Opinion
Case No. 3:20-cv-00902-YY
04-28-2021
TRUSTEES OF THE EMPLOYEE PAINTERS' TRUST, Plaintiffs, v. SILVERTON GLASS, LLC, an Oregon Limited Liability Company; WENDELL LYNN JAMES d/b/a SILVERTON GLASS SGI, an individual; and WAYNE KAIEBU NEWSON, an individual, Defendants.
FINDINGS AND RECOMMENDATIONS
FINDINGS
Plaintiffs, who are Trustees of the Employee Painters' Trust ("Trust"), have brought suit against three defendants: Defendant Silverton Glass, LLC ("Silverton"), Wendell Lynn James d/b/a/ Silverton Glass SGI, and Wayne Kaiebu Newson. Wendell James has been dismissed from this case. ECF 4 (Notice of Dismissal). Wayne Newson has filed for bankruptcy. ECF 10 (Notice of Bankruptcy).
Against Silverton, plaintiff alleges claims pursuant to Employee Retirement Income Security Act ("ERISA") provisions 29 U.S.C. §§ 1132 and 1145, seeking unpaid employee benefit contributions, as well as liquidated damages, interest, attorney's fees, and costs. Silverton has not filed an answer or otherwise appeared in this matter, and a default was entered on September 30, 2020. ECF 8. Plaintiffs have now filed a Motion for Default Judgment (ECF 12) against Silverton, which should be GRANTED for the reasons discussed below.
I. Subject Matter Jurisdiction
Federal courts are courts of limited jurisdiction. Kokkonen v. Guardian Life Ins. Co. of Am., 511 U.S. 375, 377 (1994). "It is to be presumed that a cause lies outside this limited jurisdiction, . . . and the burden of establishing the contrary rests upon the party asserting jurisdiction." Id. "If the court determines at any time that it lacks subject-matter jurisdiction, the court must dismiss the action." FED.R.CIV.P. 12(h)(3); see also Fiedler v. Clark, 714 F.2d 77, 78-79 (9th Cir. 1983) (recognizing that the court may sua sponte dismiss an action if it finds that subject matter jurisdiction is lacking).
The court has original jurisdiction over plaintiffs' ERISA claims pursuant to 28 U.S.C. § 1331.
Plaintiffs also allege a one claim for breach of contract against the other defendants. This court has supplemental jurisdiction over that claim pursuant to 28 U.S.C. § 1367.
II. Personal Jurisdiction
A district court "has an affirmative duty" to determine whether it has personal jurisdiction over a defendant before entering a default judgment. In re Tuli, 172 F.3d 707, 712 (9th Cir. 1999). "A judgment entered without personal jurisdiction over the parties is void." Id.
The Supreme Court has recognized two types of personal jurisdiction: general or "all-purpose" jurisdiction and specific jurisdiction. Daimler AG v. Bauman, 571 U.S. 117, 127-28, 132 (2014). "With respect to a corporation, the place of incorporation and principal place of business are 'paradig[m] . . . bases for general jurisdiction.'" Id. at 137 (citation omitted). "Those affiliations have the virtue of being unique—that is, each ordinarily indicates only one place—as well as easily ascertainable." Id. "These bases afford plaintiffs recourse to at least one clear and certain forum in which a corporate defendant may be sued on any and all claims." Id. Additionally, 29 U.S.C. § 1132(e)(2), which governs ERISA claims, provides:
Where an action under this subchapter is brought in a district court of the United States, it may be brought 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).
Silverton is an Oregon limited liability company. Compl. ¶ 5. The plan was administered in this district, and the breach occurred in this district. Accordingly, personal jurisdiction exists over Silverton in this case. See Daimler AG, 571 U.S. at 137.
III. Service
Before entering a default judgment, the court must "assess the adequacy of the service of process on the party against whom default is requested." Bank of the West v. RMA Lumber Inc., No. C 07-06469 JSW, 2008 WL 2474650, at *2 (N.D. Cal. June 17, 2008). "[I]n 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 . . . waived the lack of process." S.E.C. v. Ross, 504 F.3d 1130, 1138-39 (9th Cir. 2007).
Under Federal Rule of Civil Procedure 4(h)(1), service may be made on a corporation "by delivering a copy of the summons and of the complaint to an officer." Plaintiffs have filed an affidavit showing service was executed on Silverton's CEO, Wayne Newson, on August 29, 2020. ECF 5. Plaintiffs have established adequate service.
IV. Plaintiffs' Claims and Damages
Silverton entered into a collective bargaining agreement ("CBA") with the International Union of Painters and Allied Trades, District Council 5, through which it agreed to pay fringe benefit contributions on behalf of its covered employees to the Trust. Mot. Default J., Ex. 1-A (CBA ¶ 4), ECF 12-1. Silverton also agreed to be bound by the terms and conditions of the trust agreement that created the Trust. Id. As part of the trust agreement, Silverton is required to pay fringe benefit contributions by the 15th day of each month following any month during which contributions were incurred. Id., Ex. 1-B (Trust Agreement, Art. VIII, ¶ 1), ECF 12-1; Id., Ex. 1 (Wolfe Decl. ¶ 23), ECF 12-1. The contributions are delinquent if not received before 20 days after the due date. Wolf Decl. ¶ 23. The trust agreement also requires Silverton to submit monthly contribution reports. Id. ¶ 24; Trust Agreement, Art. VIII, ¶ 1.
Under 29 U.S.C. § 1154:
[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.Silverton is an "employer" as that term is defined under ERISA, 29 U.S.C. § 1002(5). Compl. ¶ 5. Plaintiffs are entitled to bring a civil action for an employer's failure to pay. 28 U.S.C. § 1132. If judgment is entered in favor of the plaintiffs, the "court shall award":
(A) the unpaid contributions,29 U.S.C. § 1132(g)(2). An award is mandatory if (1) the employer is delinquent at the time the action is filed; (2) the plan provides for such an award; and (3) the district court enters judgment against the employer. Masonry Indus. Tr. Admin., Inc. v. Chris Lee Masonry, Inc., No. 3:14-CV-01570-HZ, 2016 WL 3396939, at *2 (D. Or. June 14, 2016).
(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 (or such higher percentage as may be permitted under Federal or State law) of the amount determined by the court under subparagraph (A),
(D) reasonable attorney's fees and costs of the action, to be paid by the defendant, and
(E) such other legal or equitable relief as the court deems appropriate."
While upon an entry of default, the facts in the complaint are taken as true, "neither the default nor the allegation in the complaint can establish the amount of damages." Lasheen v. Embassy of the Arab Republic of Egypt, 625 F. App'x. 338, 341 (9th Cir. 2015) (cited pursuant to Ninth Circuit Rule 36-3). Accordingly, before the court can enter a default judgment for a sum that is uncertain, a plaintiff must prove damages. TeleVideo Sys., Inc. v. Heidenthal, 826 F.2d 915, 916-17 (9th Cir. 1987).
In the First and Second Claims, plaintiffs allege that Silverton has failed to provide reports for September and October 2019, and failed to submit accurate reports and payments for November and December 2019. Compl. ¶¶ 20-21. Plaintiffs allege they are entitled to payment of all contributions that are due, as well as liquidated damages, interest, attorney's fees, and costs, and such other legal and equitable relief as the court deems appropriate. Id. ¶ 26.
Plaintiffs have calculated a portion of the contribution amounts that Silverton owes by relying on paystubs collected from several employees, and have provided proof that "at least $6,372.94 is known to be owed in contributions by the employers." Id. ¶ 22; see Wolfe Decl., Ex. 2-B (spreadsheet), ECF 12-2, at 29. However, plaintiffs note that "these pay stubs are an incomplete representation of the work performed by all covered employees of Silverton." Id. ¶ 22.
The trust agreement allows for liquidated damages "at the rate of one percent (1%) per month on the unpaid contributions from the due date until paid for all contributions which are owed, or one-hundred dollars ($100.00), whichever is greater." Mot. Default J., Ex. 1-B, ECF 12-1, at 36. Additionally, the trust agreement permits interest at 12%. Id. Under 29 U.S.C. § 1132(g), "interest on unpaid contributions shall be determined by using the rate provided under the plan, or, if none, the rate prescribed under section 6621 of title 26."
Plaintiffs seek attorney's fees of $5,459.00 at $180 per hour for attorney Michael Urban and $110 per hour for certified paralegals Valerie P. Hernquist and Kerri Carder-McCoy. Urban Decl. 4, ECF 12-2. A breakdown of hours and tasks are provided in a detailed spreadsheet. Id., Ex. 2-A, ECF 12-2.
Attorney's fees are authorized by 29 U.S.C. § 1132(g)(2) and the terms of the trust agreement. See Trust Agreement, Art. VIII, ¶ 5, ECF 12-1. ERISA authorizes fees for work performed by non-attorneys, such as paralegals, at market rates, if this is "the prevailing practice in a given community." Trustees of Const. Indus. & Laborers Health & Welfare Tr. v. Redland Ins. Co., 460 F.3d 1253, 1257 (9th Cir. 2006).
Generally, attorney's fees are calculated using the lodestar method, i.e., by multiplying the number of hours worked by the reasonable hourly rate. See Perdue v. Kenny A., 559 U.S. 542, 551 (2010) (holding "the lodestar approach" is "the guiding light" when determining reasonable fees). In determining the "reasonable hourly rate to use for attorneys and paralegals[,]" the court looks to the "prevailing market rates in the relevant community." Gonzalez v. City of Maywood, 729 F.3d 1196, 1205 (9th Cir. 2013) (citations and internal quotation marks omitted). The court also excludes hours "that are excessive, redundant, or otherwise unnecessary." McCown v. City of Fontana, 565 F.3d 1097, 1102 (9th Cir. 2009) (quoting Hensley v. Eckerhart, 461 U.S. 424, 434 (1983)). The party seeking fees bears "the burden of documenting the appropriate hours expended in the litigation, and [is] required to submit evidence in support of those hours worked." United Steelworkers of Am. v. Ret. Income Plan For Hourly-rated Emps. Of Asarco, Inc., 512 F.3d 555, 565 (9th Cir. 2008) (quotations omitted).
For purposes of determining the prevailing market rate, the relevant community is the "one in which the district court sits." Davis v. Mason County, 927 F.2d 1473, 1488 (9th Cir. 1991). This court uses the most recent Oregon State Bar Economic Survey as a benchmark for comparing an attorney's billable rate with the fee customarily charged in the locality. Precision Seed Cleaners v. Country Mut. Ins. Co., 976 F. Supp. 2d 1228, 1244 (D. Or. 2013); see also Copeland-Turner v. Wells Fargo Bank, N.A., No. 11-cv-37-HZ, 2012 WL 92957, at *2 (D. Or. Jan. 11, 2012) ("Judges in the District of Oregon use the Oregon State Bar Economic Survey . . . as a benchmark for assessing the reasonableness of hourly billing rates."). The Economic Survey sets forth rates charged by Oregon attorneys in the relevant year, including rates specific to communities such as Portland.
Plaintiffs have submitted an itemized list of the work Urban and the certified paralegals performed on this case and the time they spent on each task. Urban Decl., Ex. 2-A, ECF 12-2. The work does not appear excessive or duplicative.
Urban has been handling cases like this for 30 years. Urban Decl. 4, ECF 12-2. According to the Oregon State Bar's latest economic survey, the median rate for Portland attorneys with over 30 years of experience is $300. See OREGON STATE BAR, 2017 ECONOMIC SURVEY 39 tbl.36 (2017). In light of Urban's experience, the requested hourly rate of $180 is reasonable. The requested hourly rate of $110 for the certified paralegals is not out of line with similar rates approved in other cases in this district. See Oregon Laborers-Employers Health & Welfare Tr. Fund v. Baseline Indus. Constr., Inc., No. 3:19-CV-1343-IM, 2019 WL 6329336, at *4 (D. Or. Nov. 26, 2019) (approving rate of $90 and citing other cases); Wilson v. Decibels of Oregon, Inc., No. 1:17-CV-01558-MC, 2019 WL 6245423, at *4 (D. Or. Nov. 22, 2019) (approving rate of $90 for legal assistant); Anderson v. Ross Island Sand & Gravel Co., No. 3:18-CV-00898-SB, 2018 WL 5993581, at *4 (D. Or. Oct. 24, 2018), report and recommendation adopted, 2018 WL 5985671 (D. Or. Nov. 12, 2018) (observing that, in 2016, the average hourly billing rate for a paralegal in the "Far West" region was $146/hour); Precision Seed Cleaners v. Country Mut. Ins. Co., 976 F. Supp. 2d 1228, 1249 (D. Or. 2013) (finding $125 per hour to be a reasonable hourly rate for paralegal work).
Plaintiffs seek costs of $1,086.74, including the $400 filing fee, $662.50 for runner/process service fees, and $24.25 for prints and scans. Urban Decl., Ex. 2-A, ECF 12-2. In response to the court's inquiry, Urban represented by email that "[a]ll of these costs are only associated with the remaining Silverton LLC defendant."
Rule 54(d)(1) provides that "[u]nless a federal statute, these rules or a court order provides otherwise, costs—other than attorney's fees—should be allowed to the prevailing party." "Rule 54(d)(1) creates a presumption in favor of awarding costs to the prevailing party, and a district court has limited discretion to deny fees under the rule." Goldberg v. Pac. Indem. Co., 627 F.3d 752, 758 (9th Cir. 2010). Additionally, the trust agreement allows plaintiffs to recover the costs of this litigation. Trust Agreement, Art. VIII, ¶ 5, ECF 12-1. Thus, plaintiffs are entitled to $1,086.74 in costs.
In sum, on the First and Second Claims, plaintiffs are entitled to unpaid contributions of $6,372.94, liquidated damages of $700 ($100 per month for September 2019 through March 2020), interest of $344.59 as of March 19, 2020, attorney's fees of $5,459, and costs of $1,086.75. On the Third Claim, plaintiffs are entitled to an audit pursuant the terms of the trust agreement, as well as costs for the audit if it shows Silverton is delinquent in the payment of contributions. Trust Agreement, Article VIII, ¶ 3, ECF 12-1. Because the precise amount of contributions, liquidated damages, interest, attorney's fees, and costs will not be known until an audit is completed, it is appropriate to retain jurisdiction to award additional damages following an audit of Silverton's payroll and related records. See Mot. 6, ECF 12.
In their motion, plaintiffs also requested relief on the Fourth Claim. However, at the hearing, plaintiff's counsel clarified that this was in error, as the Fourth Claim does not apply to Silverton. Accordingly, no relief is granted as to the Fourth Claim. V. Eitel Analysis
The district court's decision whether to enter a default judgment is a discretionary one. Aldabe v. Aldabe, 616 F.2d 1089, 1092 (9th Cir. 1980). In exercising its discretion, the court considers the following factors under Eitel v. McCool, 782 F.2d 1470 (9th Cir. 1986):
(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.Id. at 1471-72.
A. Factor One: Possibility of Prejudice to Plaintiff
In assessing this factor, courts have considered whether the plaintiff would be without recourse for recovery if the motion for default judgment is not granted. See, e.g., J & J Sports Prods., Inc. v. Cardoze, No. C 09-05683 WHA, 2010 WL 2757106, at *5 (N.D. Cal. July 9, 2010); PepsiCo, Inc. v. California Sec. Cans, 238 F. Supp. 2d 1172, 1177 (C.D. Cal. 2002). Currently, plaintiffs have no recourse to obtain relief other than through this action.
B. Factors Two and Three: Merits of Claims and Sufficiency of Complaint
Upon entry of default, this court must take the well-pleaded factual allegations of the complaint as true. See Geddes v. United Fin. Grp., 559 F.2d 557, 560 (9th Cir. 1977) ("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."); Cripps v. Life Ins. Co. of N. Am., 980 F.2d 1261, 1267 (9th Cir. 1992) ("In reviewing a default judgment, this court must take the well-pleaded factual allegations of [the complaint] as true.").
The complaint and supporting documents establish that Silverton agreed to abide by the CBA and Trust Agreements, which require fringe benefit contributions and monthly reporting. According to the terms of these agreements and relevant ERISA statutes, Silverton owes the unpaid contributions plus liquidated damages, interest, attorney's fees, and costs, as discussed above.
C. Fourth Factor: Sum of Money at Stake
Under the fourth Eitel factor, "the court must consider the amount of money at stake in relation to the seriousness of [d]efendant's conduct." PepsiCo, 238 F. Supp. 2d at 1176-77; see also J&J Sports Productions, 2010 WL 2757106, at *5 ("a large sum of money at stake would disfavor default damages," such as a request for $114,200 in damages); Board of Trustees of the Sheet Metal Workers v. Vigil, No. C 07-01508 WHA, 2007 WL 3239281, at *2 (N.D. Cal. Nov. 1, 2007) ("[D]efault judgment is disfavored if there were a large sum of money involved").
The amount at issue in this case is not relatively large.
D. Fifth Factor: Possibility of Dispute Over Material Facts
In addressing the fifth factor, the court considers the possibility that there is a dispute concerning material facts. As mentioned above, "[u]pon entry of default, all well-pleaded facts in the complaint are taken as true, except those relating to damages." PepsiCo, 238 F. Supp. 2d at 1177. Thus, "[t]he fifth factor . . . weighs in favor of default judgment when the claims in the complaint are well-pleaded." Joe Hand Prods. v. Holmes, No. 2:12-cv-00535-SU, 2015 WL 5144297, at *7 (D. Or. Aug. 31, 2015). Otherwise stated, "[b]ecause all allegations in a well-pleaded complaint are taken as true after the court clerk enters default judgment, there is no likelihood that any genuine issue of material fact exists." Elektra Entm't Grp., Inc. v. Crawford, 226 F.R.D. 388, 393 (C.D. Cal. 2005).
Plaintiffs have ascertained some of what is due from information contained in paystubs obtained from Silverton's employees. Additional information may be obtained from an audit of Silverton's records. Therefore, the possibility of a dispute over material facts is low, if it exists at all.
E. Sixth Factor: Excusable Neglect
The sixth factor pertains to the possibility that the default resulted from excusable neglect. Here, there is no evidence of excusable neglect and, as noted above, Silverton's CEO was served with a copy of the summons and complaint.
F. Policy Favoring Decision on the Merits
Factor seven is "the strong policy underlying the Federal Rules of Civil Procedure favoring decisions on the merits," specifically the policy that "[c]ases should be decided upon their merits whenever reasonably possible." Eitel, 782 F.2d at 1472. However, "this policy, standing alone, is not dispositive, especially where a defendant fails to appear or defend itself in an action." Joe Hand Promotions, Inc. v. Machuca, No. 2:13-cv-1228 GEB KJN, 2014 WL 1330749, at *6 (E.D. Cal. Mar. 31, 2014). Where a defendant has failed to answer a complaint, it "makes a decision on the merits impractical, if not impossible." PepsiCo, 238 F. Supp. 2d at 1177. Rule 55 allows the court to terminate a case before hearing the merits when a defendant fails to defend an action. Fed. R. Civ. P. 55. "Thus, the preference to decide cases on the merits does not preclude a court from granting default judgment." PepsiCo, 238 F. Supp. 2d at 1177 (internal quotation omitted).
Here, a decision on the merits is impossible because Silverton has failed to appear or defend this action. Additionally, all other factors weigh in favor of a default judgment. Therefore, the seventh factor is not dispositive, and the court is not precluded from entering a default judgment against defendant.
RECOMMENDATIONS
Plaintiffs' Motion for Default Judgment (ECF #12) should be GRANTED as follows:
First Claim (Breach of CBA and Trust Agreement): Plaintiffs are awarded unpaid contributions of $6,372.94, liquidated damages of $700, interest of $344.59 as of March 19, 2020, attorney's fees of $5,459, and costs of $1,086.74.
Second Claim (29 U.S.C. § 1145—ERISA): Plaintiffs are awarded the same damages as in the First Claim.
Third Claim (29 U.S.C. § 1132(a)(3) —Audit of Payroll Records): Silverton is ordered to submit its payroll and related records to the Trust for an audit.
Additionally, plaintiffs have leave to seek additional damages, liquidated damages, interest, attorney's fees, and costs, including audit costs, following an audit.
SCHEDULING ORDER
These Findings and Recommendations will be referred to a district judge. Objections, if any, are due Monday, May 17, 2021. If no objections are filed, then the Findings and Recommendations will go under advisement on that date.
If objections are filed, then a response is due within 14 days after being served with a copy of the objections. When the response is due or filed, whichever date is earlier, the Findings and Recommendations will go under advisement.
NOTICE
These Findings and Recommendations are not an order that is immediately appealable to the Ninth Circuit Court of Appeals. Any Notice of Appeal pursuant to Rule 4(a)(1), Federal Rules of Appellate Procedure, should not be filed until entry of a judgment.
DATED April 28, 2021.
/s/ Youlee Yim You
Youlee Yim You
United States Magistrate Judge