Board of Trustees of the Laborers Health and Welfare Trust Fund For Northern California et al v. Tear-N-It Up Demolition, Inc. et al

Northern District of California, cand-4:2015-cv-01215

REPORT AND RECOMMENDATIONS re {{19}} MOTION for Default Judgment. Objections due by 9/22/2015. Signed by Judge Joseph C. Spero on September 8, 2015. (jcslc3S, COURT STAFF)

Interested in this case?

Current View

Full Text

4 1 2 3 4 UNITED STATES DISTRICT COURT 5 NORTHERN DISTRICT OF CALIFORNIA 6 BOARD OF TRUSTEES OF THE 7 LABORERS HEALTH AND WELFARE Case No. 15-cv-01215-JSW (JCS) TRUST FUND FOR NORTHERN 8 CALIFORNIA, et al., REPORT AND RECOMMENDATION 9 Plaintiffs, REGARDING MOTION FOR DEFAULT JUDGMENT 10 v. Re: Dkt. No. 19 11 TEAR-N-IT UP DEMOLITION, INC., et al., 12 Defendants. Northern District of California United States District Court 13 I. INTRODUCTION 14 In this ERISA enforcement action, Plaintiffs bring a Motion for Default Judgment 15 ("Motion") against Defendants Tear-N-It Up Demolition, Inc. ("TUD") and Guadalupe Manuel 16 Cervantes.1 They seek an entry of judgment awarding unpaid employee benefit contributions, 17 liquidated damages, interest, attorneys' fees, and costs. They also request an order compelling 18 TUD to submit to an audit of its records. The Motion was referred to the undersigned for a report 19 and recommendation. A hearing on the Motion was held on September 4, 2015 at 9:30 a.m. 20 For the reasons stated below, the Court RECOMMENDS that the District Court GRANT 21 the Motion. 22 II. BACKGROUND 23 A. Facts 24 The Complaint lists the following trust funds ("Trust Funds") as Plaintiffs: (1) Laborers 25 Health and Welfare Trust Fund for Northern California; (2) Laborers Vacation-Holiday Trust Fund for Northern California; (3) Laborers Pension Trust Fund for Northern California; and (4) 26 27 1 28 Defendant Cervantes has since been dismissed. To the extent that the Motion seeks a judgment against Cervantes, it is recommended that it be DENIED as moot. 4 1 Laborers Training and Retraining Trust Fund for Northern California. Compl. ¶ 3. The Trust 2 Funds are employee benefit plans within the meaning of Sections 3(3) and 3(7) of ERISA, 29 3 U.S.C. §§ 1002(3), (37). Id. 4 On April 1, 2007, TUD entered into a Memorandum of Agreement with the Northern 5 California District Council of Laborers, agreeing to be bound by the Northern California Laborers 6 Master Agreement ("Master Agreement") and the agreements that govern each of the Trust Funds 7 ("Trust Agreements"). Id. ¶ 9; Declaration of Michelle Lauziere in Support of Motion for Default 8 Judgment ("Lauziere Decl.") Ex. D (2007 Memorandum of Agreement). TUD later renewed this 9 agreement on March 4, 2014. Compl. ¶ 7; Lauziere Decl. Ex. E (2014 Memorandum of Agreement). 10 The Trust Agreements specify that the Trust Funds "consist[] of all Contributions required 11. . . to be made for the establishment and maintenance of the [trust fund], including all interest, 12 Northern District of California United States District Court income and other returns of any kind."2 Lauziere Decl. Ex. B (Recitals of the Amended and 13 Restated Trust Agreement Establishing the Laborers Pension Trust Fund for Northern California, 14 dated September 2008 ("Pension Trust Agreement")), Art. II § 1. Under the Trust Agreements, 15 employers are required to make monthly contributions to the Trust Funds for hours worked by 16 union employees for the employer during each given month. Id. Ex. A (Article II of the Pension 17 Trust Agreement) ¶¶ 1, 2. These payments must be made no later than the twenty-fifth day of the 18 following month. Id. Ex. B, Art. II § 10. If payments are not made by that date, they become 19 delinquent. Id. 20 The Master Agreement specifies that delinquent contributions accrue simple interest at a 21 rate of 1.5% per month. Lauziere Decl. Ex. F (Section 28 of the Laborers' Master Agreement) § 22 28A. It sets forth the rate schedule for contributions employers are required to make to each of the 23 various Trust Funds. Id. Along with the Trust Fund Liquidated Damages Policy, the Master 24 Agreement also provides for liquidated damages for delinquent contributions at a flat rate of $150 25 26 2 Plaintiffs have only supplied exhibits for the Pension Trust Fund for Northern California, 27 although they represent that the Trust Agreements for all four of the Trust Funds contain identical terms and conditions. Lauziere Decl. ¶ 4 & Exs. A, B, and C (Article IV, Sections 3 to 14 of the 28 Pension Trust Agreement). Therefore, the references to the Pension Trust Fund for Northern California apply to all the Trust Funds. 2 4 1 per month: 2 Subject to accounting verification, liquidated damages shall be assessed on delinquent contributions at a flat rate of one hundred 3 and fifty dollars ($150.00) per month to reflect the internal administrative costs incurred by the trust administrators in 4 monitoring and tracking such late contributions. 5 Id.; see also Lauziere Decl. Ex. G (copy of the Trust Funds' Liquidated Damages Program— 6 Board Policy). 7 Finally, the Trust Agreements require employers to submit to an audit of its books and 8 records to allow the Trust Funds to conduct a proper accounting of contributions due: 9 Upon receipt of a written request from the Board, an Individual Employer agrees to permit an auditor designated by the Board to 10 enter upon the premises. . . to examine and copy books, records, papers or reports. . . to determine whether that Individual Employer 11 is making full and prompt payment of all sums required to be paid by him or it to the Fund. 12 Northern District of California Lauziere Decl. Ex. C § 7. United States District Court 13 B. Plaintiffs' Complaint 14 On March 13, 2015, Plaintiffs filed the Complaint in the Northern District of California 15 containing three counts against TUD. Plaintiffs generally allege that TUD failed to pay 16 contributions for the following periods: March 2014 through April 2014, and December 2014 17 through January 2015. They also allege that Defendant paid late contributions for the following 18 periods: March 2011 through August 2012; November 2013 through December 2013; January 19 2014 through February 2014; and during the month of September 2014. 20 Specifically, as to Count One, Plaintiffs assert a breach of contract cause of action against 21 TUD for its failure to pay contributions and failure to pay contributions on time. Compl. ¶¶ 8–15. 22 In Count Two, Plaintiffs assert a statutory cause of action against TUD, alleging that its failure to 23 pay contributions and pay contributions on time violated ERISA. Id. ¶¶ 16–20. Lastly, in Count 24 Four, Plaintiffs allege that TUD's violations entitle Plaintiffs to an order requiring it to submit to 25 an audit of its books and records.3 Id. ¶¶ 27–30. 26 27 28 3 Count Three stated a claim against Cervantes only, who has since been dismissed. 3 4 C. Service and Entry of Default 1 On March 28, 2015, Plaintiffs served the Complaint on TUD by personally delivering 2 copies of the Complaint to Cervantes as an agent for service of process for TUD. Dkt. 10 3 (certificate of service of the summons and complaint on TUD). TUD failed to answer the 4 Complaint or otherwise appear. The Clerk filed an entry of default against TUD on May 1, 2015. 5 Dkt. 15 (Clerk's notice of entry of default). 6 D. Motion for Default Judgment 7 On July 7, 2015, Plaintiffs filed a Motion for Default Judgment. Dkt. 19 (Motion for 8 Default Judgment). They request an entry of default judgment against TUD and an award of the 9 following relief: (1) $40,483.44 for unpaid contributions, interest on those unpaid contributions, 10 and liquidated damages; (2) $8,493.44 for contributions paid, but paid late, and interest on those 11 late contributions; (3) $8,543.00 for attorneys' fees and costs; and (4) an order requiring TUD to 12 submit to an audit of its business records beginning from March 2011 to the present, requiring Northern District of California United States District Court 13 TUD to pay any amounts found to be due and owing, and requesting the Court to retain 14 jurisdiction over this action to enforce the award. Id. at 11–13. 15 III. DISCUSSION 16 A. Legal Standards 17 Rule 55(b)(2) of the Federal Rules of Civil Procedure permits a court to enter default 18 judgment once the Clerk, under Rule 55(a), has entered the party's default based upon a failure to 19 plead or otherwise defend the action. Shanghai Automation Instrument Co., Ltd. v. Kuei, 194 F. 20 Supp. 2d 995, 999 (N.D. Cal. 2001). Whether to enter a judgment lies within the court's 21 discretion. Id.; PepsiCo, Inc. v. Cal. Sec. Cans, 238 F. Supp. 2d 1172, 1174 (C.D. Cal. 2002) 22 (citing Draper v. Coombs, 792 F.2d 915, 924–25 (9th Cir. 1986)) ("A defendant's default does not 23 automatically entitle the plaintiff to a court-ordered judgment."). 24 Before reaching the merits of a motion for default judgment, however, the court must first 25 confirm that it has subject matter jurisdiction over the case, personal jurisdiction over the parties, 26 and that service of process on the defendant was adequate. In re Tuli, 172 F.3d 707, 712 (9th Cir. 27 1999). If the court is satisfied that jurisdiction is proper and that service of process upon the 28 defendant was adequate, it considers several factors in determining whether to grant default 4 4 1 judgment: 2 (1) the possibility of prejudice to the plaintiff, (2) the merits of plaintiff's substantive claim, (3) the sufficiency of the complaint, (4) 3 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 4 excusable neglect, and (7) the strong policy underlying the Federal Rules of Civil Procedure favoring decisions on the merits. 5 Eitel v. McCool, 782 F.2d 1470, 1471–72 (9th Cir. 1986). In making this decision, the court takes 6 as true all factual allegations in the complaint, except those relating to damages. TeleVideo 7 Systems, Inc. v. Heidenthal, 826 F.2d 915, 917–18 (9th Cir. 1987) (citing Geddes v. United Fin. 8 Grp., 559 F.2d 557, 560 (9th Cir. 1977)). Where a court finds that default should be granted, it 9 may award damages if the plaintiff satisfies its burden of proving the damages through evidence. 10 Id. 11 B. Jurisdiction 12 Northern District of California The undersigned finds that the District Court has subject matter jurisdiction over this United States District Court 13 matter pursuant to 29 U.S.C. §§ 185(c) (granting labor union organizations the power to sue 14 employers in federal court) and 1132(e)(1) (empowering ERISA plan fiduciaries to bring civil 15 actions to enforce plan terms). The undersigned also finds that the District Court has personal 16 jurisdiction over TUD because TUD is a California corporation with its principal place of business 17 in Castro Valley, California. Compl. ¶ 7; Lauziere Decl. Ex. E. 18 C. Service of Process 19 The undersigned finds that service of process was adequate. A party may serve a 20 corporation "following state law for serving a summons in an action brought in courts of general 21 jurisdiction in the state where the district court is located or where service is made." Fed. R. Civ. 22 P. 4(e)(1); see also Fed. R. Civ. P. 4(h)(1)(A) (authorizing service of process on corporations "in 23 the manner prescribed by Rule 4(e)(1) for serving an individual"). Under California law, "[a] 24 summons may be served by personal delivery of a copy of the summons and complaint to the 25 person to be served." Cal. Code Civ. Proc. § 415.10. A summons can be served on a corporation 26 by delivering a copy of the summons and complaint to the person designated as agent for service 27 of process. Cal. Code Civ. Proc. § 416.10(a). The undersigned has reviewed the proofs of service 28 5 4 1 and finds that Plaintiffs properly served the summons and complaint on TUD by personal service. 2 Dkt. 10 (certificate of service of summons and complaint on TUD). 3 In addition, the record supports the conclusion that TUD is not otherwise exempt from 4 default judgment. "A default judgment may be entered against an infant or incompetent person 5 only if represented by a general guardian, committee, conservator, or other like fiduciary who has 6 appeared." Fed. R. Civ. P. 55(b)(2). TUD is a corporation and therefore is not an infant, 7 incompetent person, soldier or sailor. F.T.C. v. J.K. Publ'ns, Inc., No. 99-00044 ABC, 2000 U.S. 8 Dist. LEXIS 23397, at *1 (C.D. Cal. Aug. 31, 2000) ("Defendants are not corporations and are 9 therefore not infants or incompetent persons."). 10 Accordingly, the undersigned finds that TUD was properly served and is not otherwise 11 exempt from default judgment. 12 D. Eitel Factors Northern District of California United States District Court 13 The remaining claims in the Complaint against TUD are the following: (1) a breach of 14 contract cause of action in Count One; (2) an ERISA cause of action in Count Two; and (3) a 15 claim for equitable relief in Count Four. As to these claims, the undersigned finds that the Eitel 16 factors outweigh the "strong policy underlying the Federal Rules of Civil Procedure favoring 17 decision on the merits" for the reasons discussed below. Eitel, 782 F.2d at 1471–72. 18 First, Plaintiffs will suffer prejudice if the Court does not enter a default judgment against 19 TUD because Plaintiffs have no means to otherwise recover the contributions owed to them. Bd. 20 of Trs. v. Accu-Balance Assocs., Inc., No. C-05-3470 EMC, 2006 U.S. Dist. LEXIS 101206, at *5 21 (N.D. Cal. Nov. 16, 2006) (explaining in an ERISA enforcement action that "if the motion for 22 default judgment were to be denied, then the Trust Funds would likely be without a remedy"); 23 PepsiCo, 238 F. Supp. 2d at 1177 (finding that the plaintiff would be prejudiced if default 24 judgment were not entered). 25 With respect to the second and third Eitel factors, Plaintiffs have sufficiently pled facts 26 entitling them to relief for the claims sought. For their breach of contract claim in Count One, 27 Plaintiffs have offered evidence that TUD entered into a binding contract in the form of the 28 Memorandum of Agreement, which required it to perform in accordance with the terms set forth in 6 4 1 the Master Agreement and the Trust Agreements. Lauziere Decl. ¶¶ 7–14. These agreements 2 impose liability on employers for delinquent contributions that were either not paid, or were paid 3 late. Id. Exs. B, E. In the event the employer is delinquent on its contributions, Plaintiffs are 4 entitled to recover the unpaid contributions, liquidated damages, interest, and attorneys' fees and 5 costs. Id. Ex. E. Plaintiffs are also permitted to audit the employer's records. Id. Ex. C, Art. IV § 6 7. Similarly, for their ERISA claim in Count Two, Plaintiffs have offered evidence that they are 7 entitled to relief under 29 U.S.C. § 1145.4 As further discussed below, ERISA permits Plaintiffs 8 to recover the unpaid contributions, interest, liquidated damages, attorneys' fees and costs, and 9 "other legal or equitable relief as the court deems appropriate." 29 U.S.C. § 1132(g)(2). Finally, 10 as to Plaintiffs' claim in Count Four, both the contract and ERISA permit Plaintiffs to seek a 11 request to audit of TUD's books and records. Accordingly, the undersigned finds that Plaintiffs 12 have submitted a legally sufficient complaint on the merits. See Bd. of Trs. v. Piedmont Lumber & Northern District of California United States District Court 13 Mill Co., Inc., No. 10-1757 MEJ, 2010 U.S. Dist. LEXIS 125818, at *9–11 (N.D. Cal. Nov. 29, 14 2010). 15 Fourth, Eitel requires the Court to consider the entry of default judgment with respect to the 16 sum of money at stake in the action. "When the money at stake in the litigation is substantial or 17 unreasonable, default judgment is discouraged." Bd. of Trs. v. Core Concrete Const., Inc., No. 11- 18 2532 LB, 2012 U.S. Dist. LEXIS 14139, at *10 (N.D. Cal. Jan. 17, 2012) (citing Eitel, 782 F.2d at 19 1472). However, when "the sum of money at stake is tailored to the specific misconduct of the 20 defendant, default judgment may be appropriate." Id. (citing Bd. of Trs. v. Superhall Mech. Inc., 21 No. C-10-2212 EMC, 2011 U.S. Dist. LEXIS 70532, at *7 (N.D. Cal. June 30, 2011)). Here, the 22 sum of actual and statutory damages, interest, attorneys' fees, and costs that Plaintiff seeks against 23 TUD is $57,519.88. The undersigned finds this amount weighs in favor of default judgment 24 25 4 29 U.S.C. § 1145 reads in full: 26 Every employer who is obligated to make contributions to a 27 multiemployer plan under the terms of the plan or under the terms of a collectively bargained agreement shall, to the extent not 28 inconsistent with law, make such contributions in accordance with the terms and conditions of such plan or such agreement. 7 4 1 because it is supported by the evidence, tailored to TUD's alleged misconduct, and properly 2 calculated, as discussed below. See, e.g., Bd. of Trs. v. Valley Concrete Constr., No. C-14-03519 3 DMR, 2015 U.S. Dist. LEXIS 58976, at *12 (N.D. Cal. Apr. 7, 2015) (finding in an ERISA 4 enforcement action that a claim for $131,905.49 was reasonable because it was tailored to the 5 defendant's misconduct); Bd. of Trs. v. Torres, No. C-12-02633 DMR, 2014 U.S. Dist. LEXIS 6 156588, at *10–11 (N.D. Cal. Nov. 4, 2014) (finding similarly in an ERISA enforcement action 7 seeking $104,084.55 in damages). 8 Fifth, because TUD has failed to respond to this action, there is an absence of material facts 9 in dispute in the record from which the undersigned may weigh this factor. It is therefore neutral. 10 See Bd. of Trs. v. Perez, No. CV 10-02002 JSW (JCS), 2011 U.S. Dist. LEXIS 142570, at *21 11 (N.D. Cal. Nov. 7, 2011). 12 Sixth, TUD has not appeared, and there is no indication in the record that it defaulted due to Northern District of California United States District Court 13 excusable neglect. Rather, TUD was properly served with the Complaint, the notice of entry of 14 default, as well as the papers in support of this motion. Therefore, the undersigned finds that this 15 factor weighs in favor of default judgment also. See Shanghai Automation, 194 F. Supp. 2d at 16 1005 (finding that the defendant's failure to appear and lack of excusable neglect weighed in favor 17 of granting default judgment). 18 Considering these factors together, the undersigned finds that the first six Eitel factors in 19 Plaintiffs' claims against TUD outweigh the policy underlying the last Eitel factor that, "whenever 20 reasonably possible, cases should be decided on their merits." Perez, 2011 U.S. Dist. LEXIS 21 142570 at *22. Accordingly, the undersigned concludes that liability is established and 22 recommends that default judgment should be entered as to Plaintiffs' claims against TUD. 23 E. Damages 24 Once liability is established through a defendant's default, a plaintiff is required to 25 establish that the requested relief is appropriate. Geddes, 559 F.2d at 560 (citing Pope v. United 26 States, 323 U.S. 1, 12 (1944)). 27 1. Unpaid Contributions, Interest, and Liquidated Damages 28 When an employee benefit plan obtains judgment in its favor, ERISA requires the court to 8 4 1 award the following to the benefit plan: (1) unpaid contributions; (2) interest on the unpaid 2 contributions; (3) an amount equal to the greater of the interest on the unpaid contributions, or 3 liquidated damages as specified in the plan (generally not to exceed twenty percent of the unpaid 4 contributions); (4) reasonable attorneys' fees and costs; and (5) other legal or equitable relief that 5 the court deems appropriate. See 29 U.S.C. § 1132(g)(2). Interest on unpaid contributions under 6 § 1132(g)(2) "shall be determined by using the rate provided under the plan," if stated. Id. 7 However, "[t]o be entitled to a mandatory award under § 1132(g)(2), the following three 8 requirements must be satisfied: (1) the employer must be delinquent at the time the action is filed; 9 (2) the district court must enter a judgment against the employer; and (3) the plan must provide for such an award." Nw. Adm'rs, Inc. v. Albertso's, Inc., 104 F.3d 253, 257 (9th Cir. 1996). 10 Here, Plaintiffs are entitled to a mandatory award under § 1132(g)(2) for the periods March 11 2014 through April 2014, and December 2014 through January 2015. TUD was delinquent at the 12 Northern District of California United States District Court time the action was filed, and the Master Agreement and Trust Agreements provide for the relief 13 sought. See Lauziere Decl. Ex. C, Art. IV § 7; id. Ex. F § 28A. 14 Plaintiffs seek $31,760.76 for unpaid contributions during the periods March 2014 through 15 April 2014, and December 2014 through January 2015. Mot. at 11–12. In support, they submit an 16 exhibit summarizing the contribution reports from TUD for the months owed. Lauziere Decl. Ex. 17 H (summary of unpaid contributions per month by trust fund). The summary indicates that the 18 total sum of $31,760.76 in unpaid contributions consists of $4,355.28 for the Vacation-Holiday 19 Trust Fund, $14,837.76 for the Pension Trust Fund, $10,772.47 for the Health and Welfare Trust 20 Fund, $655.22 for the Apprentice and Training Trust Fund, and $1,140.03 for the Annuity Trust 21 Fund.5 Id. 22 Next, Plaintiffs seek $4,361.34 for interest on those unpaid contributions. Mot. at 11–12. 23 In support, they submit an exhibit summarizing the accrued interest on the unpaid contributions 24 for each of the Trust Funds during the months March 2014 through April 2014, and December 25 2014 through January 2015, and calculated at the rate of 1.5% through May 22, 2015. Lauziere 26 27 5 Article IV, Section 13 of the Pension Trust Agreement establishes the Annuity Trust Fund. Id. 28 Ex. C, Art. IV § 13(A). Trustees of the Pension Trust Fund retain exclusive authority to control and manage the Annuity Trust Fund. Id. Ex. C, Art. IV § 13(C). 9 4 1 Decl. Ex. I (summary of accrued interest per month on unpaid contributions by trust fund); 2 Lauziere Decl. Ex. F § 28A (specifying in the Master Agreement the interest rate and method of 3 calculation); see also 29 U.S.C. § 1132(g)(2) (allowing interest at the rate specified in the plan). 4 The summary indicates that $597.67 in interest was owed to the Vacation-Holiday Trust Fund, 5 $2,035.27 to the Pension Trust Fund, $1,508.07 to the Health and Welfare Trust Fund, $89.49 to 6 the Apprentice and Training Trust Fund, and $130.84 to the Annuity Trust Fund. 7 Finally, Section 1132(g)(2)(C) also allows Plaintiffs to recover "an amount equal to the 8 greater of—interest on the unpaid contributions, or liquidated damages provided for under the plan 9 in an amount not in excess of 20 percent" of $31,760.76. See 29 U.S.C. § 1132(g)(2)(C); see also Bd. of Trs. v. Contractors Chem., Inc., No. 14-cv-04159-JD, 2015 U.S. Dist. LEXIS 103405, at 10 *7–8 (N.D. Cal. Aug. 6, 2015) (explaining that under ERISA, benefit funds could recover § 11 1132(g)(2)(C) damages, in addition to interest under § 1132(g)(2)(B)). The Master Agreement 12 Northern District of California United States District Court sets forth liquidated damages at a rate of $150 per month. Lauziere Decl. Ex. F § 28A (listing the 13 liquidated damages rate); id. Ex. G (detailing the Trust Funds' liquidated damages policy). 14 Plaintiffs submitted evidence that TUD was therefore liable for $600 in liquidated damages for the 15 four months during the periods March 2014 through April 2014, and December 2014 through 16 January 2015. Id. Ex. I (summarizing liquidated damages per month by trust fund). However, as 17 discussed above, interest on unpaid contributions for those months totaled $4,361.34. Id. 18 Accordingly, under §1132(g)(2)(C), the undersigned recommends that Plaintiffs' request for 19 $4,361.34 be granted. See Contractors Chem., 2015 U.S. Dist. LEXIS 103405 at *7 (explaining 20 that the plaintiffs could have been entitled to "double interest" under § 1132(g)(2)(C) because the 21 amount of interest on unpaid contributions exceeded the amount of liquidated damages); Valley 22 Concrete Constr., 2015 U.S. Dist. LEXIS 58976 at *18 ("Given that the interest is greater than the 23 liquidated damages, [under § 1132(g)(2)(C),] Plaintiffs are entitled to an additional award of 24 interest. . . ."). 25 The undersigned finds the evidence provided sufficiently supports Plaintiffs' claim and 26 recommends the District Court grant their request for $31,760.76 in unpaid contributions, 27 $4,361.34 in interest, and an additional $4,361.34 in statutory damages under § 1132(g)(2)(C), for 28 10 4 1 a total of $40,483.44. 2 2. Interest and Liquidated Damages for Contributions Paid, but Paid Late 3 Next, Plaintiffs seek interest and liquidated damages for contributions paid, but paid late. 4 29 U.S.C. § 1132(g)(2) does not apply to this request because the request is not for contributions 5 that were unpaid at the time of this suit. Idaho Plumbers & Pipefitters Health & Welfare Fund v. 6 United Mech. Contractors, Inc., 875 F.2d 212, 215–17 (9th Cir. 1989) ("Because no contributions 7 were 'unpaid' at the time of this suit, § 1132(g)(2) does not apply."); see also Bd. of Trs. v. Shade 8 Const. & Eng'g, No. C 06-6830 PJH (EMC), 2007 U.S. Dist. LEXIS 103726, at *18 (N.D. Cal. 9 Oct. 19, 2007) ("Plaintiffs are not entitled to a statutory award of interest or liquidated damages 10 [on contributions paid but paid late] because remedies under 29 U.S.C. § 1132(g)(2) only apply to unpaid contributions."). 11 The Master Agreement provides that TUD is liable for liquidated damages in the amount 12 Northern District of California United States District Court of $150 for each month a contribution remains delinquent. Lauziere Decl. Ex. F § 28A. This 13 Court has found, under similar facts, that a provision providing for liquidated damages at a flat 14 rate of $150 per month in which the employer remained delinquent on contributions was 15 enforceable as a matter of federal common law. See Bd. of Trs. v. KMA Concrete Constr. Co., No. 16 SACV 09-1163 RNB, 2011 U.S. Dist. LEXIS 100747, at *21–22 (N.D. Cal. Dec. 20, 2011). For 17 the reasons stated in KMA, the undersigned finds that the liquidated damages provision in the 18 Master Agreement is enforceable. 19 Having found that Plaintiffs may recover liquidated damages for the months listed in the 20 Complaint, the Court must determine the amount of liquidated damages to which Plaintiffs are 21 entitled. Plaintiffs seek liquidated damages for late contributions for the following time periods: 22 (1) March 2011 through August 2012; (2) November 2013 through December 2013; (3) January 23 2014 through February 2014; and (4) September 2014. Lauziere Decl. Ex. J (Statement of Interest 24 and Liquidated Damages Due). In total, these are twenty-three months in which TUD paid 25 delinquent contributions. Subtracting one month in which Plaintiffs apparently waived the 26 liquidated damages charge, Plaintiffs seek a total of $3,300.00 corresponding to twenty-two 27 months of liquidated damages charges. Id. 28 11 4 1 Plaintiffs also seek interest for contributions paid late during the above time periods. The 2 Master Agreement provides for simple interest at a rate of 1.5% per month. Id. Ex. F § 28A. This 3 interest rate is reasonable. See Shade Const., 2007 U.S. Dist. LEXIS 103726 at *21–22 (finding 4 that a provision in the master agreement setting interest on late contributions at a rate of 1.5% per 5 month was enforceable). Plaintiffs' exhibit indicates that interest calculated through May 22, 6 2015 total $797.07 for the Vacation-Holiday Trust Fund, $2,249.32 for the Pension Trust Fund, 7 $1,791.80 for the Health and Welfare Trust Fund, $120.05 for the Training and Retraining Trust 8 Fund, and $235.20 for the Annuity Trust Fund, for a total of $5,193.44. 9 The undersigned finds the evidence provided sufficiently supports Plaintiffs' claim, and recommends the District Court grant their request for $3,300.00 in liquidated damages, and 10 $5,193.44 in interest, for a total of $8,493.44. 11 12 3. Attorneys' Fees Northern District of California United States District Court Plaintiffs are entitled to attorneys' fees under ERISA and the Trust Agreements. 29 U.S.C. 13 § 1132(g)(2)(D); Lauziere Decl. Ex. C, Art. IV § 3 ("If any Individual Employer defaults in the 14 making of Contributions. . . there will be added to the obligation of the Individual Employer who 15 is in default, reasonable attorney's fees [and] costs. . . ."). Plaintiffs request $7,863 in attorneys' 16 fees for a total of 27 hours of work. Declaration of Edward D. Winchester in Support of 17 Plaintiffs' Motion for Default Judgment ("Winchester Decl.") ¶ 7. This amount includes the 18 following fees: (1) $207 for work performed by Ronald Richman, a Senior Shareholder 19 (calculated for 0.6 hours at a rate of $345 per hour); and (2) $7,656 for work performed by Edward 20 D. Winchester, an Associate (calculated for 26.4 hours at a rate of $290 per hour). Id. Ex. B (copy 21 of attorneys' time sheet). 22 The undersigned finds the requested rates and amounts to be reasonable. Plaintiffs 23 provided detailed time sheets showing the time and tasks performed by each attorney for which 24 they seek fees. Id. Courts in this district have, in similar cases, awarded the same hourly rates 25 requested in this case for work performed by both attorneys, Mr. Richman and Mr. Winchester. 26 See Bd. of Trs. v. River View Constr., No. C-12-03514 PJH (DMR), 2013 U.S. Dist. LEXIS 69316 27 (N.D. Cal. Apr. 17, 2013) (finding Mr. Winchester's billed rate of $290 per hour was reasonable), 28 12 4 1 report and recommendation adopted, No. C 12-3514 PJH, 2013 U.S. Dist. LEXIS 69326 (N.D. 2 Cal. May 15, 2013); Bd. of Trs. v. A & B Bldg. Maint. Co., No. C-13-00731 DMR, 2013 U.S. Dist. 3 LEXIS 149888 (N.D. Cal. Oct. 1, 2013) (finding that Mr. Richman's billed rate of $345 per hour 4 was reasonable), report and recommendation adopted, No. C 13-00731 WHA, 2013 U.S. Dist. 5 LEXIS 149889 (N.D. Cal. Oct. 17, 2013). 6 Accordingly, the undersigned finds the attorneys' fees reasonable, and recommends the 7 District Court grant Plaintiffs' request for $7,863. 8 4. Costs 9 In the Motion, Plaintiffs request costs in the amount of $680, which consists of the 10 following: (1) $48 for document production; (2) $27 for a messenger service to deliver hard copies of the pleadings to the Court; (3) $400 for the filing fee in this case; and (4) $205 for the 11 cost of personal service. See Winchester Decl. Ex. B. Under Civil Local Rule 54-3, an award of 12 Northern District of California United States District Court costs may include the clerk's filing fee and fees for service of process "to the extent reasonably 13 required and actually incurred." In addition, the Trust Agreements provide for the recovery of all 14 expenses incurred in the collection of contributions owed. Therefore, the undersigned 15 recommends that all of the costs requested by Plaintiffs be awarded in full. 16 5. Audit 17 Plaintiffs request an injunction ordering TUD to submit to an audit of its records for the 18 period March 2011 through the last completed quarter: 19 Individual earnings records; federal tax forms W-3/W-2 and 20 1069.1099; reporting forms for all Trust Funds, State DE-3/DE-6 Tax Reports; Workers' Compensation insurance; employee time 21 cards; payroll registers/journals; quarterly payroll tax returns (Form 941); check register and supporting cash vouchers; forms 1120, 22 1040 or partnership tax returns; general ledger; source records, including time cards and time card summaries for all employees; 23 certified payroll reports; personnel records indicating job classifications and hire/termination dates; cash disbursement 24 journal; vendor invoices; copies of subcontract agreements; cash receipts journal; job cost records; records of related entities; and any 25 other books and records that may be necessary to complete the auditor's determination or provide additional explanation of 26 defendants' financial records. 27 Mot. at 12–13. Plaintiffs have also requested that the Court retain jurisdiction "should the audit 28 disclose additional amounts that may be owed by [TUD] to the Trust Funds." Id. at 13. The 13 4 1 undersigned recommends the District Court grant these requests because TUD is contractually 2 bound to allow Plaintiffs to conduct an audit of its records. See Lauziere Decl. Ex. C, Art. IV § 7; 3 see also Cent. States, Se. & Sw. Areas Pension Fund v. Cent. Transp., Inc., 472 U.S. 559, 569 4 (1985) (holding that where a collective bargaining agreement gives the benefit plan the right to 5 audit an employer's books and records, it will be enforced); Santa Monica Culinary Welfare Fund 6 v. Miramar Hotel Corp., 920 F.2d 1491, 1494 (9th Cir. 1990) (holding that a court can compel 7 audit when the trust agreement terms allow for it). Furthermore, courts in this district have 8 granted requests for audits containing similar language as those requested here. See, e.g., Valley 9 Concrete, 2015 U.S. Dist. LEXIS 58976 at *23; Perez, 2011 U.S. Dist. LEXIS 142570 at *42–43; 10 Bd. of Trs. v. Atoll Topui Island, Inc., No. C 06-3059 SBA, 2006 U.S. Dist. LEXIS 101026, at 11 *26–27 (N.D. Cal. Dec. 20, 2006). The undersigned also recommends the District Court retain 12 jurisdiction to ensure payment of any further amounts discovered to be owing during the audit. Northern District of California United States District Court 13 See Bd. of Trs. v. Montes Bros. Constr., Inc., No. C-14-1324 EMC, 2014 U.S. Dist. LEXIS 14 156659, at *16 (N.D. Cal. Nov. 5, 2014). 15 IV. CONCLUSION 16 For the reasons stated above, the undersigned recommends that the Motion be GRANTED 17 as to Defendant TUD, but DENIED as moot as to Cervantes. The undersigned recommends the 18 District Court award the following relief: (1) $40,483.44 for unpaid contributions, interest on 19 those unpaid contributions, and liquidated damages; (2) $8,493.44 for contributions paid, but paid 20 late, and interest on those late contributions; and (3) $8,543.00 for attorneys' fees and costs. In 21 addition, the undersigned recommends that TUD be ordered to comply with an audit of its 22 business records from March 2011 through the last full quarter. Finally, the undersigned 23 recommends that the District Court retain jurisdiction over this action. 24 Dated: September 8, 2015 25 ______________________________________ JOSEPH C. SPERO 26 Chief Magistrate Judge 27 28 14