Board of Trustees of the San Diego Electrical Pension Trust et al v. My Electrician Inc., No. 3:2019cv01500 - Document 31 (S.D. Cal. 2021)
Court Description: ORDER Granting in Part and Denying in Part Plaintiffs' 24 Motion for Summary Judgment. The Court hereby vacates the hearing on this matter scheduled for January 29, 2021. Signed by Judge Gonzalo P. Curiel on 1/26/21. (dlg)
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Board of Trustees of the San Diego Electrical Pension Trust et al v. My Electrician Inc. Doc. 31 Case 3:19-cv-01500-GPC-AHG Document 31 Filed 01/26/21 PageID.1609 Page 1 of 19 1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 SOUTHERN DISTRICT OF CALIFORNIA 10 11 12 BOARD OF TRUSTEES OF THE SAN DIEGO ELECTRICAL PENSION TRUST, et al., 13 14 15 16 Case No.: 19-cv-1500-GPC-AHG ORDER GRANTING IN PART AND DENYING IN PART PLAINTIFFS’ MOTION FOR SUMMARY JUDGMENT Plaintiffs, v. MY ELECTRICIAN, INC., a California Corporation, [ECF No. 24] Defendant. 17 18 19 Before this Court is Plaintiffs’ Motion for Summary Judgment (“MSJ”), ECF No. 20 24. Defendant filed a Response, ECF No. 27, and Plaintiffs filed a Reply, ECF No. 29. 21 For reasons discussed below, the Court GRANTS IN PART and DENIES IN PART 22 Plaintiffs’ Motion. Specifically, the Court finds Defendant liable under the Employee 23 Retirement Income Security Act of 1974 (“ERISA”), and thus Plaintiffs are summarily 24 entitled to $16,192.25 in damages and $4,822.44 in litigation costs. However, Plaintiffs 25 have failed to meet their burden of proof in demonstrating that the suggested $22,705.00 26 in attorney’s fees is reasonable. 27 28 1 19-cv-1500-GPC-AHG Dockets.Justia.com Case 3:19-cv-01500-GPC-AHG Document 31 Filed 01/26/21 PageID.1610 Page 2 of 19 1 I. BACKGROUND 2 A. The Trust Funds and Their Relationship with Defendant 3 The “Trust Funds” consist of the San Diego Electrical Pension Trust (“Pension 4 Trust”) and the San Diego Electrical Health & Welfare Trust (“H&W Trust”). See Def.’s 5 Separate Statement Opp’n Pls.’ Undisputed Material Facts (“UF”) No. 4, ECF No. 28. 6 The Trust Funds obtain fringe benefit contributions. These contributions come 7 from two different sources: (1) employers who sign collective bargaining agreements 8 with the International Brotherhood of Electrical Workers, Local 569 (“Local 569”); and 9 (2) employers who are obligated to make contributions pursuant to non-bargaining 10 project agreements. Id. UF No. 6. Defendant’s relationship with the Trust Funds stems 11 from the second category. Defendant entered into a Letter of Assent to be bound by the 12 San Diego Unified School District Project Stabilization Agreement Construction and 13 Major Rehabilitation Funded by Proposition S (“PSA”). Id. UF No. 18. 14 The PSA incorporates by reference certain parts of Local 569’s collective 15 bargaining agreements, including the Inside Agreement 2015-2020 International 16 Brotherhood of Electrical Workers AFL-CIO Covering San Diego and Imperial Counties 17 California (“Inside Agreement”). Id. UF Nos. 19, 20. This Inside Agreement 18 incorporates the Agreements in the Trust Funds, specifically the Agreement for the 19 Pension Trust and the Agreement for the H&W Trust (the two Agreements collectively 20 referred to as the “Trust Agreements”). See id. UF Nos. 4, 21. 21 B. The Terms of the Agreements 22 By the PSA incorporating the Inside Agreement—which in turn incorporates the 23 Trust Agreements—Defendant had certain obligations to the Trust Funds, such as making 24 fringe benefit contributions to the Trust Funds. At issue is the precise extent of these 25 obligations. Below, the Court first outlines the big picture of the obligations and the 26 resultant penalties from the failure to comply with the obligations. 27 28 2 19-cv-1500-GPC-AHG Case 3:19-cv-01500-GPC-AHG Document 31 Filed 01/26/21 PageID.1611 Page 3 of 19 1 2 1. Obligations Employers contributing to the Trust Funds receive Contribution Report Forms to 3 self-report the hours worked by their employees for the month. Each month, the 4 employer must complete the Contribution Report Form with all hours worked by its 5 employees, and submit the Form along with the resultant monthly contribution payments. 6 See id. UF Nos. 7, 8. Specifically, the Inside Agreement requires the employer to self- 7 report monthly fringe benefit contributions to the Trust Funds based on the hours worked 8 by the employees for “on-site construction work of the type covered by this Agreement.” 9 See id. UF No. 22; see also Decl. Andy Berg Ex. F at 7–8, ECF No. 24-1 (Article II, 10 Section 2.06(a) of the Inside Agreement). 11 To ensure that the contributing employers properly pay all necessary contributions, 12 the Trust Funds conduct audits of the employers’ payroll records through an independent 13 audit firm. UF No. 11, ECF No. 28. The terms of the Trust Agreements require the 14 contributing employers to comply with the audit requests by the Trust Funds. Id. UF No. 15 12; see also Decl. Andy Berg Ex. A at 34, ECF No. 24-1 (Article X, Section 5 of the 16 H&W Trust Agreement). 17 18 2. Penalties The Trust Agreements authorize the trustees of the Trust Funds to adopt collection 19 and audit procedures. Accordingly, the trustees of the Trust Funds have adopted the 20 Audit Policy and Procedures, and the Collection Policy and Procedures. Id. UF Nos. 5, 21 13. Under the Audit Policy and Procedures, if the audit determines that there are 22 contribution deficiencies amounting to $1,000 or greater, the contributing employers shall 23 be billed for the audit fees. Id. UF No. 13; see also Decl. Andy Berg Ex. D at 11, ECF 24 No. 24-1 (Section IX.(C)). 25 26 27 28 If the audit discloses any underreporting by the employer, the employer shall be chargeable for the underreported amount and any delinquency charges. UF No. 24, ECF 3 19-cv-1500-GPC-AHG Case 3:19-cv-01500-GPC-AHG Document 31 Filed 01/26/21 PageID.1612 Page 4 of 19 1 No. 28. Pertaining to the employer’s potential monetary charges, the Collection Policy 2 and Procedures discuss the collection of: (1) delinquent contributions; (2) the assessment 3 of liquidated damages and interests; and (3) the recovery of attorney’s fees and audit fees. 4 Id. UF No. 5. 5 Liquidated damages are assessed at the greater of $150 or 10% of the monthly 6 contribution delinquency or any unpaid portion thereof, not to exceed $750 per month. 1 7 And if the Trust Funds file a lawsuit, liquidated damages are assessed at the greater of 8 $150 or 20% of the delinquency, with no maximum. Id. UF No. 9; see also Decl. Andy 9 Berg Ex. C, ECF No. 24-1 (Section II.(E) of the Collection Policy and Procedures). 10 Unpaid contributions incur interest at the annual rate of ten percent (10%) per 11 annum, starting from the delinquency date until the date the payment is received. UF No. 12 10, ECF No. 28; see also Decl. Andy Berg Ex. C, ECF No. 24-1 (Section II.(F) of the 13 Collection Policy and Procedures). 14 Finally, Section VIII of the Collection Policy and Procedures discusses attorney’s 15 fees: “Whenever attorney’s fees are incurred as a result of a Contributing Employer’s 16 failure to pay contributions, interest, or liquidated damages, such Contributing Employer 17 shall be held liable for any attorney’s fees and costs and audit fees incurred.” Decl. Andy 18 Berg Ex. C, ECF No. 24-1. 19 C. The Audit Over Defendant’s Reports and the Alleged Deficiencies 20 Defendant submitted its Contribution Report Forms and the related contribution 21 payments for the covered work under the PSA, specifically for the months of July 2017 22 through May 2018. UF No. 25, ECF No. 28. Defendant reported a total of four (4) hours 23 24 1 25 26 27 28 While UF No. 9 states “any paid portion therefore,” ECF No. 28, the underlying document supporting the UF indicates that “any unpaid portion thereof” is correct. Decl. Andy Berg Ex. C, ECF No. 24-1 (discussing how liquidated damages shall be assessed of the monthly delinquent contribution “or any unpaid portion thereof”). 4 19-cv-1500-GPC-AHG Case 3:19-cv-01500-GPC-AHG Document 31 Filed 01/26/21 PageID.1613 Page 5 of 19 1 of covered work, attributed to Mr. Brian Alston as an “Inside Wireman,” id., a job 2 generally considered as requiring the reporting of hours under the Inside Agreement, id. 3 UF Nos. 22, 26, 41. Mr. Alston, a certified journeyman electrician, owns the Defendant 4 corporation. He is also Defendant corporation’s Responsible Managing Officer, CEO, 5 and President. Id. UF No. 16. In September 2018,2 the Trust Funds referred Defendant to Alsweet Associates 6 7 (“Alsweet”) for an audit of Defendant’s payroll records. Initially the audit was over the 8 period October 2017 through December 2017. The audit later expanded to July 2017 9 through May 2018. Id. UF No. 29. 10 As declared by the main auditor involved in this dispute, Alsweet’s standard 11 procedure for auditing project agreements such as the PSA is to review the employer’s 12 certified payroll records that were submitted to the California Labor Commissioner and 13 the California Department of Industrial Relations. Id. UF No. 32. At first, complications 14 existed in obtaining Defendant’s certified payroll records, and the parties dispute the 15 cause of the complications. See id. UF Nos. 35, 36. In August 2019, Plaintiffs filed their 16 Complaint. ECF No. 1. Subsequently, Defendant provided the certified payroll records, 17 and Alsweet reviewed the records as part of the audit. See UF Nos. 37–39, ECF No. 28. 18 Alsweet determined that while Defendant properly reported its employees’ hours 19 to the Trust Funds, Defendant under-reported the hours for Mr. Alston. Id. UF No. 40. 20 According to Alsweet, Defendant should have reported the hours Mr. Alston worked 21 under the PSA, especially since Mr. Alston classified himself in the payroll records as an 22 “Inside Wireman.” Id. UF No. 41. 23 24 25 26 27 28 2 While UF No. 29 states the referral occurred in “September 2019,” ECF No. 28, the underlying document supporting the UF indicates that the correct date was September 2018. Decl. Zachary Gelbart ¶ 6, ECF No. 24-5. 5 19-cv-1500-GPC-AHG Case 3:19-cv-01500-GPC-AHG Document 31 Filed 01/26/21 PageID.1614 Page 6 of 19 1 Defendant challenges the above conclusion. According to Defendant, no 2 obligation existed for Mr. Alston to report his hours under the PSA at all since all of his 3 work was non-manual and supervisory in nature. In fact, Defendant averred that Mr. 4 Alston’s self-classification of “Inside Wireman” on the payroll records was a mistake. 5 Id. UF No. 43. 6 On December 4, 2020, Plaintiffs moved for summary judgment. MSJ, ECF No. 7 24. On December 31, 2020, Defendant filed its Response, 3 and on January 13, 2021, 8 Plaintiffs filed their Reply. ECF Nos. 27, 29. Plaintiffs ultimately argue that they are 9 entitled to $43,719.69. Part of the entitlement is $22,705.00 in attorney’s fees. MSJ 10 Mem. 25, ECF No. 24. Defendant does not dispute the calculations reached that are 11 based on Plaintiffs’ theory of liability. Instead, Defendant primarily challenges the 12 underlying theory of liability, i.e. the nature of the work performed by Mr. Alston. See 13 Resp. 9, ECF No. 27. In addition, Defendant argues that the attorney’s fees, amounting 14 to “nearly 343% of the under-reported contributions,” are unreasonable. Id. at 14. 15 II. 16 LEGAL STANDARD Summary judgment is appropriate under Federal Rule of Civil Procedure 56(c) “if 17 the pleadings, depositions, answers to interrogatories, and admissions on file, together 18 with the affidavits, if any, show that there is no genuine issue as to any material fact and 19 that the moving party is entitled to a judgment as a matter of law.” Celotex Corp. v. 20 Catrett, 477 U.S. 317, 322 (1986). A fact is material when it “might affect the outcome 21 of the suit.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). 22 /// 23 24 25 26 27 28 3 The Court declines to grant Defendant’s Request for Judicial Notice, ECF No. 27-1, since the Court did not need to rely on the underlying documents. See Fed. R. Evid. 1002 (discussing the Best Evidence Rule). 6 19-cv-1500-GPC-AHG Case 3:19-cv-01500-GPC-AHG Document 31 Filed 01/26/21 PageID.1615 Page 7 of 19 1 The initial burden of establishing the absence of any genuine issues of material fact 2 falls on the moving party. Celotex, 477 U.S. at 323. The movant can satisfy this burden 3 in two ways: (1) by presenting evidence that negates an essential element of the non- 4 moving party’s case; or (2) by demonstrating that the non-moving party failed to make a 5 showing sufficient to establish an element essential to that party’s case on which that 6 party will bear the burden of proof at trial. See id. at 322–23. In such cases, “there can 7 be ‘no genuine issue as to any material fact,’ since a complete failure of proof concerning 8 an essential element of the nonmoving party’s case necessarily renders all other facts 9 immaterial.” Id. 10 Once the moving party has satisfied its initial burden, the non-moving party cannot 11 rest on the mere allegations or denials of its pleading. The non-moving party must “go 12 beyond the pleadings and by her own affidavits, or by the ‘depositions, answers to 13 interrogatories, and admissions on file,’ designate ‘specific facts showing that there is a 14 genuine issue for trial.’” Id. at 324. The non-moving party may meet this requirement by 15 presenting evidence from which a reasonable jury could find in its favor, viewing the 16 record as a whole, in light of the evidentiary burden the law places on that party. See 17 Triton Energy Corp. v. Square D Co., 68 F.3d 1216, 1221–22 (9th Cir. 1995). In 18 determining whether there are any genuine issues of material fact, the court must “view[] 19 the evidence in the light most favorable to the nonmoving party.” Fontana v. Haskin, 20 262 F.3d 871, 876 (9th Cir. 2001) (citation omitted). 21 III. DISCUSSION 22 The parties agree on most of the issues. First, all parties agree that ERISA applies 23 to this dispute, since within the meaning of ERISA, the Trust Funds are “employee 24 benefit plans” and “multi-employer plans,” and Defendant is an “employer.” See UF 25 Nos. 1, 14, ECF No. 28. The Court agrees too. See 29 U.S.C. § 1002(3), (5), (37)(A). 26 Further, the parties agree that ERISA presents a statutory duty to make all required 27 28 7 19-cv-1500-GPC-AHG Case 3:19-cv-01500-GPC-AHG Document 31 Filed 01/26/21 PageID.1616 Page 8 of 19 1 2 3 4 5 contribution payments, MSJ Mem. 11, ECF No. 24; Resp. 10, ECF No. 27: Every 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. 6 29 U.S.C. § 1145. Finally, as discussed supra Section I.B, the parties agree that 7 Defendant must adhere to the terms of the Trust Agreements, which list Defendant’s 8 obligations and potential monetary penalties if Defendant failed to comply. One of those 9 obligations is that on-site work, such as working with tools in the capacity as an “inside 10 wireman” and in contrast to a non-manual supervisory position, is “covered” work and 11 therefore must be reported to the Trust Funds. See Resp. 8, 10, 12–13, ECF No. 27. 12 There are three core disagreements in this case: (1) whether Defendant “under- 13 reported” Mr. Alston’s hours; (2) the circumstances behind the auditor’s inability to 14 initially review the records; and (3) the reasonableness of Plaintiffs’ requested attorney’s 15 fees. Upon addressing each, the Court concludes that Plaintiffs are entitled to damages 16 resulting from Defendant under-reporting 496.5 hours, which amount to $16,192.25. 17 Further, the Court concludes that Plaintiffs are entitled to the litigation costs amounting to 18 $4,822.44, as such costs were required to prosecute the case. However, the Court sides 19 with Defendant that Plaintiffs failed to meet their burden justifying $22,705.00 in 20 attorney’s fees. 21 A. 22 The first dispute concerns whether Mr. Alston under-reported his hours when “Under-Reporting” Mr. Alston’s Work and the Burden of Proof 23 Defendant claims those hours were not included because they were non-manual 24 supervisory work. Pursuant to the shifting burden of proof established under ERISA and 25 for summary judgment, Defendant must provide a credible record to demonstrate that 26 under-reporting has not occurred. Since Defendant failed to meet this burden, Plaintiffs 27 28 8 19-cv-1500-GPC-AHG Case 3:19-cv-01500-GPC-AHG Document 31 Filed 01/26/21 PageID.1617 Page 9 of 19 1 are entitled to damages relating to the under-reported hours by Defendant. 2 The Ninth Circuit has adopted a burden-shifting framework for ERISA disputes 3 over the records of the employee’s working hours. Brick Masons Pension Tr. v. Indus. 4 Fence & Supply, Inc., 839 F.2d 1333, 1337–39 (9th Cir. 1988); see also Estate of Barton 5 v. ADT Sec. Servs. Pension Plan, 820 F.3d 1060, 1068 (9th Cir. 2016) (citing Brick 6 Masons, 839 F.2d at 1337–39). The burden-shifting framework stems from ERISA’s 7 requirement under 29 U.S.C. § 1059(a)(1) for employers to keep records sufficient to 8 determine the benefits due. Brick Masons, 839 F.2d at 1338. 9 And under this framework, once Plaintiffs prove the fact of damages and 10 Defendant’s failure to keep adequate records, the burden shifts to Defendant to present 11 evidence of the extent of covered work performed by its employees. Id. at 1338–39; cf. 12 Motion Picture Indus. Pension & Health Plans v. N.T. Audio Visual Supply, Inc., 259 13 F.3d 1063, 1066 (9th Cir. 2001) (applying the Brick Masons standard: “once [Plaintiffs] 14 show 1) that [Defendant] failed to keep adequate records, and 2) that there exist some 15 employees who (a) performed covered work that was (b) unreported to the trust funds, 16 then the burden shifts to [Defendant] to show the extent of the unreported covered work 17 for those employees”). 18 Here, Plaintiffs have met the initial burden. Plaintiffs have presented a Declaration 19 from the lead auditor in the instant audit. 4 Decl. Zachary Gelbart, ECF No. 24-5. The 20 auditor has articulated: his credentials, his methodology, his basis for relying on the 21 22 23 24 25 26 27 28 4 Defendant initially presents a two-sentence assertion possibly challenging the credibility of the auditor. Resp. 7, ECF No. 27 (“The Auditor is not a third party mediator let alone an administrative body. The Auditor works on behalf of the Trust Funds.”). But Defendant fails to provide any further explanation or evidence demonstrating the auditor’s bias or partiality. In fact, Defendant concurs with the auditor’s competence. See id. at 11. Absent more, the Court declines to disclaim the auditor’s declaration. 9 19-cv-1500-GPC-AHG Case 3:19-cv-01500-GPC-AHG Document 31 Filed 01/26/21 PageID.1618 Page 10 of 19 1 certified payroll records over other record documents, the information that these records 2 provide (including the type of work of the individual), the alleged discrepancy in the 3 reported hours, and the damages calculations resulting from the under-reporting. See, 4 e.g., id. ¶¶ 1–5, 17–21, 27, 29. 5 Defendant’s response to ERISA’s burden-shifting framework and Plaintiffs’ 6 demonstration of the initial burden is that the certified payroll records, daily reports, 7 timecards, and contribution records prove that adequate records exist, and that the auditor 8 disregarded the documents other than the certified payroll records. Resp. 11, ECF No. 9 27. Yet Defendant has not provided any evidentiary support for its response, such as why 10 these other records are adequate or more persuasive than the certified payroll records. 11 Defendant’s brief merely asserts so. Not only does this fail to meet the burden of 12 persuasion under Brick Masons, it fails to meet the evidentiary standard for Defendant to 13 survive summary judgment. Cf. Hexcel Corp. v. Ineos Polymers, Inc., 681 F.3d 1055, 14 1063 (9th Cir. 2012) (“‘[C]onclusory, self-serving affidavit[s], lacking detailed facts and 15 any supporting evidence,’ are insufficient to create a genuine issue of material fact.” 16 (alterations in original) (quoting FTC v. Publ’g Clearing House, Inc., 104 F.3d 1168, 17 1171 (9th Cir. 1997)). 18 In fact, Defendant’s own descriptions and recollections of these documentations 19 prove the auditor’s (and by extension, Plaintiffs’) point: the certified payroll records are 20 far more reliable because these forms are submitted to the government, signed by the 21 submitting employer under penalty of perjury as to their accuracy. Decl. Zachary Gelbart 22 ¶ 4, ECF No. 24-5. In contrast, the other submitted documents are: 23 1. Missing particular periods of time, see Decl. Tino X. Do Ex. J (Dep. 24 Brian M. Alston) at 46:15–20, ECF No. 24-4; Resp. 12, ECF No. 27 25 (“My Electrician has acknowledged that it cannot locate all Daily 26 Reports, it is only missing a few.”); 27 28 10 19-cv-1500-GPC-AHG Case 3:19-cv-01500-GPC-AHG Document 31 Filed 01/26/21 PageID.1619 Page 11 of 19 1 2. Subject to the supervisor’s discretion as to the contents, see Decl. 2 Tino X. Do Ex. J (Dep. Brian M. Alston) at 55:13–23, ECF No. 24-4 3 (“There’s some days where I’ll show up in the morning and I’ll leave. 4 However, I’ll still write my name down for that project because I want 5 my time allotted to that particular project.”); see also id. at 63:3–64:8; 6 3. Inconsistent and conflicting with each other due to Mr. Alston’s 7 position in the Defendant corporation, see id. at 61:3–12 (discussing 8 how the time stated in the daily reports for Mr. Alston will vary from 9 the separate time cards); see also id. at 64:9–14 (“I [Mr. Alston] don’t 10 believe the daily reports apply to me because they’re not an accurate 11 assessment of what I do during the day.”); and 12 4. Of questionable accuracy and completeness, see, e.g., id. at 58:8–15 13 (“I could have been [at the Morse project site on November 13, 2017] 14 or I could have not been. I’m not sure.”). 15 Given the host of concerns over Defendant’s other documents, Defendant’s 16 challenge to the certified payroll records is unavailing. Defendant attempts to distinguish 17 the employee’s payment versus the nature of the work performed by that employee. See 18 Resp. 6, ECF No. 27 (“The CPRs merely state what was paid to and on behalf of the 19 employee listed in the report, not the nature of the work actually performed.”). The 20 problem, however, is that Defendant provides the Court with no alternative basis to 21 assess how much time Mr. Alston actually worked in his non-supervisory capacity— 22 which he clearly did at least occasionally, see, e.g., id. at 11–13 (“Brian Alston does from 23 time to time perform work in the field.”). The other documents provide zero guidance 24 due to defects discussed in the previous paragraph, and Defendant admits that no direct 25 document exists to assess the extent of Mr. Alston’s supervision during the project (so 26 that the Court can clearly distinguish supervision from on-site work), id. at 9. 27 28 11 19-cv-1500-GPC-AHG Case 3:19-cv-01500-GPC-AHG Document 31 Filed 01/26/21 PageID.1620 Page 12 of 19 1 The issue is not whether Defendant had an obligation to report Mr. Alston’s 2 supervisory work to Plaintiffs. Cf. id. at 8. Instead, to the extent that Mr. Alston 3 performs both supervisory duties and on-site work, Defendant should be able to present 4 credible evidence that partitions the two functions and itemizes the hours accordingly. 5 Defendant’s brief presents no such evidence other than those that even Defendant 6 admitted are imprecise due to Mr. Alston’s position in the corporation. 7 With no other way to assess how long Mr. Alston worked in his “inside wireman” 8 capacity, the Court must rely on the certified payroll records (which provides the most 9 credible framing of the events),5 or conclude that no “adequate” record exists on the 10 hours Mr. Alston worked under his “employee” role, see Brick Masons, 839 F.2d at 1337. 11 Either way, Defendant has failed to meet its burden of persuasion—both under the Brick 12 Masons framework and the legal standard for summary judgment on a disputed issue, see 13 Celotex Corp. v. Catrett, 477 U.S. 317, 324 (1986) (requiring Defendant to show 14 “specific facts” beyond the pleadings to prove a genuine factual dispute at the summary 15 judgment phase). Therefore, there is no genuine dispute that Plaintiffs are entitled to the 16 damages resulting from Defendant under-reporting 496.5 hours of Mr. Alston’s work. 17 B. The Auditors’ Ability to Review Defendant’s Records 18 Next, the Court addresses Defendant’s assertion that the auditor was at fault in the 19 initial inability to review Defendant’s records. See Resp. 6, 9, 14, ECF No. 27. This is a 20 material issue that the Summary Judgment Order must address, because the Court’s 21 decision on it will directly impact what Defendant owes to Plaintiffs. That is, if the 22 23 24 25 26 27 28 5 The fact that the secretary who prepared the certified payroll records was unaware of the nature of Mr. Alston’s work, see Resp. 13, ECF No. 27, also does not help Defendant’s cause. Mr. Alston had the option to certify that he worked as a “Supervisor,” but he chose not to. UF No. 55, ECF No. 28. Ultimately, Mr. Alston has certified under penalty of perjury that he was compensated as an “Inside Wireman.” 12 19-cv-1500-GPC-AHG Case 3:19-cv-01500-GPC-AHG Document 31 Filed 01/26/21 PageID.1621 Page 13 of 19 1 trouble behind Alsweet’s access to Defendant’s payroll records was wholly Alsweet’s 2 fault, the justification behind Plaintiffs’ lawsuit would become more tenuous. See Decl. 3 Andy Berg Ex. C, ECF No. 24-1 (compelling the employer to pay all attorney’s fees and 4 audit fees if the Trust Fund “is required to file a lawsuit to enforce [the employer’s] 5 obligation to comply with an audit,” under Section VIII of the Collection Policy and 6 Procedures); UF No. 9, ECF No. 28 (discussing liquidated damages assessed at a greater 7 amount upon the Trust Funds filing a lawsuit). 8 But again, Defendant’s brief only cites to Plaintiffs’ own MSJ Memorandum, and 9 does not provide evidentiary support: (1) that “the Auditor failed to schedule a visit to 10 review My Electrician’s records,” Resp. 6, ECF No. 27, (2) that “The Auditor failed to 11 appear or coordinate a time for the review of the records,” id. at 9, or (3) that “Defendant 12 made all records available to the Auditors prior to the commencement of this action and 13 the Auditor refused and/or failed to come to My Electrician’s office to review the 14 records,” id. at 14. 15 In contrast, the auditor from Alsweet has declared he received emails that twice 16 declined to provide access to Defendant’s certified payroll records, which was the reason 17 he canceled the scheduled audit and declined to schedule one later. Decl. Zachary 18 Gelbart ¶¶ 9, 11, ECF No. 24-5. The auditor has testified why the certified payroll 19 records are essential to the audit. See id. ¶ 4–5. Therefore, it makes sense that Alsweet 20 cancelled the scheduled audits when the records essential to conduct the audit were 21 unavailable to them. Defendant’s “attempts” to coordinate an audit are hollow gestures 22 when the auditor has explained why an audit without the certified payroll records would 23 have been meaningless. 24 Accordingly, Defendant owes Plaintiffs attorney’s fees, audit fees, and the 20% 25 liquidated damages since the complications relating to the audit arose from Defendant 26 denying access to the certified payroll records. Whether Defendant ultimately cooperated 27 28 13 19-cv-1500-GPC-AHG Case 3:19-cv-01500-GPC-AHG Document 31 Filed 01/26/21 PageID.1622 Page 14 of 19 1 with Plaintiffs and provided the certified payroll records matters little in the Court’s 2 decision. After the lawsuit commenced, Defendant had an obligation to comply with 3 discovery. 4 C. Plaintiffs’ Entitled Award 5 The final issue between the parties is how much Defendant owes Plaintiffs. 6 Specifically, Defendant challenges the amount Plaintiffs are asking in attorney’s fees. 7 Resp. 14, ECF No. 27. The Court agrees with Plaintiffs that they are entitled to 8 $16,192.25 in damages and $4,822.44 in litigation costs. However, Plaintiffs have failed 9 to meet their burden of proof for summary judgment on attorney’s fees. Providing an 10 itemized breakdown of each task performed by the attorneys and paralegals, in addition 11 to an explanation on the reasonableness of the paralegals’ rates, are needed for the Court 12 to summarily determine the reasonableness of the attorney’s fees. 13 14 1. Damages “Defendant does not dispute that the Auditor reached its conclusion through the 15 means and methods described in Plaintiffs’ Motion.” Resp. 9, ECF No. 27. With the 16 Court agreeing with Plaintiffs’ theory of liability, supra Sections III.A, B, it also agrees 17 with the auditor’s damages calculations: 18 19 20 21 22 23 Contributions Dues Liquidated Damages (20% of Delinquent Contributions) Audit Fee Interest (10% through 12/4/20) Total Amount Due $6,604.70 $966.31 $1,320.94 $5,250.00 $2,050.30 $16,192.25 24 Decl. Zachary Gelbart ¶ 30, ECF No. 24-5; MSJ Mem. 25, ECF No. 24. The award listed 25 above is mandatory and not discretionary. 29 U.S.C. § 1132(g)(2) (discussing how the 26 court “shall” award unpaid contributions, interest, liquidated damages, and “such other 27 28 14 19-cv-1500-GPC-AHG Case 3:19-cv-01500-GPC-AHG Document 31 Filed 01/26/21 PageID.1623 Page 15 of 19 1 legal or equitable relief”); Operating Engineers Pension Tr. v. Beck Eng’g & Surveying 2 Co., 746 F.2d 557, 569 (9th Cir. 1984) (citation omitted) (“It is settled Ninth Circuit law 3 that this provision [Section 1132(g)(2)] is mandatory and not discretionary.”). Further, 4 Defendant is contractually obliged to pay such amount under the Trust Agreements. 2. 5 6 Attorney’s Fees and Costs Plaintiffs also seek $22,705.00 in attorney’s fees, and $4,822.44 in costs expended 7 over the litigation. MSJ Mem. 20, ECF No. 24. Defendant describes such attorney’s fees 8 as unreasonable. Resp. 14, ECF No. 27. Under the legal standard for a summary 9 judgment motion and for demonstrating the reasonableness of attorney’s fees, the movant 10 bears the burden of proof. However, Plaintiffs have failed to (1) provide an itemized, by- 11 the-hour description of the work performed by counsel and the paralegals; and (2) justify 12 the reasonableness of the paralegal rates. As such, the Court finds that Plaintiffs have 13 failed to meet their initial burden. Further, as argued by Defendant, attorney’s fees 14 almost 3.5 times greater than the originally challenged contribution amount are 15 unreasonable on the record before the Court. 16 In the instant ERISA lawsuit to enforce delinquent contributions to a multi- 17 employer plan, the Court must award “reasonable attorney’s fees and costs of the action, 18 to be paid by the defendant.”6 29 U.S.C. § 1132(g)(2)(D). Upon reviewing the litigation 19 20 21 22 23 24 25 26 27 28 6 Plaintiffs imply that the Inside Agreement and the Trust Agreement may provide an independent basis for attorney’s fees. See MSJ Mem. 20, ECF No. 24. After all, Section VIII of the Collection Policy and Procedures states that if the Trust Funds are “required to file a lawsuit to enforce a Contributing Employer’s obligation to comply with an audit,” the employer must pay “all” the attorney’s fees and audit fees incurred, “even if no amounts are found due on the audit.” Decl. Andy Berg Ex. C, ECF No. 24-1. With no additional support for such claim, however, the Court declines to award attorney’s fees on this basis. Plaintiffs have not articulated whether such unilateral attorney’s fees provisions are enforceable under California law. Cf. Monster, LLC v. Superior Court, 12 15 19-cv-1500-GPC-AHG Case 3:19-cv-01500-GPC-AHG Document 31 Filed 01/26/21 PageID.1624 Page 16 of 19 1 costs, see Decl. Tino X. Do Ex. M, ECF No. 24-4, the Court agrees that Plaintiffs are 2 entitled to $4,822.44, as such fees were necessary to proceed with the lawsuit. 3 As to an attorney’s fees award, its reasonableness is first determined by calculating 4 the lodestar amount. “The ‘lodestar’ is calculated by multiplying the number of hours the 5 prevailing party reasonably expended on the litigation by a reasonable hourly rate.” 6 Morales v. City of San Rafael, 96 F.3d 359, 363 (9th Cir. 1996) (citation omitted), 7 opinion amended on denial of reh’g, 108 F.3d 981 (9th Cir. 1997). “The party seeking 8 fees bears the burden of documenting the hours expended in the litigation and must 9 submit evidence supporting those hours and the rates claimed.” Welch v. Metro. Life Ins. 10 Co., 480 F.3d 942, 945–46 (9th Cir. 2007) (citation omitted). 11 At the same time, the Court may deviate from the lodestar figure upon considering 12 twelve guideline factors. Kerr v. Screen Extras Guild, Inc., 526 F.2d 67, 70 (9th Cir. 13 1975), abrogated on other grounds. After all, the trial court’s “superior understanding of 14 the litigation” puts it in the best position to determine the reasonableness of the fees and 15 potentially reduce the final attorney’s fees awarded. Van Gerwen v. Guarantee Mut. Life 16 Co., 214 F.3d 1041, 1047 (9th Cir. 2000). The Court only needs to discuss the Kerr 17 factors that are relevant to the Court’s decision to deviate from the lodestar amount. 18 D’Emanuele v. Montgomery Ward & Co., 904 F.2d 1379, 1386 (9th Cir. 1990), overruled 19 on other grounds. 20 With the above principles in mind, the Court starts with reviewing the lodestar 21 amount presented by Plaintiffs. Plaintiffs’ counsel has provided the calculation below: 22 /// 23 24 25 26 27 28 Cal. App. 5th 1214, 1225 (2017) (discussing that the purpose of California Civil Code § 1717 is “to prevent the oppressive use of one-sided attorney fee provisions”). 16 19-cv-1500-GPC-AHG Case 3:19-cv-01500-GPC-AHG Document 31 Filed 01/26/21 PageID.1625 Page 17 of 19 1 1. 2 Attorney Name Matthew P. Minser Tino X. Do Total: 3 4 5 2. 6 8 9 3. Rate/Hour Dates Worked $230–245 4/18/19 to 10/31/20 $230–245 4/17/19 to 10/31/20 Billed Hours 10.50 78.60 89.10 Total Fees $2,458.00 $18,430.00 $20,888.00 Billed Hours 2.60 10.70 13.30 Total Fees $351.00 $1,466.00 $1,817.00 Paralegal Fees: Paralegal Name Nargis Shaghasi Alicia Wood Total: 7 10 Attorney Fees: Rate/Hour Dates Worked $135 4/18/19 to 9/20/19 $135–145 10/9/20 to 10/31/20 Total from adding the attorney fees and paralegal fees: $22,705.00. Decl. Tino X. Do Ex. L, ECF No. 24-4; see also UF No. 47, ECF No. 28. 11 The Court first concludes that the attorney rates billed to Plaintiffs are reasonable. 12 In ERISA cases, “billing rates ‘should be established by reference to the fees that private 13 attorneys of an ability and reputation comparable to that of prevailing counsel charge 14 their paying clients for legal work of similar complexity.’” Welch v. Metro. Life Ins. Co., 15 480 F.3d 942, 946 (9th Cir. 2007) (citations omitted). The Court finds the attorney’s fees 16 ranging from $210 to $250 per hour to be well-grounded, given that cases of similar 17 complexity have set the attorney’s fees at such rates.7 Cf. Bd. of Trustees of the 18 Boilermaker Vacation Tr. v. Skelly, Inc., 389 F. Supp. 2d 1222, 1228 (N.D. Cal. 2005) 19 (finding $210 per hour in an ERISA default judgment case reasonable); Trs. ex rel. 20 Teamsters Benefit Tr. v. Casey’s Office Moving & Servs., No. C-05-4157MHP (EMC), 21 2007 U.S. Dist. LEXIS 24722 (N.D. Cal. Mar. 30, 2007) (adopting the magistrate judge’s 22 recommendation of an hourly rate at $250 in an ERISA default judgment case). 23 24 25 26 27 28 7 Given that the charged rates are reasonable, it is unnecessary to determine whether $345 and $450 per hour rates that Plaintiffs have presented in their briefs are reasonable, see MSJ Mem. 22, ECF No. 24. 17 19-cv-1500-GPC-AHG Case 3:19-cv-01500-GPC-AHG Document 31 Filed 01/26/21 PageID.1626 Page 18 of 19 1 However, in contrast to the hourly billing rates, the Court lacks the evidentiary 2 basis to conclude that the 89.10 attorney hours billed to Plaintiffs are reasonable. The 3 Court understands that the hours billed spanned a period from April 17, 2019 through 4 October 31, 2020, a bit over a year and a half. But with no breakdown of how long 5 counsel spent on each assignment, the Court cannot determine whether those hours were 6 reasonable. For example, Plaintiffs’ counsel has provided a description of work 7 performed, Decl. Tino X. Do 6–7, ECF No. 24-4, and some of the work include activities 8 such as “Intra-office conferences,” or “communications with Trustees regarding 9 settlement proposal.” These are certainly core parts of a lawsuit, but the Court has no 10 way to determine if more hours on this were spent than necessary. Plaintiffs have failed 11 to demonstrate an “essential element” in meeting its burden to justify attorney’s fees, i.e. 12 the reasonableness of the hours. Cf. Celotex Corp. v. Catrett, 477 U.S. 317, 322–23 13 (1986). Indeed, a billing record that breaks down each task by the hour would be 14 necessary. See MSJ Mem. 24, ECF No. 24 (“The Trust Funds are not opposed to 15 producing their billing records, if requested by the Court.”). 16 The fees billed on behalf of the paralegals face the same problem. See id. at 7–8 17 (“Intra-office conferences”). Further, Plaintiffs have failed to provide any briefing on 18 whether the $135 to $145 rates of the paralegals are reasonable or whether such rates 19 correspond to the market compensation. Thus, the Court lacks the evidentiary support to 20 conclude that the $1,817.00 in paralegal fees is reasonable as well. 21 Since the Court lacks the evidentiary basis to set a reasonable lodestar amount, it 22 would be premature to consider the Kerr factors for any potential deviation. See Van 23 Gerwen v. Guarantee Mut. Life Co., 214 F.3d 1041, 1045 (9th Cir. 2000) (discussing the 24 need to establish the lodestar amount first, because “[t]he lodestar amount is 25 presumptively the reasonable fee amount”). However, to guide the parties on any 26 potential settlement or follow-up motions, the Court observes that “(2) the novelty and 27 28 18 19-cv-1500-GPC-AHG Case 3:19-cv-01500-GPC-AHG Document 31 Filed 01/26/21 PageID.1627 Page 19 of 19 1 difficulty of the questions involved, . . . (8) the amount involved and the results obtained, 2 . . . and (12) awards in similar cases” are salient factors the Court would consider in 3 deciding a subsequent attorney’s fees dispute. See Kerr, 526 F.2d at 70. 4 Plaintiffs’ explanations behind the reasonableness of the attorney’s fees is not 5 convincing, at least at the summary judgment stage. Lawsuits take time, so the length 6 alone (or the fact that Defendant was responsible for such protracted lawsuit) cannot 7 establish reasonableness. 8 9 While it is true that ERISA does not require attorney’s fees to be proportional to the total recovery, the fees must still be reasonable. Operating Engineers Pension Trusts 10 v. B & E Backhoe, Inc., 911 F.2d 1347, 1355 (9th Cir. 1990). And in determining such 11 reasonableness, the Ninth Circuit expressly permits considering proportionality. Id. at 12 1355–56 (discussing how the plaintiffs received reduced attorney’s fees in part “because 13 the recovery was so disproportionate to the amount sought”). On the record before the 14 Court, there is reason to believe that attorney’s fees ($22,705.00) almost 1.4 times greater 15 than the damages award itself ($16,192.25) would be disproportionate, and therefore 16 unreasonable. 17 IV. CONCLUSION 18 For reasons discussed above, the Court GRANTS IN PART and DENIES IN 19 PART Plaintiffs’ Motion for Summary Judgment. Under this Order, Plaintiffs are 20 summarily entitled to $16,192.25 in damages and $4,822.44 in litigation costs. The Court 21 hereby VACATES the hearing on this matter scheduled for January 29, 2021. 22 23 IT IS SO ORDERED. Dated: January 26, 2021 24 25 26 27 28 19 19-cv-1500-GPC-AHG
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