Trustees of the Southern California IBEW-NECA Pension Trust Fund et al v. Gartel Corp

Filing 34

ORDER by Judge Otis D. Wright, II: granting 28 plaintiffs Motion for Default Judgment. Court will enter judgment in accordance with this order. (lc). Modified on 4/19/2013. (lc).

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UNITED STATES DISTRICT COURT

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CENTRAL DISTRICT OF CALIFORNIA

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TRUSTEES OF THE SOUTHERN
CALIFORNIA IBEW-NECA PENSION
PLAN; TRUSTEES OF THE
SOUTHERN CALIFORNIA IBEWNECA HEALTH TRUST FUND,
TRUSTEES OF THE LOS ANGELES
COUNTY ELECTRICAL
EDUCATIONAL AND TRAINING
TRUST FUND; TRUSTEES OF THE
NATIONAL ELECTRICAL BENEFIT
FUND; TRUSTEES OF THE
SOUTHERN CALIFORNIA IBEWNECA LABOR-MANAGEMENT
COOPERATION COMMITTEE,
CONTRACT COMPLIANCE FUND;
NATIONAL ELECTRIACL INDUSTRY
FUND; ADMINISTRATIVE
MAINTENANCE FUND; LOS
ANGELES ELECTRICAL WORKERS
CREDIT UNION,

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v.

Case No. 2:11-cv-5929-ODW(SHx)
ORDER GRANTING MOTION FOR
DEFAULT JUDGMENT [28]

Plaintiffs,

GARTEL CORP.,
Defendant.

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I.

INTRODUCTION

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Plaintiffs are trustees of various trusts created under trust agreements between a

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local union chapter and an employers’ association. These agreements and others

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obligated Defendant Gartel Corp. to pay certain contributions at specified rates

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depending on how many hours its employees worked on covered projects. When

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Gartel failed to pay all required fringe-benefit contributions, Plaintiffs filed suit.

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Since Gartel never answered, the Clerk entered default, and Plaintiffs moved for

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default judgment.

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damages and costs, the Court GRANTS Plaintiffs’ Motion for Default Judgment.1

After considering Gartel’s liability and Plaintiffs’ requested
II.

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FACTUAL BACKGROUND

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Plaintiffs Trustees of the Southern California IBEW-NECA Pension Plan,

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Trustees of the Southern California IBEW-NECA Health Trust Fund, Trustees of the

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Los Angeles County Electrical Educational and Training Trust Fund, Trustees of the

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National Electrical Benefit Fund, and Trustees of the Southern California IBEW-

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NECA Labor-Management Cooperation Committee are trustees of express trusts

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created under trust agreements between various chapters of the International

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Brotherhood of Electrical Workers (“IBEW”) and employers’ associations of the

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National Electrical Contractors Association (“NECA”).

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Compliance Fund, National Electrical Industry Fund, Administrative Maintenance

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Fund, and Los Angeles Electrical Workers Credit Union all collect various payments

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authorized under collective-bargaining agreements. (Id.)

(Compl. ¶ 5.)

Contract

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Gartel is incorporated and has its principal place of business in California. (Id.

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¶ 6.) On or before January 1, 2008, Gartel performed electrical work on various

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public-works projects covered by the Los Angeles Unified School District Project

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Stabilization Agreement–New School Construction and Major Rehabilitation Funded

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by Proposition BB and/or Measure K (“PSA”). (Id. ¶ 7.) Gartel is bound to the PSA

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for work performed on projects covered by the agreement. (Id. ¶ 8.)

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The PSA incorporates, among others, the Inside Wiremen’s Agreement and the

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Sound & Communications Agreement, which are collective-bargaining agreements

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After carefully considering the papers filed with respect to this Motion, the Court deems the matter
appropriate for decision without oral argument. Fed. R. Civ. P. 78; L.R. 7-15.

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between IBEW Local 11 and the Los Angeles County Chapter of NECA. (Id. ¶ 9.)

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On November 17, 2008, Gartel also signed a letter of assent to both of these

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agreements. (Id. ¶¶ 10–11.) The Inside Wiremen’s Agreement incorporates the terms

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of Plaintiffs’ trust agreements. (Johnson Decl. ¶ 7.) As an employer, the agreements

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obligate Gartel to pay, among other things, fringe-benefit contributions on a monthly

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basis at specified rates for each hour worked by covered employees.

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¶ 14(B).) If an employer fails to timely pay mandated contributions, the employer

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also becomes liable for liquidated damages, interest, audit fees, litigation expenses,

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and reasonable attorneys’ fees. (Johnson Decl. Ex. B, at 16; Ex. C, at 31.)

(Compl.

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Since January 1, 2008, Gartel has failed to pay to Plaintiffs all required fringe-

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benefit and other contributions for five different Los Angeles Unified School District

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projects. (Compl. ¶ 18; Ware Decl. Ex. 1.) Plaintiffs’ auditor calculated $109,335.40

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in missing contributions for the period of January 1, 2009, through April 24, 2012.

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(Ware ¶ 6, Ex. 1; Mot. 4.)

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On July 19, 2011, Plaintiffs filed a Complaint against Gartel for breach of the

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trust and collective-bargaining agreements and violation of the Employee Retirement

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Income Security Act (“ERISA”). Plaintiffs filed a proof of service on August 24,

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2011. (ECF No. 5.) Since Gartel never answered, the Clerk entered default. (ECF

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No. 16.) On April 1, 2013, Plaintiffs moved for default judgment. Defendants have

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not opposed the Motion, and it is now before the Court for decision.
III.

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LEGAL STANDARD

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Federal Rule of Civil Procedure 55(b) authorizes a district court to grant default

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judgment after the Clerk enters default under Rule 55(a). Local Rule 55-1 requires

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that the movant submit a declaration establishing (1) when and against which party

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default was entered; (2) identification of the pleading to which default was entered;

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(3) whether the defaulting party is a minor, incompetent person, or active

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servicemember; and (4) that the defaulting party was properly served with notice.

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A district court has discretion whether to enter a default judgment. Aldabe v.

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Aldabe, 616 F.2d 1089, 1092 (9th Cir. 1980). Upon default, the defendant’s liability

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generally is conclusively established, and the well-pleaded factual allegations in the

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complaint are accepted as true. Televideo Sys., Inc. v. Heidenthal, 826 F.2d 915, 917–

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19 (9th Cir. 1987) (per curiam) (citing Geddes v. United Fin. Grp., 559 F.2d 557, 560

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(9th Cir. 1977)).

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In exercising its discretion, a court must consider several factors, including

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(1) the possibility of prejudice to plaintiff; (2) the merits of plaintiff’s substantive

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claim; (3) the sufficiency of the complaint; (4) the sum of money at stake; (5) the

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possibility of a dispute concerning material facts; (6) whether the defendant’s default

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was due to excusable neglect; and (7) the strong policy underlying the Federal Rules

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of Civil Procedure favoring decisions on the merits. Eitel v. McCool, 782 F.2d 1470,

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1471–72 (9th Cir. 1986).
IV.

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DISCUSSION

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Plaintiffs argue that Gartel breached the Inside Wiremen’s Agreement and the

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PSA by failing to pay all mandated fringe-benefit contributions for hours worked by

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Gartel employees on covered projects. As a result, Plaintiffs seek the delinquent

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contributions, liquidated damages, prejudgment interest, and costs.

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A.

Liability

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ERISA provides that, if a multiemployer plan or collective-bargaining

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agreement obligates an employer to make contributions, the employer must make the

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contributions according to the terms and conditions of the relevant agreements. 29

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U.S.C. § 1145.

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Gartel’s failure to timely and fully pay all contributions calculated according to

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the rates specified in the Inside Wiremen’s Agreement and the PSA—as confirmed by

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Plaintiffs’ audit—violates § 1145. This violation thus renders Gartel liable for the

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damages and remedies enumerated in the agreements and provided under ERISA.

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It is also apparent that Gartel was properly served with process.

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Section

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415.20(a) of the California Code of Civil Procedure provides a person may effect

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substitute service on a corporation by delivering a copy of the summons and

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complaint to the corporation’s business address and leaving the documents with a

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person apparently in charge. Here, after several unfruitful attempts, Plaintiffs served a

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Jane Doe occupant of Gartel’s registered business address and also mailed a copy of

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the documents to the same location. (ECF No. 5, at 1.) There is no indication that the

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mail was not received. Service was therefore proper under California law.

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B.

Damages

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Plaintiffs request several types of damages from Gartel, including the unpaid

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contributions, prejudgment interest, liquidated damages, audit fees, attorneys’ fees,

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and litigation expenses. The Court considers each in turn.

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When a fiduciary of a covered plan obtains a favorable judgment, ERISA

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mandates that a court award unpaid contributions, interest on those contributions,

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liquidated damages or a similar amount, reasonable attorneys’ fees, and other relief as

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the court deems appropriate. 29 U.S.C. § 1132(g)(2).

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1.

Unpaid contributions

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Plaintiffs’ auditor reviewed Gartel’s payroll records for the period between

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January 1, 2008, and April 24, 2012. (Ware Decl. ¶ 6.) The auditor determined that

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Gartel failed to pay $109,335.40 in fringe-benefit contributions on five different Los

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Angeles Unified School District projects. (Id. Ex. 1.) The auditor computed this

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amount by multiplying the hours worked and wages paid to Gartel employees during

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the relevant time period by the rates specified in the agreements.

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therefore entitled to $109,335.40 in unpaid contributions.

Plaintiffs are

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2.

Prejudgment interest

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ERISA specifically dictates that a court award prejudgment interest in unpaid-

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contribution actions like this one. 29 U.S.C. § 1132(g)(2)(B). The interest rate is

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either the rate set under the relevant agreements, if any, or the rate established under

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26 U.S.C. § 6621. Here, Plaintiffs invoke the latter interest-rate determination and

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seek $10,214.78 in interest calculated through May 6, 2013, the hearing date of this

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Motion.

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Section 6621 provides that the underpayment interest shall be the federal short-

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term interest rate plus three percentage points. 26 U.S.C. § 6621(a)(2). The Treasury

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Secretary determines the short-term interest rate.

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compounded on a daily basis. Rev. Rul. 2012-32, 2012-52 I.R.B. 762 (2012).

Id. § 6621(b)(1).

Interest is

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Plaintiffs’ auditor calculated the prejudgment interest using the historical

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underpayment interest rates, culminating with the current three-percent rate. (Johnson

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Decl. Ex. G.) Gartel accordingly owes Plaintiffs $10,214.78 in prejudgment interest.

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3.

Liquidated damages

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ERISA also provides that a prevailing trust fiduciary is entitled the greater of an

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amount equal to the interest on the unpaid contributions or the liquidated damages

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provided under the applicable agreements. 29 U.S.C. § 1132(g)(2)(C). But the statute

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caps the liquidated damages at 20 percent of the unpaid contributions.

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§ 1132(g)(2)(C)(ii).

Id.

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The agreements here provide that liquidated damages are determined based on

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the number of days a payment is late, up to 18 percent per annum. Plaintiffs request a

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total of $47,119.87, which is also calculated through the hearing date. But Plaintiffs’

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requested amount exceeds ERISA’s liquidated-damages cap. Plaintiffs are therefore

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only entitled to $21,867.08 in liquidated damages, which is 20 percent of Gartel’s

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unpaid contributions.

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4.

Audit fees

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Plaintiffs additionally request $3,037.50 in audit fees.

ERISA does not

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specifically authorize an audit-fees award. But § 1132 does permit a court to award

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“such other legal or equitable relief as the court deems appropriate.”

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§ 1132(g)(2)(E). In Section 7.52 of the Inside Wiremen’s Agreement, the parties

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agreed that a delinquent contractor would pay audit fees incurred by the trustees in a

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Id.

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collection action. The Court thus finds it appropriate to award Plaintiffs $3,037.50 in

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audit fees.

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5.

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ERISA further requires that a court award reasonable attorneys’ fees in an

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unpaid-contribution action. Id. § 1132(g)(2)(D). The Ninth Circuit has recognized

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that “attorney’s fees are no longer discretionary in § 1132(g)(2) cases.” Operating

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Eng’rs Pension Trust v. Reed, 726 F.2d 513, 514 (9th Cir. 1984).
A court calculates reasonable attorneys’ fees using a “hybrid lodestar /

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Attorneys’ fees and litigation costs

multiplier approach.”

McElwaine v. US W., Inc., 176 F.3d 1167, 1173 (9th Cir.

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1999). First, one multiplies the number of hours reasonably expended on the litigation

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by a reasonable hourly rate. D’Emanuele v. Montgomery Ward & Co., 904 F.2d 1379,

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1383 (9th Cir. 1990), overruled on other grounds by Burlington v. Dague, 505 U.S.

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557 (1992). Second, the court may increase or decrease the lodestar amount after

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assessing the factors enunciated by the Ninth Circuit in Kerr v. Screen Extras Guild,

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Inc., 526 F.2d 67, 70 (9th Cir.1975). D’Emanuele, 904 F.2d at 1383.

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Plaintiffs seek $44,265.66 in hourly attorneys’ fees (including paralegal work)

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and $5,284.66 in litigation expenses. But in an accompanying declaration, Plaintiffs

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list $38,981.00 in attorneys’ and paralegal fees. Plaintiffs submitted billing records

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for each of the attorneys and paralegals that worked on the case.

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A review of the billing records reveals that a significant portion of the hours

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were spent on Gartel’s bankruptcy matter—a separate, though partially related, case.

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It appears that 99.3 hours were spent exclusively on this case. Multiplying those

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hourly totals by the various billing rates results in $22,467.00 in attorneys’ and

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paralegal fees—an average of $226.25 per hour.

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Plaintiffs $22,467.00 in attorneys’ and paralegal fees.

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Attorney/Paralegal Total Hours

Years out of Law School Hourly Rate

Total

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JLS

43.4

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$220

$9,526

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JLS

28.4

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$240

$6,816

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The Court accordingly awards

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JPM

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$220

$3,080

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MTB

0

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$195

$0

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SGL

4.6

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$280

$1,288

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SGL

4.4

21

$300

$1,320

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KAM

3.4

n/a

$95

$323

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NEW

1.2

n/a

$95

$114

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Plaintiff’s requested costs include process-server fees, copying, postage,

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mileage, parking, scanning, faxing, printing, legal research, a filing fee, and subpoena

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fees. The Court agrees that Gartel must reimburse Plaintiffs for most of these costs.

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29 U.S.C. § 1132(g)(2)(D)–(E).

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associated with the bankruptcy matter, and other computations are unreasonably high.

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But the Court notes again that some costs are

The Court therefore adjusts the costs and finds that $2,717.34 is a reasonable

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cost award.

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copying, faxing, printing, and scanning—not $0.25 per page. Plaintiffs also do not

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apportion their PACER research, legal research, copying, printing, faxing, or scanning

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between the bankruptcy matter and this case. The Court thus reduces each requested

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amount by 50 percent. The mileage and parking charges similarly do not apply to this

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case, so the Court excludes them.

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Item

Units

Reasonable Cost

Total

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Process server

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varies

$535.00

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Copies

1,147

$0.10

$114.70

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Postage

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Varies

$71.70

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Fax

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$0.10

$2.20

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Mileage

0

$0

$0

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Legal research

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varies

$962.75

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PACER

varies

varies

$36.99

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Parking

0

$0

$0

Printing

1,408

$0.10

$140.80

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Specifically, the Court finds that $0.10 per page is reasonable for

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Scanning

3,210

$0.10

$321.00

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Subpoena costs

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n/a

$182.20

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Filing fee

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$350

$350.00

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V.

CONCLUSION

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For the reasons discussed above, Plaintiffs’ Motion for Default Judgment is

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GRANTED. Gartel shall pay Plaintiffs a total of $169,639.10 in damages and costs,

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consisting of the following amounts:

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 $109,335.40 in unpaid contributions;

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 $10,214.78 in prejudgment interest;

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 $21,867.08 in liquidated damages;

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 $3,037.50 in audit fees;

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 $22,467.00 in attorneys’ fees; and

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 $2,717.34 in costs.

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The Court will enter judgment in accordance with this order.

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IT IS SO ORDERED.

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April 19, 2013

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____________________________________
OTIS D. WRIGHT, II
UNITED STATES DISTRICT JUDGE

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