United States District Court, C.D. California
BOARD OF DIRECTORS OF THE MOTION PICTURE INDUSTRY PENSION PLAN, ET AL.
Attorneys Present for Plaintiffs: Kathryn Halford
Present: The Honorable CHRISTINA A. SNYDER
CIVIL MINUTES - GENERAL
PLAINTIFFS' MOTION FOR DEFAULT JUDGMENT (Dkt. 34, filed
February 28, 2018)
April 5, 2017, plaintiffs Board of Directors of the Motion
Picture Industry Pension Plan, Board of Directors of the
Motion Picture Industry Individual Account Plan, and Board of
Directors of the Motion Picture Industry Health Plan
(collectively, the “Plans”) brought this action
against defendant AnEFX, Inc. (“AnEFX”) pursuant
to § 301 of the Labor Management Relations Act of 1947
(“LMRA”), as amended, 29 U.S.C. § 185, and
§ 502 of the Employee Retirement Income Security Act of
1974 (“ERISA”), 29 U.S.C. § 1132, for breach
of collective bargaining agreements and violations of ERISA.
Dkt. 1 (“Compl.”).
October 4, 2017, counsel for defendant filed a motion to
withdraw from the representation. Dkt. 19. On November 6,
2017, the Court found good cause to permit withdrawal and
directed AnEFX to retain new counsel within 30 days,
admonishing that failure to do so may result in the
imposition of sanctions or the entry of default. Dkt. 23. No
substitution of counsel was made. Pursuant to plaintiffs'
request, the Clerk entered default on January 25, 2018. Dkt.
31. On February 28, 2018, plaintiffs filed the instant motion
for default judgment. Dkt. 34 (“Mot.”). The Court
held a hearing on April 2, 2018. No appearance was made on
behalf of AnEFX.
carefully reviewed the motion and plaintiffs' supporting
declarations and exhibits, the Court finds and concludes as
Plans are employee welfare benefit and pension plans under
ERISA, 29 U.S.C. § 1002(1) & 2, and multiemployer
plans within the meaning of ERISA, 29 U.S.C. §
1002(37)(A). Compl. ¶ 4. The Plans were established
pursuant to a series of collective bargaining agreements (the
“Trust Agreements”) between various employers and
employer associations performing work in the motion picture
and television industry and the International Alliance of
Theatrical Stage Employees and Moving Picture Machine
Operators of the United States and Canada, AFL-CIO
(“IATSE”). Id. ¶¶ 4, 9.
October 18, 2010, AnEFX executed a Memorandum Agreement with
IATSE Local 700, in which it agreed to become signatory to
the 2009-2012 Producer IATSE and M.P.T.T.A.A.C. Basic
Agreement and the 2009-2012 Local 700 Post Production
Independent Agreement. Id. ¶ 8, Ex. 1. On
November 5, 2010, AnEFX executed an Agreement of Consent in
which it agreed to become a party to and be bound by the
Producer-IATSE Basic Agreement of 2009 between the Alliance
of Motion Picture and Television Producers, Inc. and IATSE
together with its West Coast Studio Locals, including Local
700. Id., Ex. 2. In conjunction with these
Agreements, AnEFX executed an IATSE Trust Acceptance,
acknowledging that it agreed to be bound by all terms and
conditions of the Trust Agreements establishing the Plans and
to contribute to the Plans on behalf of employees covered by
the Agreements. Id. ¶ 9, Ex. 3. AnEFX also
entered into an Employee-Shareholder Company Agreement,
wherein the company agreed to contribute to the Plans on
behalf of its shareholder, John Levy, on a continuous 56
hour-per-week basis within five working days following the
end of each weekly payroll period. Id., Ex. 4.
Trust Agreements obligate employers to submit weekly
remittance reports, together with contributions owed to the
Plans for the total hours worked by or guaranteed to all
employees covered by the Agreements by the last day of each
work week. Contributions are delinquent if they are not
received within the timeframes established by the Trust
Agreements. Id. ¶ 11; dkt. 34-2, Declaration of
Chris Tashchyan (“Tashchyan Decl.”) ¶ 8A,
Exs. 1-3. Pursuant to the Trust Agreements, the Plans have
the right to audit employer records. Should any audit
disclose a delinquency, underpayment, or other erroneous
reporting, the cost of the audit shall be borne by the
employer. Id. ¶¶ 8B-C. The Plans may sue
to enforce the provisions of the Trust Agreements, in which
event the employer shall be liable for all expenses of
enforcement and collection, including costs and fees for
accountants, auditors and attorneys, as well as liquidated
damages and interest. Id. ¶ 8D. In the event of
a default in the payment of contributions, interest is
charged from the date when payment was due through the date
payment is made at a rate of one percent per month.
Id. ¶ 8E. Liquidated damages are assessed in an
amount greater than either (1) twenty percent of all unpaid
contributions, or (2) interest calculated at a rate of one
percent per month from date payment was due to the date
payment is made. Id. ¶ 8F.
Audits of Defendant
Plans conducted two audits of AnEFX's records through May
7, 2016, which revealed that AnEFX owed delinquent
contributions in the amount of $237, 176.47. Id.
¶ 9, see Exs. 9 & 10. The first audit was
published on March 19, 2015 and disclosed $1, 087.39 in
unpaid contributions for hours worked by AnEFX's
employees during the period of November 7, 2010 through April
15, 2013. Id. The second audit, completed on
December 16, 2016, disclosed that AnEFX had underpaid
contributions in the amount of $236, 089.08 during the period
between April 21, 2013 through May 7, 2016. Id.
Although given an opportunity both prior to and after the
finalization of the audits, AnEFX failed to dispute the
findings or pay the delinquent contributions. Id.
did not produce records for a final audit for the period
between May 2016 through August 2017, nor has the company
reported or paid contributions for any weekly period after
December 3, 2016 through August 31, 2017, the date
AnEFX's participation in the Plans was terminated.
Id. ¶ 10. As a result of this breach of the
Trust Agreements, the full amount of additional delinquent
contributions and other damages for the period after May 2016
has not been fully ascertained. Id. However, the
Plans received multiple complaints regarding unreported hours
for this period from participants in the Plans. Id.
Based on payroll information provided by these participants,
the Plans have determined that AnEFX owes additional
contributions in the amount of $131, 033.33 as of February 2,
2018. Id., Exs. 11, 15. In addition, AnEFX has
failed to make contributions for John Levy at the rate of 56
hours per week for 48 weeks per year as required by the
Employee-Shareholder Company Agreement. AnEFX owes a total of
$42, 175.14 for unpaid employee shareholder contributions
pursuant to this agreement. Id. ¶ 11, Ex. 8.
to Federal Rule of Civil Procedure 55, when a party against
whom a judgment for affirmative relief is sought has failed
to plead or otherwise defend, and the plaintiff does not seek
a sum certain, the plaintiff must apply to the court for a
default judgment. Fed.R.Civ.P. 55.
general rule, cases should be decided on the merits as
opposed to by default, and, therefore, “any doubts as
to the propriety of a default are usually resolved against
the party seeking a default judgment.” Judge William W.
Schwarzer et al., California Practice Guide: Federal Civil
Procedure Before Trial ¶ 6:11 (The Rutter Group 2015)
(citing Pena v. Seguros La Comercial, S.A., 770 F.2d
811, 814 (9th Cir. 1985)). Granting or denying a motion for
default judgment is a matter within the court's
discretion. Elektra Entm't Grp. Inc. v.
Crawford, 226 F.R.D. 388, 392 (C.D. Cal. 2005); see
also Sony Music Entertainment, Inc. v. Elias, 2004 WL
141959, *3 (C.D. Cal. Jan. 20, 2004).
Ninth Circuit has directed that courts consider the following
factors in deciding whether to enter default judgment: (1)
the possibility of prejudice to plaintiff; (2) the merits of
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 concerning the material
facts; (6) whether defendant's default was the product of
excusable neglect; and ...