considering trust agreement providing trustee with right to inspect employer 2 records that contained "the names and current addresses of [company's] Employees, 3 their Social Security numbers, the hours worked by each Employee and past industry 4 employment history in its files"
How later courts described this case
- considering trust agreement providing trustee with right to inspect employer 2 records that contained "the names and current addresses of [company's] Employees, 3 their Social Security numbers, the hours worked by each Employee and past industry 4 employment history in its files"
Written by the judges who cited it.
The opinion
1
2
3
4 IN THE UNITED STATES DISTRICT COURT
5 FOR THE NORTHERN DISTRICT OF CALIFORNIA
6
7 BOARD OF TRUSTEES OF THE BAY Case No. 24-cv-08468-MMC
AREA ROOFERS HEALTH &
8 WELFARE TRUST FUND, et al.,
ORDER DENYING DEFENDANT'S
9 Plaintiffs, MOTION TO SET ASIDE DEFAULT
AND DEFAULT JUDGMENT;
10 v. VACATING HEARING
11 ELITE WATERPROOFING & EPOXY
FLOORING,
12
Defendant.
13
14 Before the Court is defendant Elite Waterproofing & Epoxy Flooring's ("Elite")
15 Motion, filed May 8, 2025, "to Vacate Entry of Default and Default Judgment." Plaintiffs1
16 have filed opposition, to which Elite has replied. Having read and considered the papers
17 filed in support of and in opposition to the motion, the Court deems the matter suitable for
18 decision on the parties' respective written submissions, VACATES the hearing scheduled
19 for June 20, 2025, and rules as follows.
20 As set forth in the Court's order granting default judgment, plaintiffs alleged the
21 following in their Complaint:
22 (1) [P]laintiffs are the Board of Trustees of five "Trust Funds"
and a Trustee of those funds, all of which funds are "employee
23 benefit plan[s]" (see Compl. ¶¶ 10, 12); (2) Elite is an employer
that is a party to a collective bargaining agreement titled
24 "Working Agreement" (hereinafter, "the CBA"), as well as a
25
1 Plaintiffs are the Board of Trustees of the Bay Area Roofers Health & Welfare
26
Trust Fund, Pacific Coast Roofers Pension Plan, East Bay/North Bay Roofers Vacation
Trust Fund, Bay Area Counties Roofing Industry Promotion Fund, and Bay Area Counties
27
Roofing Industry Apprenticeship Training Fund, as well as Carlos Opfermann, a Trustee
party to a "Trust Agreement," under which agreements Elite is
1 required to "make contributions" to the Trust Funds on behalf
of "certain of [Elite's] employees" (see Compl. ¶¶ 10, 16, 20;
2 see also Compl. Ex. A (CBA), Art. XVIII-XXII, Ex. B (Individual
Employer Agreement), and Ex. C (Trust Agreement) ¶ III);
3 (3) under the Trust Agreement, plaintiffs are authorized "to
request and review a broad range of business records to
4 determine whether an employer has satisfied all obligations to
the Trust Funds" (see Compl. ¶ 20; see also Ex. [C] ¶¶ III.D);
5 (4) on or about October 2, 2023, plaintiffs' auditor notified Elite
that "the Trust Funds would be conducting an audit of Elite for
6 the period of January 1, 2022, through December 31, 2022,"
and requested "six categories of documents," but Elite "never
7 produced any documents to the auditor" (see Compl. ¶ 21);
(5) thereafter, on various dates beginning in April 2024,
8 plaintiffs' counsel made written and telephonic demands that
Elite produce the requested documents, but Elite did not do so,
9 and had not done so as of November 26, 2024, the date on
which plaintiffs filed the instant action (see Compl. ¶¶ 22-24).
10
(See Order, filed April 10, 2025 [Doc. No. 21] at 2:1-18.) Based on the above, plaintiffs
11
asserted that Elite had violated the terms of the CBA and Trust Agreement, and that,
12
under the Employee Retirement Income Security Act ("ERISA"), they were entitled to an
13
order directing Elite to submit to the requested audit.
14
After Elite was served with the summons and Complaint, the Clerk of Court, upon
15
request by plaintiffs after the time for Elite to file a response had passed, entered the
16
default of Elite. Thereafter, plaintiffs filed a motion for default judgment, which motion the
17
Court granted by order filed April 10, 2025. The order (1) required Elite "to submit to an
18
audit on no less than two weeks written notice from plaintiffs," and further required Elite to
19
"make available to the auditor, for the period January 1, 2022, through December 31,
20
2022, the six categories of documents identified in the letter the auditor previously
21
provided to Elite on or about October 2, 2023" (see id. at 3:18-21), (2) afforded plaintiffs
22
leave to request "a potential award of monetary relief in amounts to be determined
23
according to proof . . . if warranted by the results of the audit" and afforded Elite an
24
opportunity to respond to any such request (see id. at 3:22-4:4), (3) awarded plaintiffs
25
fees and costs in the total amount of $6,229 (see id. at 4:5-6), and (4) retained jurisdiction
26
over the matter "for purposes of enforcing the . . . order and amending the judgment to
27
include, following the audit, the sums, if any, determined by the Court to be due and
1 owing" (see id. at 4:7-9). The Clerk of Court thereafter entered judgment on the order
2 granting default judgment. (See Doc. No. 22.)
3 By the instant motion, Elite seeks an order setting aside the entry of default and
4 the default judgment.
5 In determining whether to set aside an entry of default or to set aside a default
6 judgment, district courts consider the same factors, namely, (1) "whether the party
7 seeking to set aside the default engaged in culpable conduct that led to the default,"
8 (2) "whether it had no meritorious defense," and (3) "whether reopening the default
9 judgment would prejudice the other party." See United States v. Signed Personal Check
10 No. 730 of Yubran S. Mesle, 615 F. 3d 1085, 1091 (9th Cir. 2010). The "standard" is
11 "disjunctive," and, consequently, a "finding that any one of [the] factors is true is sufficient
12 reason for the district court to refuse to set aside the default." See id.
13 Here, the Court first considers whether Elite has identified a meritorious defense.
14 In that regard, although "the burden on a party seeking to vacate a default judgment is
15 not extraordinarily heavy," the party "must present specific facts that would constitute a
16 defense." See TCI Group Life. Ins. Plan v. Knoebber, 244 F.3d 691, 700 (9th Cir. 2001).
17 The defenses identified by Elite in its motion pertain to the scope of the documents
18 sought by plaintiffs.2 In its written demand for an audit, plaintiffs' auditor stated that the
19 Trust Funds sought to examine specified "records for the period January 1, 2022 through
20 December 31, 2022," e.g., "time cards," "[p]ayroll journals," "Federal and California
21 quarterly tax returns, W-2's, and 1099s," "[p]ersonnel records of employees indicating job
22 classifications and dates of hire and termination," and "cash disbursement journals."
23
24
2 Elite has attached to its motion a proposed Answer, which pleading, in addition to
raising defenses arising from the scope of the documents sought by plaintiffs, lists a
25
number of other defenses, such as "Comparative Negligence," "Equitable Estoppel,"
"Laches," and "Unclean Hands." (See Def.'s Mot. Ex. A.) The proposed answer,
26
however, does not include any facts, let alone the requisite "specific facts," see TCI
Group Life Ins. Plan, 244 F.3d at 700, in support of the other defenses. Indeed, Elite, in
27
its motion, does not contend that any defense unrelated to its challenge to the scope of
1 (See Wahidi Decl. Ex. A.) According to Elite, such request was "ultra vires and outside
2 the scope of the documents and information that the Union and the Plaintiff Trust Funds
3 may request pursuant to the CBA and Trust Agreements" and that, under such asserted
4 circumstances, the Trust Funds, rather than Elite, "breached the CBA and Trust
5 Agreements." (See Def.'s Mot. at 10:4-10.) In particular, according to a declaration
6 submitted by Elite's owner, plaintiffs' auditor had requested Elite produce "all records for
7 all employees for the entire year of 2022" (see Wahidi Decl. ¶ 5), "not just union
8 employees" (see id. ¶ 3), and, Elite's owner contends, providing the auditor with the
9 requested documents could subject Elite to being "sued" by its employees (see id. ¶ 5).
10 Plaintiffs do not dispute that their auditor's request sought documents for all
11 employees, but argue that such request was not improper and was one with which Elite
12 was obligated to comply. As set forth below, the Court agrees.
13 First, contrary to Elite's characterization of the request for records of all employees
14 as "ultra vires" and "outside the scope" of the parties' agreements, the Trust Agreement
15 expressly provides that, when conducting an audit, plaintiffs have the power to inspect,
16 inter alia, "time cards for all employees," "individual earnings for all employees," and "all
17 other documents reflecting the hours and wages and/or piecework records of employees
18 (whether or not such documents are privileged)." (See Compl. Ex. C at III.D.) Elite cites
19 no language in the Trust Agreement or the CBA that the "employees" identified in the
20 above-quoted provision of the Trust Agreement are limited to employees the employer
21 asserts have performed work covered by the CBA.
22 Moreover, as plaintiffs point out, the Supreme Court already has decided the issue
23 Elite seeks to raise as a defense and has rejected it. In Central States, Southeast and
24 Southwest Areas Pension Fund v. Central Transport, Inc., 472 U.S. 559 (1985), the
25 Supreme Court considered "whether an employer who participates in a multiemployer
26 plan that is governed by [ERISA] must allow the plan to conduct an audit involving the
27 records of employees who the employer denies are participants in the plan," see id. at
1 id. at 566 (considering trust agreement providing trustee with right to inspect employer
2 records that contained "the names and current addresses of [company's] Employees,
3 their Social Security numbers, the hours worked by each Employee and past industry
4 employment history in its files"). In explaining why the employer was required to turn
5 over records of employees it contended were not participants in the union's benefit plans,
6 the Supreme Court held that an audit of the records of all employees "is highly relevant to
7 legitimate trustee concerns," see id. at 568-69, namely, to "verify[ ] that the employer has
8 accurately determined the class of covered employees," see id. at 566-68; see also id. at
9 568 (finding trustee's request for records of all employees "fully conform[ed] to generally
10 accepted auditing standards"). In sum, the Supreme Court found "there is no reason in
11 ERISA or the plan documents [at issue] why the kind of audit requested [by the trustee]
12 should, as a matter of law, be considered outside the scope of proper plan
13 administration." See id. at 582.3
14 In attempting to avoid the holding set forth in Central States, Elite observes that
15 the Supreme Court stated it was not "determin[ing] whether ERISA would independently
16 confer on the trustees a right to perform the sort of audit demanded [therein] in the face
17 of trust documents that explicitly limit the audit powers of trustees." See id. at 581. The
18 Trust Agreement at issue in the instant action, however, does not contain any language
19 "explicitly," or for that matter, implicitly, limiting the audit powers of the Trust Funds to
20 inspecting only records of employees that an employer contends are performing covered
21 work. Indeed, in addition to the express right to inspect the employer's records of "all
22 employees," the Trust Agreement provides that plaintiffs have the power to "require any
23 person with obligations or rights [under the Trust Agreement] to furnish, or permit an audit
24
25
3 Although, as noted, Elite contends it could be liable to its employees if it were to
provide the auditor with the requested information, Elite fails to identify any law under
26
which an employee would have a right to bring such claim. Moreover, as also noted, the
Supreme Court, in Central States, required the employer in that case to provide the
27
trustees with the names, current addresses, social security numbers, and work histories
1 of, any reasonable information, data, and documents which are pertinent in verifying the
2 || accuracy of contributions and acting upon claims for benefits, or which are otherwise
3 || pertinent in administering th[e] Trust." (See Compl. Ex. C at VI.D.)
4 Accordingly, the Court finds Elite has not identified a meritorious defense, and,
5 || consequently, the motion is hereby DENIED.*
6 IT IS SO ORDERED.
7
8 || Dated: June 2, 2025 .
AKINE M. CHESNEY
9 Unitéd States District Judge
10
11
12
13
16
17
18
19
20
21
22
23
24
25
26 * in light of the above finding, the Court does not address herein the parties’
respective arguments pertaining to the remaining two factors, namely, whether, as Elite
27 || asserts, its failure to appear is the result of negligence rather than culpable conduct, and
whether, as plaintiffs assert, they would be prejudiced if the default and default judgment
2g || were to be set aside.