Board of Trustees, in their capacities as Trustees of the Laborers Health and Welfare Trust Fund For Northern California et al v. Brunk Industries, No. 3:2018cv04367 - Document 29 (N.D. Cal. 2018)

Court Description: ORDER GRANTING IN PART 20 MOTION FOR DEFAULT JUDGMENT. By Judge William Alsup. (whalc3, COURT STAFF) (Filed on 12/27/2018)
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Board of Trustees, in their capacities as Trustees of the Labor...lifornia et al v. Brunk Industries Doc. 29 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 THE BOARD OF TRUSTEES, in their capacities as trustees of the LABORERS HEALTH AND WELFARE TRUST FUND FOR NORTHERN CALIFORNIA; LABORERS PENSION TRUST FUND FOR NORTHERN CALIFORNIA; LABORERS VACATION-HOLIDAY TRUST FUND FOR NORTHERN CALIFORNIA; and LABORERS TRAINING AND RETRAINING TRUST FUND FOR NORTHERN CALIFORNIA, 16 17 18 19 20 No. C 18-cv-04367 WHA ORDER RE DEFAULT JUDGMENT Plaintiffs, v. BRUNK INDUSTRIES, a California Corporation, Defendant. / 21 INTRODUCTION 22 23 In this enforcement action brought under the Labor Management Relations Act and 24 Employee Retirement Income Security Act, plaintiffs seek entry of default judgment, an 25 award of outstanding employee benefit contributions, liquidated damages and interest, 26 reasonable attorney’s fees and cost of suit, an injunction requiring an audit of books and 27 records, and for the Court to retain jurisdiction (Dkt. No. 20). After carefully reviewing the 28 record, and having had the benefit of oral argument on December 20, 2018, the motion is GRANTED IN PART. Dockets.Justia.com 1 2 An independent employer, defendant Brunk Industries executed a series of agreements 3 with the Northern California District Council of Laborers (the “Union”). Defendant agreed to 4 be bound by all the obligations imposed by various Trust Agreements establishing each of the 5 Plaintiff Trust Funds. As part of these agreements, defendant promised it would pay plaintiffs 6 the hourly amounts required by the agreements for each hour paid for, or worked by, any of 7 the employees who performed any work covered by the agreements. Defendant did not 8 provide written notice (as the agreements require) to terminate its collective bargaining 9 agreement with the Union and so, the agreements continue to be in effect (Dkt. No. 1 ¶ 4, Ex. 10 A at Article II). More specifically, the agreements provide for prompt payments of all employer 11 For the Northern District of California United States District Court STATEMENT 12 contributions to the various Trust Funds. They also provide for liquidated damages, to 13 provide for payments to cover the damages incurred by the Trust Funds in the event of a 14 breach by the employer where it would have been impracticable to ascertain the losses to the 15 Trust Funds. The Trust Funds also provide for interest on all delinquent contributions, 16 attorney’s fees, other collection costs, and for the audit of the employers’ books and records to 17 permit the plaintiff to ascertain whether or not all fringe benefit contributions have been 18 timely paid as required by the agreements and applicable law. Each of the agreements 19 provide that upon request in writing by the board of trustees, an individual employer will 20 permit an auditor to enter the premises of the employer during business hours to examine and 21 copy books and records and other items, subject to additional limitations (Dkt. No. 1 ¶¶ 22 5–10). 23 The complaint, filed and served in July 2018, alleges that defendant submitted 24 electronic contribution reports setting forth the hours worked by the employees. 25 Nevertheless, defendant failed to pay contributions due for work performed by its employees 26 totaling $23,480.42 in fringe benefit contributions. These delinquent contributions arose from 27 work performed between July–October 2017. Plaintiffs requested defendant pay the 28 2 1 outstanding balance due. Defendant did not respond to the request. The proof of service and 2 executed summons were filed in August 2018. For the Northern District of California United States District Court 3 Defendant failed to answer or otherwise appear resulting in defendant’s default being 4 entered by the Clerk (Dkt. No. 15). Plaintiffs filed the present motion in November 2018, 5 requesting: (1) defendant be ordered to pay contributions in the amount of $25,106.06; (2) 6 defendant be ordered to pay actual damages according to proof; (3) defendant be ordered to 7 pay to plaintiffs their reasonable attorney’s fees in the amount of $6,831.00 and plaintiffs’ 8 costs of suit in the amount of $584.80; (4) defendant be permanently enjoined and required to 9 timely submit all required monthly contribution reports and contributions due and owing by 10 defendant to plaintiffs; and that (5) the Court retain jurisdiction to allow plaintiffs to seek 11 judgment for any amounts found due and owing as a result of the audit of defendant’s books 12 and records conducted after entry of this judgment (Dkt. No. 20 at 1–2). ANALYSIS 13 14 I. JURISDICTION AND SERVICE OF PROCESS. 15 When considering whether or not to enter a default judgment there is “an affirmative 16 duty to look into its jurisdiction over both the subject matter and the parties.” In re Tuli, 172 17 F.3d 707, 712 (9th Cir. 1999). Here, two federal statutes provide subject matter jurisdiction. 18 First, under 29 U.S.C. § 1132 which empowers ERISA plan fiduciaries to bring civil actions 19 to enforce plan terms. Second, under 29 U.S.C. § 185 which grants labor union organizations 20 power to sue employers in federal court. Requirements for personal jurisdiction are also met 21 because defendant is a California corporation that engages in business activities in the 22 Northern District of California. 23 There is an additional requirement to “assess the adequacy of the service of process on 24 the party against whom default is requested.” Bd. of Trs. of the N. Cal. Sheet Metal Workers 25 v. Peters, No. 00–0395, 2000 U.S. Dist. LEXIS 19065, at *2 (N.D. Cal. Jan. 2, 2001) (Judge 26 Vaughn Walker). Here, Preston Brunk, the co-occupant of the premises where the person 27 authorized to accept service of process resided, was personally served with the summons and 28 complaint (Dkt. Nos. 6 and 10). The service of process requirements have been satisfied. 3 1 2 For the Northern District of California United States District Court 3 II. DEFAULT JUDGMENT. After entry of default, a court may exercise its discretion to grant default judgment on 4 the merits of the case. See Aldabe v. Aldabe, 616 F.2d 1089, 1092 (9th Cir. 1980); see also 5 FRCP 55. The factual allegations of the complaint, except those concerning damages, are 6 deemed to have been admitted by the non-responding party and are taken as true. Geddes v. 7 United Fin. Grp., 559 F.2d 557, 560 (9th Cir. 1977). The following factors may be 8 considered in determining whether or not to enter default judgment: (1) the possibility of 9 prejudice to the plaintiff, (2) the merits of plaintiffs’ substantive claim, (3) the sufficiency of 10 the complaint, (4) the sum of money at stake in the action; (5) the possibility of a dispute 11 concerning material facts; (6) whether the default was due to excusable neglect, and (7) the 12 strong policy underlying the Federal Rules of Civil Procedure favoring decisions on the 13 merits. Eitel v. McCool, 782 F.2d 1470, 1471–72 (9th Cir. 1986). 14 The majority of the Eitel factors support default judgment. First, if this motion were 15 to be denied, then plaintiffs would likely be left without a remedy given defendant’s failure to 16 appear or otherwise defend this action. See Pepsico, Inc. v. Cal. Sec. Cans, 238 F. Supp. 2d 17 1172, 1176–77 (C.D. Cal. 2002) (Judge Nora Margaret Manella). Second, because defendant 18 has not answered the complaint or otherwise appeared in this action, the possibility of a 19 dispute concerning material facts is unknown. Third, plaintiffs properly served defendant and 20 there is no evidence in the record that defendant’s failure to appear and otherwise defend this 21 action was the result of excusable neglect. Fourth, the sum of money being sought by 22 plaintiffs is reasonable in that it is sought pursuant to a collective bargaining agreement and 23 plaintiffs seek amounts owed based on defendant’s specific contractual obligations under the 24 agreements to which it is bound. As such, because the amounts due are with respect to 25 defendant’s unfulfilled contract obligations and are reasonably proportionate to the harm 26 caused by defendant’s breach, this factor supports the entry of default judgment. Finally, 27 although the seventh Eitel factor, which favors decisions on their merits, weighs against 28 default judgment, this factor is not dispositive. 4 1 Having determined that on balance the Eitel factors discussed above support plaintiffs’ 2 motion, this order turns to the merits of plaintiffs’ substantive claims and the sufficiency of 3 the evidence (the second and third Eitel factors). These factors require plaintiffs to state a 4 claim on which it may recover. Danning v. Lavine, 572 F.2d 1386, 1388 (9th Cir. 1978). The 5 Complaint seeks a finding of liability as to defendant for the failure to remit payment of fringe 6 benefit contributions to the Trust Funds. The amounts sought by plaintiffs are based on contribution reports submitted by For the Northern District of California United States District Court 7 8 defendant. The Trust Funds and their counsel notified defendant of its outstanding 9 delinquency, but defendant failed to make payment of its delinquent contributions (also 10 despite mounting interest charges). These allegations are sufficient to state a claim under 11 Federal Rule of Civil Procedure 8(a). See 29 U.S.C. § 1145 (“Every employer who is 12 obligated to make contributions to a multiemployer plan under the terms of the plan or under 13 the terms of a collectively bargained agreement shall, to the extent not inconsistent with law, 14 make such contributions in accordance with the terms and conditions of such plan or such 15 agreement”). The claims are further substantiated by the factual record. Thus, accepting all 16 factual allegations as true, plaintiffs have stated a claim for relief. Defendant breached its agreement with plaintiffs when it failed to pay contributions 17 18 for the periods listed above. Defendant’s default triggered the filing of the instant suit for 19 recovery, in response to which defendant has taken no action. Based on the foregoing, 20 plaintiffs are entitled to default judgment on this claim against defendant. 21 III. 22 DAMAGES, AUDIT, AND ATTORNEY’S FEES. Under ERISA, an employee benefit plan that obtains judgment in its favor in an action 23 under 29 U.S.C. § 1132(g)(2) shall be entitled to the following forms of relief: (1) unpaid 24 contributions; (2) interest on the unpaid contributions; (3) liquidated damages, not in excess 25 of 20% of the unpaid contributions; (4) reasonable attorney’s fees and costs; and (5) other 26 legal or equitable relief in the discretion of the court. The Court must use its discretion and 27 consider plaintiffs’ requested relief in light of the statute. 28 5 1 A. 2 The complaint alleges damages in the sum of $25,106.06. These damages reflect 3 unpaid contributions in the following months: July 2017 ($2,144.36); August 2017 4 ($16,583.34); September 2017 ($5,515.38); and October 2017 ($863.04) (Dkt. Nos. 21-4; 21 5 at 5). Plaintiff has submit spreadsheets sent by defendant that assessed each monthly amount. For the Northern District of California 6 United States District Court Damages A number of numerical discrepancies exist. First, as alleged, the sum of the amounts 7 owed equals $25,106.12, not $25,106.06. Second, when taking a closer look at the amount 8 claimed for August 2017, a discrepancy exists between the Lauziere Declaration (Dkt. No. 9 21), the invoice, and plaintiff’s motion for default judgment. The complaint itself is silent as 10 to the individual monthly amounts claimed. In addition, plaintiffs’ motion does not apply any 11 damages analysis — instead relying on a block quote from the statute. 12 As reflected above, the declaration asserts the amount owed in August 2017 as 13 $16,583.34, which can be calculated by adding the figures in the invoice for August 2017 14 (Dkt. No. 21-4 at 4). But the amount hand-written on the invoice and the specific number 15 requested for August 2017 in the motion for default judgement is $14,957.64. Thus, despite 16 the discrepancy, this order adopts the $14,957.64 figure as the amount claimed as owed for 17 fringe benefit contributions in August 2017 as indicated by defendant’s purported self- 18 reporting. Plaintiffs will accordingly be granted damages in the adjusted amount of 19 $23,480.42 for the months July–October 2017 (consistent with the handwritten figure on the 20 invoice for August 2017 and the amounts specified in the motion for default judgment). 21 B. Audit and Continuing Jurisdiction. 22 Plaintiffs also seek to conduct a further audit of defendant’s records to discover 23 whether or not additional amounts are due. In addition, plaintiffs request that the Court retain 24 jurisdiction to ensure payment of any delinquent amounts discovered during such audit. 25 Where a collective bargaining agreement gives trustees of an employee benefit plan the right 26 to audit an employer’s books and records, it will be enforced. See Santa Monica Culinary 27 Welfare Fund v. Miramar Hotel Corp., 920 F.2d 1491 (9th Cir.1990). Additionally, in 28 ERISA cases, courts may retain jurisdiction to adjust the damages award following an audit. 6 1 See, e.g., Board of Trustees v. RBS Washington Blvd. LLC, No. 09-0660 WHA, 2010 WL 2 145097, at *6–7 (N.D. Cal. Jan. 8, 2010). 3 4 contributions to plaintiffs. Thus, defendant must submit to an audit to ensure compliance with 5 those agreements especially as related to properly substantiated additional delinquencies. 6 Still, for a district court’s contempt power to apply to this injunction, defendant must “receive 7 actual notice of it by personal service or otherwise.” FRCP 65(d)(2). Plaintiffs are thus 8 instructed to provide proper service of this order to defendant no later than JANUARY 24, 9 2019. Plaintiffs shall also file a copy of the proof of service no later than JANUARY 31, 2019. For the Northern District of California 10 United States District Court Defendant signed (and was therefore bound by) an employer agreement remitting Only after such service occurs and proof of service is filed will the injunction take effect. 11 C. Attorney’s Fees and Costs. 12 Plaintiffs reasonably request $6,831.00 in fees and $584.80 in costs. The agreement 13 provides that if an employer fails to abide by the terms of the agreement with regard to fringe 14 benefit payment, and legal consultation is sought by the board of trustees, reasonable 15 attorney’s fees, costs and all other expenses incurred in enforcing collection will be paid by 16 the delinquent employer. Based on this explicit contractual term, defendant should be held 17 liable for reasonable cost of attorney’s fees and costs incurred by the plaintiffs in seeking to 18 collect the delinquencies and compel the audit at issue. See Kemner v. District Council of 19 Painting and Allied Trades No. 36, 768 F. 2d 1115, 1120 (9th Cir. 1985). Furthermore, under 20 ERISA, the plaintiffs are entitled to a mandatory award of attorney’s fees. 29 U.S.C. 21 1132(g)(2)(D). 22 Plaintiffs have also substantiated their request with a declaration, attached exhibits, 23 and a detailed ledger. The ledger clearly explains the amount of time expended (17.65 hours), 24 and the declaration sets out the qualifications of the attorneys and paralegals who performed 25 work on the case. 26 27 28 7 1 CONCLUSION 2 Based on the foregoing, the motion for default judgment is GRANTED IN PART. 3 Default judgment is hereby entered in favor of plaintiffs in the amount of $23,480.42 in 4 damages, $6,831.00 in fees, and $584.80 in costs. Judgment will be entered separately. 5 6 GRANTED to the following extent: by no later than JANUARY 24, 2019, plaintiffs are 7 instructed to provide proper service of this order to defendant; by no later than JANUARY 31, 8 2019, plaintiffs shall file a copy of the proof of service; and by MAY 31, 2019, defendant is 9 required to submit to an audit. Only once service occurs and proof of service is filed will the 10 injunction take effect. 11 For the Northern District of California United States District Court In addition, plaintiffs’ requests for injunctive relief and continued jurisdiction are 12 IT IS SO ORDERED. 13 14 Dated: December 27, 2018. WILLIAM ALSUP UNITED STATES DISTRICT JUDGE 15 16 17 18 19 20 21 22 23 24 25 26 27 28 8