.Supp.2d 1172, 1175 (C.D. Cal. 2002)). “Of all the Eitel factors, courts often consider the second and third factors to be ‘the most important.'” Id. (quoting Sanrio, Inc. v. Jay Yoon, 2012 WL 610451, at *4 (N.D. Cal. Feb. 24, 2012)).
Plaintiffs' claim is for unpaid contributions in violation of ERISA. Section 515 of ERISA 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 bargaining 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. Section 515 creates a federal cause of action against employers who do not make timely contributions to employee benefit plans, and it allows plan fiduciaries to enforce obligations created under the collective bargaining agreement. Trs. of the Screen Actors Guild Producers Pension & Health Plans v. NYCA, Inc., 572 F.3d 771, 776 (9th Cir. 2009). To succeed, Plaintiffs must prove: (1) the Trusts are multiemployer plans under 29 U.S.C. § 1002(37); (2) the collective bargaining agreement obligated Advantage Commercial to make the employee benefit contributions; and (3) Advantage Commercial failed to make the contribution payments pursuant to the collective bargaining agreement. C & L Coatings, 2012 WL 7748318, at *4. In this case, Plaintiffs' complaint and supporting materials allege facts sufficient to prove the necessary elements.
First, Advantage Commercial must be deemed an employer before it is bound to comply with section 515 of ERISA, 29 U.S.C. § 1145. An “employer” is defined as “any person acting directly as an employer, or indirectly in the interest on an employer, in relation to an employee benefit plan, and includes a group or association of employers acting for an employer in such capacity.” 29 U.S.C. § 1002(5). Advantage Commercial is an employer within the meaning of ERISA section 3(5), 29 U.S.C. § 1002(a). Compl. ¶ 3.
Second, the requirements of section 515 make clear that an employer must be bound under a collective bargaining agreement to make employee contributions to a multiemployer plan. C & L Coatings, 2012 WL 7748318, at *5. Under ERISA, these plans are defined as employee benefit pension plans made pursuant to a collective bargaining agreement, and to which more than one employer contributes. 29 U.S.C. §§ 1002(3), (37). Here, the Trust Funds were established as employee benefit plans under ERISA and Advantage Commercial's obligation to contribute to the benefit plans arose out of the parties' agreements.
Third, Advantage Commercial failed to make timely contribution payments. Thus, Plaintiffs are entitled to any unpaid contributions, interest and liquidated damages on any unpaid and late-paid contributions, reasonable attorneys' fees and costs, and all other reasonable expenses under 29 U.S.C. § 1132(g)(2).
3. The 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.” Dr. JKL Ltd., v. HPC IT Educ. Ctr., 749 F.Supp.2d 1038, 1050 (N.D. Cal. 2010) (citation and quotation marks omitted). When the amount at stake is substantial or unreasonable in light of the allegations in the complaint, default judgment is disfavored. See Eitel, 782 F.2d at 1472 (affirming the denial of default judgment where the plaintiff sought $3 million in damages and the parties disputed material facts in the pleadings). “However, when the sum of money at stake is tailored to the specific misconduct of the defendant, default judgment may be appropriate.” Yelp Inc. v. Catron, 70 F.Supp.3d 1082, 1100 (N.D. Cal. 2014).
Here, Plaintiffs seek $5,807.50 in attorney's fees and $742.37 in costs. Minser Decl. ¶¶ 34-43. As this amount is tailored to Advantage Commercial's specific misconduct and supported by evidence in the record, the undersigned finds it is appropriate for default judgment. See Church Bros., LLC v. Garden of Eden Produce, LLC, 2012 WL 1155656, at *3 (N.D. Cal. Apr. 5, 2012) ($212,259.21 deemed “modest” and “far less than [the $2.9 million] contemplated by the court in Eitel”). This factor, therefore, supports the entry of default judgment.
4. The Possibility of Dispute Concerning Material Facts
The fifth Eitel factor examines the likelihood of dispute between the parties regarding the material facts surrounding the case. Eitel, 782 F.2d at 1471-72. However, upon entry of default, the defendant is “deemed to have admitted all well-pleaded factual allegations” in the complaint. DIRECTV, Inc., 503 F.3d at 851 (citing Fed.R.Civ.P. 55(a)). Accordingly, this factor weighs in favor of default judgment.
5. Whether Default was Due to Excusable Neglect
The sixth Eitel factor examines whether the defendant's failure to respond to the complaint was the result of excusable neglect. Eitel, 782 F.2d at 1471-72. Here, Plaintiffs provided adequate notice of this action, see ECF Nos. 13, 22, 24, yet Advantage Commercial made no appearance and failed to respond to the present motion. See S.E.C. v. Internet Sols. for Bus. Inc., 509 F.3d 1161, 1166 (9th Cir. 2007) (“A signed return of service constitutes prima facie evidence of valid service which can be overcome only by strong and convincing evidence.”) (simplified). Further, there is nothing in the record suggesting this failure is based on excusable neglect. See Shanghai Automation, 194 F.Supp.2d at 1005 (default after proper service was not excusable neglect). Thus, this factor supports default judgment.
6. Policy Favoring Deciding a Case on its Merits
The last Eitel factor examines whether the policy of deciding a case based on the merits precludes entry of default judgment. Eitel, 782 F.2d at 1472. In Eitel, the Ninth Circuit admonished that “[c]ases should be decided on their merits whenever reasonably possible.” Id. “The existence of Federal Rule of Civil Procedure 55(b), however, shows that this policy is not dispositive.” McMillan Data Commc'ns, Inc. v. AmeriCom Automation Servs., Inc., 2015 WL 4380965, at *11 (N.D. Cal. July 16, 2015) (citing Kloepping v. Fireman's Fund, 1996 WL 75314, at *3 (N.D. Cal. Feb. 13, 1996)). Further, “deciding the case on the merits is impossible where a party refuses to participate.” Vietnam Reform Party, 416 F.Supp.3d at 970. Thus, because Advantage Commercial has not participated in the proceedings, “[t]his factor thus weighs against, but does not preclude, entry of default judgment.” Id.
7. Summary of the Eitel Factors
In sum, the majority of the Eitel factors weigh in favor of granting default judgment. Accordingly, the undersigned RECOMMENDS the District Court GRANT the motion and enter default judgment against Advantage Commercial.
C. Relief Sought
Once liability is established, the plaintiff must then establish that the requested relief is appropriate. Geddes v. United Fin. Grp., 559 F.2d 557, 560 (9th Cir. 1977). 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).
1. Attorneys' Fees
Plaintiffs seek $5,807.50 in attorneys' fees for hours worked by Plaintiffs' counsel from November 24, 2020 through May 31, 2022. Minser Decl. ¶ 41. Plaintiffs also seek reimbursement of costs in the amount of $742.37. Id. ¶ 42. ERISA requires the Court to award “reasonable attorneys' fees and costs of the action” when a plaintiff obtains a judgment in their favor or otherwise obtains the relief sought. 29 U.S.C. § 1132(g)(2)(D); Nw. Adm'rs, Inc. v. Albertson's, Inc., 104 F.3d 253, 253, 258 (9th Cir. 1996). Similarly, Plaintiffs' Trust Agreements provide that Advantage Commercial must reimburse Plaintiffs for attorneys' fees and costs, including audit fees, incurred in connection with the collection of delinquent contributions. Christophersen Decl., Ex. D § III(E). Pursuant to Civil Local Rule 54-5(b)(2)-(3), Plaintiffs' counsel submitted the Declaration of Matthew Minser, which summarizes the background and experience of the attorneys and paralegals who performed work on this matter and their hourly rates. Minser Decl. ¶ 33. Plaintiffs also provided detailed billing records. Id., Ex. U.
Reasonable attorneys' fees are generally based on the traditional “lodestar” calculation set forth in Hensley v. Eckerhart, 461 U.S. 424, 433 (1983). See Fischer v. SJB-P.D., Inc., 214 F.3d 1115, 1119 (9th Cir. 2000). A reasonable fee is determined by multiplying (1) “the number of hours reasonably expended on the litigation” by (2) “a reasonable hourly rate.” Hensley, 461 U.S. at 433. The lodestar amount may also be adjusted based on an evaluation of the factors articulated in Kerr v. Screen Extras Guild, Inc., 526 F.2d 67, 70 (9th Cir. 1975), which have not been subsumed in the lodestar calculation. See Fischer, 214 F.3d at 1119 (citation omitted).
a. Reasonableness of Hourly Billing Rate
To determine the appropriate lodestar amount, the Court must first assess the reasonableness of counsel's claimed hourly billing rate. Credit Managers Ass'n of S. Cal. v. Kennesaw Life & Accident Ins. Co., 25 F.3d 743, 750 (9th Cir. 1994). Courts look to the prevailing market rates in the relevant community for similar work by attorneys of comparable skill, experience, and reputation. Camacho v. Bridgeport Fin., Inc., 523 F.3d 973, 979 (9th Cir. 2008). Generally, the relevant community is the forum where the district court sits. Id. The applicant bears the burden to produce sufficient evidence that the rates claimed for its attorneys are in line with prevailing market rates. Fischer, 214 F.3d at 1121 (citing Hensley, 461 U.S. at 433). “Affidavits of the plaintiffs' attorney and other attorneys regarding prevailing fees in the community, and rate determinations in other cases, particularly those setting a rate for the plaintiffs' attorney, are satisfactory evidence of the prevailing market rate.” U.Steelworkers of Am. v. Phelps Dodge Corp., 896 F.2d 403, 407 (9th Cir. 1990). Put differently, the party seeking fees bears the burden to prove the reasonableness of hours expended using detailed time records documenting completed tasks and time expended. Hensley, 461 U.S. at 437; Roberts v. City of Honolulu, 938 F.3d 1020, 1024 (9th Cir. 2019) (“It is the responsibility of the attorney seeking fees to submit evidence to support the requested hourly rate.”).
When a party seeking fees submits declarations, courts must consider those declarations and cannot substitute that analysis by only considering previous fee awards. Roberts, 938 F.3d at 1024 (“The district court diverged from the applicable standard in discarding the declarations entirely and considering only previous fee awards in determining the prevailing market rate.”) (emphasis in original). Indeed, the Ninth Circuit has explained that solely “[e]xamining prior fee awards to [even the same attorneys] in the district [is] not an acceptable substitute for considering declarations submitted by [that attorney], and explaining why those declarations did or did not establish the prevailing hourly rate in the district.” Id. at 1025.
Counsel charged Plaintiffs $250-285 per hour for a shareholder attorney, $245-265 for an associate attorney, and $145-$165 for a paralegal. Minser Decl. ¶ 33. An hourly rate of $650 for lead counsel and $190 for senior paralegals has been found to be reasonable for Bay Area ERISA specialists. Villasenor v. Cmty. Child Care Council of Santa Clara Cty., Inc., 2021 WL 242924, at *9 (N.D. Cal. Jan. 25, 2021); see also Echague v. Metro Life Ins. Co., 69 F.Supp.3d 990, 996-97 (N.D. Cal. 2014) (finding $650 for lead counsel, $250 for associates, and $135 for paralegals was reasonable for ERISA legal professionals in the Bay Area). Here, the billing rates of Plaintiffs' attorneys and paralegals fall below or are comparable to rates that other courts have found to be reasonable for ERISA work in this area. Therefore, the undersigned finds the rates charged by Plaintiffs' attorneys are reasonable.
Plaintiffs' counsel's billing rates increased effective January 1, 2022. Minser Decl. ¶ 33.
b. Reasonableness of Hours Billed
Having determined the reasonable hourly rate to be applied, the undersigned proceeds to determine the number of hours reasonably expended on the litigation. Fischer, 214 F.3d at 1119. The Court “may not attempt to impose its own judgment regarding the best way to operate a law firm, nor to determine if different staffing decisions might have led to different fee requests.” Moreno v. City of Sacramento, 534 F.3d 1106, 1115 (9th Cir. 2008). At the same time, however, the Ninth Circuit has recently explained that “district courts have a duty to ensure that claims for attorneys' fees are reasonable, and a district court does not discharge that duty simply by taking at face value the word of the prevailing party's lawyer for the numbers of hours expended on the case. Rather, a district court must ensure that the winning attorneys have exercised billing judgment.” Vogel, 893 F.3d at 1160 (emphasis in original and quotation marks and citations omitted).
Here, counsel submitted detailed billing records concerning the attorneys' fees and costs billed in this matter. Minser Decl., Ex. U. The billing records are itemized by timekeeper and clearly detail the amount of time spent on each billed task by each timekeeper. The records do not suggest duplicative billing or an unreasonably high number of hours spent on any one task. Thus, the undersigned finds counsel submit a reasonable number of hours billed.
c. Lodestar Calculation
Based on this analysis, the undersigned finds Plaintiffs' counsel's rates and hours expended are reasonable and therefore recommends the District Court award Plaintiffs attorneys' fees in the amount of $5,807.50.
3. Costs
The court also will award costs if “the prevailing practice in a given community [is] for lawyers to bill those costs separately from their hourly rates.” Trs. of Contrs. Indus. & Laborers Health & Welfare Tr. v. Redland Ins. Co., 460 F.3d 1253, 1258 (9th Cir. 2006) (quotation marks omitted); see 29 U.S.C. § 1132(g)(2)(D). Here, Plaintiffs seek costs in the amount of $742.37 for the filing fee, service of the summons and Complaint, and for legal research. Minser Decl. ¶ 42 & Ex. U. The undersigned has reviewed the costs and finds them reasonable. See Trs. of the Constr. Indus. & Laborers Health & Welfare Tr., 460 F.3d at 1256-59 (approving of awards for computerized research, courier services, facsimile charges, and photocopies); Sheet Metal Workers Local 104 Health Care Tr. v. Nichols Plumbing & Heating, Inc., 2016 WL 8313928, at *9 (N.D. Cal. Dec. 19, 2016) (“[C]ourts have routinely awarded costs for service, messenger services, and investigatory fees in actions brought under 29 U.S.C. § 1132(g)(2)(D).”).
Therefore, the undersigned recommends the District Court award costs in the amount of $742.37.
2. Injunctive Relief
Plaintiffs also seek injunctive relief requiring an audit of Advantage Commercial's books and records for the period December 1, 2018 through the present as follows:
a. Timecards for the period October 7, 2019 through October 20, 2019 for the following employees:
i. Edell, Adam H
ii. Guerrero, Isaac J
iii. Loverde, Brian T
iv. Martinez, Jr, Armando v. Martino, Anthony S
vi. Mccormick, Justin J
vii. Pene, Jr, Brent C
viii. Reser, Jason J
ix. West, Christopher D
b. Cash Disbursement Journals including date, payee, check number and amount for December 1, 2018 through December 31, 2020.
Hallenbeck Decl. ¶ 8; Minser Decl. ¶¶ 7-9, 14-24. As additional documentation may be required once these documents are produced and analyzed, Plaintiffs request the Court retain jurisdiction until the audit is complete and all amounts owing are collected.
The Supreme Court has held that 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. Cent. States, Se. & Sw. Areas Pension Fund v. Cent. Transp. Inc., 472 U.S. 559, 581-82 (1985); see also Bd. of Trs. v. KMA Concrete Constr. Co., 2011 WL 4031136, at *8 (N.D. Cal. Aug. 12, 2011), report and recommendation adopted, 2011 WL 4031100, at *1 (N.D. Cal. Sept. 8, 2011) (retaining jurisdiction to account for further delinquencies discovered by an audit after proper showing by the plaintiff). Here, the Bargaining Agreement and the Trust Agreements require Advantage Commercial to maintain time records or time cards, and to submit any and all relevant records to Plaintiffs for examination to determine whether it is making full and prompt payment of all sums required to be paid by it to Plaintiffs. Christophersen Decl. ¶ 14. If, upon audit, Advantage Commercial's records reveal that it has failed to provide full and prompt payment of all sums due, it must reimburse Plaintiffs for the amounts due, including audit fees, in addition to any other obligations pursuant to the Bargaining and Trust Agreements. Id. & Exs. A, B, Art. 19 §§ 4(h), 4(i), 4(k), 4(1), & 5; Ex. D, Art. III § D. Thus, Advantage Commercial is contractually obligated to submit to an audit of its financial records to ensure compliance with the Agreements. Accordingly, the undersigned recommends the District Court order Advantage Commercial to submit to an audit of its records and that the Court retain jurisdiction over this matter pending a timely audit to amend the judgment upon a proper showing by Plaintiffs. See KMA Concrete Const. Co., 2011 WL 7446345, at *6 (“In ERISA cases, courts may retain jurisdiction to adjust the damages award following an audit.”).
V. CONCLUSION
For the reasons stated above, the undersigned RECOMMENDS that:
1. Plaintiffs' motion for default judgment be GRANTED as to Defendant Advantage Commercial.
2. Advantage Commercial should be required to submit to an audit by Plaintiffs for the period from December 1, 2018 to the present and provide the records listed above in Section IV.C.2.
3. Plaintiffs be awarded $5,807.50 in attorneys' fees and $742.37 in costs, for a total award of $6,549.87.
4. The Court should retain jurisdiction pending completion of the audit so that the
judgment may be amended, if appropriate, to reflect to correct amount due.
Plaintiffs shall serve a copy of this Report and Recommendation upon Defendant and file proof of service thereafter. Pursuant to 28 U.S.C. § 636(b)(1) and Federal Rule of Civil Procedure 72(b)(2), a party may serve and file any objections within 14 days after being served. Failure to file objections within the specified time may waive the right to appeal the district court's order.
IT IS SO RECOMMENDED.