Northwest Administrators Inc v. Ace Paving Co. Inc, No. 2:2010cv00194 - Document 20 (W.D. Wash. 2010)
Court Description: ORDER Granting Pltf's 8 Motion for Summary Judgment by Hon. Mary Alice Theiler; Pltf is awarded liquidated damages in the amount of $3,329.17, interest in the amount of $1.99, and atty's fees in the amount of $6,361.75. (TF)
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Northwest Administrators Inc v. Ace Paving Co. Inc Doc. 20 01 02 03 04 05 06 07 08 UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON AT SEATTLE 09 NORTHWEST ADMINISTRATORS, INC., ) ) Plaintiff, 10 ) ) v. 11 ) ) 12 ACE PAVING CO., INC., ) ) Defendant. 13 ) ____________________________________ ) 14 15 16 CASE NO. C10-0194-MAT ORDER GRANTING PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT INTRODUCTION Plaintiff Northwest Administrators, Inc. moves the Court for summary judgment 17 against defendant Ace Paving Co., Inc. (Dkt. 8.) This matter was brought pursuant to the 18 Employee Retirement Income Security Act, 29 U.S.C. § 1001, et seq. (ERISA), to recover 19 remittance reports, trust fund contributions, liquidated damages, interest, attorney’s fees, and 20 courts costs from defendant based on its labor agreement with Teamsters Local 589, the 21 Teamsters Construction Industry Welfare Trust Agreement (TCWT), and the Western 22 Conference of Teamsters Pension Trust Agreement (WCTPT). Plaintiff is the authorized ORDER GRANTING PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT PAGE -1 Dockets.Justia.com 01 administrative agent for and assignee of the TCWT and the Washington Teamsters Welfare 02 Trust (WTWT), the latter of which became the successor trust following a merger effective 03 January 1, 2010. 04 Following the filing of this lawsuit, defendant provided remittance reports and made all 05 necessary payments, including liquidated damages, under the WCTPT for the time period at 06 issue, November 2009 through January 2010. Defendant also provided remittance reports and 07 paid contributions under the TCWT for this same time period. However, defendant failed to 08 timely submit the TCWT contributions for the months of November and December 2009. The 09 only remaining issue in this lawsuit is, therefore, whether defendant remains liable for 10 liquidated damages, interest, and attorney’s fees for that time period.1 11 Plaintiff seeks liquidated damages in the amount of $1,328.60 for November 2009 and 12 $2,000.57 for December 2009, for a total liquidated damages award of $3,329.17, interest in the 13 amount of $1.99, and attorney’s fees in the amount of $6,361.75. (See Dkts. 16-18.) 14 Defendant contends the liquidated damages sought are unenforceable under Washington and 15 federal common law as penalties and are not otherwise recoverable under ERISA. (Dkt. 12.) 16 It seeks attorney’s fees for its defense of this motion pursuant to 29 U.S.C. § 1132(g)(1). 17 However, for the reasons described below, the Court finds plaintiff entitled to summary 18 judgment and the liquidated damages, interest, and attorney’s fees requested. 19 20 BACKGROUND On or around July 28, 2003, defendant and Teamsters Local 589 entered into an 21 22 1 Defendant made a payment in early August 2010 covering court costs and all but a small amount of interest. (Dkt. 17, ¶ 5.) ORDER GRANTING PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT PAGE -2 01 agreement entitled the Heavy Construction Compliance Agreement. (Dkt. 9, Ex. B.) In so 02 doing, defendant agreed to be bound by the June 1, 2003 through May 31, 2007 collective 03 bargaining agreement between the Associated General Contractors of America, Inc., and 04 several Teamsters Locals, including Local 589, and any successor collective bargaining 05 agreements. (Id.) It also agreed to be bound by the TCWT. (Id. and Ex. A.) Defendant 06 and Local 589 are currently parties to a collective bargaining agreement effective June 1, 2007 07 through May 31, 2012. (Id., Ex. C.) The agreement requires defendant to make contributions 08 to the Teamsters Construction Industry Fund for all employees covered by the agreement on or 09 before the tenth day of the month following the month in which the relevant hours were worked. 10 (Id. at 13 (Section 7.2.1.)) 11 Pursuant to the TCWT, a participating employer who makes delinquent contributions is 12 required to pay liquidated damages in an amount equal to twenty percent of the delinquent 13 contributions owed and interest on those delinquent contributions at the rate of twelve percent 14 per annum from the date the contributions became due and payable until the contributions are 15 paid. (Id., Ex. A (Amendment to TCWT).) (See also Dkt. 4, ¶7 (defendant admits in its 16 Answer “that the Trust Agreements between Defendant and the Plaintiff Trusts contain 17 provisions providing for payment of interest and liquidated damages under certain 18 circumstances.”)) It also requires the payment of reasonable attorney’s fees, costs, and other 19 reasonable expenses incurred in the collection of delinquent contributions. (Dkt. 9, Ex. A.) 20 Plaintiff, as the TCWT’s authorized agent and assignee, receives monthly remittance 21 reports from employers setting forth contributions owing for that month. (Id., ¶ 20.) It did 22 not receive any such reports from defendant for the months of November and December 2009. ORDER GRANTING PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT PAGE -3 01 (Id., ¶¶ 20-22.) By letter dated January 27, 2010, counsel for plaintiff requested from 02 defendant the monthly reports and contribution payments for the period of November 2009 and 03 beyond. (Id., Ex. D.) It thereafter, on February 1, 2010, filed the lawsuit under consideration. 04 (Dkt. 1.) On February 10, 2010, plaintiff received the TCWT remittance reports and 05 contributions owed from defendant for November and December 2009. (Dkt. 9, ¶ 24 and Ex. 06 E.) Defendant did not submit associated liquidated damages. (Id., ¶ 27; Dkt. 13, ¶10.) 07 08 DISCUSSION Summary judgment is appropriate when “the pleadings, depositions, answers to 09 interrogatories, and admissions on file, together with the affidavits, if any, show that there is no 10 genuine issue as to any material fact and that the moving party is entitled to a judgment as a 11 matter of law.” Fed. R. Civ. P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). 12 The moving party is entitled to judgment as a matter of law when the nonmoving party fails to 13 make a sufficient showing on an essential element of his case with respect to which he has the 14 burden of proof. See Celotex, 477 U.S. at 322-23. 15 Genuine issues of material fact that preclude summary judgment are “disputes over 16 facts that might affect the outcome of the suit under the governing law[.]” Anderson v. Liberty 17 Lobby, Inc., 477 U.S. 242, 248 (1986). In deciding a summary judgment motion, the Court 18 must view all facts and inferences therefrom in the light most favorable to the nonmoving party. 19 See Warren v. City of Carlsbad, 58 F.3d 439, 441 (9th Cir. 1995). “[A] party opposing a 20 properly supported motion for summary judgment may not rest upon mere allegation or denials 21 of his pleading, but must set forth specific facts showing that there is a genuine issue for trial.” 22 Anderson, 477 U.S. at 256 (citing Fed. R. Civ. P. 56(e)). ORDER GRANTING PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT PAGE -4 01 Plaintiff here seeks liquidated damages, interest, and attorney’s fees based on 02 defendant’s failure to timely submit its TCWT contributions for the months of November and 03 December 2009. Defendant objects to plaintiff’s motion, contending the damages sought are 04 unenforceable and void as a penalty, and that ERISA does not mandate such damages until the 05 entry of a judgment.2 As discussed below, both of defendant’s contentions lack merit. 06 A. Law Governing Liquidated Damages 07 Defendant states that it was not provided an opportunity to negotiate any of the 08 provisions of the TCWT prior to entering into the agreement or provided any explanation as to 09 the relation of the liquidated damages provision to any actual damages suffered as the result of 10 unpaid contributions. (Dkt. 13, ¶¶ 6-7.) Defendant also states that the damages it has been 11 forced to pay over the past two years, as a result of the downturn in the economy and resulting 12 loss in revenues, has forced the delay in its ability to make required contributions. (Id., ¶¶ 8-9.) 13 Defendant posits that the TCWT liquidated damages provision is unenforceable as a 14 penalty under both state and federal common law. See, e.g., Walter Implement, Inc. v. Focht, 15 107 Wn.2d 553, 558-59, 730 P.2d 1340 (1987) (“‘A provision in a contract which bears no 16 reasonable relation to actual damages will be construed as a penalty.’”; applying a two part test 17 to determine whether a liquidated damages clause may be enforced: “First, the amount fixed 18 must be a reasonable forecast of just compensation for the harm that is caused by the breach. 19 Second, the harm must be such that it is incapable or very difficult of ascertainment.”) (quoting 20 21 2 In summarizing the “issues presented” in its brief, defendant states that there are genuine issues of material fact regarding both the legality of the liquidated damages provision at issue in this case and the 22 availability of liquidated damages under ERISA. (Dkt. 12 at 3.) However, defendant did not thereafter identify any particular factual dispute. ORDER GRANTING PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT PAGE -5 01 Northwest Collectors, Inc. v. Enders, 74 Wn.2d 585, 594, 446 P.2d 200 (1968)); Idaho 02 Plumbers & Pipefitters Health & Welfare Fund v. United Mech. Contractors, Inc., 875 F.2d 03 212, 215 (9th Cir. 1989) (for a liquidated damages provision to be deemed void as a penalty 04 under federal common law it must meet two conditions: “First, the harm caused by a breach 05 must be very difficult or impossible to estimate. Second, the amount fixed must be a reasonable 06 forecast of just compensation for the harm caused.”) (citations omitted). However, for the 07 reasons asserted by plaintiff and discussed below, this argument fails. 08 ERISA obligates participating employers to make contributions to a multi-employer 09 trust fund in accordance with the contract and trust agreement. See ERISA Section 515, 29 10 U.S.C. § 1145. It provides, at § 1132(g)(2), specific remedies for delinquent contributions, 11 including, in addition to the unpaid contributions, liquidated damages, interest, attorney’s fees, 12 and costs. As noted, defendant is also bound by a trust agreement containing terms as to 13 damages owed as a result of delinquent contributions. (Dkt. 9, Exs. A-C.) 14 “Section 1132(g)(2) is ‘mandatory and not discretionary.’” Northwest Adm’rs Inc. v. 15 Albertson’s, Inc., 104 F.3d 253, 257 (9th Cir. 1996) (quoting Operating Eng’rs Pension Trust v. 16 Beck Eng’g & Surveying, Co., 746 F.2d 557, 569 (9th Cir. 1984)). Entitlement to a mandatory 17 § 1132(g)(2) award requires that: “(1) the employer must be delinquent at the time the action is 18 filed; (2) the district court must enter a judgment against the employer; and (3) the plan must 19 provide for such an award.” Id. (citing Idaho Plumbers & Pipefitters Health & Welfare 20 Fund, 875 F.2d at 215). 21 Here, it is undisputed that defendant was delinquent in making its contributions at the 22 time plaintiff filed this suit and that the trust agreement provides for liquidated damages, ORDER GRANTING PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT PAGE -6 01 interest, attorney’s fees, and courts costs. Also, as discussed further below, “mandatory fees 02 are available under § 1132(g)(2) ‘notwithstanding the defendant’s post-suit, pre-judgment 03 payment of the delinquent contributions themselves.’” Id. at 258 (quoting Carpenters 04 Amended & Restated Health Benefit Fund v. John W. Ryan Constr. Co., 767 F.2d 1170, 1175 05 (5th Cir. 1985)). Plaintiff is, accordingly, entitled to liquidated damages, interest, and 06 attorney’s fees under § 1132(g)(2). 07 Defendant’s reliance on state and federal common law is unavailing. ERISA contains 08 an expansive preemption provision. See generally 29 U.S.C. § 1144 (a) (ERISA “shall 09 supersede any and all State laws insofar as they may now or hereafter relate to any employee 10 benefit plan” covered by ERISA) and (c)(1) (“‘State law’ includes all laws, decisions, rules, 11 regulations, or other State action having the effect of law[.]”); Egelhoff v. Egelhoff, 532 U.S. 12 141, 146 (2001) (observing that ERISA’s preemption provision is “‘clearly expansive.’”) 13 (sources omitted); General Am. Life Ins. Co. v. Castonguay, 984 F.2d 1518, 1521 (9th Cir. 14 1993) (“ERISA’s preemption clause is one of the broadest ever enacted by Congress, and it 15 preempts even generally applicable laws, not just laws aimed exclusively at employee benefit 16 plans[.]”) (internal citations omitted). 17 Section 1132(g)(2)(C)(ii) specifically allows for a grant of “liquidated damages 18 provided for under the plan in an amount not in excess of 20 percent[.]” Defendant fails to 19 support the contention that the liquidated damages provision at issue here, allowing for twenty 20 percent of delinquent contributions owing (Dkt. 9, Ex. A), may escape preemption. 21 Indeed, plaintiff entirely ignores the issue of preemption, focusing instead on 22 distinguishable and inapplicable state and federal common law. For instance, in the Ninth ORDER GRANTING PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT PAGE -7 01 Circuit decision relied upon by plaintiff, Idaho Plumbers & Pipefitters Health & Welfare 02 Fund, 875 F.2d at 215, the Court noted that § 1132(g)(2) did not apply because there were no 03 unpaid contributions at the time the suit in that case was filed. See also, e.g., Board of Trustees 04 of Local 41, Int'l Bhd. of Elec. Workers Health Fund v. Zacher, 771 F. Supp. 1323, 1332 05 (W.D.N.Y. 1991) (same); Walter Implement, Inc., 107 Wn.2d at 555-59 (considering contract 06 claim under state law). The Ninth Circuit also read the legislative history to indicate that 07 “Congress intended only to preempt laws limiting liquidated damages to an amount below the 08 20% level when the terms of § 1132(g)(2) are satisfied.” Idaho Plumbers & Pipefitters Health 09 & Welfare Fund, 875 F.2d at 217 (emphasis in original). Here, as stated above and discussed 10 further below, the terms of § 1132(g)(2) are satisfied. The state and federal common law cases 11 relied on by defendant are, therefore, inapposite, and plaintiff is entitled to the liquidated 12 damages, interest, and attorney’s fees sought. 13 B. Liquidated Damages Award Prior to Judgment 14 Section 1132(g)(2)(C)(ii) provides for an award of liquidated damages “in an action to 15 recover delinquent contributions . . . in which a judgment in favor of the plan is awarded[.]” 16 Defendant avers that this provision, therefore, allows for liquidated damages only once a 17 judgment has been awarded. See Idaho Plumbers & Pipefitters Health & Welfare Fund, 875 18 F.2d at 215 (§ 1132 (g)(2)(C)(ii) “applies when (1) the fiduciary obtains a judgment in favor of 19 the plan, (2) unpaid contributions exist at the time of suit, and (3) the plan provides for 20 liquidated damages.”) (emphasis added). Relying on a Sixth Circuit decision supporting this 21 reading of § 1132(g)(2), defendant maintains that, because it paid all contributions owing, 22 plaintiff’s action – seeking liquidated damages alone – necessarily fails. In re Michigan ORDER GRANTING PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT PAGE -8 01 Carpenters Council Health & Welfare Fund, 933 F.2d 376, 388 (6th Cir. 1991) (concluding 02 that § 1132(g)(2)(A) and (B) “apply only if there were unpaid contributions on the date of the 03 award” because § 1132(g)(2) “provides that upon ‘a judgment in favor of the plan’ the court 04 shall award the plan ‘the unpaid contributions’ and ‘interest on the unpaid contributions.’”) 05 (quoting § 1132(g)(2)(A) and (B)) (emphasis added by court). However, defendant fails to 06 support this reading of § 1132(g)(2) under Ninth Circuit law. 07 As stated above, the Ninth Circuit has held that “mandatory fees are available under § 08 1132(g)(2) ‘notwithstanding the defendant’s post-suit, pre-judgment payment of the delinquent 09 contributions themselves.’” Northwest Adm’rs Inc., 104 F.3d at 258 (quoting Carpenters 10 Amended & Restated Health Benefit Fund, 767 F.2d at 1175). In so doing, the Ninth Circuit 11 rejected the contention that an employer was not obligated to pay liquidated damages and 12 attorney’s fees on contributions voluntarily paid prior to the entry of a judgment. Id. 13 It appears that, excluding the Sixth Circuit, every Court of Appeals to consider the issue 14 concurs with the Ninth Circuit. See UAW Local 259 Soc. Sec. Dep't v. Metro Auto Ctr., 501 15 F.3d 283, 288-89 (3d Cir. 2007) (§ 1132(g)(2) remedies apply to all contributions unpaid at the 16 time a suit is filed, even if the debts are partially satisfied before judgment); Operating Eng'rs 17 Local 139 Health Benefit Fund v. Gustafson Constr. Corp., 258 F.3d 645, 654 (7th Cir. 2001) 18 (“The interest and liquidated-damages provisions of ERISA apply . . . only to contributions that 19 are unpaid at the date of suit (not the date of judgment, as argued by the defendant.”); Iron 20 Workers Dist. Council v. Hudson Steel Fabricators & Erectors, Inc., 68 F.3d 1502, 1507 (2d 21 Cir. 1995) (“[T]he provisions of § 1132(g)(2)(B) and (C) make reference to unpaid 22 contributions not to establish a limit on qualifying judgments, but rather because the amount of ORDER GRANTING PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT PAGE -9 01 an award of interest or liquidated damages should logically be predicated upon the amount of 02 the unpaid contributions originally at issue, whether or not outstanding at the time of judgment, 03 since that amount correctly measures the damage caused by the delinquency.”) See also 04 Carpenters & Joiners Welfare Fund v. Gittleman Corp., 857 F.2d 476, 478 (8th Cir. 1988) 05 (agreeing that “unpaid contributions” accounted for in § 1132(g)(2) means “contributions 06 unpaid at the time suit was filed[.]”) 07 These decisions reflect the intention that an employer not “escape its statutory liability 08 for interest, liquidated damages or double interest, attorney fees, and costs simply by paying the 09 delinquent contributions before entry of judgment in a § 1132(g)(2) action brought to recover 10 delinquent contributions.” Iron Workers Dist. Council, 68 F.3d at 1506. As stated by one 11 court: “Permitting delinquent employers to avoid paying § 1132 penalties after suit is filed . . . 12 would largely thwart the purpose of § 1132(g)(2) to provide plan fiduciaries with an effective 13 weapon against delinquent employers. It would also anomalously cause only employers with 14 legitimate legal arguments (. . . awaiting final judgment) to pay ancillary relief.” Id. at 1508 15 (internal citations omitted). Accord UAW Local 259 Soc. Sec. Dep’t, 501 F.3d at 289 (“The 16 payment of interest compensates plans for one kind of cost[] incurred in connection with 17 delinquencies, that is, the loss of interest. The purpose of the provision would be defeated if 18 we allowed employers to avoid paying interest simply by satisfying their debt moments before 19 the court issues judgment.”) (quotation marks and quoted sources omitted). 20 Defendant unsuccessfully distinguishes the applicable, binding case law. It notes that 21 Northwest Adm’rs, unlike this case, involved the entry of a judgment for unpaid contributions. 22 See 104 F.3d at 258 (noting judgment entered in the amount of $60,037.60, including ORDER GRANTING PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT PAGE -10 01 $42,821.62 in delinquent contributions). However, it remains that the Ninth Circuit in that 02 case awarded liquidated damages and attorney’s fees associated with both contributions that 03 remained deficient and those paid prior to the entry of judgment. Id. at 257-58. The Court 04 also explicitly rejected the contention that the mandatory fees provided for in § 1132(g)(2) may 05 not be awarded in the absence of a judgment. Id. at 258 (“‘fees may be awarded even though 06 there is no judgment on the merits or when the dispute has become moot because relief is 07 otherwise obtained.’”) (quoting Lads Trucking Co. v. Board of Trustees of W. Conference of 08 Teamsters Pension Trust Fund, 777 F.2d 1371, 1375 (9th Cir. 1985)). 09 At least one district court within the Ninth Circuit has applied the ruling in Northwest 10 Adm’rs to a case, like this one, in which unpaid contributions were voluntarily paid in full prior 11 to the entry of judgment. Trustees of the Constr. Indus. v. B Witt Concrete Cutting, Inc., 685 F. 12 Supp. 2d 1158, 1163 (D. Nev. 2010) (finding an award of damages pursuant to § 1132(g)(2) 13 mandatory even where delinquent contributions were paid prior to judgment; stating that the 14 Ninth Circuit has “squarely rejected” the interpretation of the Sixth Circuit on this issue) (citing 15 Northwest Adm’rs, 104 F.3d at 258, and In re Michigan Carpenters Council Health & Welfare 16 Fund, 933 F.2d at 388).3 See also Fanning v. Langenfelder Marine, Inc., No. 07-2182 (PLF), 17 2010 U.S. Dist. LEXIS 29827 at *4-6 (D. D.C. Mar. 29, 2010) (finding employer who paid all 18 delinquent contributions after suit filed liable for twenty percent of the amount due pursuant to 19 § 1132(g)(2)). As with cases involving partial payments of delinquent contributions, the 20 21 3 Plaintiff provides several unpublished district court decisions from the Ninth Circuit recognizing that liquidated damages may be awarded even where unpaid contributions are tendered prior to the entry of 22 judgment. (Dkt. 16, Exs. A-C.) However, those cases also involved other outstanding unpaid contributions. (See id.) ORDER GRANTING PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT PAGE -11 01 conclusion that liquidated damages may be collected following the full payment of delinquent 02 contributions supports the underlying purpose of § 1132(g)(2) and avoids the possibility that an 03 employer may evade its obligations under this provision simply by paying delinquent 04 contributions at some point prior to the entry of a judgment. Defendant’s contention that § 05 1132(g)(2) is inapplicable because it paid all outstanding delinquent contributions prior to the 06 entry of a judgment, therefore, fails. 07 08 CONCLUSION In sum, the Court finds no issues of fact regarding either the enforceability of the 09 collective bargaining and trust agreements at issue in this case or plaintiff’s entitlement to the 10 total amount of liquidated damages, interest, and attorneys’ fees sought. Accordingly, 11 plaintiff’s motion for summary judgment is hereby GRANTED and plaintiff awarded 12 liquidated damages in the amount of $3,329.17, interest in the amount of $1.99, and attorney’s 13 fees in the amount of $6,361.75. 14 DATED this 7th day of September, 2010. 15 /s/ Mary Alice Theiler___________ MARY ALICE THEILER United States Magistrate Judge 16 17 18 19 20 21 22 ORDER GRANTING PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT PAGE -12
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