Board of Trustees of the Oregon Retail Employees Pension Plan v. Signature Northwest LLC

UNITED STATES DISTRICT COURT

DISTRICT OF OREGON

PORTLAND DIVISION

BOARD OF TRUSTEES OF THE

OREGON RETAIL EMPLOYEES

PENSION PLAN,

Case No. 3:20-cv-02244-YY

Plaintiff,

FINDINGS AND

v. RECOMMENDATIONS

SIGNATURE NORTHWEST LLC,

MFH AGI, LLC, MFH AVIATION, LLC,

MFH DAYTON, LLC, MFH TRAILBLAZAER

LLC, MFH 16TH STREET GARAGE LLC,

Defendants.

FINDINGS

Plaintiff is the Board of Trustees of the Oregon Retail Employees Pension Plan (the

“Trust”) and brings this action against defendants Signature Northwest LLC (“Signature NW”),

MFH AGI, LLC, MFH Aviation, LLC, MFH Dayton, LLC, MFH Trailblazer LLC, MFH 16th

Street Garage LLC, pursuant to § 4301(a) of the Employee Retirement Income Security Act

(“ERISA”), 29 U.S.C. §1451(a), for nonpayment of withdrawal liability. Compl., ECF 1.

Defendant Signature NW has not filed an Answer or otherwise appeared in this matter. On

March 22, 2021, plaintiff filed a motion for order of default against defendant Signature NW.

ECF 11. The remaining defendants were dismissed from this action on April 2, 2021, by a

Stipulated Judgment. ECF 15. On May 6, 2021, the Clerk entered a default against defendant

Signature NW. ECF 16. Plaintiff has now filed a motion for default judgment against defendant

Signature NW (ECF 17), which should be GRANTED for the reasons set forth below.

I. Subject Matter Jurisdiction

Federal courts are courts of limited jurisdiction. Kokkonen v. Guardian Life Ins. Co. of

Am., 511 U.S. 375, 377 (1994). “It is to be presumed that a cause lies outside this limited

jurisdiction, . . . and the burden of establishing the contrary rests upon the party asserting

jurisdiction.” Id. “If the court determines at any time that it lacks subject-matter jurisdiction, the

court must dismiss the action.” FED.R.CIV.P. 12(h)(3); see also Fiedler v. Clark, 714 F.2d 77,

78-79 (9th Cir. 1983) (recognizing that the court may sua sponte dismiss an action if it finds that

subject matter jurisdiction is lacking).

Here, plaintiffs have brought a claim pursuant to ERISA § 4301(b), 29 U.S.C. § 1451(b).

Because plaintiffs’ claims arise under federal law, the court has subject matter jurisdiction.

II. Personal Jurisdiction

A district court “has an affirmative duty” to determine whether it has personal

jurisdiction over a defendant before entering a default judgment. In re Tuli, 172 F.3d 707, 712

(9th Cir. 1999). “A judgment entered without personal jurisdiction over the parties is void.” Id.

The Supreme Court has recognized two types of personal jurisdiction: general, or “all-purpose,”

jurisdiction, and specific jurisdiction. Daimler AG v. Bauman, 571 U.S. 117, 127–28, 132

(2014). “With respect to a corporation, the place of incorporation and principal place of business

are ‘paradig[m] . . . bases for general jurisdiction.’” Id. at 137 (citation omitted). “Those

affiliations have the virtue of being unique—that is, each ordinarily indicates only one place—as

well as easily ascertainable.” Id. “These bases afford plaintiffs recourse to at least one clear and

certain forum in which a corporate defendant may be sued on any and all claims.” Id.

Additionally, 29 U.S.C. § 1132(e)(2), which governs ERISA claims, provides:

Where an action under this subchapter is brought in a district court of the United

States, it may be brought in the district where the plan is administered, where the

breach took place, or where a defendant resides or may be found, and process may

be served in any other district where a defendant resides or may be found.

Here, plaintiff administers the Trust in Washington County, Oregon. See Barlow Decl. 2,

ECF 12. Accordingly, personal jurisdiction over defendant Signature NW exists in this case. See

Daimler AG, 571 U.S. at 137.

III. Service of Process

Before entering a default judgment, the court must “assess the adequacy of the service of

process on the party against whom default is requested.” Bank of the West v. RMA Lumber Inc.,

No. C 07-06469 JSW, 2008 WL 2474650, at *2 (N.D. Cal. June 17, 2008). “[I]n the absence of

proper service of process, the district court has no power to render any judgment against the

defendant’s person or property unless the defendant has . . . waived the lack of process.” S.E.C.

v. Ross, 504 F.3d 1130, 1138–39 (9th Cir. 2007).

Under Federal Rule of Civil Procedure 4(h)(1)(B), service may be made on a corporation

by delivering a copy of the summons and complaint to an agent authorized by law to receive

service of process. Plaintiff has filed a declaration of service showing that on January 5, 2021, a

process server personally served the clerk on duty in the office of defendant Signature NW’s

registered agent, Derick Lohrey. Decl. Service, ECF 10. Thus, plaintiff has established that the

service of process in this case is adequate.

IV. Plaintiff’s Claim

Plaintiff has brought this action pursuant to ERISA § 4219(c)(5)(A), 29 U.S.C.

§ 1399(c)(5)(A), seeking payment from defendant Signature NW for its assessed withdrawal

liability. ERISA § 4219(b)(2)(A) provides that within 90 days of the initial notification of the

assessed withdrawal liability and demand for payment, the employer may contest the assessed

amount, identify inaccuracies in the determination of the amount assessed, and provide

additional relevant information to the plan sponsor. 29 U.S.C. § 1399(b)(2)(A). ERISA

§ 4221(a)(1) provides that any dispute between an employer and the plan sponsor concerning the

assessed withdrawal liability must be resolved through arbitration. 29 U.S.C. § 1401(a)(1).

Under ERISA § 4221(b)(1), if the employer fails to contest the assessed withdrawal liability

within 90 days of receipt of the demand, the employer loses the right to request arbitration and

the withdrawal liability payments become due and owing according to the schedule provided by

the plan sponsor. 29 U.S.C. § 1401(b)(1). Specifically, the statute provides:

(1) If no arbitration proceeding has been initiated pursuant to subsection (a) of

this section, the amounts demanded by the plan sponsor under section 1399(b)(1)

of this title shall be due and owing on the schedule set forth by the plan sponsor.

The plan sponsor may bring an action in a State or Federal court of competent

jurisdiction for collection.

29 U.S.C. § 1401(b)(1).

Additionally, ERISA provides that if the employer fails to submit its withdrawal liability

payments in accordance with the plan’s payment schedule, the plan may require the employer to

cure its failure to pay within 60 days. ERISA § 4219(c)(5)(A), 29 U.S.C. § 1399(c)(5)(A). Upon

the termination of the 60 days, if the employer has not paid, then the employer is in “default” and

the entire amount of withdrawal liability is immediately due and owing. Specifically, 29 U.S.C.

§ 1399(c)(5)(A) provides:

(5) In the event of a default, a plan sponsor may require immediate payment of the

outstanding amount of an employer’s withdrawal liability, plus accrued interest

on the total outstanding liability from the due date of the first payment which was

not timely made. For purposes of this section, the term ‘default' means—

(A) the failure of an employer to make, when due, any payment under this

section, if the failure is not cured within 60 days after the employer receives

written notification from the plan sponsor of such failure[.]

Here, plaintiff has established that Signature NW made a complete withdrawal from the

Trust in 2019 for purposes of ERISA § 4203(a)(1), 29 U.S.C. § 1383(a)(1), and stopped

submitting payments at the same time. Piro Decl. 2, ECF 18. Following the withdrawal by

defendant Signature NW, the Trust’s actuaries calculated Signature NW’s withdrawal liability to

be $996,803.00. Id. On May 23, 2020, the Trust notified Signature NW in writing of its

withdrawal liability assessment. Mot. 2, ECF 17. Defendant Signature NW did not request

arbitration and did not submit any payment. Piro Decl. 2, ECF 18. On July 16, 2020, a follow-up

demand letter was served on Signature NW’s registered agent, Derek Lohrey. Id. at Ex. B. On

October 15, 2020, the Trust notified Signature NW that its payment was due within 60 days to

avoid default pursuant to ERISA § 4219(c)(5), 29 U.S.C. § 1399(c)(5)(A). Mot. 2, ECF 17. More

than 60 days have passed since the October 15, 2020 letter, and defendant Signature NW has

made no payments. Mot. 2, ECF 17; Piro Decl. 2, ECF 18. On April 2, 2021, the Clerk entered a

default against defendant Signature NW. ECF 16. Plaintiff therefore claims that defendant

Signature NW owes an assessed withdrawal liability of $996,803.00 to the Trust. Mot. 6, ECF

17; see 29 U.S.C. § 1399(c)(5)(A). Plaintiff also seeks liquidated damages, interest, attorney’s

fees, and costs pursuant to ERISA provisions and the terms of the Trust Agreement Governing

the Oregon Retail Employees Pension Trust (“Trust Agreement”). Mot. 3, ECF 17.

V. Eitel Analysis

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). In exercising its discretion, the court

considers the following factors under Eitel v. McCool, 782 F.2d 1470 (9th Cir. 1986):

(1) the possibility of prejudice to the 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 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.

Id. at 1471–72. Each of the Eitel factors is discussed below.

A. Factor One: Possibility of Prejudice to Plaintiff

In assessing this factor, courts have considered whether a plaintiff would be without

recourse for recovery if the motion for default judgment is not granted. See, e.g., J & J Sports

Prods., Inc. v. Cardoze, No. C 09–05683 WHA, 2010 WL 2757106, at *5 (N.D. Cal. July 9,

2010); PepsiCo, Inc. v. California Sec. Cans, 238 F. Supp. 2d 1172, 1177 (C.D. Cal. 2002).

Here, prior to filing this lawsuit, the Trust notified defendant Signature NW in writing of its

withdrawal liability assessment in May 2020 and served a follow-up letter on its registered agent

in July 2020. Piro Decl. Ex. A, ECF 18. By letter dated October 15, 2020, the Trust notified

defendant Signature NW that its payment due on August 20, 2020 had not been received and that

payment had to be made within 60 days to avoid a default pursuant to ERISA § 4219(c)(5)(A),

29 U.S.C. § 1399(c)(5)(A). Compl. 3, ECF 1. More than 60 days have passed since the October

15, 2020 letter, and defendant Signature NW has not made any payments. Piro Decl. 2, ECF 18.

As plaintiff’s efforts failed to result in the relief that it seeks, plaintiff had no recourse for

recovery other than to file this action.

B. Factors Two and Three: Merits of Claims and Sufficiency of Complaint

Upon entry of default, this court must take the well-pleaded factual allegations of the

complaint as true. See Geddes v. United Fin. Grp., 559 F.2d 557, 560 (9th Cir. 1977) (“The

general rule of law is that upon default the factual allegations of the complaint, except those

relating to the amount of damages, will be taken as true.”); Cripps v. Life Ins. Co. of N. Am., 980

F.2d 1261, 1267 (9th Cir. 1992) (“In reviewing a default judgment, this court must take the well-

pleaded factual allegations of [the complaint] as true.”).

Here, plaintiff’s well-pleaded complaint alleges facts establishing defendant Signature

NW’s withdrawal liability to the Trust. It is clear from plaintiff’s documents that during the 2019

plan year, defendant Signature NW had a complete withdrawal from the Trust for the purposes of

ERISA § 4203(a)(1), 29 U.S.C. § 1383(a)(1), and, as a result of that withdrawal, defendant

Signature NW incurred a withdrawal liability of $996,803.00. Piro Decl. 2, ECF 18. Plaintiff has

also stated a claim for liquidated damages, interest, attorney’s fees, and costs pursuant to

29 U.S.C. § 1132(g)(2) and the terms of the Trust Agreement. Piro Decl. Ex. C, ECF 18. Thus,

plaintiff has established the merits of its claims.

C. Fourth Factor: Sum of Money at Stake

Under the fourth Eitel factor, “the court must consider the amount of money at stake in

relation to the seriousness of [d]efendant’s conduct.” PepsiCo, 238 F.Supp.2d at 1176–77; see

also J & J Sports, 2010 WL 2757106, at *5 (“a large sum of money at stake would disfavor

default damages,” such as a request for $114,200 in damages); Board of Trustees of the Sheet

Metal Workers v. Vigil, No. C 07-01508 WHA, 2007 WL 3239281, at *2 (N.D. Cal. Nov. 1,

2007) (“[D]efault judgment is disfavored if there were a large sum of money involved”).

Here, the sum sought is not small, but the amount is well supported by the evidence that

plaintiff has presented.

D. Fifth Factor: Possibility of Dispute Over Material Facts

In addressing the fifth factor, the court considers the possibility that there is a dispute

concerning material facts. As mentioned above, “[u]pon entry of default, all well-pleaded facts in

the complaint are taken as true, except those relating to damages.” PepsiCo, 238 F. Supp. 2d at

1177. Thus, “[t]he fifth factor . . . weighs in favor of default judgment when the claims in the

complaint are well-pleaded.” Joe Hand Prods. v. Holmes, No. 2:12–cv–00535–SU, 2015 WL

5144297, at *7 (D. Or. Aug. 31, 2015). Otherwise stated, “[b]ecause all allegations in a well-

pleaded complaint are taken as true after the court clerk enters default judgment, there is no

likelihood that any genuine issue of material fact exists.” Elektra Entm’t Grp., Inc. v. Crawford,

226 F.R.D. 388, 393 (C.D. Cal. 2005).

As noted, the complaint is well-pleaded, and plaintiff has submitted the Trust Agreement

and other supporting documents establishing the merits of its claims. Thus, the possibility that

there is a dispute over material facts is low.

E. Sixth Factor: Excusable Neglect

The sixth factor pertains to the possibility that the default resulted from excusable

neglect. As noted, before filing suit, plaintiff sent an initial demand letter to defendant Signature

NW on May 23, 2020, and sent further demands on July 16, 2020, and October 15, 2020,

requesting that defendant Signature NW cure its default within 60 days. Barlow Decl. Ex. A,

ECF 19; Piro Decl. 2, ECF 18. Thus, defendant had notice of this lawsuit, in addition to proper

service discussed above. There is no indication of excusable neglect.

F. Policy Favoring Decision on the Merits

Factor seven is “the strong policy underlying the Federal Rules of Civil Procedure

favoring decisions on the merits,” specifically the policy that “[c]ases should be decided upon

their merits whenever reasonably possible.” Eitel, 782 F.2d at 1472. However, “this policy,

standing alone, is not dispositive, especially where a defendant fails to appear or defend itself in

an action.” Joe Hand Promotions, Inc. v. Machuca, No. 2:13-cv-1228 GEB KJN, 2014 WL

1330749, at *6 (E.D. Cal. Mar. 31, 2014). Where a defendant has failed to answer a complaint, it

“makes a decision on the merits impractical, if not impossible.” PepsiCo, 238 F. Supp. 2d at

1177. Rule 55 allows the court to terminate a case before hearing the merits when a defendant

fails to defend an action. FED.R.CIV.P. 55. “Thus, the preference to decide cases on the merits

does not preclude a court from granting default judgment.” PepsiCo, 238 F. Supp. 2d at 1177

(internal quotation omitted).

Here, a decision on the merits is impossible because defendant Signature NW has failed

to appear, plead, or defend this action. Additionally, all other factors weigh in favor of a default

judgment. Therefore, the seventh factor is not dispositive and does not preclude the court from

entering a default judgment against defendant.

VI. Damages

While this court assumes the facts in the complaint are true, “neither the default nor the

allegation in the complaint can establish the amount of damages.” Lasheen v. Embassy of the

Arab Republic of Egypt, 625 F. App’x. 338, 341 (9th Cir. 2015) (cited pursuant to Ninth Circuit

Rule 36-3). Before the court can enter a default judgment for a sum that is uncertain, the plaintiff

must prove damages. TeleVideo Sys., Inc. v. Heidenthal, 826 F.2d 915, 916-17 (9th Cir. 1987).

In an action for collection of outstanding withdrawal liability, ERISA § 4301(b) provides

that the withdrawal liability shall be treated as a delinquent contribution. 29 U.S.C. § 1451(b).

Under ERISA § 502(g)(2), in actions for the collection of unpaid contributions, the plan shall be

awarded (1) the unpaid contributions, (2) interest on the unpaid contributions, (3) liquidated

damages as provided by the plan (not to exceed 20% of the unpaid contributions); and (4)

reasonable attorney’s fees and costs. 29 U.S.C. § 1132(g)(2).

Additionally, Amendment No. 1 to the Trust Agreement provides that in a suit for the

collection of delinquent contributions, liquidated damages shall be assessed at 20% of the

outstanding amount of contributions due and interest shall be assessed at 12% per annum from

the date the contributions were due until the contributions are paid. Piro Decl. 3, ECF 18. The

Trust Agreement also provides for the recovery of attorney fees and costs. Id. at Ex. C.

Plaintiff has established damages. Again, defendant Signature NW’s failed to submit

payments according to the withdrawal liability schedule and failed to cure its default. Mot. 6,

ECF 17. Plaintiff submitted a withdrawal liability calculation prepared by the Trust’s actuaries

that shows the assessed withdrawal liability for Signature NW is $996,803.00. Barlow Decl. Ex.

A, ECF 19. Plaintiff seeks liquidated damages of $199,360.60 (20% of $966,803.00) and interest

of $51,123.701, calculated from the date of default, December 14, 2020, to June 2, 2021.2 Those

sums are also correct and due.

Plaintiff seeks attorney’s fees of $1,574.50. Attorney’s fees are authorized by 29 U.S.C.

§ 1132(g)(2), and the terms of the Trust Agreement provide that in a suit for delinquent

1 It is unclear how this interest amount was calculated. Nevertheless, it is slightly less than 12%

interest, whether it is calculated by simple or compound method, on $966.803.00 for 170 days

from December 14, 2020, to June 2, 2021.

2 This date appears to roughly correspond to the date on which plaintiff filed its motion for

default judgment, June 4, 2021. See ECF 17.

contributions, the court shall award the Trust reasonable attorney fees and costs of collection.

Piro Decl. Ex. C, ECF 18. Generally, attorney’s fees are calculated using the lodestar method,

i.e., by multiplying the number of hours worked by the reasonable hourly rate. See Perdue v.

Kenny A., 559 U.S. 542, 551 (2010) (holding “the lodestar approach” is “the guiding light” when

determining reasonable fees). In determining the “reasonable hourly rate to use for attorneys

and paralegals[,]” the court looks to the “prevailing market rates in the relevant community.”

Gonzalez v. City of Maywood, 729 F.3d 1196, 1205 (9th Cir. 2013) (citations and internal

quotation marks omitted). The court also excludes hours “that are excessive, redundant, or

otherwise unnecessary.” McCown v. City of Fontana, 565 F.3d 1097, 1102 (9th Cir. 2009)

(quoting Hensley v. Eckerhart, 461 U.S. 424, 434 (1983)). The party seeking fees bears “the

burden of documenting the appropriate hours expended in the litigation, and [is] required to

submit evidence in support of those hours worked.” United Steelworkers of Am. v. Ret. Income

Plan For Hourly-rated Emps. Of Asarco, Inc., 512 F.3d 555, 565 (9th Cir. 2008) (quotations

omitted).

The court looks to the “prevailing market rates in the relevant community” to determine

reasonable hourly rates. Blum v. Stenson, 465 U.S. 886, 895 n.11 (1984). The relevant

community “is one in which the district court sits.” Davis v. Mason County, 927 F.2d 1473, 1488

(9th Cir. 1991). This court uses the most recent Oregon State Bar Economic Survey as a

benchmark for comparing an attorney’s billable rate with the fee customarily charged in the

locality. Precision Seed Cleaners v. Country Mut. Ins. Co., 976 F. Supp. 2d 1228, 1244 (D. Or.

2013); see also Copeland-Turner v. Wells Fargo Bank, N.A., No. 11-cv-37-HZ, 2012 WL 92957,

at *2 (D. Or. Jan. 11, 2012) (“Judges in the District of Oregon use the Oregon State Bar

Economic Survey . . . as a benchmark for assessing the reasonableness of hourly billing

rates.”). The Economic Survey sets forth rates charged by Oregon attorneys in the relevant year,

including rates specific to communities such as Portland.

Plaintiff’s counsel, David Barlow, seeks an hourly rate of $335 for 4.7 hours of work

performed between January 20, 2021, and May 19, 2021. Barlow Decl. Ex. C, ECF 19. Barlow

has submitted an itemized list of the work that he performed on this case and the time spent on

each task. Id. The work does not appear excessive or duplicative. Barlow, who works at a firm in

Seattle, Washington, has been licensed to practice law for at least 30 years. The median rate for

Portland attorneys with 30 or more years of experience is $425. See OREGON STATE BAR, 2017

ECONOMIC SURVEY 39 tbl.36 (2017). Barlow’s hourly rate of $335, which is under the median

for Portland attorneys with his level of experience, is reasonable.

Plaintiff also seeks costs of $527, specifically, $402 for the filing fee and $125 for the

service fee. Barlow Decl. Ex. B, ECF 19. “Unless a federal statute, these rules or a court order

provides otherwise, costs—other than attorney’s fees—should be allowed to the prevailing

party.” FED.R.CIV.P. 54(d)(1). “Rule 54(d)(1) creates a presumption in favor of awarding costs

to the prevailing party, and a district court has limited discretion to deny fees under the rule.”

Goldberg v. Pac. Indem. Co., 627 F.3d 752, 758 (9th Cir. 2010). Thus, plaintiff is entitled to

$527 in costs.

Because plaintiff has proven its damages in accordance with ERISA § 4301(b), 29 U.S.C.

§ 1451(b), and the Trust Agreement, plaintiff may therefore recover the damages they seek on

their claim for unpaid withdrawal liability. See Pension Tr. Fund for Operating Engineers v.

Dalecon, Inc., No. C 11-02851 LB, 2014 WL 1007274, at *16-17 (N.D. Cal. Mar. 12, 2014)

(granting the plaintiff summary judgment and finding the defendant liable for the assessed

withdrawal liability, interest, liquidated damages, and attorneys’ fees and costs).

RECOMMENDATIONS

Plaintiff’s Motion for Default Judgment (ECF 17) should be GRANTED, and judgment

should be issued in the amount of $996,803.00 plus liquidated damages of $199,360.60, interest

of $51,123.70, attorney’s fees of $1,574.50, and $527 in costs.

SCHEDULING ORDER

These Findings and Recommendations will be referred to a district judge. Objections, if

any, are due Thursday, October 28, 2021. If no objections are filed, then the Findings and

Recommendations will go under advisement on that date.

If objections are filed, then a response is due within 14 days after being served with a

copy of the objections. When the response is due or filed, whichever date is earlier, the Findings

and Recommendations will go under advisement.

NOTICE

These Findings and Recommendations are not an order that is immediately appealable to

the Ninth Circuit Court of Appeals. Any Notice of Appeal pursuant to Rule 4(a)(1), Federal

Rules of Appellate Procedure, should not be filed until entry of a judgment.

DATED October 7, 2021.

/s/ Youlee Yim You

Youlee Yim You

United States Magistrate Judge