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Board of Trustees v. Contractors Chemical, Inc.

United States District Court, N.D. California

August 6, 2015



JAMES DONATO, District Judge.

The Board of Trustees ("Board") for several employee benefit plans has moved for default judgment against defendant Contractors Chemical, Inc. The Court grants the motion.


Plaintiffs are the Board of Trustees for the following trust funds: the Laborers Health and Welfare Trust Fund for Northern California; the Laborers Vacation-Holiday Trust Fund for Northern California; the Laborers Pension Trust Fund for Northern California; and the Laborers Training and Retraining Trust Fund for Northern California. Dkt. No. 1 ¶ II. According to the complaint, defendant Contractors Chemical "was signatory and bound to a written collective bargaining agreement with the Northern California District Council of Laborers (hereinafter Union'), a labor organization within the meaning of section 301 of the Labor Management Relations Act (29 U.S.C. § 185)." Dkt. No. 1 ¶ IV. The Board alleges that Contractors Chemical became subject to the terms of a Master Agreement after signing a Memorandum of Agreement with the Union. Id. The Master Agreement required Contractors Chemical to timely contribute certain amounts of money to the trust funds, based on hours worked by its employees. Id. The Master Agreement also provides "for the payment of interest on all delinquent contributions, attorneys' fees, and other collection costs, and for the audit of the signatory employer or employers' books and records in order to permit the Plaintiffs to ascertain whether all fringe benefit contributions have been timely paid." Id. ¶ V.

The Board initially filed suit on September 15, 2014. See Dkt. No. 1. The Board alleges that Contractors Chemical violated ERISA § 515 (29 U.S.C. § 1145) by failing to pay contributions and permit an audit pursuant to the Master Agreement. Dkt. No. 17 at 11. According to the Board, Contractors Chemical has not made timely fringe benefit contributions for the periods November 2013, January 2014, and June to July 2014. Id. at 7. It further alleges that "there also are liquidated damages and interest due and owing for the months of January 2010 through March 2012, October 2013, December 2013, as well as February through April 2014 for contributions paid but paid late." Id. at 8. Contractors Chemical failed to respond to this lawsuit, and the clerk of the court entered default against it on December 4, 2014. See Dkt. No. 15. The Board filed this motion for default judgment on June 24, 2015. Contractors Chemical has not responded or appeared in any way.


A. Jurisdiction

In default judgment proceedings, the Court is obliged to first consider whether jurisdiction is proper. See In re Tuli, 172 F.3d 707, 712 (9th Cir. 1999) (holding that in a default judgment proceeding, "a district court has an affirmative duty to look into its jurisdiction over both the subject matter and the parties"). The Court has subject matter jurisdiction under 29 U.S.C. § 1132, which authorizes ERISA plan fiduciaries to bring civil actions to enforce plan terms. The Court also has personal jurisdiction over Contractors Chemical because it is a California corporation engaged in business activities in California, and because "plan contributions are due and payable in the County of San Francisco." Dkt. No. 17 at 10. Defendant was properly served because it was served with a copy of the summons and complaint via substituted service on October 2, 2014, a copy was mailed to it on October 3, 2014, and service was deemed complete ten days after mailing on October 13, 2014, pursuant to California Code of Civil Procedure § 415.20(a) and Rule 4(e)(1) of the Federal Rules of Civil Procedure. Id.

B. Default Judgment

Under Rule 55(b)(2) of the Federal Rules of Civil Procedure, a party may apply to the Court for entry of judgment by default. "The district court's decision whether to enter a default judgment is a discretionary one." Aldabe v. Aldabe, 616 F.2d 1089, 1092 (9th Cir. 1980). The Court may consider the following factors in deciding whether to grant a motion for default judgment:

(1) the possibility of prejudice to plaintiff, (2) the merits of plaintiff's substantive claim, (3) the sufficiency of the complaint, (4) the sum of money at stake in the action, (5) the possibility of a dispute concerning the material facts, (6) whether the default was due to excusable neglect, and (7) the strong policy underlying the Federal Rules of Civil Procedure favoring decisions on the merits.

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

1. The Merits of the Claim and the Sufficiency of the Complaint

The second and third Eitel factors - the merits of the claim and the sufficiency of the complaint - are generally considered together because after the entry of default, well-pleaded factual allegations in the complaint are taken as true, except as to the amount of ...

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