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International Brotherhood of Electrical Workers District v. Metropolitan Netcomm

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA SAN JOSE DIVISION


October 5, 2010

INTERNATIONAL BROTHERHOOD OF ELECTRICAL WORKERS DISTRICT
PENSION PLAN; NORTHERN CALIFORNIA- NORTHERN NEVADA SOUND & COMMUNICATION DISTRICT NO. 9 HEALTH & WELFARE TRUST FUND; NORTHERN CALIFORNIA-NORTHERN NEVADA SOUND & COMMUNICATION DISTRICT NO. 9 APPRENTICESHIP & TRAINING COMMITTEE; JOHN O'ROURKE, AS TRUSTEE OF THE ABOVE,
PLAINTIFFS,
v.
METROPOLITAN NETCOMM, INC., A CALIFORNIA CORPORATION,
DEFENDANT.

The opinion of the court was delivered by: Lucy H. Koh United States District Judge

ORDER GRANTING IN PART AND DENYIN IN PART AMENDED MOTION FOR DEFAULT JUDGMENT

United States District Court For the Northern District of California

Three employee benefit trusts (International Brotherhood of Electrical Workers District 9 Pension Plan; the Northern California-Northern Nevada Sound and Communications District No. 9 22 Health and Welfare Trust Fund; and the Northern California-Northern Nevada Sound and 23 Communications District No. 9 Joint Apprenticeship and Training Committee) are funded pursuant 24 to a collective bargaining agreement between an electricians' union (International Brotherhood of 25 Electrical Workers, "IBEW") and an employers' association (National Electrical Contractors 26 Association, "NECA"). The trusts and their trustee, John O'Rourke, (collectively, "Plaintiffs") 27 bring this action against Metropolitan Netcomm, Inc. ("Defendant"). Plaintiffs allege that 28 Defendant is delinquent in its payments into the trusts as required by the collective bargaining agreement, in violation of the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 2 U.S.C. § 1145, and the Labor Management Relations Act ("LMRA"), 29 U.S.C. § 145. 3 4 motion"), ECF No. 18. Having considered the motion and supporting evidence, Plaintiffs' 5 amended motion for default judgment is hereby GRANTED in part and DENIED in part. 6

10 the Northern California-Northern Nevada Sound and Communications District No. 9 Health and Communications District No. 9 Joint Apprenticeship and Training Committee ("Apprenticeship") §§ 1002(3), (37) and 29 U.S.C. § 1132(d)(1) and jointly trusteed employee benefit trusts pursuant 15 to the LMRA, 29 U.S.C. § 186(c)(5). Compl. ¶ 3. Dominic Nolan is a trustee and fiduciary of the "employer" "engaged in an industry or activity affecting commerce" (electrical wiring installation) 18 within the meaning of 29 U.S.C. § 152 and 29 U.S.C. §§ 1002-03. Compl. ¶ 8. 19

Addendum #2 ("S&C Agreement"), a written collective bargaining agreement between the IBEW 22 Local Union (a union) and the National Electrical Contractors Association (an employers 23 association). The S&C Agreement also requires Defendant to be bound by applicable Trust 24 agreements, which established the Trusts. The S&C Agreement requires a monthly payment to 25 each Fund. See Amended Stephenson Decl., Ex. A at 25-28, 30-31 (S&C Agreement arts. V, VIII, 26 IX). The rates of contributions reflected in the agreements are consistent with the calculations on 27 the benefits transmittal forms prepared by Defendant. Compare id., Ex. A at 37 (S&C Agreement 28

Presently before the Court is Plaintiffs' amended motion for default judgment ("amended

I.Background

A.Factual History

In a Complaint filed on December 2, 2010, Plaintiffs allege as follows:

The International Brotherhood of Electrical Workers District 9 Pension Plan ("Pension"), Welfare Trust Fund ("Health"), and the Northern California-Northern Nevada Sound and 12 (collectively, "Trusts") are multi-employer employee benefit plans pursuant to ERISA 29 U.S.C. 14 Funds under ERISA and the LMRA. Compl. ¶ 4. Defendant ACS Controls Corporation is an 17 At all relevant times, Defendant was a signatory to a Letter of Assent binding it to the 9th District Sound & Communications Agreement & Northern California & Northern Nevada 21 Wages and Fringes Schedule 2-C, requiring employer contributions of $7.35 per job hour for Health Insurance, $1.10 per job hour for Apprenticeship, and $1.70 per job hour for 9th District 2

Pension); with id. Exs. F, H (benefits transmittal forms prepared by Defendant for January 2010 3 and February 2010, calculating benefits at the Schedule 2-C rates).

F, H, pursuant to the Heath Trust Agreement's provision allowing such collateral benefits 7 purchases. See id., Ex. C at 29-30 (Health Trust Agreement art. VII § 5 "Non-Bargaining Unit 8

Defendant's benefit transmittal forms also calculate fringe benefit contributions paid to 10 non-parties. Defendants paid $0.11 per employee hour to the National and the Local NECA-IBEW Administrative Maintenance Fund (AMF); and 0.5% of monthly payroll the National Electrical H; see also id., Ex. A at 37 (S&C Agreement Wages and Fringes Schedule 2-C, setting forth LMCC, NEBF, and AMF payments); Ex. A at 26 (S&C Agreement art. VII, setting forth NECA 17 payments).

Defendant's benefit transmittal forms also show flat monthly payment of $1,000 to the

Health Trust, to purchase health insurance coverage for non-union employee Tori Angland, id. Ex. 6

Employees of Participating Employers"). 9

Labor Management Co-Operation Committees (LMCC). Defendants also paid 3% of monthly payroll to the National Electrical Benefit Fund (NEBF); 0.5% of monthly payroll to the 13

Industry Fund benefiting the National Electrical Contractors Association (NECA). See id. Ex. F, The Trust Agreements provide for prompt payment of all employer contributions to the Funds and in case of late payments, the Trust Agreements provide for liquidated damages, 20 prejudgment interest, and attorney's fees. See id., Ex. C (Health Trust Agreement art. III § 4, 21 requiring payment by the tenth of the month and setting forth 10% liquidated damages and 8% 22 annual interest as penalties for delinquency; art. III § 9, providing for payment of attorney's fees 23 for collection actions); Ex. D (Pension Trust Agreement art. VIII § 2, requiring payment by the 24 twentieth of the month and setting forth 10% liquidated damages and 8% annual interest as 25 penalties for delinquency; art. VIII § 5, providing for payment of attorney's fees for collection 26 actions); Ex. E (Apprenticeship Trust Agreement art. IV § 4, requiring payment by the tenth of the 27 month and setting forth 10% liquidated damages and 12% annual interest as penalties for 28 delinquency; art. IV § 7, providing for payment of attorney's fees for collection actions).

2 contributions for the four months of December 2009 through March 2010. See Compl. ¶ 20. 3

Plaintiffs allege two causes of action: (1) failure to make obligatory payments to a multiemployer 4 plan under the terms of a collective bargaining agreement in violation of ERISA, Compl. ¶ 11-13; 5 and (2) breach of Articles VI and VII of the S&C Agreement in violation of the LMRA. Compl. ¶ 6 14-15. 7

Plaintiffs allege that Defendant breached the Trust Agreements by failing to pay required

B.Procedural History

On December 12, 2010, Plaintiffs filed this suit. See ECF No. 1. On December 22, 2010, Plaintiffs served Defendant with the summons and complaint. See ECF No. 5. Pursuant to Federal 10 February 9, 2011, as a result of Defendant's failure to answer the complaint, Plaintiffs filed a motion for entry of default. See ECF No. 6. On March 1, 2011, the Clerk of Court entered default. 1

15. On June 25, 2011, the Court denied Plaintiffs' initial motion for default judgment on the 15 grounds that insufficient evidence was submitted to support Plaintiffs' damages and attorney's fees 16 calculations. See ECF No. 17. Presently before the Court is Plaintiffs' amended motion for default 17 judgment, filed with supporting amended declarations on July 25, 2011. See ECF No. 18. 18

20 answer a complaint, the plaintiff may move the Court for an entry of default judgment. The grant 21 of default judgment is within the discretion of the Court. Draper v. Coombs, 792 F.2d 915, 924 22

(9th Cir. 1986). In the Ninth Circuit, the district court must consider seven factors: (1) the 23 possibility of prejudice to the plaintiff; (2) the merits of plaintiff's substantive claim; (3) the 24 sufficiency of the complaint; (4) the sum of money at stake in the action; (5) the possibility of a 25 dispute concerning material facts; (6) whether the default was due to excusable neglect; and (7) the 26 strong policy underlying the Federal Rules of Civil Procedure favoring decisions on the merits. 27

Eitel v. McCool, 782 F.2d 1470, 1471-72 (9th Cir. 1986). 28

Rule of Civil Procedure 12(a)(1), Defendant's answer was due on January 12, 2011. See id. On See ECF No. 11. Plaintiffs filed a motion for default judgment on April 19, 2011. See ECF No. 14

II.Legal Standard

Pursuant to Federal Rule of Civil Procedure 55(b)(2), when a defendant fails to timely

III. Discussion

2 contributions, liquidated damages for unpaid contributions, interest for unpaid contributions, and 3 attorney's fees and costs. Mot. at 3-4. 4

6 timely answer, leading the Clerk of Court to enter default against Defendant. See ECF Nos. 5, 11. 7

Procedure 55(b). See Eitel, 782 F.2d at 1471-72. Although strong public policy favors decisions 9 on the merits, in light of Defendant's refusal to litigate, the Court must examine whether default 10 judgment is appropriate in this case under Eitel.

Defendant has not presented a defense or otherwise communicated with the Court. Thus,

Defendant has failed to show excusable neglect. If Plaintiffs are not granted default judgment, the 13

Plaintiffs move the Court to enter default judgment against Defendant for unpaid

A.Default Judgment

Plaintiffs have presented proof of adequate service of process, and Defendant has failed to

The Court thus has discretion to grant or deny a default judgment under Federal Rule of Civil 8 Unions and Funds cannot recover the contributions owed to them. See Bay Area Painters and 14

Sept.23, 2010). The Court finds that Defendant's failure to demonstrate excusable neglect, 16 measured against the possibility of prejudice to Plaintiffs, favors default judgment. See San Mateo 17

*3 (N.D. Cal., November 22, 2010). 19

20 taken as true except as to the amount of damages. Fair Hous. of Marin v. Combs, 285 F.3d 899, 21

Clerk of Court entered default on March 1, 2011. Upon review of Plaintiffs' Complaint, and 23 pursuant to ERISA § 502, Plaintiffs have standing to enforce provisions of ERISA or to obtain 24 appropriate equitable relief to redress certain violations. 29 U.S.C. § 1132 (2006). Further, the 25

Defendant did not contribute to the Trusts as required by the Trust Agreements. 29 U.S.C. § 1145. 27

Thus, the merits of Plaintiffs' claims are deemed valid. Because the allegations are taken as true, 28 there is no possibility of a dispute concerning material facts. These factors favor granting default

Tapers Pension Trust Fund v. Lombari, No. 10-0709 SC, 2010 WL 3749401, at *3 (N.D. Cal. 15

Elec. Workers Health Care Trust v. ACS Controls Corp., No. 09-CV-05519, 2010 WL 4916420, at 18

Once the Clerk of Court enters default, all well-pleaded allegations regarding liability are 906 (9th Cir. 2002); Geddes v. United Fin. Group, 559 F.2d 557, 560 (9th Cir. 1977). Here, the 22 Court finds that Plaintiffs have adequately alleged a violation of § 515 of ERISA by showing that 26 judgment for Plaintiffs. See San Mateo Elec. Workers Health Care Trust v. ACS Controls Corp., 2 No. 09-CV-05519, 2010 WL 4916420, at *3 (N.D. Cal., November 22, 2010). $29,668.08, inclusive of attorney's fees and costs. Mot. at 10. This is a small amount when 6 compared to "the potential loss of benefits by Defendant's employees as a result of Defendant's 7 conduct." See Bd. of Tr. of the N. Cal. Sheet Metal Workers, v. Peters, No. C-00-0395, 2000 U.S. 8

A large sum of money in dispute weighs against granting default judgment. See Eitel, 782 F.2d at 1472 (affirming denial of default judgment for claim to $3 million). Here, Plaintiffs seek 5 Dist. Lexis 19065, at *5 (N.D. Cal. Dec. 29, 2000). Thus, the Court finds that this factor favors 9 default judgment. See San Mateo Elec. Workers Health Care Trust v. ACS Controls Corp., No. 09-10

In sum, the Court finds that the Eitel CV-05519, 2010 WL 4916420, at *3 (N.D. Cal., November 22, 2010). 11 factors favor granting default judgment. Accordingly, the Court GRANTS in part Plaintiffs' amended motion for default judgment. For the reasons 13 explained below, however, the Court DENIES a portion of the remedy requested.

16 interest, and attorney's fees and costs. Mot. at 5-10. 17

18

Accordingly, the Court is obligated to award the unpaid contributions, interest on the contributions, 20 the greater of interest on the unpaid contributions or liquidated damages as provided by the plan, 21 and reasonable attorney's fees and costs. 29 U.S.C. § 1132(g)(2). 22

The Ninth Circuit has held that this provision is mandatory, and not discretionary, when (1)

23 defendant was delinquent when the action was filed, (2) the court is entering a judgment against 24 defendant, and (3) the Trust Agreements provide for these awards. Nw. Admin., Inc. v. Albertson's, 25 Inc., 104 F.3d 253, 257 (9th Cir. 1996). 26 28 month following the month in which the employees' work was performed. Delinquent contributors

B.Remedy

Plaintiffs contend that Defendant should pay delinquent contributions, liquidated damages, This action was brought by Plaintiff O'Rourke, the fiduciary of the Trusts, to enforce

Defendant's duties to make regular contributions to the Trusts under 29 U.S.C. § 1145. 19

1.Contributions

Under the Trust Agreements, contributions are due by either the tenth or twentieth of the are liable for liquidated damages of 10% on late contributions and for attorney's costs and fees 2 incurred enforcing collection by the Funds. The Trust Agreements provide for various rates of 3 annual interest on delinquent contributions ranging from 8% to 12%. In the case of the Pension 4

Trust Agreement, the annual interest rate of 12% is charged not only on the principle, but also on 5 the liquidated damages. The terms of these agreements are in accordance with 29 U.S.C. § 6 Plaintiffs claim $21,691.17 in delinquent contributions for the four months of December 2009 through March 2010. Mot. at 5-6. Plaintiffs derive this figure from a series of emails sent to 9 them on behalf of the Defendant by Tori Angland. See Amended Bissen Decl. ¶ 2, Ex. A. The 10 emails include a spreadsheet accounting for the specific amount of fringe benefits owed for each month from December 2009 through March 2010: $6,168.36, $4,437.51, $5,736.15, and $5,349.15, respectively. 13

Decl., Exs. F, H. The January 2010 form shows $4,817.55 fringe benefits owed. See id., Ex. F. 16

Plaintiffs suggest that the correct calculation was $5,173.62. See id., Ex. G. The Court has 18 independently calculated the amount owed for January 2010, using the formulas listed on 19

Defendant's benefits transmittal form. These formulas are consistent with the S&C Agreement and 20 the Trust Agreements. The Court's calculation matched Plaintiffs' calculation of $5,173.62 and 21 suggests arithmetic errors by Defendant.*fn1 However, Plaintiffs do not seek to recover the 22

$5,173.62, and instead only seek to recover the $4,437.51 admitted in Defendant's email. 23

Plaintiffs further support the amounts owed for the two months of January 2010 and February 2010 with benefits transmittal forms prepared by Defendant. See Amended Stephenson 15 This is more than the $4,437.51 listed in Exhibit A. This discrepancy is unexplained, and in fact Defendant's February 2010 benefits transmittal form shows that the Defendant calculated $5,736.15 in fringe benefits owed. This is the same amount of fringe benefits that Defendant's 3 email later admitted was delinquent, and the amount which Plaintiffs now seek to recover. See 4 Amended Stephenson Decl., Ex. H. However, the Court again discovered multiple arithmetic 5 errors by Defendant in the February 2010 form. The correct amount owed is only $3,707.26.*fn2 6

7 for December 2009 and March 2010. If Defendant's calculation errors were uniformly incorrect to 8

However, Defendant's calculations were low for January 2010 and high for February 2010, and 10 over these two months combined Defendant overstated its obligations by nearly $1,300. The Court

is unwilling to presume the accuracy of Defendant's calculations for December 2009 and March

2010, where Plaintiffs have neglected to submit benefits transmittal forms that would provide 13 evidence as to the hours worked and wages earned by Defendant's employees. Thus, Plaintiffs 14 have provided insufficient evidence as to the amount of unpaid contributions from December 2009 15 and March 2010. In consequence, the Court cannot determine the contributions owed for these two 16 months. However, Defendant's contribution to the Health Trust for Tori Angland was at a flat rate 17 of $1,000 per month, independent of her hours worked and wages earned. The emails between Ms. 18

Defendant at least into May 2010. See Amended Bissel Decl., Ex. A. Therefore, the Court awards In seeking to recover the full amount of fringe benefit contributions owed by Defendant, Plaintiffs overlook the fact that both Defendant's benefits transmittal forms and Plaintiffs' 23 corrected fringe benefits contribution calculations for January 2010 include contributions owed to 24 non-plaintiffs. These non-plaintiffs are the National and the Local NECA-IBEW Labor 25

National Electrical Industry Fund benefiting the National Electrical Contractors Association 27

The Court does not accept the accuracy of Defendant's calculations of the amounts owed Plaintiffs' detriment, Plaintiffs might be entitled to simply accept Defendant's own calculations. 9 Angland and the Plaintiffs provide evidence that Ms. Angland continued working for the 19 $1,000 for December 2009 and $1,000 for March 2010. 21

Management Cooperation Committees (LMCC), the National Electrical Benefit Fund (NEBF), the (NECA), and the Administrative Maintenance Fund (AMF). These entities are not named 2 plaintiffs in this action. Furthermore, the Court notes that O'Rourke is only named as Plaintiff on 3 the grounds that he is a trustee of the Health, Pension, and Apprenticeship Trusts, and there is no 4 evidence that O'Rourke has a relationship with the non-plaintiff recipients of fringe benefits 5 contributions. The Court will not award Plaintiffs monies that are owed to non-plaintiffs, simply 6 because the Defendant incurred both sets of obligations through overlapping transactions. 7

8 reduced proportionally. Plaintiffs are owed $1.70 per hour for Pension, $7.35 per hour for Health, 9 and $1.10 per hour for Apprenticeship, for a total of $10.15 per hour. Plaintiffs are also owed 10

$4,755.50. For February 2010, $10.15 x 240 $1,000 = $3,436. Thus, the Court awards

$10,191.50 in unpaid principle for the four month period from December 2009 through March 13 Because recovery of monies owed to non-plaintiffs is unwarranted, Plaintiffs' remedy is $1,000 per month for Ms. Angland's health insurance. For January 2010, $10.15 x 370 $1,000 = 2010. Plaintiffs had the opportunity to submit documentation of the hours worked by union 14 employees in December 2009 and March 2010, but failed to do so. 15

2.Liquidated Damages

Plaintiffs seek 10% of the entire unpaid principle in liquidated damages, per the Trust Agreements. See Mot. at 6. This is an appropriate application of 29 U.S.C. § 1132(g)(2). See 18 Thus, Plaintiffs are entitled to an award of $1,019.15 in liquidated damages. 21

22 consciously make three approximations that work to their own detriment. First, Plaintiffs seek 8% 23 simple interest per annum on all unpaid contributions, even though unpaid contributions to the 24

Pension Trust are entitled to 12% interest. See Amended Bissel Decl. ¶ 3-6 (calculating interest 25 owed for each month); Ex. D (Pension Trust Agreement art. VIII § 2). Second, Plaintiffs seek 26 interest only on the principle, even though they are entitled to prejudgment interest on the 27 liquidated damages owed to the Pension Trust. Id. Third, Plaintiffs begin counting interest from 28 the twentieth of each month, even though the Health Trust and the Apprenticeship Trust are owed

Roofers Local Union No. 81 v. Wedge Roofing, Inc., 811 F. Supp. 1398, 1401-02 (N.D. Cal.1991). 19

3.Prejudgment Interest

To ease the calculation of prejudgment interest on the unpaid contributions, Plaintiffs their payments on the tenth of each month. Id. Thus, each Trust seeks slightly less than it is owed, 2 but it need not pay for the attorney hours that would be required to calculate each Trust's 3 prejudgment interest independently. The Court finds Plaintiffs' methodology to calculate 4 prejudgment interest reasonable. 5

The Plaintiffs seek interest running through September 29, 2011. The Court is reluctant to 6 award interest accruing after Plaintiffs' initial, insufficient motion for default judgment. However, 7 because Plaintiffs' recovery has been delayed during the pendency of this amended motion, and 8 because the award of prejudgment interest is not discretionary, the interest is awarded as requested. Thus, Plaintiffs' are awarded $1,283.99 in prejudgment interest.*fn3

See Nw. Admin., Inc. v. Albertson's, Inc., 104 F.3d 253, 257 (9th Cir. 1996).

13 and $847.00 in litigation costs incurred from the beginning of the case through the initial motion 14 for default judgment. Mot. at 6-9. Plaintiffs do not seek any fees in relation to this amended 15 motion. Id. at 8. In total, Plaintiffs seek $2,992.00 in attorney's fees and costs. 16

The Court calculates reasonable attorney's fees by calculating the hours "reasonably 17 expended on the litigation . . . by a reasonable hourly rate." Van Gerwen v. Guarantee Mut. Life 18

4.Attorney's Fees and Costs

Plaintiffs also request $2,145.00 in attorney's fees for 11.0 hours of work at $195 per hour Co., 214 F.3d 1041, 1045 (9th Cir. 2000). Plaintiffs have submitted evidence of their counsel's 19 experience and of other attorney's fee awards in this District for similar cases. Bissen Decl. ¶¶ 8-20 12. The Court finds that Plaintiffs' requested rate is "in line with those prevailing in the 21 community for similar services." Intel Corp. v. Terabyte Int'l, Inc., 6 F.3d 614, 622 (9th Cir. 22 1993). The Court also finds that Plaintiffs' requested hours are reasonable because they have 23 omitted the hours related to their amended motion.

IV. Conclusion

The unpaid principal, liquidated damages, interest, and attorney's fees and costs described 3 above total $15,486.64. Accordingly, the Court GRANTS in part and DENIES in part Plaintiffs' 4 amended motion for default judgment and awards Plaintiffs $15,486.64. 5 6

IT IS SO ORDERED.


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