"ERISA authorizes the court to provide for other legal or equitable relief as the 16 court deems appropriate [under 29 U.S.C. § 1132(g)(2)(E)]. This relief can include an injunction 17 requiring a defendant to permit, and cooperate with, an audit of its books and records."
How later courts described this case
- "ERISA authorizes the court to provide for other legal or equitable relief as the 16 court deems appropriate [under 29 U.S.C. § 1132(g)(2)(E)]. This relief can include an injunction 17 requiring a defendant to permit, and cooperate with, an audit of its books and records."
- "If 3 Plaintiffs' motion for default judgment is not granted, Plaintiffs will likely be without other 4 recourse for recovery."
- stating that "the court must consider the amount 9 of money at stake in relation to the seriousness of Defendant's conduct"
Written by the judges who cited it.
The opinion
1
2
3
4 UNITED STATES DISTRICT COURT
5 NORTHERN DISTRICT OF CALIFORNIA
6
7 THE BOARD OF TRUSTEES, et al., Case No. 19-cv-02921-EMC
8 Plaintiffs,
ORDER GRANTING PLAINTIFF’S
9 v. MOTION FOR DEFAULT JUDGMENT
10 JAMES ISLAND PLASTERING, INC., Docket No. 20
11 Defendant.
12
13
14 Plaintiff is the Board of Trustees for the following four trust funds: (1) Laborers Health
15 and Welfare Trust Fund for Northern California (“Health and Welfare Trust Fund”); (2) Laborers
16 Vacation-Holiday Trust Fund for Northern California (“Vacation-Holiday Trust Fund”); (3)
17 Laborers Pension Trust Fund for Northern California (“Pension Trust Fund”); and (4) Laborers
18 Training-Retraining/Apprenticeship Trust Fund for Northern California (“Training Trust Fund”).
19 Collectively, the trust funds shall hereinafter be referred to as the “Trust Funds.” The Board filed
20 the instant action in its capacity as trustee for the Trust Funds, asserting claims pursuant to the
21 Employee Retirement Income Security Act (“ERISA”) and the Labor Management Relations Act
22 (“LMRA”).
23 After Defendant James Island Plastering, Inc. (“JPI”) failed to respond to the Board’s
24 complaint, the Clerk of the Court entered its default on July 16, 2019. See Docket No. 14 (notice).
25 The Board thereafter moved for entry of a default judgment. A hearing was held on the Board’s
26 motion on March 5, 2020. Having considered the Board’s motion and accompanying
27 submissions, the Court hereby GRANTS the motion for default judgment.
1 I. FACTUAL & PROCEDURAL BACKGROUND
2 The evidence submitted by the Board in conjunction with their motion for default
3 judgment reflects as follows. See generally Docket Nos. 26, 29 (supplemental briefing and
4 evidence). In March 2003, JIP entered into a Memorandum Agreement with a local union
5 affiliated the Northern California District Council of Laborers. By signing the Memorandum
6 Agreement, JIP also agreed to be bound by a certain Master Agreement entered into by the local
7 union and an employer’s association – as well as all successor Master Agreements. The relevant
8 successor Master Agreements are the 2012-2016 Master Agreement and the 2016-2019 Master
9 Agreement. Those Master Agreements contain provisions stating that the employer will make
10 contributions to certain trust funds established for the benefit of employees. The Master
11 Agreements also contain provisions incorporating by reference the Trust Agreements for the
12 relevant trust funds. The relevant trust funds include the Trust Funds at issue in the instant case.
13 The Trust Agreements for the Trust Funds at issue contain provisions allowing the Board to audit
14 the employer to ensure that contributions are being properly made. JIP has recognized its
15 obligation to make contributions and to submit to an audit by providing the Board with some
16 documents requested by the Board for audit purposes.
17 In the pending motion for default judgment, the Board asks the Court to, inter alia, order
18 JIP to comply with a full audit (for the period starting January 1, 2014) so that the Board may
19 ensure that contributions are being properly made.
20 II. DISCUSSION
21 A. Adequacy of Service of Process
22 “As a preliminary matter, the Court must first ‘assess the adequacy of the service of
23 process on the party against whom default is requested.’” Bd. of Trs. v. Charles B. Harding
24 Constr., Inc., No. C-14-1140 EMC, 2014 U.S. Dist. LEXIS 175680, at *5-6 (N.D. Cal. Dec. 18,
25 2014). Federal Rule of Civil Procedure 4(h)(1) authorizes service upon a corporation “in the
26 manner prescribed by Rule 4(e)(1) for serving an individual.” Fed. R. Civ. P. 4(h)(1). Rule
27 4(e)(1) allows for service “following state law for serving summons in an action brought in courts
1 Fed. R. Civ. P. 4(e)(1). Under California law, substituted service on a corporation is permitted.
2 See Cal. Code Civ. Proc. § 415.20(a). In the instant case, the Board has provided evidence to
3 support its claim that substituted service was effected on JIP. See Docket No. 6 (proofs of
4 service). Accordingly, the Court concludes that service of process on JIP was properly
5 effectuated.
6 B. Merits of Motion for Default Judgment
7 As noted above, the Clerk of the Court entered JIP’s default on July 16, 2019. See Docket
8 No. 14 (notice). The Board thereafter moved for entry of a default judgment. After entry of
9 default, a court may grant a default judgment on the merits of the case. See Fed. R. Civ. P. 55.
10 "The district court's decision whether to enter a default judgment is a discretionary one." Aldabe
11 v. Aldabe, 616 F.2d 1089, 1092 (9th Cir.1980). A court may consider the following factors in
12 exercising such discretion:
13 (1) the possibility of prejudice to the plaintiff, (2) the merits of
plaintiff's substantive claim, (3) the sufficiency of the complaint, (4)
14 the sum of money at stake in the action, (5) the possibility of a
dispute concerning material facts, (6) whether the default was due to
15 excusable neglect, and (7) the strong policy underlying the Federal
Rules of Civil Procedure favoring decisions on the merits.
16
17 Eitel v. McCool, 782 F.2d 1470, 1471-72 (9th Cir. 1986). Because default has already been
18 entered in this case, the Court must construe as true all of "the factual allegations of the complaint,
19 except those relating to the amount of damages." TeleVideo Sys., Inc. v. Heidenthal, 826 F.2d
20 915, 917-18 (9th Cir. 1987). The Court may also consider evidence submitted by the Board in
21 support of its motion for default judgment. Cf. Fed. R. Civ. P. 55 (noting that a “court may
22 conduct hearings . . . when, to enter or effectuate judgment, it needs to [e.g.] establish the truth of
23 any allegation by evidence” or “investigate any other matter”).
24 The Court finds that the Eitel factors weigh in favor of granting default judgment. For
25 example, as to the first factor, if the motion for default judgment were to be denied, then the Trust
26 Funds at issue (on whose behalf the Board has sued) would likely be prejudiced as they would be
27 left without a remedy. See Walters v. Shaw/Guehnemann Corp., No. 03-cv-04058, 2004 U.S.
1 judgment] would leave them without a remedy. Prejudice is also likely in light of the merits of
2 their claims."); Pepsico, Inc. v. Cal. Sec. Cans, 238 F. Supp. 2d 1172, 1177 (C.D. Cal. 2002) ("If
3 Plaintiffs' motion for default judgment is not granted, Plaintiffs will likely be without other
4 recourse for recovery.").
5 As for the fourth Eitel factor, at this point, the Board is not asking for money damages –
6 only an audit; furthermore, although the Board has not waived its right to seek damages after
7 conducting an audit, it has indicated that it will only seek damages tailored to JIP’s specific
8 misconduct. See Pepsico, 238 F.Supp.2d at 1176 (stating that "the court must consider the amount
9 of money at stake in relation to the seriousness of Defendant's conduct").
10 As to the fifth, sixth, and seventh Eitel factors, because JIP has not filed an answer to the
11 complaint, there is nothing to suggest that there is a possibility of a dispute concerning material
12 facts. Nor is there any indication that JIP’s default was due to excusable neglect. And while
13 public policy favors decisions on the merits, see Eitel, 782 F.2d at 1472, JIP’s choice not to defend
14 this action renders a decision on the merits "impractical, if not impossible." PepsiCo, 238 F.
15 Supp. 2d at 1177.
16 The only remaining factors that warrant additional analysis are the second and third Eitel
17 factors – i.e., the merits of the Board’s substantive claims and the sufficiency of those claims. As
18 noted above, the Board has provided evidence to support its claim that JIP agreed to make
19 contributions to the Trust Funds at issue and to submit to an audit to ensure compliance – in
20 particular (1) its Memorandum Agreement, which incorporated (2) a Master Agreement and all
21 successor Master Agreements, which in turn incorporated (3) the Trust Agreements for the Trust
22 Funds at issue. ERISA authorizes a fiduciary to bring a civil action to enforce an employer’s
23 obligation under 29 U.S.C. § 1145 “to make contributions to a multiemployer plan under the terms
24 of the plan or under the terms of a collectively bargained agreement shall, to the extent not
25 inconsistent with law, make such contributions in accordance with the terms and conditions of
26 such plan or such agreement.” 29 U.S.C. § 1145. Furthermore, "[w]here a Fund's trust
27 documents, to which an employer has bound itself, specifically provide that Fund trustees can
1 obligations." Eng'rs Joint Welfare, Pension, Supplemental Unemployment Ben. & Training Funds
2 v. BDR Inc., No. 05-cv-1385, 2006 U.S. Dist. LEXIS 70967, at *9 (N.D.N.Y Sept. 29, 2006)
3 (citing Central States, Southeast & Southwest Pension Fund v. Central Transport, Inc., 472 U.S.
4 559 (1985)). Thus, the Board has successfully stated a claim for relief, including but not limited
5 to a right to an audit.1
6 C. Relief
7 “Because the Court concludes that default judgment is warranted, it must determine what
8 damages or other relief is appropriate. [The Board has] the burden of ‘proving up’ . . . damages or
9 the need for other requested relief.” Harding, 2014 U.S. Dist. LEXIS 175680, at *11-12.
10 The immediate relief requested by the Board is an injunction directing JIP to submit to an
11 audit of its financial records for the period starting January 1, 2014. See Mot. at 1. The Board’s
12 requested injunctive relief is appropriate under ERISA to the extent the audit is tailored to the
13 purpose of verifying that required contributions have been paid. See International Painters &
14 Allied Trades Indus. Pension Fund v. R.W. Amrine Drywall Co., Inc., 239 F. Supp. 2d 26, 31
15 (D.D.C. 2002) ("ERISA authorizes the court to provide for other legal or equitable relief as the
16 court deems appropriate [under 29 U.S.C. § 1132(g)(2)(E)]. This relief can include an injunction
17 requiring a defendant to permit, and cooperate with, an audit of its books and records.").
18 Accordingly, the Court grants the Board’s claim for injunctive relief. JIP is ordered to: permit an
19 auditor designated by the Board to enter upon its premises or other location where records are
20 kept, during business hours, and at a reasonable time or times, to examine and copy books,
21
1 The Board has also noted that, even if the relevant Master Agreements did not incorporate the
22
Trust Agreements for the Trust Funds at issue – which contain the audit provisions – that would
not prevent them from getting an audit. See Santa Monica Culinary Welfare Fund v. Miramar
23
Hotel Corp., 920 F.2d 1491, 1494 (9th Cir. 1990) (concluding that audit could be conducted
because an audit provision was in the trust agreement, even if the collective bargaining agreement
24
was silent on the matter; noting that, even though the employer “is not a signatory to the Trust
Agreement, it is undisputed that it contributed to the Fund and intended its employees to receive
25
the benefits from the Fund” – the employer “would not make the contributions if it did not intend
its employees to receive benefits from the Fund”); see also N.Y. State Teamsters Conference
26
Pension & Ret. Fund v. Boening Bros., 92 F.3d 127, 130 (2d Cir. 1996) (stating that, even though
employer “has not entered into any explicit contractual undertaking to submit to an audit by the
27
Fund[,] [w]e nonetheless conclude that such an audit may be conducted by the trustees of the Fund
1 records, papers, or reports of JIP to determine whether it is making full and prompt payment of all
2 sums required to be paid to the Trust Funds at issue.
3 As for the remaining relief requested by the Board, the Court rules as follows:
4 • To the extent the Board asks for the Court to retain jurisdiction and to amend
5 judgment if the Board discovers, after the audit, that contributions are owing, the
6 Court retains what jurisdiction it has if the Board moves to alter or amend judgment
7 pursuant to Federal Rules of Civil Procedure 59 and/or 60.2
8 • To the extent the Board seeks an order “permanently . . . requir[ing] [JIP] to timely
9 submit all required monthly contribution reports,” Mot. at 2 (emphasis added), that
10 request for relief is denied. Based on the papers submitted, the Board does not
11 clearly establish JIP has failed to submit required monthly contribution reports;
12 rather, its failure is to submit to an audit. This ruling, of course, does not preclude
13 the Board from seeking relief in the future should JIP not provide required monthly
14 contribution reports.
15 • To the extent the Board asks for attorney’s fees in the amount of $9,673.25 and
16 costs in the amount of $779.92, the request is granted. Fees and costs are provided
17 for in the relevant agreements and also by statute. See 32 U.S.C. § 1132(g).
18 Having reviewed the supporting declaration, the Court finds the requested fees and
19 costs reasonable, and JIP has not appeared in this case to contest the amounts.
20 ///
21 ///
22 ///
23 ///
24 ///
25 ///
26
2 At the hearing, the Court asked the Board if it wanted a delay in the entry of final judgment so
27
that it could conduct the audit and then, if necessary, ask the Court to award contributions owed
1 Il. CONCLUSION
2 For the foregoing reasons, the Court grants the Board’s motion for default judgment. The
3 Court also grants the Board’s request for an audit and attorney’s fees and costs.
4 The Clerk of the Court is instructed to enter a final judgment in accordance with the above.
5 If the Board desires to amend the final judgment (e.g., after conducting the audit), it will need to
6 || file a post-judgment motion to alter or amend the judgment.
7 This order disposes of Docket No. 20.
8
9 IT IS SO ORDERED.
10
11 Dated: March 10, 2020
a 12
1 ==
ED M.C
14 United States District Judge
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