Northwest Administrators, Inc. v. Ace Paving Co., Inc, No. 2:2010cv00647 - Document 15 (W.D. Wash. 2010)
Court Description: ORDER Granting Pltf's 8 Motion for Summary Judgment by Hon. James P. Donohue. (TF)
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Northwest Administrators, Inc. v. Ace Paving Co., Inc Doc. 15 1 2 3 4 5 6 7 UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON AT SEATTLE 8 9 10 11 12 NORTHWEST ADMINISTRATORS, INC., Plaintiff, v. Case No. 10-cv-647-JPD ORDER GRANTING PLAINTIFF’S MOTION FOR SUMMARY JUDGMENT 13 ACE PAVING CO., INC., 14 Defendant. 15 16 17 I. 18 Plaintiff Northwest Administrators, Inc. moves the Court for summary judgment 19 20 INTRODUCTION AND SUMMARY CONCLUSION against defendant Ace Paving Co., Inc. Dkt. 8; Dkt. 13. Defendant opposes the motion. Dkt. 12. After careful consideration of plaintiff’s motion, defendant’s opposition, plaintiff’s reply, 21 22 23 and the balance of the record, the Court GRANTS plaintiff’s motion for summary judgment. II. BACKGROUND 24 The relevant facts of this case, as set forth by plaintiff’s briefs and supporting 25 documents, are uncontroverted by defendant. Plaintiff is the authorized administrative agent 26 and assignee of the Washington Teamsters Welfare Trust (the “Trust”). The Trust is an ORDER PAGE - 1 Dockets.Justia.com 1 employee benefit plan established by the Washington Teamsters Welfare Trust Agreement and 2 Declaration of Trust (the “WTWT Trust Agreement”), and governed by § 302(c)(5) of the 3 Labor Management Relations Act of 1947 and the Employee Retirement Income Security Act 4 of 1974 (“ERISA”). See 29 U.S.C. § 186(c)(5); 29 U.S.C. § 1001 et seq., as amended (1988). 5 The Trust provides medical, dental, vision, time loss, and death benefits to eligible employees. 6 See Dkt. 11 at 2-3 (Ditter Decl.); id., Ex. A. at 5. 7 Employers bound by a 2007-2012 collective bargaining agreement (“CBA”) with a 8 9 local Teamsters union, the International Brotherhood of Teamsters Local 589 (“Local 589”), 10 are required to remit monthly contributions to the Trust at specified rates “for each 11 compensable man hour of Teamsters employed by such Employers in work contained under 12 the terms of this Agreement.” See id., Ex. C at § 7.2.1. The CBA also requires employers to 13 make their required contributions to the Trust “on or before the tenth (10th) day of the month 14 following the month in which the hours were worked. . . .” Id. The defendant is such an 15 employer. 16 17 Defendant became bound to the terms of the 2007-2012 CBA, as well as the WTWT 18 Trust Agreement, when it entered into a Heavy Construction Compliance Agreement (the 19 “Compliance Agreement”) with Local 589 on July 28, 2003.1 See id. at 4 (Ditter Decl.); id., 20 Ex. B. Defendant acknowledges that it is a party to the above-described agreements, and is 21 22 therefore obligated to remit contributions to the Trust by the tenth day of each month following work by his eligible Teamster employees. See Dkt. 12, Ex. 1 at 2 (Yingling Decl.). 23 1 24 25 26 The Compliance Agreement provides that defendant is bound by any “successive collective bargaining agreements” to a 2003-2007 CBA, which in this case is the Teamsters 2007-2012 Building, Heavy and Highway Construction Labor Agreement. Id., Exs. B and C. Similarly, although the Compliance Agreement states that defendant is bound by the Teamsters Construction Industry Welfare Trust (“TCIWT”) Agreement, it also provides that defendant is a party to agreements entered into by TCIWT’s “successors in trust.” Id. Following a merger effective January 1, 2010, the Trust became the TCIWT’s successor trust and the WTWT Trust Agreement became the TCIWT Agreement’s successor trust agreement. See id. at 1-2 (Ditter Decl.). ORDER PAGE - 2 1 Pursuant to the WTWT Trust Agreement, a participating employer who makes 2 delinquent contributions is required to pay “liquidated damages of 20% of the amount of 3 Employer contributions due on such date following the date on which Employer contributions 4 became delinquent. . . .” Dkt. 11, Ex. A at 8. In addition, the WTWT Trust Agreement 5 provides that employers must pay interest for the delinquent contributions, and “reimburse the 6 Trust Fund for all of its costs, including . . . all reasonable attorneys’ fees incurred by the Trust 7 Fund in connection” with the collection of the employer’s delinquent payments. Id. 8 9 Defendant acknowledges that its contributions to the Trust for work performed in 10 February and March 2010 “were not timely paid.” Dkt. 12, Ex. 1 at 3-4 (Yingling Decl.). 11 These contributions were due on March 10, 2010, and April 10, 2010, respectively. See id. On 12 April 15, 2010, plaintiff initiated this action against defendant for the delinquent contributions, 13 which totaled $19,896.16, as well as liquidated damages, interest, and attorneys’ fees and 14 costs. See Dkt. 1 at 2-3; Dkt. 11 at 8 (Ditter Decl.). Approximately one month later, on May 15 17, 2010, defendant paid the full amount of the delinquent contributions. See Dkt. 9 at 1-2 16 17 18 (Azus Decl.); Dkt. 11 at 8 (Ditter Decl.); Dkt. 12, Ex. 1 at 3 (Yingling Decl). Plaintiff’s motion for summary judgment seeks $3,979.23 in liquidated damages, which 19 is 20% of $19,896.16, as well as $105.58 in interest, $2,858.40 in attorneys’ fees, and $453.70 20 in costs. See Dkt. 11, Ex. E; Dkt. 14 (Leahy Decl.). Defendant acknowledges its obligation to 21 pay plaintiff interest, attorneys’ fees, and costs, and does not challenge plaintiff’s calculations.2 22 See Dkt. 12, Ex. 1 at 4 (Yingling Decl.). Defendant contends, however, that the liquidated 23 24 2 25 26 Although defendant states that it “does not dispute that it will owe ‘reasonable’ attorney’s fees and costs to the Trust in this action,” defendant also requests an award of attorneys’ fees under 29 U.S.C. § 1132(g)(1) in the event that the Court finds “that 29 U.S.C. § 1132(g)(2) does not apply to this action.” Dkt. 12, Ex. 1 at 4 (Yingling Decl.); see id. at 13-14. As discussed below, the Court finds that § 1132(g)(2), rather than § 1132(g)(1), governs this case, and therefore defendant is not entitled to attorneys’ fees. ORDER PAGE - 3 1 damages provision of the WTWT Trust Agreement constitutes an unenforceable penalty under 2 state and federal common law, and that liquidated damages may not be awarded under ERISA 3 if there are no unpaid contributions at the time judgment is entered. See Dkt. 12; id., Ex. 1 at 4 6-8 (Yingling Decl.). For the reasons discussed below, the Court finds defendant’s arguments 5 unpersuasive. 6 III. JURISDICTION 7 The parties have consented to this matter proceeding before the undersigned United 8 9 States Magistrate Judge pursuant to 28 U.S.C. § 636(c). See Dkt. 5 at 3. The Court has 10 exclusive jurisdiction over this action pursuant to 29 U.S.C. §§ 1132(e)(1) and (f). Venue is 11 proper because the Trust Funds are administered in this district. 29 U.S.C. § 1132(e)(2). 12 IV. DISCUSSION 13 A. Summary Judgment Standard 14 Summary judgment is appropriate when, viewing the evidence in the light most 15 favorable to the nonmoving party, there exists “no genuine issue as to any material fact” such 16 17 that “the moving party is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(c). A 18 material fact is a fact relevant to the outcome of the pending action. See Anderson v. Liberty 19 Lobby, Inc., 477 U.S. 242, 248 (1986). Genuine issues of material fact exist when the evidence 20 would enable “a reasonable jury . . . [to] return a verdict for the nonmoving party.” Id. In 21 22 response to a summary judgment motion that is properly supported, the nonmoving party may not rest upon mere allegations or denials in the pleadings, but must set forth specific facts 23 24 25 26 demonstrating a genuine issue of fact for trial, and produce evidence sufficient to establish the existence of the elements essential to his case. See Fed. R. Civ. P. 56(e); Celotex Corp. v. Cattrett, 477 U.S. 317, 323 (1986). A mere scintilla of evidence, however, is insufficient to ORDER PAGE - 4 1 create a factual dispute. See Anderson, 477 U.S. at 252. To defeat a motion for summary 2 judgment, the non-moving party must make more than conclusory allegations, speculations, or 3 argumentative assertions that material facts are in dispute. T.W. Elec. Service, Inc. v. Pacific 4 Elec. Contractors Ass'n, 809 F.2d 626, 630-32 (9th Cir. 1987). 5 6 B. ERISA Governs the Liquidated Damages Clause of the WTWT Trust Agreement Defendant states that, in addition to the delinquent contributions for February and 7 March 2010, it has consistently been forced to delay its required contributions to the Trust over 8 9 the past two years due to the economic downturn and resulting loss in revenues. Dkt. 12, Ex. 10 1at 6-7 (Yingling Decl.). In addition, defendant asserts that the “liquidated damages that 11 Northwest has forced Ace to pay over the past two years was a principle (sic) cause of Ace 12 being late in making its payments.” Id. at 7. Thus, defendant contends that the liquidated 13 damages provision of the WTWT Trust Agreement operates as a penalty, which is 14 unenforceable under state and federal common law. See Dkt. 12 at 11. To support this 15 argument, defendant relies upon the Washington Supreme Court’s assertion that in order for a 16 17 liquidated damages clause in a lease to be enforceable, “the amount fixed must be a reasonable 18 forecast of just compensation for the harm that is caused by the breach . . . [and] the harm must 19 be such that it is incapable or very difficult of ascertainment.” Walter Implement, Inc. v. 20 Focht, 107 Wn.2d 553, 558-59, 730 P.2d 1340 (1987). Defendant also cites the Ninth Circuit’s 21 22 decision in Idaho Plumbers & Pipefitters Health & Welfare Fund v. United Mech. Contractors, Inc. as support for the proposition that a liquidated damages provision is void as a penalty 23 24 25 26 under federal common law unless the harm caused by a breach is very difficult or impossible to estimate, and the amount fixed is a reasonable forecast of just compensation for the harm caused. 875 F.2d 212, 215 (9th Cir. 1989) (holding that ERISA’s damages provision was ORDER PAGE - 5 1 2 3 inapplicable because the defendant had paid all contributions owed to the trust before the lawsuit was initiated). Defendant’s reliance upon state and federal common law in this case is unavailing, 4 because ERISA governs cases such as this one, where an employer owed contributions to an 5 employee benefit plan at the time the lawsuit was initiated. See 29 U.S.C. § 1144(a) (providing 6 that ERISA “shall supersede any and all State laws insofar as they may now or hereafter relate 7 to any employee benefit plan. . . .”); Egelhoff v. Egelhoff, 532 U.S. 141, 146 (2001) (observing 8 9 that ERISA’s preemption provision is “clearly expansive”); General Am. Life Ins. Co. v. 10 Castonguay, 984 F.2d 1518, 1521 (9th Cir. 1993) (“ERISA’s preemption clause is one of the 11 broadest ever enacted by Congress, and it preempts even generally applicable laws, not just 12 laws aimed exclusively at employee benefit plans. . . .”) (internal citations omitted). ERISA 13 provides specific remedies for delinquent contributions, including an award of “(A) the unpaid 14 contributions, (B) interest on the unpaid contributions, (C) an amount equal to the greater of— 15 (i) interest on the unpaid contributions, or (ii) liquidated damages provided for under the plan 16 17 in an amount not in excess of 20 percent (or such higher percentage as may be permitted under 18 Federal or State law) of the amount determined by the court under subparagraph (A), [and] (D) 19 reasonable attorney’s fees and costs of the action, to be paid by the defendant. . . .” 29 U.S.C. 20 § 1132(g)(2). 21 22 Furthermore, ERISA obligates participating employers to make contributions to a multi-employer trust fund in accordance with the terms of the trust agreement or collective 23 24 25 26 bargaining agreement. See 29 U.S.C. §§ 1102(a), 1103(a), 1145. The language of a written trust agreement defines the rights and obligations of the parties to the trust to the extent they are consistent with ERISA. Id. at § 1145; Santa Monica Culinary Welfare Fund v. Miramar ORDER PAGE - 6 1 Hotel Corp., 920 F.2d 1491, 1493-94 (9th Cir. 1990) (internal citations omitted). As noted, the 2 WTWT Trust Agreement provides that an employer shall pay liquidated damages of 20% of 3 the amount of the delinquent contributions. See Dkt. 11, Ex. A at 8. Defendant has made no 4 showing in these proceedings that this provision is somehow inconsistent with ERISA, which 5 also provides for liquidated damages in the amount of 20% of any delinquent contributions. 6 Finally, the Ninth Circuit has held that § 1132(g)(2) is “mandatory and not 7 discretionary.” Northwest Adm'rs Inc. v. Albertson's, Inc., 104 F.3d 253, 257 (9th Cir. 1996) 8 9 (quoting Operating Eng'rs Pension Trust v. Beck Eng'g & Surveying, Co., 746 F.2d 557, 569 10 (9th Cir. 1984)). Section 1132(g)(2) requires only that: “(1) the employer must be delinquent 11 at the time the action is filed; (2) the district court must enter a judgment against the employer; 12 and (3) the plan must provide for such an award.” Id. (citing Idaho Plumbers & Pipefitters 13 Health & Welfare Fund, 875 F.2d at 215). 14 Here, the Court finds that all three criteria for a mandatory award under § 1132(g)(2) 15 are satisfied. See Dkt. 12 at 5. Defendant admits that there were unpaid contributions at the 16 17 time plaintiff filed this lawsuit, and that the WTWT Trust Agreement provides for an award of 18 liquidated damages. See id.; id., Ex. 1 at 2, 4 (Yingling Decl.). As discussed in greater detail 19 below, with respect to the final factor, the Ninth Circuit has held that “mandatory fees are 20 available under § 1132(g)(2) ‘notwithstanding the defendant’s post-suit, prejudgment payment 21 22 of the delinquent contributions themselves.’” Albertson's, 104 F.3d at 258 (quoting Carpenters Amended & Restated Health Benefit Fund v. John W. Ryan Constr. Co., 767 F.2d 1170, 1175 23 24 25 26 (5th Cir. 1985)). Accordingly, the state and federal common law cases cited by defendant are inapposite, as such law is preempted by ERISA. While the Court is sympathetic to defendant’s apparent ORDER PAGE - 7 1 2 3 plight, defendant is obligated to pay liquidated damages as a result of its failure to timely pay contributions to the Trust, regardless of its financial situation. C. Liquidated Damages Are Available Pursuant to § 1132(g(2) If Unpaid Contributions Existed at the Time the Lawsuit was Filed 4 5 Defendant argues that ERISA is inapplicable to this case because a judgment for unpaid 6 contributions is a necessary predicate for an award of liquidated damages under § 1132(g)(2). 7 Dkt. 12 at 5. Specifically, he asserts that where “there are no remaining ‘unpaid contributions’ 8 to enter a judgment on . . . no judgment may be awarded in favor of the plan for unpaid 9 contributions.” Dkt. 12 at 6. Defendant relies upon statutory language providing for an award 10 of liquidated damages “in an action to recover delinquent contributions . . . in which a 11 judgment in favor of the plan is awarded. . . .” 29 U.S.C. § 1132(g)(2). He also points to 12 13 statutory language providing that a liquidated damages award may not exceed “20 percent . . . 14 of the amount [of unpaid contributions] determined by the court under subparagraph (A). . . .” 15 Id. § 1132(g)(2)(C)(ii). 16 17 18 As the plaintiff points out, defendant’s arguments are unavailing because the Ninth Circuit has held that an employer is liable for mandatory fees under § 1132(g)(2), including liquidated damages, “notwithstanding the defendant’s post-suit, prejudgment payment of the 19 20 21 delinquent contributions themselves.” Albertson’s, 104 F.3d at 258. Significantly, the Ninth Circuit has also expressly rejected defendant’s argument that “a mandatory award under 22 § 1132(g)(2) is improper because the employer voluntarily paid the delinquent contributions 23 . . . thus the district court did not enter judgment against [the employer] relating to those 24 contributions. . . .” Id. Instead, the court held that mandatory “[f]ees may be awarded even 25 though there is no judgment on the merits or when the dispute has become moot because relief 26 ORDER PAGE - 8 1 2 3 is otherwise obtained.” Id. (citing Lads Trucking Co. v. Board of Trustees of W. Conference of Teamsters Pension Trust Fund, 777 F.2d 1371, 1375 (9th Cir. 1985)). Indeed, defendant appears to concede that an interpretation of § 1132(g)(2) which 4 authorizes an award of liquidated damages as long as unpaid contributions existed at the time 5 the lawsuit was filed “is arguably the prevailing Ninth Circuit interpretation. . . .” Dkt. 12 at 9. 6 Nevertheless, defendant posits that Ninth Circuit precedent incorrectly interprets the plain 7 language of § 1132(g)(2). Id. at 9-10. 8 9 The Court declines defendant’s invitation to interpret § 1132(g)(2) in a manner that is 10 contrary to longstanding Ninth Circuit precedent. In doing so, the Court notes that with the 11 exception of the Sixth Circuit, every Court of Appeals to consider the issue concurs with the 12 Ninth Circuit’s interpretation of § 1132(g)(2). See UAW Local 259 Soc. Sec. Dep't v. Metro 13 Auto Ctr., 501 F.3d 283, 288-89 (3d Cir. 2007) (providing that § 1132(g)(2) remedies apply to 14 all contributions unpaid at the time a suit is filed, even if the debts are partially satisfied before 15 judgment); Operating Eng'rs Local 139 Health Benefit Fund v. Gustafson Constr. Corp., 258 16 17 F.3d 645, 654 (7th Cir. 2001) (“The interest and liquidated-damages provisions of ERISA 18 apply . . . only to contributions that are unpaid at the date of suit (not the date of judgment, as 19 argued by the defendant).”); Iron Workers Dist. Council v. Hudson Steel Fabricators & 20 Erectors, Inc., 68 F.3d 1502, 1507 (2d Cir. 1995) (“[T]he provisions of § 1132(g)(2)(B) and 21 22 (C) make reference to unpaid contributions not to establish a limit on qualifying judgments, but rather because the amount of an award of interest or liquidated damages should logically be 23 24 25 26 predicated upon the amount of the unpaid contributions originally at issue, whether or not outstanding at the time of judgment, since that amount correctly measures the damage caused by the delinquency.”). See also Carpenters & Joiners Welfare Fund v. Gittleman Corp., 857 ORDER PAGE - 9 1 2 3 F.2d 476, 478 (8th Cir. 1988) (agreeing that “unpaid contributions” accounted for in § 1132(g)(2) means “contributions unpaid at the time suit was filed[.]”). Thus, defendant’s argument that § 1132(g)(2) is inapplicable to this case is unavailing. 4 Pursuant to the WTWT Trust Agreement and § 1132(g)(2), plaintiff is entitled to liquidated 5 damages, interest, attorneys’ fees and costs. 6 V. CONCLUSION 7 For the reasons discussed above, the Court finds no issues of fact regarding plaintiff’s 8 9 entitlement to the total amount of liquidated damages sought in this action, which equals 20% 10 of the amount of defendant’s delinquent contributions for the February and March 2010 11 employment periods. Accordingly, the Court hereby ORDERS as follows: 12 (1) Plaintiff’s motion for summary judgment, Dkt. 8, is GRANTED. 13 (2) Judgment is awarded in favor of plaintiff and against defendant in the following amounts: $3,979.23 for liquidated damages; $105.58 for interest; $2,858.40 for attorneys’ fees; and $453.70 for costs. (3) The Clerk is directed to send copies of this Order to counsel for all parties. 14 15 16 17 DATED this 30th day of September, 2010. A 18 19 JAMES P. DONOHUE United States Magistrate Judge 20 21 22 23 24 25 26 ORDER PAGE - 10
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