Summary
finding plaintiff's calculations of damages and attorney fees reasonable, based on plaintiff's sworn declarations and pay stubs and other documentation submitted by plaintiffs
Summary of this case from Joe Hand Promotions, Inc. v. BeltranOpinion
No. C 03-04058 WHA.
April 15, 2004
ORDER GRANTING IN PART AND DENYING IN PART PLAINTIFFS' MOTION FOR ENTRY OF DEFAULT JUDGMENT AND VACATING HEARING
INTRODUCTION
Plaintiffs, in their respective capacities as trustees for the named trust funds, applied for entry of default judgment. Based on a review of the record under the Eitel factors, this order GRANTS IN PART and DENIES IN PART plaintiffs' motion.
STATEMENT
On September 5, 2003, plaintiffs filed a complaint against Shaw/Guehnemann Corp. and the president of defendant corporation, Ms. Lena Shaw. Ms. Shaw was named as a defendant in her individual capacity. The complaint alleged breach-of-contract under Section 502 of the Employee Retirement Income Security Act, 29 U.S.C. § 1132, and Section 301 of the Labor Management Relations Act, 29 U.S.C. § 185. (According to plaintiffs' brief, defendant Shaw/Guehnemann, Corp. is a suspended California corporation (Br. 4)). Plaintiffs alleged the following.
At all times material herein, plaintiffs were trustees of trust funds established under the ERISA and LMRA. These trust funds were employee-benefit plans created by written trust agreements and by collective bargaining. In September 1999, defendant corporation entered into a written collective-bargaining agreement with plaintiffs via its agreement with Operating Engineers Local Union No. 3. The collective-bargaining agreement expressly incorporated by reference the trust agreements. Under those agreements, inter alia, defendant corporation was required to make timely contributions into the trust funds for work covered by the agreements. The agreements required defendant corporation to report the number of hours worked by each of its employees by submitting reports of contributions, along with amounts owed to the trust funds. Under the agreements, failure to timely contribute or report to the trust funds was subject to liquidated damages and interest. The agreements provided for an audit of the signatory employer's books and records to ascertain whether all fringe-benefit contributions had been paid as required (Br. 5; McBride Decl. Exh. F). The agreements also provided for payment of all legal fees and costs incurred in any suit for unpaid contributions.
Sometime after January 2000 and before the filing of plaintiffs' complaint, Mr. Carlton White, an employee of defendant corporation, came forward with check stubs indicating that he performed work in January 2000, for which defendant corporation should have contributed $1,573.20 to the trust funds. Defendant had not done so. Additionally, defendant corporation had not submitted any reports of contributions from February 2000 to the present (McBride Decl. ¶ 8; Exh. D, E). Because defendant corporation had not paid, liquidated damages and interest in the amount of $1,008.95 was assessed against defendant corporation (ibid).
According to the agreements, if the employer was tardy in making trust-fund contributions, the trust fund could assess liquidated damages in the amount of thirty-five dollars or fifteen percent of the outstanding amount owed, whichever was greater. Until such amount was paid, interest was assessed at an annual rate of twelve percent of the contributions (McBride Decl. Exh. B).
Plaintiff served defendants with the summons and complaint on September 12, 2003. Defendants did not serve plaintiffs with a responsive pleading within twenty days, as required by FRCP 12(a)(1)(A), or otherwise appear in this case. Default was entered on January 14, 2004. Plaintiffs now request entry of judgment by default and damages equivalent to the remaining unpaid contributions, interest, liquidated damages, and attorney's fees and costs. They seek a total of $4,732.40. Plaintiffs also seek injunctive relief compelling defendant corporation to submit to an audit — pursuant to the trust agreements — of all documents relevant to the agreements. Following the audit, plaintiffs seek an accounting to be had between the parties, and that upon completion of the accounting the default judgment entered by this Court be amended by plaintiffs to incorporate any outstanding trust contributions and damages deemed due by defendants (Br. 6). Proper proof of service of the summons, complaint, and notice of default is on file.
ANALYSIS
Under Federal Rule of Civil Procedure 55(b)(2), a party may apply to the court for entry of default judgment. Whether to grant a motion for default judgment is within the discretion of the trial court. Lau Apprehension Yew v. Dulles, 236 F.2d 415, 416 (9th Cir. 1956). In the Ninth Circuit, a court is to consider the following factors in exercising this discretion:
(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 this 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, 1471-72 (9th Cir. 1986). These factors favor GRANTING IN PART and DENYING IN PART plaintiffs' motion for entry of default judgment.
1. CLAIM AGAINST MS. SHAW.
Ms. Shaw is being sued here not in her capacity as an officer of defendant corporation, but as an individual (Br. 1). However, Ms. Shaw is a party to the collective-bargaining agreement in her capacity as an officer of defendant corporation (McBride Decl. Exh. A). She did not sign in an individual capacity. Plaintiffs' allegation that Ms. Shaw is individually liable are conclusory, as plaintiffs provide no evidence of Ms. Shaw's individual wrongdoing. This order will not rely on ipse dixit to find Ms. Shaw individually liable. See Slottow v. American Casualty Co., 10 F.3d 1355, 1359 (9th Cir. 1993). This order therefore DENIES plaintiffs' motion as to Ms. Shaw.
2. CLAIM AGAINST SHAW/GUEHNEMANN CORPORATION.
With regards to defendant Shaw/Guehnemann Corp., the first three Eitel factors favor entry of default judgment. To deny plaintiffs' motion would leave them without a remedy. Prejudice is also likely in light of the merits of their claim. The elements of a claim for unpaid contributions are: (1) the trust fund is a multi-employer plan as defined by 29 U.S.C. § 1002(37)(A); (2) the defendant is an employer obligated to contribute under the plan's terms; and (3) the defendant failed to contribute in accordance with the plan. Upon entry of default, the factual allegations of the complaint will be taken as true. See Televideo Systems, Inc. v. Heidenthal, 826 F.2d 915, 917 (9th Cir. 1987).
The complaint alleges facts in support of finding every necessary element. According to the complaint, the trust funds were set up as employment-benefit plans under ERISA and LMRA. Defendant corporation agreed, via its written collective-bargaining agreement with the local union, to report and contribute fringe benefits to the trust funds. Thereafter, defendant breached its contractual obligations by failing to report and contribute to the trust funds. Accepting all factual contentions as true at this stage of default, plaintiffs have made a strong showing of likelihood of success on the merits.
A. Relief Requested.
The fourth Eitel factor — "the sum of money at stake in this action" — looks to the relief sought by plaintiffs. Plaintiffs seek $1,573.20 in unpaid contributions and $1,008.95 in liquidated damages and interest. With regard to the unpaid contributions, plaintiffs provided copies of Mr. White's check stubs and a summary of the calculation of liability based on those stubs produced by the administrator for the trust funds (McBride Decl. Exh. D). With regard to the liquidated damages and interest, plaintiffs provided an "Employer Statement of Account" produced by the collections manager's office for the Operating Engineers Local Union No. 3 ( id. Exh E). Plaintiffs also seek $2,150.25 in attorney's fees and costs pursuant to Section 12.13.02 of the collective-bargaining agreement. That section permits plaintiffs to recover reasonable attorney's fees and costs. Plaintiffs' counsel submitted a sworn declaration consisting of a statement and detailed accounting of attorney's fees and costs of litigation incurred in this matter. Based on plaintiffs' declarations, the monetary damage amounts are reasonable.
Plaintiffs also seek injunctive relief ordering defendant to:
submit to an audit by auditors selected by the Trust Funds at the premises of SHAW/GUEHNEMANN during business hours, at a reasonable time or times, and to allow said auditors to examine and copy such books, records, papers, reports of SHAW/GUEHNEMANN that are relevant to the enforcement of the collective bargaining agreement or Trust Agreements . . .
(Br. 11). Article IV of the Trust Agreement for the Pension Trust Fund for Operating Engineers, which plaintiffs claim is representative of the language of the other trust fund agreements, specifically provides that:
Reasonable cause appearing therefor upon notice in writing from the Board, a Contributing Employer must permit a certified public accountant appointed by the Board to enter upon the premises of such employer during business hours, at all reasonable time or times, and to examine and copy such books, records, papers or reports of such Contributing employer as may be necessary to determine whether such Contributing Employer is making full and prompt payment of all sums required to be paid by him or it to this Fund.
(McBride Decl. Exh. F). Where a collective-bargaining agreement gives trustees of an employee-benefit plan the right to audit an employer's records, that right will be enforced. Central States, Southeast and Southwest Areas Pension Fund, et al v. Central Transport, Inc., et al, 472 U.S. 559, 581 (1985). Therefore, plaintiffs' request for this Court to enjoin defendants to submit to the aforementioned audit is reasonable.
However, plaintiffs also seek that upon completion of the audit, plaintiffs be empowered to amend the default judgment to include any outstanding trust contributions and damages determined due after the audit; therein ordering defendant corporation to pay such sum. Plaintiffs will not have any such blank check. This Court will retain jurisdiction over this matter. Plaintiffs may submit further motions and declarations after the audit as to amounts owed. Plaintiffs' request for the power to amend the default judgment is therefore DENIED.
B. Remaining Factors.
The remaining Eitel factors on balance favor entry of default judgment. There is no dispute concerning the material facts. Defendants have refused to litigate this action after being properly served with the summons, complaint, and notice of default. It is unlikely that the default was the result of excusable neglect. Although federal policy may favor decisions on the merits, Federal Rule of Civil Procedure 55(b) permits entry of default judgment in situations such as this where defendants refuse to litigate.
CONCLUSION
Based on the foregoing, plaintiffs' motion as to Ms. Shaw is DENIED. Plaintiffs' motion as to Shaw/Guehnemann Corp. is GRANTED IN PART and DENIED IN PART. Shaw/Guehnemann Corp. shall pay $4,732.40 to plaintiffs for unpaid contributions, interest, liquidated damages, and attorney's fees and costs. Shaw/Guehnemann Corp. shall submit to an audit under the conditions expressed in the trust agreements. Plaintiffs shall not have the power to amend this Court's judgment following the audit. This Court retains jurisdiction over this case with regard to contributions and damages determined owed to plaintiffs during the audit. Following the audit, the parties will meet and confer so as to settle the remaining amount due, if any. If the parties cannot agree on a final amount, plaintiffs may submit another claim for the amount owed. The hearing on this motion, scheduled for April 22, 2004, is VACATED.