Opinion
No. C-00-4591 EMC.
March 6, 2003
ORDER GRANTING PLAINTIFFS' MOTION FOR SUMMARY JUDGMENT (Docket No. 76)
FACTUAL BACKGROUND
This is an action by a group of employee benefit plans ("Plaintiffs") to collect employee benefit contributions from Mark R. Jacobs, individually and d/b/a Accurate Painting and Decorating, Inc. ("Defendants") pursuant to a collective bargaining agreement. The suit covers the period between September 1999 and June 2001. The factual background of this case is described in greater detail in this Court's February 22, 2002 order, in which it granted Plaintiffs' motion for summary adjudication, finding that the allegations in Defendants' third-party complaint against the Painter's Union for breach of the collective bargaining agreement could not form the basis for Defendants' defense in Plaintiffs' collection action. At that time, the Court also granted the Painter Union's motion for judgment on the pleadings, dismissing Defendants' claim for interpleader and other third-party claims.
On December 23, 2002 this Court allowed Brett Dickerson, Esq. to withdraw as counsel for Mr. Jacobs individually but not for Accurate Painting and Decorating, Inc. On January 22, 2003 the Court held a hearing on Plaintiffs' present motion for summary judgment. No opposition was filed and only Plaintiffs' counsel appeared at this hearing. The Court ordered supplemental briefing from both parties regarding the amount owed and additional information regarding the transfer of the business from Mr. Jacobs to Accurate Painting and Decorating, Inc. Defendants did not respond to Plaintiffs' additional filings.
LEGAL ANALYSIS
Under Rule 56 of the Federal Rules of Civil Procedure, summary judgment is proper if the pleadings and evidence submitted in support of the motion show that "there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law." F.R.C.P. 56(c); see also Coca-Cola Co. v. Overland, Inc., 692 F.2d 1250, 1253 (9th Cir. 1982). The moving party possesses the initial burden of showing the absence of a genuine issue of fact. See Blair Foods, Inc. v. Ranchers Cotton Oil, 610 F.2d 665, 668 (9th Cir. 1980). An issue of fact is "genuine" only if there is sufficient evidence for a reasonable fact finder to find for the non-moving party. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248-49 (1986); Aydin Corp. v. Loral. Corp., 718 F.2d 897, 902 (9th Cir. 1983) (stating that a genuine issue is found where "a judge or jury [must] resolve the parties' differing versions of the truth at trial"). Where the absence of a genuine issue of material fact is found, the opposing party must set forth facts demonstrating such an issue. F.R.C.P. 56(e); Ruffin v. County of Los Angeles, 607 F.2d 1276, 1280 (9th Cir. 1979). Justifiable inferences are drawn in the non-moving party's favor. Liberty Lobby, 477 U.S. at 255.
Plaintiffs move for summary judgment on claim that Defendants breached its agreement to pay into Plaintiffs' employee benefits fund and seek a judgment of $292,184.74. As indicated in this Court's February 22, 2002 order, it is undisputed that Defendant Jacobs executed the Registration and Shop Data Card and the Employer's Agreement Card in August 1999 in full knowledge that he was entering into a collective bargaining agreement. See also Jacobs Decl. Ex. B; Christopher Decl. ¶ 3, Ex. B. The Employer's Agreement Card stated that by executing the card, the signor acknowledged that he agreed to pay the monthly contributions for each employee required by the collective bargaining agreement, to be bound in all respects to the collective bargaining agreement and the trust agreements (including the Bay Area Painters Pension Trust Fund), and to be personally and individually liable for said contributions. LoBue Decl. Ex. 2. Therefore the owed contributions at issue here fall under the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. § 1132.
Although Jacobs states he does not remember signing the cards, he does not dispute that his signature appears on the cards. Nor does Jacobs assert that his signature was forged. Hence, the Court found that there was no genuine dispute of fact as to whether Jacobs signed the cards.
The Court also finds that there is no genuine issue of fact regarding the number of hours worked by Plaintiffs for which pension contributions are owed. The report presented on behalf of Plaintiffs by Esnhayer Lainez was based on the Defendants' payroll records, employee time cards, federal tax form W-2's, DE-6 forms (worker's compensation report), year-to-date earnings reports, payroll registers, and state income tax reports. Lainez Declaration, at Exh. 1. Defendants provided payroll records for the entire September 1999 to June 2001 period. Id. Since the production of the Lainez report in July of 2001, Defendants have not provided any evidence or declarations that might create a justifiable inference that the number of hours is disputed. Thus, under the circumstances Defendants are unable to set forth that there is a genuine issue for trial regarding the hours for which contributions are owed. F.R.C.P. 56(e); Liberty Lobby, 477 U.S. at 248-49.
Lainez is a Benefit Plan Compliance Auditor for Hemming Morse, Inc., and a certified public accounting. Lainez Decl. ¶ 1.
In his report on behalf of Plaintiffs, Lainez states that the total amount due is $305,225.29 after mandatory ERISA liquidated damages (10% of the principal) are calculated. Lainez Decl., Exh. 1. Plaintiffs' present motion excludes $2,463.66 included in Lainez Exhibit E (which covered 212.55 hours worked by non-signatory subcontractors) as well as $10,576.89 which Plaintiffs acknowledge was paid by the employer, for an outstanding sum of $292,184.74. Renner Decl.; Lainez Decl., Exh. 1.
ERISA liquidated damages provisions are mandatory and proper under 29 U.S.C. § 1132(g)(2). This ERISA provision states that a courtshall award "an amount equal to the greater of (i) interest on the unpaid contributions, or (ii) liquidated damages provided for under the plan . . ." Section 1132(g)(2)(c)(ii). It is settled law in the Ninth Circuit that this provision is mandatory rather than discretionary. Operating Engineers Pension Trust v. A-C Co., 859 F.2d 1336, 1342 (9th Cir. 1988); Operating Engineers Pension Trust v. Beck Engineering Surveying Co., 746 F.2d 557, 569 (9th Cir. 1984); Operating Engineers Pension Trust v. Reed, 726 F.2d 513, 514 (9th Cir. 1984); Kemmis v. McGoldrick, 706 F.2d 993, 997 (9th Cir. 1983). The collective bargaining agreement provided for liquidated damages in the amount of 10% of the principal of overdue pension contributions. Lainez Decl., ¶ 6, Exh. 3. Accordingly, regarding the inclusion of liquidated damages in the amount of 10% o of the principal, the Court finds that Plaintiffs have met their burden of showing the absence of a genuine issue of fact. Liberty Lobby, 477 U.S. at 248-49; Blair Foods, 610 F.2d at 668. Defendants cannot and have not set forth facts that would create such an issue. F.R.C.P. 56(e).
The issue remaining is whether Accurate Painting Decorating, which was incorporated in July of 2000 and took over operations of Mr. Jacobs' sole proprietorship, is jointly and severally liable along with Mr. Jacobs as a successor employer for pension contributions that accrued during the relevant period. In order to find that a new employer is a "successor employer" the focus is "on whether the new company has `acquired substantial assets of its predecessor and continued, without interruption or substantial change, the predecessor's business operations.'" Fall River Dyeing Finish Corp. v. NLRB, 482 U.S. 27, 43 (1987) (citing Golden State Bottling Co. v. NLRB, 414 U.S. 168, 184 (1973)). Factors included in this analysis are "whether the business of both employers is essentially the same; whether the employees of the new company are doing the same jobs in the same working conditions under the same supervisors; and whether the new entity has the same production process, produces the same products, and basically has the same body of customers." Fall River Dyeing, 482 U.S. at 43. This is a "totality of the circumstances" test, so the absence of a factor is not dispositive. Id. at 45 (finding successor status despite seven month hiatus between operations of the two companies); Hawaii Carpenters Trust Funds v. Waiola Carpenter Shop, Inc. 823 F.2d 289, 293-95 (9th Cir. 1987) (finding new employer liable for delinquent contributions to pension fund when the successor company did not have the same supervisor).
In the case at bar, it is undisputed that Mark Jacobs is the principle of Defendant Accurate Painting and Decorating, Inc., and that this company commenced operations on July 1, 2000. Defendants' Answer to the Complaint, ¶¶ 5, 9. Accurate Painting operated in the same business, in the same location, with the same license, and with the same employees. Deposition of Mark Jacobs; Renner Decl., Exh. 8. Plaintiffs provided additional information based on Defendants' employment records indicating that in the transition months of June and July of 2000 while the business was transferred from Jacobs to Accurate Painting and Decorating, Inc, there were ten employees who were continuously employed by both entities., one new hire, and only one employee whose did not make the transition. Supplemental Lainez Decl., at 1-2. The Court finds that the undisputed facts establishes that Accurate Painting and Decorating, Inc. clearly "continued, without interruption or substantial change, the predecessor's business operations." Fall River Dyeing, 482 U.S. at 43.
Plaintiffs have therefore met their burden of showing the absence of a genuine issue of fact regarding joint and several liability. Liberty Lobby, 477 U.S. at 248-49. Defendants, who did not file opposition, appear at the hearing, or respond to Plaintiffs' supplemental brief, have not set forth any facts to indicate that there is a genuine issue of material fact for trial. F.R.C.P. 56(e). The Employer's Agreement Card, signed by Jacobs in August 1999, establishes Jacobs' liability. It states, "The individual whose signature appears below on behalf of the employer, agrees to be personally and individually liable for said contributions." Lo Bue Decl, Exh. 2. See Employee Painters Trust v. JB Finishes, 77 F.3d 1188, 1192 (9th Cir. 1986) (president who agreed to collective bargaining agreement without realizing he would be personally liable for contract breathes nonetheless was personally liable for contributions to ERISA pension plan); Cement and Concrete Workers Welfare Fund v. Lollo, 35 F.3d 29, 37 (2nd Cir. 1994) (president who signed collective bargaining agreement qualifies as an employer obligated to make contributions to ERISA pension plan).
Moreover, because Accurate Painting and Decorating, Inc. continued the business without significant interruption or change, it is "required to abide by the terms and conditions of employment established by its predecessor's collective bargaining agreement" and is liable for delinquent contributions pursuant to the original collective bargaining agreement. Hawaii Carpenters Trust Funds, 823 F.2d at 294-95; see also Upholsterer's Pension Fund v. Artistic Furniture of Pontiac, 920 F.2d 1323, 1329 (7th Cir. 1990) (successor liability imposed for delinquent pension contributions when there is sufficient indicia of continuity of operations).
CONCLUSION
The Court GRANTS Plaintiffs' motion for summary judgement under Rule 56, and holds Defendant Jacobs and Defendant Accurate Painting Decorating, Inc., jointly and severally liable in the amount of $292,184.74.