The opinion
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES —- GENERAL ‘O’
Case No. 2:19-cv-04058-CAS-AFMx Date April 11, 2022
Title Trustees of the Operating Engineers Pension Trust et al v. Smith-Emery
Company
Ss ee eee CHRISTINA A_SNYDER
Catherine Jeang Laura Elias N/A
Deputy Clerk Court Reporter / Recorder Tape No.
Attorneys Present for Plaintiffs: Attorneys Present for Defendants:
Marija Decker John Worden
Christopher Brown
Andrew Zepeda
James Partridge, Pro Se
Proceedings: SMITH-EMERY’S MOTION FOR APPOINTMENT OF SPECIAL
MASTER PURSUANT TO RULE 53 (Dkt. 108, filed on March 8,
2022)
I. INTRODUCTION & BACKGROUND
This case is the latest iteration of a labor dispute between plaintiff trustees
(“Trustees”) that administer several trusts and funds (“Trust Funds”) that provide benefits
to members of the International Union of Operating Engineers, Local Union No. 12
(“Local 12”), on the one hand, and Smith-Emery Company (“Smith-Emery”), a
California corporation that performs construction tests and inspections, on the other. In
broad terms, the dispute concerns allegations that Smith-Emery has failed, over the
course of many years, to make payments into certain trusts for the benefit of Local 12
members employed by Smith-Emery, which the Trustees allege is required by labor
agreements between Smith-Emery (or its bargaining agents) and Local 12.
Trustees initiated this latest action on May 9, 2019, by filing a complaint against
Smith-Emery in this Court. See Dkt. 1 (“Compl.”). The complaint states a single claim
for relief for breach of collective bargaining agreements, and violation of the Employee
Retirement Security Act of 1974 (“ERISA”). Compl. §[ 14-28. Smith-Emery filed an
answer on July 15, 2019, asserting 13 affirmative defenses, and attached a
countercomplaint stating a single claim for relief, a request for a declaration pursuant to
the Declaratory Judgment Act, 28 U.S.C. § 2201, that the Trustees’ claims “to recover
pension, health and welfare contributions and other employee benefits under [Smith-
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES —- GENERAL ‘O’
Case No. 2:19-cv-04058-CAS-AFMx Date April 11, 2022
Title Trustees of the Operating Engineers Pension Trust et al v. Smith-Emery
Company
Emery’s] labor contracts with [Local 12]” are foreclosed by (1) “state public safety laws
regulating the building and construction industry” (the “Illegality Defense’), and (2)
Section 302 of the Labor Management Relations Act of 1947 (“LMRA”), 29 ULS.C. §
186 (the “LMRA Defense”). Dkt. 11 (“Countercl.”). The countercomplaint adds Smith-
Emery’s principal, James E. Partridge (“Partridge’’), as a counterclaimant, and, in
addition to plaintiffs, lists three California state agencies—the California Division of the
State Architect (“DSA”), the California Office of Statewide Health Planning and
Development (“OSHPD”), and the California Building Standards Commission (“BSC”)
(collectively, the “State Agencies” or “the State”)—as counterdefendants. Countercl. 4]
5-12.
On September 20, 2019, the State Agencies filed a motion dismiss the
counterclaim as it applied to them. Dkt. 36. That same day, the Trustees filed a motion
to dismiss the counterclaim as it applied to them, as well as a motion to strike all of the
13 affirmative defenses asserted by Smith-Emery’s Answer. Dkt. 37. On October 28,
2019, the Court denied the Trustees’ motion to dismiss pursuant to Federal Rule of Civil
Procedure 12(b)(1), granted the Trustees’ motion to dismiss pursuant to Federal Rule of
Civil Procedure 12(b)(6) without leave to amend, denied the Trustees’ motion to strike
pursuant to Federal Rule of Civil Procedure 12(f), and granted the State Agencies’
motion to dismiss pursuant to Federal Rule of Civil Procedure 12(b)(1) without leave to
amend. Dkt. 47.
Subsequently, the parties appeared before Magistrate Judge Alexander M.
MacKinnon with regard to several discovery disputes, and the Court modified its
scheduling order four times pursuant to the parties’ stipulations. See Dkts. 51, 55, 67, 72,
86, 88, 91. On October 19, 2021, the Trustees moved for an ex parte order “modifying
the Court’s Scheduling Order so that Trustees can complete discovery and file a motion
for summary judgment.” Dkt. 92. The Trustees contended that “Smith-Emery [has]
failed to produce all responsive documents.” Dkt. 93. On October 27, 2021, the Court
granted Trustees’ unopposed ex parte application to modify the Court’s scheduling order.
Dkt. 96.
On October 19, 2021, Mitchell Silberberg & Knupp LLP (“MSK’”), former counsel
for Smith-Emery, filed a motion to withdraw as counsel, claiming that “there has been
a[n] irreparable breakdown in the attorney client relationship.” Dkt. 95 at 4. On
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES —- GENERAL ‘O’
Case No. 2:19-cv-04058-CAS-AFMx Date April 11, 2022
Title Trustees of the Operating Engineers Pension Trust et al v. Smith-Emery
Company
November 22, 2021, the Court granted MSK’s motion to withdraw as counsel for Smith-
Emery. Dkts. 100-101. On January 14, 2022, John S. Worden of Venable LLP appeared
as counsel for Smith-Emery. Dkt. 103.
On March 8, 2022, Smith-Emery filed a motion to appoint special master pursuant
to Fed. R. Civ P. 53. Dkt. 108 (“Mot.”). On March 21, 2022, the Trustees filed their
opposition. Dkt. 112 (“Opp.”). Smith-Emery replied on March 28, 2022. Dkt. 113
(“Reply”).
The Court held a hearing on April 11, 2022. Having carefully considered the
parties’ arguments and submissions, the Court finds and concludes as follows.
I. LEGAL STANDARD
Fed. R. Civ. P. 53 governs the appointment of special masters. Special masters
may be appointed only to “(A) perform duties consented to by the parties; (B) hold trial
proceedings and make or recommend findings of fact on issues to be decided without a
jury if appointment is warranted by: (1) some exceptional condition; or (11) the need to
perform an accounting or resolve a difficult computation of damages; or (C) address
pretrial and post-trial matters that cannot be effectively and timely addressed by an
available district judge or magistrate judge of the district.” Fed. R. Civ. P. 53(a).
“<The only prerequisite to the appointment of a pretrial or posttrial master is that
no district judge or magistrate judge of the district be available who can address the
matter to be referred in a timely and effective manner. The prerequisite that some
exceptional condition warrant the appointment of a master, which was applicable to all
appointments under the former rule, applies only to some appointments of a master to
hold trial proceedings and make or recommend findings of facts on issues to be decided
without a jury; it does not apply to the appointment of pretrial and posttrial masters.’”
United States ex rel. Poehling v. United Health Grp., Inc., No. CV 16-8697 FMO (SSx),
2020 WL 10731245, at *1 (C.D. Cal. May 5, 2020) (quoting 9 Moore’s Federal Practice
§ 53.10[3][b]). “Courts may appoint a special master with broad authority to “supervise
and conduct pretrial matters, including discovery activity, the production and
arrangement of exhibits and stipulations of fact, the power to hear motions for summary
judgment or dismissal and to make recommendations thereto.’” Thakur v. Cofiroute
USA, LLC, No. 8:19-cv-02233-ODW (JDEx), 2020 WL 10731939, at *4 (C.D. Cal. Aug.
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES —- GENERAL ‘O’
Case No. 2:19-cv-04058-CAS-AFMx Date April 11, 2022
Title Trustees of the Operating Engineers Pension Trust et al v. Smith-Emery
Company
5, 2020) (quoting Burlington N. R.R. Co. v. Dep’t of Revenue of Wash., 934 F.2d 1064,
1073 (9th Cir. 1991)).
“A judge may designate a magistrate judge to serve as a special master pursuant to
the applicable provisions of this title and the Federal Rules of Civil Procedure for the
United States district courts.” 28 U.S.C. § 636(b).
Il. DISCUSSION
Smith-Emery argues that a special master 1s appropriate because “this matter is
complicated, and will culminate in an extensive audit conducted by [Trustees]” regarding
their claim that Smith-Emery failed to pay fringe benefit contributions owed to Trustees
pursuant to the relevant collective bargaining agreements (“CBAs”). Mot. at 3. Smith-
Emery contends that, after the audit is complete, the Court will “need to assess
| Trustees’ | audit in granular fashion—down to type of work performed and hours worked
for each individual cited therein, as well as the interest calculation that Trustees’ □ auditor
will likely proffer—and will also need to evaluate [Trustees’| contentions respecting any
counter-audit that Smith-Emery may itself conduct.” Id. According to Smith-Emery, the
complexity of the audit(s), along with the potential evidentiary issues that may be raised
by the parties, justifies the appointment of a special master pursuant to Fed. R. Civ. P.
S3(a)(1(C). Id.
Smith-Emery notes that the “the audit will encompass work completed between
October 1, 2016, and March 31, 2020, nearly four years.” Id. at 4. Smith-Emery requests
that the Court appoint a special master for the following pretrial matters: (1) “[t]o oversee
all matters related to the audit portion of this litigation, including the production and
assessment of Plaintiffs’ audit, as well as any counter-audit Smith-Emery may submit in
response to Plaintiffs’ audit;” (2) “[t]o rule on any evidentiary objections the parties may
have concerning the respective audit(s), including the documents related to the third-party
subpoenas;” and (3) “[t]o oversee any litigation that directly follows as a result of the
audit(s).” Id. Smith-Emery requests that “Magistrate Judge Alexander F. MacKinnon be
appointed as special master respecting the audit issues” because Judge MacKinnon “‘is
intimately familiar with the issues surrounding the audit and is equipped to resolve the
evidentiary and authenticity issues that will arise once the audit has been produced.” Id.
at 9-10.
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES —- GENERAL ‘O’
Case No. 2:19-cv-04058-CAS-AFMx Date April 11, 2022
Title Trustees of the Operating Engineers Pension Trust et al v. Smith-Emery
Company
In opposition, Trustees note that they do not consent to Smith-Emery’s “request for
appointment of a Special Master in this case as the facts do not warrant the need for any
such appointment.” Opp. at 3. Trustees claim that their auditor “has conducted or been
involved with thousands of compliance audits including employers similar to and larger
than [Smith-Emery],” and contend that “[t|he calculation of the fringe benefit
contribution involves nothing more than multiplying the hours of covered work by the
appropriate contribution rate.” Id. at 4. Therefore, “[n]o part of the Trustees’ audit
process requires or would be aided by the appointment of a Special Master.” Id.
Trustees also argue that “the appointment of a Special Master (for the purposes outlined
by [Smith-Emery]) would only further complicate and delay the resolution of this case, as
[Smith-Emery] will no doubt attempt to challenge and litigate every facet of the Trustees’
audit while the audit is being conducted.” Id. at 5. Additionally, Trustees argue that a
special master is not warranted because “Judge McKinnon already demonstrated his
ability to address discovery related issues (including [Smith-Emery’s] related legal
arguments) in his role as a Magistrate Judge” and “this Court has reviewed and analyzed
similar audits of [Smith-Emery] conducted by [Smith-Emery] in prior actions without
issue.” Id. at 6. In sum, Trustees argue that, once their audit is complete, “if [Smith-
Emery] has disputes with the audit claim, it may then argue those disputes before this
Court through the normal avenues of litigation. Similarly, if further discovery related
disputes arise, [Smith-Emery] may seek to have these disputes adjudicated by Judge
McKinnon in his role as a Magistrate Judge.” Id. at 7.
In reply, Smith-Emery claims that Trustees’ opposition “significantly understates
the complexity of the evidentiary issues surrounding their audit that this Court will need
to address.” Reply at 2. Smith-Emery reiterates that “Plaintiffs” upcoming audit is not
simple; it will contain a number of line items each requiring individualized review.” Id.
Smith-Emery adds that Trustees’ opposition essentially acknowledges that Judge
MacKinnon is qualified to serve as Special Master over the audit. Id. Moreover, Smith-
Emery argues that its request for the appointment of a special master “is based in part on
its potential disputes with Plaintiffs’ audit process. . . . If, upon review of Plaintiffs’ audit,
Smith-Emery sees the need to file evidentiary motions, hire its own audit expert witness,
or raise any other potential issues with the Court, some authority will need to address
those arguments. As of now, that authority is this Court. This is precisely the kind of
pretrial matter that Fed. R. Civ. P. 53 highlights can be handled by a Special Master in an
effort to alleviate the burden on the Court.” Id. at 4. Finally, Smith-Emery contends that
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES —- GENERAL ‘O’
Case No. 2:19-cv-04058-CAS-AFMx Date April 11, 2022
Title Trustees of the Operating Engineers Pension Trust et al v. Smith-Emery
Company
“Ti]f Plaintiffs’ audit is a summary of voluminous records, either this Court or a Special
Master will need to scrutinize that summary and determine if it accurately represents the
disputed issues in this case concerning fringe benefit contributions,” and that “Smith-
Emery anticipates that Plaintiffs’ audit will not account for or appropriately document
important details that are relevant to liability in this matter.” Id. at 5.
Pursuant to Fed. R. Civ. P. 53, the Court has discretion to appoint a special master
to “address pretrial and posttrial matters that cannot be effectively and timely addressed
by an available district judge or magistrate judge of the district,” or “perform an
accounting or resolve a difficult computation of damages.” Fed. R. Civ. P. 53(a)(1).
However, the Court finds that the appointment of a special master 1s unnecessary and
premature at this time. Judge MacKinnon is already going to be required to resolve
certain discovery disputes in this case. At this juncture, asking him to serve as a special
master in addition to his other obligations as Magistrate Judge represents an unfair
burden on Judge MacKinnon. While the Court 1s appreciative of Smith-Emery’s attempt
to reduce the burden on the Court, unless there is a demonstrable need for a third-party to
resolve potential disputes related to the audit(s), the appointment of a special master 1s
inappropriate and unnecessary. Simply put, at this stage, Smith-Emery has not
demonstrated that the Court and Judge MacKinnon cannot “effectively and timely
address| |” disputes related to the audit portion of this litigation. United States ex rel.
Poehling, 2020 WL 10731245, at *3.
IV. CONCLUSION
In accordance with the foregoing, the Court DENIES, without prejudice, Smith-
Emery’s motion for appointment of special master pursuant to Rule 53.
IT IS SO ORDERED.
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Initials of Preparer CMJ
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