Unpublished Disposition, 902 F.2d 1579 (9th Cir. 1990)

MEMORANDUM^* 

United Steel, Inc. ("United") appeals the district court's award on summary judgment of liquidated damages and attorney's fees to several multi-employer union trust funds (the "Trust Funds"), as provided by the parties' collective bargaining agreement and Trust Fund agreements, contending that the liquidated damages provision is void as a penalty. The Trust Funds brought suit under Sec. 301 of the Labor Management Relations Act, 29 U.S.C. § 185, for United's delinquent contributions to the Trust Funds. United does not appeal the district court's award of interest on the delinquent amounts. The Trust Funds seek attorney's fees on the appeal.

We review a grant of summary judgment de novo. Kruso v. International Telephone & Telegraph Corp., 872 F.2d 1416, 1421 (9th Cir. 1989).

Since the district court's ruling, this Circuit has adopted the following analysis of such liquidated damages provisions:

Such a provision must meet two conditions for enforceability. First, the harm caused by a breach must be very difficult or impossible to estimate. Second, the amount fixed must be a reasonable forecast of just compensation for the harm caused. The parties' intentions determine whether this second requirement is satisfied. They must make a good faith attempt to set an amount equivalent to the damages they anticipate.

Idaho Plumbers and Pipefitters Health and Welfare Fund v. United Mechanical Contractors, Inc., 875 F.2d 212, 217 (9th Cir. 1989) (holding that a twenty percent liquidated damages provision was unenforceable because it was not a good faith attempt to forecast the amount of damages flowing from a potential breach) (citing United Order of Am. Bricklayers and Stone Masons Union v. Thorleif Larsen and Son, Inc., 519 F.2d 331, 332 (7th Cir. 1975)).

More recently, we have held that " [w]ithout some indication that this liquidated damages provision is a good faith attempt to set an amount reflective of anticipated damages, we will find the provision void as a penalty." Parkhurst v. Armstrong Steel Erectors, Inc., No. 87-6383, slip op. 3471, 3475 (9th Cir. April 25, 1990) (holding that there was nothing in the record indicating that a twenty percent liquidated damages provision, or its predecessor, a ten percent provision, was a reasonable, good faith attempt at forecasting anticipated damages).

In the present case liquidated damages are assessed at twelve percent of the delinquent amount, or twenty-five dollars, whichever is more, for each delinquency. There is no evidence in the record showing that this amount was reached by good faith negotiation and bargaining by the parties, nor is there evidence as to any estimates, forecasts, or other information that the parties relied upon at the time of the execution of the collective bargaining agreement in calculating the potential damages as this amount. Under Idaho Plumbers and Parkhurst the fact that the agreement was achieved through collective bargaining and that the trustees are Taft-Hartley trustees is not sufficient to show that there was "a good faith attempt to set an amount reflective of anticipated damages" at the time of the execution of the collective bargaining agreement. See Parkhurst, slip op. at 3475.

When the district court awarded the Trust Funds liquidated damages, relying upon a comparison of the amount of liquidated damages requested to those authorized by the Employee Retirement Income Security Act, 29 U.S.C. § 1132(g) (2) (C) (ii) ("ERISA"), it did not have the benefit of our rulings in Idaho Plumbers and Parkhurst to guide its decision. Because the district court's award is now in conflict with these cases, we reverse the district court's summary judgment ruling, vacate the liquidated damages award, and remand to the district court. The Trust Funds will thus have the opportunity to renew their summary judgment motion and to submit evidence as to the reasonableness of its forecast of twelve percent as just compensation for the potential harm caused by an employer breach.

As we are vacating the liquidated damages award, United contends that because substantially all of the litigation pertained to that issue, we must also vacate the district court's award of attorney's fees and remand for reconsideration. Although the Trust Funds did prevail on its claim for interest due on the unpaid contributions, because we are vacating the liquidated damages portion of the award, we believe that the district court should have the opportunity to reconsider its award of attorney's fees and thus vacate that award and remand for reconsideration.

REVERSED IN PART, VACATED IN PART, AND REMANDED.