Crosthwaite et al v. Bay Cities Concrete Pumping Inc., No. 3:2010cv03939 - Document 39 (N.D. Cal. 2011)
Court Description: ORDER GRANTING DEFAULT JUDGMENT AND ORDERING DEFENDANT TO SUBMIT TO AN AUDIT by Judge Alsup granting 26 Motion for Default Judgment (whalc1, COURT STAFF) (Filed on 4/6/2011)
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Crosthwaite et al v. Bay Cities Concrete Pumping Inc. Doc. 39 1 2 3 4 5 6 IN THE UNITED STATES DISTRICT COURT 7 FOR THE NORTHERN DISTRICT OF CALIFORNIA 8 9 11 For the Northern District of California United States District Court 10 12 13 14 15 F.G. CROSTHWAITE and RUSSEL E. BURNS, in their respective capacities as Trustees of the OPERATING ENGINEERS’ HEALTH AND WELFARE TRUST FUND FOR NORTHERN CALIFORNIA, PENSION TRUST FUND FOR OPERATING ENGINEERS, PENSIONED OPERATING ENGINEERS’ HEALTH AND WELFARE TRUST FUND; and OPERATING ENGINEERS’ LOCAL UNION NO. 3, 16 17 18 No. C 10-03939 WHA ORDER GRANTING PLAINTIFFS’ MOTION FOR DEFAULT JUDGMENT AND REQUIRING DEFENDANT TO SUBMIT TO AN AUDIT Plaintiffs, v. 19 BAY CITIES CONCRETE PUMPING, INC., 20 Defendant. / 21 INTRODUCTION 22 23 In this ERISA enforcement action, plaintiffs F.G. Crosthwaite and Russell E. Burns, in 24 their respective capacities as Trustees of the Operating Engineers’ Health & Welfare Trust Fund 25 for Northern California; Pension Trust Fund for Operating Engineers; Pensioned Operating 26 Engineers’ Health and Welfare Trust Fund, and Operating Engineers Local 3, move for an entry 27 of default judgment against defendant Bay Cities Concrete Pumping, Inc. For the following 28 reasons, the motion is GRANTED. Dockets.Justia.com 1 2 STATEMENT Plaintiffs, F.G. Crosthwaite and Russell E. Burns, in their respective capacities as Trustees 3 of the Operating Engineer’s Health & Welfare Trust Fund for Northern California, Pension Trust 4 Fund for Operating Engineers, Pensioned Operating Engineers’ Heath and Welfare Trust Fund 5 and Operating Engineers Local 3, bring this motion for a default judgment against defendant Bay 6 Cities Concrete, Pumping, Inc. The Operating Engineer’s Health & Welfare Trust Fund for 7 Northern California, Pension Trust Fund for Operating Engineers, and Pensioned Operating 8 Engineers’ Heath and Welfare Trust Fund are employee benefit plans as defined in the Employee 9 Retirement Income Security Act of 1974. Operating Engineers Local Union No. 3 is a labor 11 For the Northern District of California United States District Court 10 organization as defined by the National Labor Relations Act (Compl. ¶¶ 2–3). Plaintiffs allege that “[t]he union and defendant entered into a collective bargaining 12 agreement requiring employer contributions to the Plaintiff Funds, to the union for union dues 13 and to bargained plans” (id. ¶ 10). The bargained plans are funds defendant was required to make 14 contributions into under the collective bargaining agreement. Defendant allegedly failed to 15 comply with plaintiffs’ request for payment of delinquent contributions reported between 16 June 2009 and September 2009, as well as liquidated damages and interest for delinquent 17 contributions for the period of July 2006 through May 2009. Defendant allegedly failed to submit 18 reports or payment for work performed between October 2009 and December 2010. 19 Plaintiffs filed this action in September 2010. Proper service was made and proof of 20 service was filed. Defendant is a corporation and therefore not a minor or incompetent person. 21 Pursuant to plaintiffs’ request, the Clerk entered defendant’s default in October 2010. Defendant 22 was served with a copy of plaintiffs’ request for entry of default and did not reply. Nor did 23 defendant respond to the Clerk’s notice of entry of default. Defendant has failed to plead, defend, 24 or appear (Dkt. No. 26 at 3). 25 26 ANALYSIS A defendant must serve an answer within 21 days of being served with a summons and 27 complaint. FRCP 12(a)(1)(A)(i). After entry of default, a plaintiff may apply for a default 28 judgment against a defendant that has failed to plead or otherwise defend. FRCP 55(b)(2). The 2 1 trial court has discretion to grant or deny the application, but default judgments are generally 2 disfavored. Factors that may be considered in deciding whether to enter default judgment include 3 the following: (1) the possibility of prejudice to the plaintiff; (2) the merits of plaintiff’s 4 substantive claim; (3) the sufficiency of the complaint; (4) the sum of money at stake in the 5 action; (5) the possibility of a dispute concerning material facts; (6) whether the default was due 6 to excusable neglect; and (7) the strong policy favoring decisions on the merits. Eitel v. McCool, 7 782 F.2d 1470, 1471–72 (9th Cir. 1986). For the following reasons, each of these factors favors 8 entry of default judgment against defendant. 9 EITEL FACTORS. First, if the motion were denied, plaintiffs may be unable to recover and provide the 11 For the Northern District of California United States District Court 10 1. contributions owed to beneficiaries and members of the pension fund. Failure to enter a default 12 judgment therefore would result in prejudice to plaintiffs. 13 Second, the complaint is sufficient to support entry of a default judgment. Judgment by 14 default cannot be entered if the complaint fails to state a claim. See Moore v. United Kingdom, 15 384 F.3d 1079, 1090 (9th Cir. 2004). In the instant action, plaintiffs claim that defendant violated 16 Section 515 of ERISA by failing to pay contributions or provide audit reports pursuant to the 17 terms of the collective bargaining agreement (Dkt. No. 26 at 2). These allegations are sufficient 18 to state a claim under FRCP 8(a). 19 Third, the sum of money at stake is relatively small. In general, the fact that a large sum 20 of money is at stake is a factor disfavoring default judgment. See Eitel, 782 F.2d at 1472 (stating 21 that the fact that $2,900,000 was at stake, when considered in light of the parties’ dispute as to 22 material facts, supported the court’s decision not to enter judgment by default). In the instant 23 case, plaintiffs have asked for a total of $11,077.17 in damages. This sum is a far cry from 24 the $2,900,000 sum contemplated in Eitel. Because the sum of money at stake is modest, this 25 factor weighs in favor of entering a default judgment. 26 27 28 3 1 Fourth, there is no dispute of material fact. Indications that there is a dispute of material 2 fact weigh against entry of default judgment. Eitel, 782 F.2d at 1471–72. Here, defendant has 3 not disputed any of plaintiffs’ contentions, and all material facts pled in the complaint 4 are verifiable. 5 Fifth, it is unlikely that default was the result of excusable neglect. This action was filed 6 six months ago and defendant has been properly served (Dkt. No. 26 at 3). Defendant is aware of 7 the payment obligations for which it is responsible. 8 9 of the Eitel factors weigh in favor of a default judgment. The motion to enter default judgment is, therefore, GRANTED. DAMAGES. 11 For the Northern District of California United States District Court 10 Sixth, although federal policy generally disfavors the entry of a default judgment, here all 2. 12 Plaintiffs’ action is based on the statutory duty provided by ERISA Section 515, which 13 states that an employer who is obligated to make contributions to a multiemployer plan must do 14 so in accordance with the terms and conditions of such plan or such agreement. 29 U.S.C. 1145. 15 Section 502(g) of ERISA states that in an action to enforce Section 1145, the court shall award 16 the plan unpaid contributions, interest on the unpaid contributions, liquidated damages, 17 reasonable attorney’s fees and costs, and equitable relief as the court deems appropriate. 18 29 U.S.C. 1132(g)(2). 19 Plaintiffs seek interest on delinquent and unpaid contributions, as well as liquidated 20 damages, attorneys fees, and costs in the total amount of $11,077.17 (Dkt. No. 26 at 2). Our court 21 of appeals has held: 22 23 24 25 Section 1132(g)(2) of ERISA provides that when there is a judgment in favor of an employment benefit trust, the court shall award the trust unpaid contributions, interest on unpaid contributions, liquidated damages in some instances, and reasonable attorney fees. The language “shall award” denotes that such an award is mandatory. While attorney’s fees are discretionary in the case of many ERISA claims, we have recognized on numerous occasions that attorney’s fees are not discretionary in section 1132(g)(2) cases. 26 Operating Engineers Pension Trust v. A-C Co., 859 F.2d 1336, 1342 (9th Cir. 1988) (citations 27 omitted). Plaintiffs are, therefore, entitled to the award of unpaid contributions and interest as 28 well as attorneys’ fees and costs. 4 1 Plaintiffs also request that defendant submit to an audit of its records for the period of 2 January 1, 2008, through the date of inspection and make payment of any resulting employee 3 benefit contributions found due and unpaid. This is equitable relief as contemplated by 4 Section 1132(g)(2). Pursuant to the terms of the trust agreement, plaintiffs are entitled to a yearly 5 audit which defendants have not conducted (Hayner Exh. C). This order finds that plaintiffs are 6 entitled to the audit reports and any unpaid contributions discovered therefrom, subject to proof. award statutory liquidated damages in the Ninth Circuit, (1) the fiduciary must obtain a judgment 9 in favor of the plan, (2) unpaid contributions must exist at the time of suit, and (3) the plan must 10 provide for liquidated damages. Once the provision applies, liquidated damages are mandatory. 11 For the Northern District of California This order next considers whether plaintiffs are entitled to liquidated damages. In order to 8 United States District Court 7 Idaho Plumbers & Pipe Fitters Health and Welfare Fund v. United Mech. Contractors, Inc., 12 875 F.2d 212, 215 (9th Cir. 1989). 13 Here, all three requirements for liquidated damages are satisfied. Contributions for the 14 months of June 2009 through September 2009 were unpaid, and remain unpaid to date (Dkt. 15 No. 26 at 5). Contributions for the period of October 2009 through December 2010 were not 16 reported or paid. Furthermore, the agreement between plaintiffs and defendant provided for 17 liquidated damages (Hayner Exh. A at 5). Plaintiffs should, therefore, be awarded liquidated 18 damages in the amount of $676. 90. Thus, plaintiffs are entitled to an award of unpaid 19 contributions and interest, liquidated damages, and attorneys’ fees and costs in the total amount 20 of $11,077.17. 21 This order follows full briefing and a hearing on the motion. At the March 31 hearing, 22 Steve Beasley and Randy Beasley, principals for defendant corporation, appeared for the first 23 time in this action without a lawyer. The Beasleys admitted that defendant owed plaintiffs the 24 funds at issue in this litigation. When asked why defendant had not made an appearance before 25 this time, the Beasleys stated that they had been and still were financially “overwhelmed”and 26 unable to pay. If defendant could show a meritorious defense, the court would set aside the 27 default and allow the litigation to be adjudicated on the merits, but this has not been done, so 28 there is no choice but to grant the motion. 5 1 2 CONCLUSION The order to show cause is discharged. Plaintiffs’ motion for entry of default judgment is 3 GRANTED in the amount of $11,077.17. Judgment will be entered accordingly. Defendant also is 4 ORDERED to submit to an audit of its records for the period of January 1, 2008, through date of 5 inspection and to make payment of any resulting employee benefit contributions found due and 6 unpaid. The audit shall be conducted by MAY 5, 2011. For the Court’s contempt power to apply 7 to this injunction, defendants must “receive actual notice of it by personal service or otherwise.” 8 FRCP 65(d)(2). Plaintiffs are instructed to provide proper service of this order, by personal 9 service, no later than APRIL 21, 2011. Plaintiffs also shall file a copy of the proof of service. 11 For the Northern District of California United States District Court 10 IT IS SO ORDERED. 12 13 Dated: April 6, 2011 WILLIAM ALSUP UNITED STATES DISTRICT JUDGE 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 6
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