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Resilient Floor Covering Pension Fund, et al., Inc v. Michael's Floor Covering

January 24, 2013

RESILIENT FLOOR COVERING PENSION FUND, ET AL., INC., PLAINTIFFS,
v.
MICHAEL'S FLOOR COVERING,
DEFENDANT.



The opinion of the court was delivered by: Jacqueline Scott Corley United States Magistrate Judge

ORDER RE: DEFENDANT'S MOTION FOR ATTORNEYS' FEES AND COSTS (Dkt. No. 117)

United States District Court Northern District of California

Now pending before the Court is Defendant's Motion for Attorneys' Fees and Non-Taxable Costs (Dkt. No. 117). The Court finds this matter suitable for disposition without 19 oral argument. See N.D. Cal. Civ. L.R. 7--1(b). Accordingly, the hearing set for January 31, 20 2013 is VACATED. Having considered the parties' pleadings and the relevant legal 21 authority, and for the reasons set forth in this Order, the Court DENIES Defendant's motion. 22

DISCUSSION

This suit arises out of the dissolution of Studer's Floor Covering, Inc. ("Studer's"), 24 which had performed building and construction industry work consisting of sales and 25 installation of residential and commercial flooring products in and around the Vancouver, 26 Washington and Portland, Oregon market from 1960 to 2009, and the subsequent opening of 27 Michael's Floor Covering, Inc. ("Michael's" or "Defendant") by a former Studer's salesman 28 in the same location. Plaintiffs, the Pension Trust Funds to which Studer's belonged, alleged that Michael's was a successor to Studer's and that Michael's should be ordered to either pay 2 withdrawal liability to Plaintiff Trust Fund or continue making monthly contributions, 3 including those now allegedly delinquent, under the CBA. Michael's liability under either 4 theory hinged on a finding that Michael's was a successor employer to Studer's. Because the 5 Court concluded that Michael's was not a successor, judgment was entered in Defendant's 6 favor. 7

"[i]n any action under this section, the court may award all or a portion of the costs and 9 expenses incurred in connection with such action, including reasonable attorney's fees, to the 10 prevailing party." Five factors guide the district court's exercise of discretion: (1) the degree 11 of the opposing parties' culpability or bad faith; (2) the ability of the opposing parties to 12 satisfy an award of fees; (3) whether an award of fees against the opposing parties would deter others from acting under similar circumstances; (4) whether the parties requesting fees 14 sought to benefit all participants and beneficiaries of an ERISA plan or to resolve a 15 significant legal question regarding ERISA; and (5) the relative merits of the parties' 16 positions. Hummell v. S.E. Rykoff & Co., 634 F.2d 446, 453 (9th Cir. 1980). "[T]the 17 ERISA plaintiffs." Carpenters S. California Admin. Corp. v. Russell, 726 F.2d 1410, 1416 19 (9th Cir. 1984). For the reasons explained below, the Court finds that here, too, the Hummell 20 factors suggest an award of fees is not warranted. 21

The Court finds that the first factor-degree of culpability or bad faith-weighs 23 against an award of fees and costs. The question of successor liability under the statute and 24 relevant case law is fact specific and required that the Court determine whether under the 25 "totality of the circumstances, there [was] 'substantial continuity' between the old and new 26 enterprise." Hawaii Carpenters Trust Funds v. Waiola Carpenter Shop, Inc., 823 F.2d 289, 27 294 (9th Cir. 1987). In doing so, the Court carefully weighed the successor liability factors 28 set forth in NLRB v. Jeffries Lithograph Co., 752 F.2d 459, 463-69 (9th Cir. 1985), and

Defendant now moves for attorneys' fees under 29 U.S.C. § 1451(e) which provides United States District Court Northern District of California Hummell factors very frequently suggest that attorney's fees should not be charged against 18

1. The Degree of Culpability or Bad Faith concluded that the majority of factors weighed against a successor employer finding. There 2 was, however, some evidence supporting Plaintiffs' position: among other evidence, 3

Michael's chose to open its business in the exact same location with the exact same 4 telephone number as Studer's the day after Studer's closed its business. While the Court 5 found that this evidence was not sufficient to compel a finding of successorship in light of 6 the record as a whole, Plaintiffs' successorship argument was not unreasonable. This 7 conclusion is especially warranted in light of Plaintiffs' argument that given the policy 8 reasons behind withdrawal liability and Congress's concern with the financial health of 9 pension funds, successor liability should be found under the facts presented here even if the 10 facts were not sufficient to support successor liability in other contexts. That this Court was 11 ultimately unpersuaded does not mean Plaintiffs acted with such culpability that they should 12 be required to pay Defendants' fees and costs.

15 status" by its actuary since March of 2010. (Dkt. No. 130.) "Specifically, for plan years 16 2019, 2020, and 2021, the plan will not have sufficient assets and employer contributions to 17 be funded at the minimum level required by federal law." (Id.) The Court therefore has 18 concerns as to whether the Fund could satisfy the fee award without undermining its finances 19 and jeopardizing retirees' vested pension benefits. 20

22 generally found less applicable to trustees than employers: 23

2. The Ability of the Opposing Party to Satisfy a Fee Award United States District Court Northern District of California Plaintiffs have offered evidence that the ...


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