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Central California Ibew/Neca Pension Trust v. Ozzimo Electric, Inc.

United States District Court, N.D. California, San Francisco Division

April 2, 2015

CENTRAL CALIFORNIA IBEW/NECA PENSION TRUST, et al., Plaintiffs,
v.
OZZIMO ELECTRIC, INC., Defendant.

REPORT AND RECOMMENDATION REGARDING DAMAGES

LAUREL BEELER, Magistrate Judge.

INTRODUCTION

Plaintiffs - the collective-bargaining representative and trustees of employee-benefits plans for employees working as electrical workers - sued Defendant Ozzimo Electric for failing to pay employee fringe benefits in violation of the parties' collective-bargaining agreements ("CBAs"). (Compl. - ECF No. 1.)[1] The court previously recommended that the district judge grant Plaintiffs' motion for default judgment, and the district judge then granted it, which resulted in: (1) an award of fees of $6, 273.50 and costs of $520.07; and (2) an order for a payroll audit covering January 2010 to the present and any monthly transmittals from March 2012 to the present to establish the unpaid contributions. (ECF Nos. 20, 22.) Plaintiffs have now submitted their audit. The undersigned recommends that the district judge enter judgment for $237, 475.92.

STATEMENT

This statement incorporates by reference the facts in the initial report and recommendation establishing the filing of the complaint, the allegations in it, its service on Ozzimo, and the service of both the entry of default and the default-judgment motion on Ozzimo. ( See ECF No. 20.) The record reflects that Plaintiffs also served the undersigned's report and recommendation on Ozzimo. (ECF No. 21.) As set forth in the January 23, 2014 report and recommendation, the terms of the CBA required Ozzimo to make timely monthly contributions for the benefit of its employees. (1/24/14 Report and Recommendation - ECF No. 20 at 3.) The complaint sought an audit to determine what Ozzimo had failed to pay in required contributions "during the period of the statute of limitations, " the amounts that that audit ultimately discovered Ozzimo owed, as well as missing monthly transmittals from March 2012 to the present. (Compl. - ECF No. 1 at 5, 8.) Plaintiffs also asked for an order compelling Ozzimo to produce documents from January 2010 forward to facilitate the audit; the undersigned recommended that the district judge grant, and the district judge later did grant, that request. ( See ECF Nos. 20, 22.)

In its order granting default judgment and ordering the audit, the district court retained jurisdiction "for the limited purpose of permitting Plaintiffs to file a second submission detailing any unpaid contributions that are revealed by the audit." (ECF No. 22 at 1.) On February 27, 2015, Plaintiffs filed the necessary submission and attached the audit, which had been conducted by Miller Kaplan Arase LLP, a certified public accounting firm. ( See ECF Nos. 29 at 2, 29-1 at 7.) The audit shows $139, 352.85 in unpaid or underpaid contributions. (ECF No. 29 at 5.) Plaintiffs additionally seek interest of $69, 496.79, liquidated damages of $13, 935.28, attorney's fees of $10, 506.00, and the costs of the audit of $4, 185.00, which brings the total amount sought to $237, 475.92. ( Id. ) Defendants were served with the results of the audit on February 27, 2015. (ECF No. 29 at 7.)

RELIEF SOUGHT

Under ERISA and the CBAs, when contributions are unpaid, Plaintiffs may recover: (1) the unpaid contributions; (2) interest on the unpaid contributions; (3) an amount equal to the greater of the interest on the unpaid contributions or liquidated damages as specified in the plan (generally not to exceed 20% of the unpaid contributions); (4) reasonable attorney's fees and costs; and (5) such other legal and equitable relief as the court deems appropriate. See 29 U.S.C. § 1132(g)(2); (CBA S ECF No. 11-4 at 27, § 6.08).

For the damages claim under 29 U.S.C. § 1132(g)(2), Plaintiffs must prove their entitlement to relief through written declarations and fulfill the following three requirements: (1) the defendant must be delinquent in its contributions at the time the action is filed; (2) the district court must enter judgment against the defendant; and (3) the plan must provide for the damages sought. Nw. Admin'rs, Inc. v. Albertsons, Inc., 104 F.3d 253, 257-58 (9th Cir. 1996); Idaho Plumbers & Pipefitters Health & Welfare Fund v. United Mech. Contractors, Inc., 875 F.2d 212, 215 (9th Cir. 1989). If these requirements are met, then an award of contributions, liquidated damages, and reasonable attorney's fees and costs is mandatory. Northwest Administrators, 104 F.3d at 257-58; Bd. of Trs. v. RBS Washington Blvd. LLC, No. C 09-06660 WHA, 2010 WL 145097, at *3 (N.D. Cal. Jan. 8, 2010).

For the liquidated-damages demand, the court applies federal contract law to determine whether those damages are reasonable. See Idaho Plumbers, 875 F.2d at 214-18. Liquidated damages must meet two requirements: (1) the harm caused by the breach of contract must be difficult or impossible to estimate; and (2) the amount of liquidated damages must be a reasonable forecast of compensation for the harm caused. Id .; United Order of Am. Bricklayers & Stone Masons Union No. 21 v. Thorleif Larsen & Son, Inc., 519 F.2d 331, 337 (9th Cir. 1975) (upholding liquidated-damages provision in collective-bargaining agreement of 10% of unpaid contributions).

The earlier report and recommendation could not fully evaluate the default-judgment test set forth in Eitel v. McCool, 782 F.2d 1470 (9th Cir. 1986), because the "sum of money at stake in the litigation" - which is Eitel's last factor - was unknown before the audit. ( See ECF No. 20 at 7-8.) As discussed below, the undersigned now finds that the damages and fees sought are warranted and reasonable, and that the "money at stake" does not impede this last element of the requested default judgment.

Two further principles guide the court's damages inquiry. First, in assessing the Eitel factors, all factual allegations in the complaint are taken as true, except those with regard to damages. See Televideo Sys., Inc. v. Heidenthal, 826 F.2d 915, 917-18 (9th Cir. 1987). "To recover damages after securing a default judgment, a plaintiff must prove the relief it seeks through testimony or written affidavit." Bd. of Trustees of the Laborers Health & Welfare Trust Fund for N. Cal. v. A & B Bldg. Maint. Co. Inc., C 13-00731 WHA, 2013 WL 5693728, at *4 (N.D. Cal. Oct. 17, 2013); see also Bd. of Trustees of Bay Area Roofers Health & Welfare Trust Fund v. Westech Roofing, 12-CV-05655-JCS, 2014 WL 2085339, at *8 n.13 (N.D. Cal. May 19, 2014) ("It is Plaintiffs' burden on default judgment to establish the amount of their damages.").

Second, under Federal Rule of Civil Procedure 54(c), "[a] default judgment must not differ in kind from, or exceed in amount, what is demanded in the pleadings." Fed.R.Civ.P. 54(c). The purpose of this rule is to ensure that a defendant is put on notice of the damages being sought against him so that he may make a calculated decision as to whether or not it is in his best interest to answer. In re Ferrell, 539 F.3d 1186, 1192-93 (9th Cir. 2008); Board of Trs. of the Sheet Metal ...


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