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Hilda L. Solis, Secretary of Labor v. Empire Business Systems

January 21, 2011

HILDA L. SOLIS, SECRETARY OF LABOR,
UNITED STATES DEPARTMENT OF LABOR,
PLAINTIFF,
v.
EMPIRE BUSINESS SYSTEMS, INC., ET AL.,
DEFENDANTS.



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

ORDER GRANTING MOTION FOR DEFAULT JUDGMENT

Business Systems, Inc. 401(k) Plan for violations of the Employee Retirement Income Security Act 20 of 1974 ("ERISA"), 29 U.S.C. §§ 1001 et seq. Defendants did not file an Answer or otherwise 21 appear in this action. According to an affidavit submitted by the Secretary's investigator, Decl. of Investigator Julianne Krauss, attached as Exhibit A to Pl.'s Mot. for Default Judgment ("Krauss Decl."). The Clerk of the Court having issued an entry of default, the Secretary now seeks an entry of judgment with no hearing requested. Pursuant to Civil Local Rule 7-1(b), the Court deems the Secretary's motion appropriate for resolution without oral argument. For good cause shown, the Secretary's motion is GRANTED.

United States District Court For the Northern District of California

Plaintiff Hilda L. Solis, Secretary of Labor, United States Department of Labor (the "Secretary"), brought this action against Defendants Empire Business Systems, Inc. and Empire Defendant Empire Business Systems has not conducted business since sometime in 2003. See

I.BACKGROUND

The Secretary filed this action against Defendants Empire Business Systems, Inc.

("Empire") and Empire Business Systems, Inc. 401(k) Plan ("Plan") on May 26, 2010. According to the Secretary, the Plan is named as a Defendant pursuant to Fed. R. Civ. P. 19 "solely to ensure 5 that complete relief can be granted by the Court." The complaint alleges that Empire was the "Plan Administrator and Named Fiduciary of the 401(k) Plan." See Compl. at ¶ 7. The Secretary alleges 7 that Defendant Empire ceased operating sometime in 2003, but did not appoint a successor to 8 distribute the remaining Plan assets to the Plan's participants and beneficiaries. Id. at ¶¶ 9-11;

Krauss Decl. at ¶ 5(g). The Secretary submits that, as of November 4, 2009, the Plan had ten 10 participants and $12,879 in Plan assets. Id. at ¶ 13. Because of these circumstances, the Plan's participants are unable to access their account balances. The Secretary further alleges that the Plan's custodial trustee, "State Street Bank and Trust Company," will not authorize distribution of the remaining Plan assets without direction from a "properly-appointed fiduciary or a court-14 appointed independent fiduciary." Id. at ¶ 12.

fiduciaries or trustees with authority to disburse the Plan's assets violate the requirements of ERISA Sections 402(a), 29 U.S.C. § 1102(a), and Section 403(a), 29 U.S.C. § 1103(a). Plaintiff 18 moves for default judgment and requests that the Court: 1) remove Empire as the Plan Administrator and named fiduciary of the Plan; and 2) appoint an independent fiduciary withdiscretionary authority to administer the Plan and distribute the remaining assets.

United States District Court For the Northern District of California

Plaintiff claims that Defendant Empire's abandonment of the Plan and failure to name

II.DISCUSSION

A. Default Judgment

The district court's decision whether to enter a default judgment is a discretionary one. See Aldabe v. Aldabe, 616 F.2d 1089, 1092 (9th Cir. 1980) (citations omitted). After the Clerk enters a 25 party's default under FED. R.CIV. P. 55(a), the Court may enter a default judgment against the party. See Fed. R. Civ. P.55(b)(2). "A failure to make a timely answer to a properly served 27 complaint will justify the entry of a default judgment." Benny v. Pipes, 799 F.2d 489, 492 (9th Cir. 1986). "The general rule of law is that upon default the factual allegations of the ...


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