Opinion
No. C-03-2610 CW (JCS).
October 21, 2004
REPORT AND RECOMMENDATION RE PLAINTIFFS' MOTION FOR DEFAULT JUDGMENT [Docket No. 31]
I. INTRODUCTION
In this ERISA enforcement action, Plaintiffs seek to collect unpaid contributions, liquidated damages on unpaid contributions, interest, attorneys' fees and costs on behalf of employees of Defendant Hotel Airport Shuttle.Com. Defendant has not appeared in this action but has engaged in some informal discovery. See Motion at 3. The Clerk entered default on May 14, 2004, pursuant to Fed.R.Civ.P. 55(a), and Plaintiffs now seek an order from this Court entering default judgment pursuant to Fed.R.Civ.P. 55(b). Plaintiffs' Motion for Default Judgment ("the Motion") was referred to the undersigned magistrate judge for a Report and Recommendation. The Motion came on for hearing on September 3, 2004. Plaintiffs filed additional materials in support of the Motion on September 9, 2004. On September 10, 2004, Defendant filed a motion to vacate the default, but on October 6, 2004, Defendant withdrew that motion. Accordingly, the Court now issues its Report and Recommendation. For the reasons stated below, it is recommended that the Court GRANT Plaintiffs' Motion. Plaintiffs should be awarded $179,451.61 in damages and $1,040.00 in attorneys' fees and costs. II. BACKGROUND
Plaintiffs Board of Trustees of the San Mateo Hotel Employees and Restaurant Employees Welfare Fund and Board of Trustees of the San Mateo Hotel Employees and Restaurant Employees Pension Fund are trustees of employee benefits plans within the meaning of §§ 3 (1) (3) of ERISA. 29 U.S.C. § 1002(1) (3). Second Amended Complaint ("SAC") at 2, ¶ 2. In their Second Amended Complaint, filed July 18, 2003, Plaintiffs allege that Defendant Hotel Airport Shuttle.Com breached a written collective bargaining agreement ("the Collective Bargaining Agreement") with Hotel Employees Restaurant Employees Local No. 340 ("the Local 340") requiring that Defendant make regular contributions to the San Mateo Hotel Employees and Restaurant Employees Pension and Welfare Funds ("the Trust Funds") on behalf of its employees and binding Defendant to abide by all of the terms of the Trust Agreements. Complaint at 2, ¶ 5; see also Collective Bargaining Agreement, Sections 36-36, Ex. 1 to Declaration of Timothy Eagan in Support of Motion for Default Judgment ("Eagan Decl."). In particular, Plaintiffs allege that as of the filing of the complaint, Defendant had failed to make contributions to the Welfare Fund since December 1, 2002, and to the Pension fund since September 15, 2001. SAC at 3, ¶ 8. In the Second Amended Complaint, Plaintiffs seek unpaid contributions, liquidated damages, interest and attorneys fees and costs. SAC at 4, ¶ 2. In addition, Plaintiffs ask the Court to order Defendant to permit Plaintiffs to review all of Defendants' past payroll books and records. SAC at 3, ¶ 1.
After this action was initiated, the parties engaged in some informal discovery, and Defendant paid some of the delinquent contributions. Plaintiffs now seek an award of the following amounts: 1) $157,474.72 (unpaid contributions); 2) $15,747.47 (liquidated damages); 3) $6,229.42 (interest); and 4) $1,040.00 in attorneys' fees and costs. Plaintiffs stipulated at oral argument that they no longer seek an accounting or other injunctive relief requested in their complaint.
III. ANALYSIS A. Standard Governing Default Judgment 1. Discretion in Awarding a Default Judgment
Plaintiffs have applied for a default judgment in this action on the basis that Defendants have failed to appear after valid service. Under Federal Rule of Civil Procedure 55(b)(2), the court may enter a default judgment where the clerk, under Rule 55(a), has already entered the party's default based upon a failure to plead or otherwise defend the action. The district court's decision to enter a default involves some discretion. Lau Ah Yew v. Dulles, 236 F.2d 415 (9th Cir. 1956) (affirming district court's denial of default judgment). Further, Rule 55(c) allows the district court to exercise its discretion a second time by setting aside a default judgment in appropriate circumstances. The court is free to consider a wide range of factors in deciding whether to enter a default judgment, including: "(1) the possibility of prejudice to the plaintiff, (2) the merits of plaintiff's substantive claim, (3) the sufficiency of the complaint, (4) the sum of money at stake in the action, (5) the possibility of a dispute concerning material facts, (6) whether the default was due to excusable neglect, and (7) the strong policy underlying the Federal Rules of Civil Procedure favoring decisions on the merits." Eitel v. McCool, 782 F.2d 1470, 1471-1472 (9th Cir. 1986); see also Wright Miller, Federal Practice and Procedure, Civil § 2685. In deciding whether to enter a default judgment, the Court may also consider whether there would be grounds for setting aside the judgment if the defaulting party were to seek such relief. Id.
Here, there is no evidence in the record to suggest that the default was caused by excusable neglect. Nor is there any other evidence in the record that suggests that default judgment would be inappropriate. Therefore, Plaintiffs' Motion should be granted.
2. Liability as to "Well-Pleaded Allegations
Where a default judgment is deemed appropriate, the factual allegations of the complaint, except those relating to damages, are taken as true. Geddes v. United Fin. Group, 559 F.2d 557, 560 (9th Cir. 1977) (citing Pope v. United States, 323 U.S. 1, 12 (1944)). So long as the allegations in the complaint are "well-pleaded," liability is established as to those allegations by the default. Trans World Airlines Inc. v. Hughes, 308 F. Supp. (D.C.N.Y. 1969), modified on other grounds, 449 F.2d 51, rev'd on other grounds, 409 U.S. 363 (1973).
The claims in this action against Defendant are well-pleaded. In particular, Plaintiffs allege that the Collective Bargaining Agreement between Defendant and the Local 340 requires that Defendant shall make timely contributions to the Trust Funds. In addition, Plaintiffs have provided a copy of the Collective Bargaining Agreement in support of this allegation. Further, Plaintiffs allege that Defendant has not made these contributions or has made them late. These allegations, which are deemed true by virtue of Defendant's default, establish liability on the part of Defendant. B. Amount of Default Judgment 1. Section 1132(g)
Once liability is established in a default situation, a plaintiff must then establish the extent of damages. Geddes, 559 F.2d at 560. Under ERISA, § 1132(g) provides for statutory damages where a multi-employer plan successfully sues under 29 U.S.C. § 1145 (providing that "[e]very employer who is obligated to make contributions to a multiemployer plan under the terms of the plan or under the terms of a collective bargaining agreement shall . . . make such contributions in accordance with the terms and conditions of such plan or such agreement"); 29 U.S.C. § 1132(d)(1) (giving multi-employer plan standing to sue for unpaid contributions in federal district court). A plan that obtains judgment in its favor in an action for unpaid contributions under § 1145 is entitled to:
(A) the unpaid contributions,
(B) interest on the unpaid contributions,
(C) an amount equal to the greater of —
(1) interest on the unpaid contributions, or
(2) liquidated damages provided for under the plan in an amount not in excess of 20 percent . . . of the amount determined by the court under subparagraph (A),
(D) reasonable attorney's fees and costs of the action, to be paid by the defendant, and
(E) such other legal or equitable relief as the court deems appropriate.29 U.S.C. § 1132(g)(2). Section 1132(g) further provides that where the interest rate is not specified in the collective agreement, the Court is to use the rate specified in 26 U.S.C. § 6621.
2. Damages Sought By Plaintiffs a. Contributions
Plaintiffs seek $157,474.72 in unpaid contributions. In support of this request, Plaintiffs have provided reports prepared by Defendant showing that this amount is correct. See Supplemental Declaration of Timothy Eagan in Support of Motion for Default Judgment ("Eagan Supp. Decl."), Ex. 7-8. Accordingly, this amount should be awarded in full.
b. Liquidated Damages
In their Motion, Plaintiffs seek liquidated damages for late and unpaid contributions in the amount of $15,747.47. This is a straight 10% of the unpaid contributions, consistent with the terms of the Collective Bargaining Agreement. See Eagan Decl. Ex. 2, Amendment 3 (specifying 10% liquidated damages). This amount should be awarded in full.
c. Interest
In the Motion, Plaintiffs sought $8,093.57 in interest. This number was based on the short term interest rate, which, under 29 U.S.C. § 1132(g), is to be used when the collective bargaining agreement does not set forth a specific rate of interest. However, although the federal short term rate at the time the Motion was filed was 5% (the figure used to obtain the original interest calculation), it has now dropped to 4%. Therefore, Plaintiffs have revised their interest calculation to reflect the lower rate and now seek $6,229.00 in interest. This amount should be awarded in full.
3. Award of Attorneys' Fees and Costs
Having prevailed in this action for unpaid and late contributions, Plaintiffs are also entitled to reasonable attorneys' fees and costs of the action. 29 U.S.C. § 1132(g)(2)(D).
a. Attorneys' Fees
In this Circuit, the starting point for determining reasonable fees is the calculation of the "lodestar," which is obtained by multiplying the number of hours reasonably expended on litigation by a reasonable hourly rate. See Jordan v. Multnomah County, 815 F.2d 1258, 1262 (9th Cir. 1987). In calculating the lodestar, the Court must determine a reasonable rate and a reasonable number of hours for each attorney. Chalmers v. City of Los Angeles, 796 F.2d 1205, 1210 (9th Cir. 1986), reh'g denied, amended on other grounds, 808 F.2d 1373 (9th Cir. 1987).
Here, Plaintiffs seek $740.00 in attorneys' fees. Plaintiffs have submitted a declaration by one of Plaintiffs' attorneys, Michael Carroll, stating that Carroll spent over 4 hours on this action, and that the firm's billing rate is $185.00/hour. Declaration of Michael J. Carroll in Support of Motion for Default Judgment ("Carroll Decl."). Because the Court finds both the hours spent and the rate sought to be reasonable, it is recommended that Plaintiffs' request for $740.00 in attorneys' fees be granted.
b. Costs
Plaintiffs seek $300.00 for the following costs incurred in prosecuting this action: (1) $150.00 for the Clerk's filing fee; (2) $75.00 for service of process of the First Amended Complaint; and (3) $75.00 for service of process of the Second Amended Complaint. Carroll Decl. at ¶ 2. Under Civil Local Rule 54-3 ("Rule 54-3), an award of costs may include the clerk's filing fee and fees for service of process "to extent reasonably required and actually incurred." The court therefore recommends that Plaintiffs be awarded $150.00 for the filing fee and $150.00 for service of process fees.
IV. CONCLUSION
For the reasons stated above, it is recommended that default judgment be GRANTED. Plaintiffs should be awarded $179,451.61 in damages and $1,040.00 in attorneys' fees and costs.