BOARD OF TRUSTEES OF THE CEMENT MASONS HEALTH AND WELFARE TRUST FUND FOR NORTHERN CALIFORNIA; BOARD OF TRUSTEES OF THE CEMENT MASONS VACATION-HOLIDAY TRUST FUND FOR NORTHERN CALIFORNIA; BOARD OF TRUSTEES OF THE CEMENT MASONS PENSION TRUST FUND FOR NORTHERN CALIFORNIA; BOARD OF TRUSTEES OF THE CEMENT MASONS TRAINING TRUST FUND FOR NORTHERN CALIFORNIA, Plaintiffs,
C AND C CONCRETE INC., and JOSE R. HERRERA, JR., Defendants.
ORDER GRANTING PLAINTIFFS' REVISED MOTION FOR DEFAULT JUDGMENT [Re: ECF No. 90]
LAUREL BEELER, Magistrate Judge.
Plaintiffs - the trustees of employee benefits plans for masons and other covered employees in the construction industry - sued Defendants C and C Concrete, Inc. ("C and C Concrete") and Jose R. Herrera, Jr. for failing to pay employee fringe benefits and make monthly reports in violation of the parties' collective bargaining agreement ("CBA"), the trust agreements, the Labor Management Relations Act ("LMRA"), 29 U.S.C. § 141 et seq., and the Employee Retirement Income Security Act ("ERISA"), Pub. L. No. 93-406 (codified in part at 29 U.S.C. § 1002 et seq. ). See First Amended Complaint ("FAC"), ECF No. 34. Plaintiffs dismissed Mr. Herrera from this action, Voluntary Dismissal, ECF No. 70, and now they seek a default judgment against C and C Concrete, Revised Motion, ECF No. 90. Following a hearing on June 6, 2013, and upon consideration of the papers submitted, the undersigned finds that (a) Plaintiffs established subject-matter and personal jurisdiction, and (b) the factors in Eitel v. McCool favor entry of default judgment against C and C Concrete. Accordingly, the court GRANTS Plaintiffs' motion and enters default judgment against C and C Concrete in the amount of $163, 833.16.
I. FACTUAL ALLEGATIONS
Plaintiffs are the administrators and trustees for the trust funds. FAC, ECF No. 32 ¶ 3. These trust funds are organized pursuant to the LMRA, and the trustees are fiduciaries of multiemployer benefit plans within the meaning of ERISA. Id. Each of the trust funds is a third-party beneficiary of the CBA described below. Id. ¶ 4.
C and C Concrete is a California corporation with its principal place of business in Lodi, California and is an employer engaged in an industry or activity affecting commerce within the meaning of Sections 3(5) and 515 of ERISA, 29 U.S.C. §§ 1002(2), 1145, and Section 301 of the LMRA, 29 U.S.C. § 185. Id. ¶ 7. Mr. Herrera is C & C Concrete's Regional Managing Officer, Chief Executive Officer, and President. Id.
Plaintiffs and C and C Concrete are parties to a CBA that requires C and C Concrete to pay (1) fringe benefits for their employees to employee benefit plans by the 15th day of the next calendar month, and (2) report the contributions for covered employees to the plan administrator. Id. ¶¶ 7-11, 13. C and C Concrete is a fiduciary as defined by ERISA Section 3(21), 29 U.S.C. § 1002(21), and therefore also is a party in interest as defined by ERISA Section 3(14)(A), 29 U.S.C. § 1002(14)(A). Id. ¶ 27. In the event that C and C Concrete fails to make the monthly installments on or before the 25th day of the month in which the employee fringe benefit contributions are due, C and C Concrete is subject to interest at the rate of 1.5% per month as well as liquidated damages of $150 for each month that the contribution is delinquent. See Revised Hagan Declaration, ECF No. 91 ¶ 16; id., Exh. H (Liquidated Damage Program - Board Policy), ECF No. 91-1 at 41-44.
Plaintiffs bring claims against Defendants for (1) Breach of Collective Bargaining Agreement, (2) Recovery of Unpaid Trust Fund Contributions, (3) Breach of Fiduciary Duty, and (4) Mandatory Injunction. See FAC, ECF No. 32 ¶¶ 8-34. In essence, they allege that Defendants failed to pay employee fringe benefits and make monthly reports, as required, and that Defendants failed to pay the resulting interest and liquidated damages, too. See generally id. More specifically, Plaintiffs allege that Defendants breached the CBA in the following ways:
A. By reporting, but failing to pay all employee fringe benefit contributions on behalf of its covered employees for the period August, September, November and December, 2009; January - December, 2010; and February and March, 2011, in the principal amount of $64, 114.28 ( see id. ¶ 13(a)), and by failing to pay additional interest and liquidated damages for the same periods ( see id. ¶ 13(b) (the "Reported, Not Paid Contributions, Interest, and Liquidated Damages"));
B. By failing to report and pay all employee fringe benefit contributions on behalf of the owner, Herrera, for the period April, May, June and October, 2009; October, November and December, 2010; and January, February and March, 2011 in the principal amount of $25, 871 ( see id. ¶ 13(c)), and by failing to pay interest and liquidated damages for the same periods ( see id. ¶ 13(d))(the "Owner Not Reported, Not Paid Contributions, Interest, and Liquidated Damages");
C. By failing to report and pay all employee fringe benefit contributions on behalf of the covered employees of C and C Concrete for the period September - December, 2008 and February - March, 2009 in the principal amount of $11, 705.48 ( see id. ¶ 13(e)), by failing to pay interest and liquidated damages for the same periods ( see id. ¶ 13(f)) (the "Audit Not Reported, Not Paid Audit Contributions, Interest, and Liquidated Damages"); and
D. By failing to pay liquidated damages on employee fringe benefit contributions that were paid, but paid late (the "Late Contributions"), for the period December, 2008 and January, February, April, June and July, 2009 in the amount of $1, 808.97 through April 25, 2011 ( see id. ¶ 13(g)).
II. PROCEDURAL HISTORY
On July 29, 2010, Plaintiffs filed a complaint against Defendants for failing to pay employee fringe benefits and make monthly reports, as required. See Complaint, ECF No. 1 ¶ 1. After serving Defendants with the complaints and summons, Plaintiffs, on September 3, 2010, requested that the Clerk of the Court enter default against Defendants for failing to answer its complaint. Complaint, ECF No. 1; Proof of Service, ECF No. 4 (Herrera); Proof of Service, ECF No. 5 (C & C Concrete); Request for Clerk's Entry of Default, ECF No. 6. A few days later, the Clerk of the Court entered default against Defendants. First Entry of Default, ECF No. 15.
On May 18, 2011, Plaintiffs filed a First Amended Complaint. FAC, ECF No. 32. After serving Defendants with the First Amended Complaint and Defendants failed to answer it, Plaintiffs requested the Clerk of the Court to enter default against Defendants with respect to the First Amended Complaint. Certificates of Service, ECF No. 34, 35; Motion for Entry of Default, ECF No. 38. On August 17, 2011, the Clerk of the Court entered default against Defendants. Second Entry of Default, ECF No. 41. Soon thereafter, Defendants filed an answer. Answer, ECF No. 42. In response, the parties filed, and the court granted, a stipulation to vacate the August 17, 2011 entry of default. Stipulation, ECF No. 44; Stipulation and Order, ECF No. 45.
Defendants were originally represented by attorney Scott Woodall. On May 25, 2012, the court granted Mr. Woodall's motion to withdraw. See Order Granting Defendants' Counsel's Motion to Withdraw, ECF No. 66 at 1. In the order, the court noted that "corporations may not appear in federal court except through counsel, " see N.D. Cal. Civil Local Rule 3-9(b), and ordered C & C Concrete to file a substitution of counsel by June 29, 2012. Id. at 3. After C and C Concrete failed to obtain a substitute counsel, Plaintiffs asked the court to strike C & C Concrete's answer to the First Amended Complaint. See Plaintiffs' Case Management Conference Statement, ECF No. 68 at 3. A few months thereafter, the court struck C and C Concrete's answer and invited Plaintiffs to seek C and C Concrete's entry of default and to proceed with a motion for default judgment. Order Striking Answer, ECF No. 74.
Plaintiffs again sought C and C Concrete's default, Request for Entry of Default, ECF No. 85, and the Clerk of Court entered C and C Concrete's default on March 26, 2013, Third Entry of Default, ECF No. 87. Plaintiffs thereafter filed the instant motion for default judgment against C and C Concrete. Revised Motion, ECF No. 90. C and C Concrete was served with the motion by mail on April 17, 2013. Certificate of Service, ECF No. 94. C and C Concrete has failed to respond to it, see generally Docket, and C and C Concrete also did not appear at the June 6, 2013 motion hearing, see 6/6/2013 Minute Order, ECF No. 97.
Before entering default judgment, a court must determine whether it has jurisdiction over defendants. See In re Tuli, 172 F.3d 707, 712 (9th Cir. 1999).
A. Subject-Matter Jurisdiction
Plaintiffs allege four claims in their First Amended Complaint: (a) the first under the LMRA for breach of the CBA, see 29 U.S.C. § 185(a); (b) the second under ERISA to recover unpaid trust fund contributions, see 29 U.S.C. §§ 1132(g)(2), and 1145; (c) the third under ERISA for breach of fiduciary duty, see 29 U.S.C. §§ 1002(21)(A), 1104, 1109; and (d) the fourth under ERISA for a mandatory injunction for an audit, see 29 U.S.C. § 1132(g)(2)(E). See FAC, ECF No. 32 ¶¶ 8-34. The court has subject-matter jurisdiction over these federal claims. See 28 U.S.C. § 1331(a).
B. Personal Jurisdiction
Plaintiffs served C and C Concrete and Mr. Herrera with the original complaint and the First Amended Complaint in California. Proofs of Service, ECF Nos. 4, 5, 34, 35. C and C Concrete is a California corporation doing business in the state of California with its headquarters in Lodi, California. FAC, ECF No. 32 ¶ 7; Richman Declaration, ECF No. 16 at 5, Exh. A (showing valid contractor's license for C and C Concrete, Inc. until January 31, 2012). The court has personal jurisdiction over C and C Concrete. See, e.g., S.E.C. v. Ross, 504 F.3d 1130, 1138 (9th Cir. 2007); Draper v. Combs, 792 F.2d 915, 924 (9th Cir. 1986).
II. DEFAULT JUDGMENT
Under Federal Rule of Civil Procedure 55(b)(2), a plaintiff may apply to the district court for - and the court may grant - a default judgment against a defendant who has failed to plead or otherwise defend an action. See Draper, 792 F.2d at 925. Default judgments are generally disfavored because "cases should be decided on the merits whenever reasonably possible." Eitel v. McCool, 782 F.2d 1470, 1472 (9th Cir. 1986). The court must consider the following factors when deciding whether to use its discretion to grant a motion for default judgment: (1) the possibility of prejudice to the plaintiff; (2) the merits of the plaintiff's substantive claims; (3) the sufficiency of the complaint; (4) the sum of money at stake in the action; (5) the possibility of a dispute about the material facts; (6) whether the default was due to excusable ...