GCIU Employer Retirement Fund et al v. ABCO Printing LLC.
Filing
15
MINUTES (IN CHAMBERS) by Judge Christina A. Snyder: RE MOTION FOR DEFAULT JUDGMENT 14 .The Court GRANTS plaintiffs motion for default judgment. Plaintiffs are directed to submit a revised proposed judgment consistent with this Order. The Court further ORDERS that defendant shall submit to an audit pursuant to the terms of the CBA and Trust Agreement for the period beginning April 1, 2010 through June 30, 2013. (lc). Modified on 6/19/2018. (lc).
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES – GENERAL
Case No.
2:18-cv-01602-CAS (AJMx)
Title
GCIU–EMP’ RET. FUND AND BD. OF TRS. OF THE GCIU–EMP’ RET.
FUND v. ABCO PRINTING
Present: The Honorable
Date
‘O’
June 18, 2018
CHRISTINA A. SNYDER
Catherine Jeang
Laura Elias
N/A
Deputy Clerk
Court Reporter / Recorder
Tape No.
Attorneys Present for Plaintiffs:
Attorneys Present for Defendants:
Valentina Mindirgasvova
Not Present
Proceedings:
I.
DEFENDANT’S MOTION FOR ENTRY OF DEFAULT
JUDGMENT (Dkt. 14, filed May 15, 2018)
INTRODUCTION
On February 27, 2018, plaintiffs GCIU–Employer Retirement Fund (the “Fund”)
and Board of Trustees of the GCIU–Employer Retirement Fund (the “Board”) brought
this action against defendant ABCO Printing d/b/a RP Enterprises, LLC (“RP
Enterprises”) pursuant to the Employee Retirement Income Security Act of 1974
(“ERISA”), as amended by the Multiemployer Pension Plan Amendments Act of 1980
(“MPPAA”), 29 U.S.C. § 1001 et seq., and Section 515 of ERISA, 29 U.S.C. § 1145.
Dkt. 1 (“Compl.”). Plaintiffs allege that defendant is liable for withdrawals from and
underpaid benefit contributions to a multiemployer pension plan, and that defendant
failed to produce books and records for purposes of conducting an audit. Id.
On March 1, 2018, plaintiffs served the summons and complaint on defendant.
Dkt. 8. Defendant has failed to file an answer or otherwise respond. On April 9, 2018,
the Clerk entered default. Dkt. 12. On May 15, 2018, plaintiffs filed the instant motion
for default judgment in addition to a supporting declaration and several exhibits. Dkt. 14
(“Mot.”). The Court held a hearing on June 18, 2018. Having carefully reviewed the
motion and supporting documentation, the Court finds and concludes as follows.
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES – GENERAL
Case No.
2:18-cv-01602-CAS (AJMx)
Title
GCIU–EMP’ RET. FUND AND BD. OF TRS. OF THE GCIU–EMP’ RET.
FUND v. ABCO PRINTING
II.
Date
‘O’
June 18, 2018
BACKGROUND
The Fund is a multiemployer pension plan within the meaning of 29 U.S.C. §§
1002(37) and 1301(a)(3). Compl. ¶ 5. The Board is comprised of the named fiduciaries
of the Fund within the meaning of 29 U.S.C. § 1102(a), and is the plan sponsor of the
Fund within the meaning of 29 U.S.C. §§ 1002(16)(B)(iii) and 1301(a)(10). Id. ¶ 6. The
Fund is authorized to bring this action pursuant to the Fund’s Trust Agreement. Compl.,
Ex. 1 (“Trust Agreement”). As a named fiduciary, the Board is authorized to bring this
action on behalf of the Fund, its participants, and beneficiaries pursuant to 29 U.S.C. §§
1132(a)(3) and 1451(a)(1). Id. ¶ 7.
Defendant is a limited liability company organized under the laws of the State of
New Jersey with a revoked status. Id. ¶ 9. During the time period relevant to this action,
defendant was an “employer” as defined by 29 U.S.C. § 1002(5), and was engaged in an
industry affecting commerce, as defined by the Labor Management Relations Act, 29
U.S.C. § 185(a). Id. ¶ 10. As a result of a collective bargaining agreement (“CBA”) with
GCC/IBT Local 612M, signed May 28, 2010, defendant agreed to contribute to the Fund
on behalf of certain employees. Compl. ¶ 12, Ex. 2; Declaration of Judi Knore (“Knore
Decl.”) ¶ 24.1 Pursuant to the CBA, defendant also agreed to be bound by the terms and
conditions of the Fund’s Trust Agreement. Compl. ¶ 27; Trust Agreement.
1.
Withdrawal Liability
Defendant ceased participating in the plan and making contributions to the Fund in
2013. Compl. ¶ 13. The Fund therefore determined that defendant effectuated a
“complete withdrawal” from the Fund pursuant to 29 U.S.C. § 1383. Mot. at 4.
Defendant also experienced three partial withdrawals due to a 70 percent contribution
decline, triggered in 2010, 2011, and 2012, pursuant to 29 U.S.C. § 1385(a)(1). Compl. ¶
14. Plaintiffs allege that, as a result, defendant was subject to withdrawal liability under
the MPPAA. Id. ¶ 16.
On May 18, 2017, plaintiffs sent defendant a notice and demand letter, pursuant to
29 U.S.C. §§ 1382(2) and 1399(b)(1), which plaintiff received on July 3, 2017. Id. ¶ 15.
1
Judi Knore is the third-party administrator for plaintiffs.
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES – GENERAL
Date
‘O’
Case No.
2:18-cv-01602-CAS (AJMx)
June 18, 2018
Title
GCIU–EMP’ RET. FUND AND BD. OF TRS. OF THE GCIU–EMP’ RET.
FUND v. ABCO PRINTING
The letter included an actuarial calculation of defendant’s partial withdrawal liability in
the amount of $891,318, and complete withdrawal liability in the amount of $170,780,
totaling $1,062,098, in addition to providing defendant with a payment schedule in
accordance with 29 U.S.C. § 1399(c). Id. ¶ 16–17, 23, Ex. 3. Plaintiffs allege that
defendant failed to make payments pursuant to the four payment schedules as required by
29 U.S.C. § 1399(c)(2). Id. ¶ 18.
On September 12, 2017, in accordance with 29 U.S.C § 1399(c)(5), plaintiffs sent
a letter notifying defendant that it had failed to pay, and informing defendant that it had
60 days to cure the delinquencies prior to default. Id. ¶ 19. Plaintiffs allege that
defendant failed to cure within the allotted time and thus is in default within the meaning
of 29 U.S.C. § 1401(b)(1). Id. ¶ 22. The letter also advised defendant that it had 90 days
to request a review or object to the assessments pursuant to 29 U.S.C. § 1399(b)(2)(A).
Id. ¶ 20. Defendant did not initiate arbitration pursuant to 29 U.S.C. § 1401(a)(1) and the
time to initiate arbitration has consequently expired. Id. ¶ 21, Ex. 3.
2.
Audit Requirements
Pursuant to the CBA and Trust Agreement, defendant was required to report on a
monthly basis the hours worked by all of its employees performing bargaining unit work,
to pay contributions to the Fund accordingly, and to permit plaintiffs to examine and
audit its books and records relating to hours worked by all employees. Compl. ¶ 27, Exs.
1–2; Knore Decl. ¶ 25. Plaintiffs requested an audit covering the period of April 1, 2010
through June 30, 2013 to determine whether defendant had accurately reported the
number of hours worked by its employees. Compl. ¶ 29. Plaintiffs allege that defendant
failed to allow the Fund to conduct this audit. Knore Decl. ¶ 29.
3.
Minimum Annual Contributions
Pursuant to 29 U.S.C. § 1145, the CBA, and the Trust Agreement, defendant is
obligated to remit contributions to the Fund. Compl. ¶ 33. The Fund’s Rehabilitation
Plan obligates participating employers to pay a minimum annual contribution amount—
no less than an employer’s annual contributions from September 1, 2008 through August
31, 2009. Id. ¶ 34, Ex. 5. Defendant’s contributions for that period totaled $5,626, which
is therefore defendant’s minimum annual contribution. Id. ¶ 35. Because defendant only
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES – GENERAL
Date
‘O’
Case No.
2:18-cv-01602-CAS (AJMx)
June 18, 2018
Title
GCIU–EMP’ RET. FUND AND BD. OF TRS. OF THE GCIU–EMP’ RET.
FUND v. ABCO PRINTING
participated in the Fund for six months in 2013, the pro-rated minimum contribution
requirement for 2013 was $2,813. Id. ¶ 36. Defendant contributed a total of $835.63 to
the Fund in 2013, underpaying by $1977.37. Id. ¶ 38. Pursuant to the Trust Agreement
and 29 U.S.C. § 1132(g)(2), defendant is liable for (1) the amount of contributions due,
plus (2) interest on the unpaid and untimely paid Fund contributions, at the rate of ten
percent per annum, (3) liquidated damages equal to twenty percent of those delinquent
contributions, and (4) costs and fees of collection and attorneys’ fees. Id. ¶ 40.
III.
LEGAL STANDARDS
Pursuant to Federal Rule of Civil Procedure 55, when a party against whom a
judgment for affirmative relief is sought has failed to plead or otherwise defend, and the
plaintiff does not seek a sum certain, the plaintiff must apply to the court for a default
judgment. Fed. R. Civ. P. 55.
As a general rule, cases should be decided on the merits as opposed to by default,
and, therefore, “any doubts as to the propriety of a default are usually resolved against the
party seeking a default judgment.” Judge William W. Schwarzer et al., California
Practice Guide: Federal Civil Procedure Before Trial ¶ 6:11 (The Rutter Group 2015)
(citing Pena v. Seguros La Comercial, S.A., 770 F.2d 811, 814 (9th Cir. 1985)). Granting
or denying a motion for default judgment is a matter within the court’s discretion.
Elektra Entm’t Grp. Inc. v. Crawford, 226 F.R.D. 388, 392 (C.D. Cal. 2005); see also
Sony Music Entertainment, Inc. v. Elias, No. 03-cv-6387-DT, 2004 WL 141959, *3 (C.D.
Cal. Jan. 20, 2004).
The Ninth Circuit has directed that courts consider the following factors in
deciding whether to enter default judgment: (1) the possibility of prejudice to plaintiff;
(2) the merits of plaintiff’s substantive claims; (3) the sufficiency of the complaint; (4)
the sum of money at stake in the action; (5) the possibility of a dispute concerning the
material facts; (6) whether defendant’s default was the product of excusable neglect; and
(7) the strong policy favoring decisions on the merits. See Eitel v. McCool, 782 F.2d
1470, 1471–72 (9th Cir. 1986); see also Elektra, 226 F.R.D. at 392. “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.” TeleVideo Sys., Inc. v. Heidenthal, 826
F.2d 915, 917–18 (9th Cir. 1987) (quotation marks omitted).
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES – GENERAL
Case No.
2:18-cv-01602-CAS (AJMx)
Title
GCIU–EMP’ RET. FUND AND BD. OF TRS. OF THE GCIU–EMP’ RET.
FUND v. ABCO PRINTING
IV.
Date
‘O’
June 18, 2018
DISCUSSION
Plaintiffs seek default judgement against defendant for withdrawal liability, unpaid
contributions, accrued interest, liquidated damages, attorneys’ fees and costs, and for
injunctive relief compelling defendant to produce its books and records covering the
period from April 1, 2010 through June 20, 2013. Dkt. 14-2.
1.
Application of the Eitel Factors
a.
Risk of Prejudice to Plaintiff
The first Eitel factor considers whether a plaintiff will suffer prejudice if a default
judgment is not entered. PepsiCo, Inc. v. California Sec. Cans, 238 F. Supp. 2d 1172,
1177 (C.D. Cal. 2002); see also Eitel, 782 F.2d at 1471–72. As defendant has failed to
pay both its withdrawal liability and the balance on its minimum annual contribution,
plaintiffs lack any recourse to recovery save default judgment. PepsiCo, 238 F. Supp. 2d.
at 1177. Defendant’s failure to compensate the Fund for its withdrawal liability and
unpaid contributions will unfairly burden other participating employers with increased
payments and potential reductions in benefits. See Carpenters Pension Tr. Fund for N.
Cal. v. Underground Const. Co, Inc., 31 F.3d 776, 778 (9th Cir. 1994); see also Bd. of
Trs. of the Clerks v. Piedmont Lumber & Mill Co., No. C 10–1757 MEJ, 2010 WL
4922677, at *4 (N.D. Cal. Nov. 29, 2010) (finding that plaintiffs would be prejudiced in
the absence of default judgment because if the “contributions are not covered, future
benefits for Plan participants and their beneficiaries may be put at risk if the Plan is
underfunded.”). Accordingly, this factor weighs in favor of entering default judgment.
b.
Sufficiency of the Complaint and the Likelihood of Success on the
Merits
Courts often consider the second and third Eitel factors together. See PepsiCo, 238
F. Supp. 2d at 1175; HTS, Inc. v. Boley, 954 F. Supp. 2d 927, 941 (D. Ariz. 2013).
These factors assess the substantive merit of the movant’s claims and the sufficiency of
its pleadings, which “require that a [movant] state a claim on which [it] may recover.”
PepsiCo, 238 F. Supp. 2d at 1177 (quotation marks omitted); see also Danning v. Lavine,
572 F.2d 1386, 1388 (9th Cir. 1978) (noting that the issue is whether the allegations in
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES – GENERAL
Date
‘O’
Case No.
2:18-cv-01602-CAS (AJMx)
June 18, 2018
Title
GCIU–EMP’ RET. FUND AND BD. OF TRS. OF THE GCIU–EMP’ RET.
FUND v. ABCO PRINTING
the pleading state a claim upon which plaintiff can recover). Here, plaintiffs assert claims
for (1) withdrawal liability and associated interest pursuant to 29 U.S.C. § 1381, (2)
injunctive relief in the form of an order compelling defendant to produce its books and
records, and (3) unpaid contributions and interest pursuant to 29 U.S.C. § 1145.
As an initial matter, plaintiffs’ claims are timely. Claims for delinquent
contributions and injunctive relief may be brought up to six years after the date on which
the cause of action arose. See 29 U.S.C. §§ 1451(a)(1) and 1451(f). Here, defendant’s
unpaid contributions became due on January 1, 2014, and plaintiffs requested that
defendants submit to an audit on or after June 30, 2013. See Knore Decl. ¶¶ 27–28, 37.
Pursuant to 29 U.S.C. § 1451(b), actions for withdrawal liability are treated the same as
actions for delinquent payments, and the statute of limitations begins running once an
employer fails to make any withdrawal liability payment within the time prescribed. See
Bay Area Laundry & Dry Cleaning Pension Tr. Fund v. Ferbar Corp. of California, 522
U.S. 192, 202 (1997) (holding that “a plan’s interest in receiving withdrawal liability
does not ripen into a cause of action triggering the limitations period until . . . the trustees
. . . demand payment pursuant to § 1399(b)(1) [and] the employer . . . default[s] on an
installment due and payable under the trustees’ schedule.”). Here, defendant defaulted on
its withdrawal liability on November 11, 2017, 60 days after being notified by plaintiffs
that it had failed to pay according to plaintiffs’ specified schedule. Compl. ¶ 19.
Accordingly, plaintiffs’ claims were brought within the limitations period.
1.
MPPAA Withdrawal Liability
Under the MPPAA, an employer who partially or completely withdraws from a
defined benefits plan is liable for a proportionate share of the plan’s unfunded vested
benefits. See 29 U.S.C. § 1381. A partial withdrawal occurs when there is a 70 percent
contribution decline for a given plan year. Id. § 1385(b)(1)(A). A complete withdrawal
occurs when “an employer permanently ceases to have an obligation to contribute to the
plan.” Id. § 1383(a)(1). In the event of either type of withdrawal, the plan sponsor must
“(1) determine the amount of the employer’s withdrawal liability, (2) notify the employer
of the amount of the withdrawal liability, and (3) collect the amount of the withdrawal
liability from the employer.” Id. § 1382. No later than 90 days after the plan assesses
liability, the employer may ask the sponsor to review any specific matter relating to the
determination of the employer’s withdrawal liability. Id. § 1399(b)(2)(A). “Any dispute
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES – GENERAL
Date
‘O’
Case No.
2:18-cv-01602-CAS (AJMx)
June 18, 2018
Title
GCIU–EMP’ RET. FUND AND BD. OF TRS. OF THE GCIU–EMP’ RET.
FUND v. ABCO PRINTING
between an employer and the plan sponsor of a multiemployer plan” over withdrawal
liability “shall be resolved through arbitration.” Id. § 1401(a)(1). If an employer fails to
demand arbitration within the time period prescribed by the statute, the assessment
becomes “due and owing” on the schedule provided by the plan sponsor. Id. §
1404(b)(1). If the employer defaults on its obligations, the plan sponsor is entitled to
obtain “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.” Id. § 1399(c)(5).
Here, plaintiffs have sufficiently alleged that defendant incurred withdrawal
liability based on both its partial and complete withdrawals from the Plan and is currently
in default. Comp. ¶¶ 13–14, 22. Defendant signed a CBA by which it agreed to make
contributions to the Fund on behalf of certain employees and to be bound by the terms
and conditions of the Trust Agreement. Id. ¶ 15, Exs. 1 & 2. Plaintiffs notified
defendant of its withdrawal liabilities via letter and explained the actuarial calculations
used to arrive at the liability assessments totaling $1,062,098. Id., Ex. 3. Because
defendant neither contested plaintiffs’ determination of liability nor sought arbitration in
the time period prescribed by statute, it entered into “default” within the meaning of 29
U.S.C. § 1399(c)(5). Id. ¶¶ 20–22. Thus, plaintiffs’ complaint is well-pleaded as to
defendant’s withdrawal liability.
2.
Audit Injunction
A trust agreement may provide trustees and their representatives broad rights to
assist trustees in conducting an audit. Santa Monica Culinary Welfare Fund v. Miramar
Hotel Corp., 920 F.2d 1491, 1493–94 (9th Cir. 1990). “[T]he right of employee benefit
plaintiffs to enforce a power to audit pursuant to a trust agreement is well established.”
Carpenters Sw. Admin. Corp. v. Comstock Concrete LLC, No. 2:17-cv-03835 CAS
(ASx), 2017 WL 4022392, at *5 (C.D. Cal. Sept. 11, 2017) (citing Central States Pension
Fund v. Central Transport, 472 U.S. 559, 581–82 (1985)). Here, the Trust Agreement
provides that the Board “shall have the authority to audit the payroll books and records of
a participating employer . . . as they deem necessary in the administration of the Trust
Fund.” Trust Agreement at 27. As defendant failed to produce its books and records, it
is now in breach of its obligations under the Trust Agreement. Knore Decl. ¶¶ 27–29.
Therefore, plaintiffs’ request for injunctive relief is appropriate.
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES – GENERAL
Case No.
2:18-cv-01602-CAS (AJMx)
Title
GCIU–EMP’ RET. FUND AND BD. OF TRS. OF THE GCIU–EMP’ RET.
FUND v. ABCO PRINTING
3.
Date
‘O’
June 18, 2018
Underpaid Minimum Annual Contributions
ERISA provides a federal cause of action against employers who fail to make
timely contributions to employee benefit plans and allows plan fiduciaries to enforce
obligations created under a CBA. See 29 U.S.C. § 1145; see also Trs. of the Screen
Actors Guild–Producers Pension & Health Plaintiffs v. NYCA, Inc., 572 F.3d 771, 776
(9th Cir. 2009). To state such a claim, plaintiffs must allege that (1) the plans are
multiemployer plans within the meaning of 29 U.S.C. § 1002(37); (2) the CBA obligated
the employer to make employee benefit contributions; and (3) the employer failed to
make the contribution payments. Bd. of Trustees of U.A. Local No. 159 Health &
Welfare Tr. Fund v. RT/DT, Inc., No. C 12-05111 JSW, 2013 WL 2237871, at *4 (N.D.
Cal. May 21, 2013). Here, plaintiffs have sufficiently alleged that (1) the Fund is a
multiemployer plan; (2) by signing the CBA and Trust Agreement, defendant was
obligated to make minimum annual contributions to the Fund; and (3) defendant failed to
remit minimum contributions for the period of January 1, 2013 through December 31,
2013. See Compl. ¶¶ 5, 34, 36, Exs. 1 & 2. Therefore, this factor weighs in favor of
plaintiffs.
c.
Sum of Money at Stake in the Action
Pursuant to the fourth Eitel factor, the Court balances “the amount of money at
stake in relation to the seriousness of the [defaulting party’s] conduct.” PepsiCo, 238 F.
Supp. 2d at 1176; see also Eitel, 782 F.2d at 1471–72. “This determination requires a
comparison of the recovery sought and the nature of defendant’s conduct to determine
whether the remedy is appropriate.” United States v. Broaster Kitchen, Inc., No. 2:14-cv09421-MMM-PJW, 2015 WL 4545360, at *6 (C.D. Cal. May 27, 2015); see also Walters
v. Statewide Concrete Barrier, Inc., No. 3:04-cv-02559-JSW, 2006 WL 2527776, *4
(N.D. Cal. Aug. 30, 2006) (“If the sum of money at issue is reasonably proportionate to
the harm caused by the defendant’s actions, then default judgment is warranted.”).
Here, plaintiffs request a total of $1,134,703.53 in damages, interest, costs, and
attorneys’ fees, which is comprised of (1) $1,062,098 in withdrawal liability, (2)
$1,977.37 in delinquent minimum annual contributions, (3) $38,486.42 in prejudgment
interest on withdrawal liability, (4) $864.44 in interest on delinquent contributions, (5)
$395.48 in liquidated damages, (6) $25,676.44 in attorneys’ fees, and (7) $583 in costs.
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES – GENERAL
Date
‘O’
Case No.
2:18-cv-01602-CAS (AJMx)
June 18, 2018
Title
GCIU–EMP’ RET. FUND AND BD. OF TRS. OF THE GCIU–EMP’ RET.
FUND v. ABCO PRINTING
Knore Decl. ¶¶ 22, 40–41. This amount is authorized pursuant to the terms of the Trust
Agreement, as well as by 29 U.S.C § 1132(g)(2)(D) and Local Rule 55–3. Accordingly,
these damages are “consistent with the terms of the contract and otherwise appropriate.”
Landstar Ranger, Inc. v. Parth Enters, Inc., 725 F. Supp. 2d 916, 921 (C.D. Cal. 2010).
This factor consequently weighs in favor of entering default judgment.
d.
Possibility of a Dispute Concerning a Material Fact
The fifth Eitel factor considers the possibility that material facts are disputed.
PepsiCo, 238 F. Supp. 2d at 1177; see also Eitel, 782 F.2d at 1471–72. The issues in this
case are straightforward: whether defendant withdrew from the Fund, whether defendant
underpaid its minimum annual contributions, and whether plaintiffs properly notified
defendant. “Upon 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. Having
defaulted, defendant has therefore admitted all factual allegations contained in the
complaint, and hence no genuine dispute of material facts exists that would preclude
granting the motion. See Elektra, 226 F.R.D. at 393. Accordingly, this factor weighs in
favor of entering default judgment.
e.
Possibility of Excusable Neglect
The sixth Eitel factor considers whether the defendant’s default may have been the
product of excusable neglect. PepsiCo, 238 F. Supp. 2d at 1177; see also Eitel, 782 F.2d
at 1471–72. The possibility of excusable neglect here is remote. Defendant was served
on March 3, 2018. Dkt. 8. Default was entered on April 9, 2018. Dkt. 12. Defendant
has neither responded to this action nor attempted to have default set aside. Where a
defendant “[is] properly served with the Complaint, the notice of entry of default, as well
as the papers in support of the instant motion,” there is little possibility of excusable
neglect. Shanghai Automation Instrument Co. Ltd. v. Kuei, 194 F. Supp. 2d 995, 1005
(N.D. Cal. 2001). Accordingly, this factor weighs in favor of entry of default judgment.
f.
Public Policy Favoring Decisions on the Merits
Under the seventh Eitel factor, the Court takes into account the strong policy
favoring decisions on the merits. See Eitel, 782 F.2d at 1472. However, “this preference,
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES – GENERAL
Date
‘O’
Case No.
2:18-cv-01602-CAS (AJMx)
June 18, 2018
Title
GCIU–EMP’ RET. FUND AND BD. OF TRS. OF THE GCIU–EMP’ RET.
FUND v. ABCO PRINTING
standing alone, is not dispositive,” and a party’s failure to answer or appear makes a
decision on the merits impractical, if not impossible. PepsiCo, 238 F. Supp. 2d at 1177
(internal citation omitted). Rule 55(a) also permits a court to decide a case before the
merits are heard if a defendant fails to defend the suit. Here, defendant’s failure to
answer or appear makes a decision on the merits impractical. Thus, the seventh Eitel
factor does not preclude the entry of default judgment.
g.
Conclusion Regarding Eitel Factors
Apart from the policy favoring decisions on the merits, all of the Eitel factors
weigh in favor of the entry of default judgment, including the merits of plaintiffs’ claims.
See Federal Nat. Mortg. Ass’n v. George, No. 5:14-cv-01679-VAP-SP, 2015 WL
4127958, *3 (C.D. Cal. July 7, 2015) (“The merits of the plaintiff’s substantive claim and
the sufficiency of the complaint are often treated by courts as the most important Eitel
factors.”) (citation omitted). Consequently, it is appropriate to grant plaintiffs’ motion
for default judgment against defendant.
2.
Relief Sought by Plaintiffs
“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.”
TeleVideo Sys., 826 F.2d at 917–18 (internal quotation marks omitted). The “[p]laintiff
has the burden of proving damages through testimony or written . . . declarations.” Board
of Trs. of the Boilermaker Vacation Tr. v. Skelly, Inc., 389 F. Supp. 2d 1222, 1226 (N.D.
Cal. 2006). Here, plaintiffs seek a substantial amount of damages, but have provided
detailed declarations and supporting exhibits to prove up that amount.
a.
MPPAA Withdrawal Liability
Plaintiffs seek a total of $1,062,098 in withdrawal liability. Knore Decl. ¶ 9. As
defined by 29 U.S.C. § 1381(b)(1), an employer’s withdrawal liability is the amount of its
proportionate share of a multiemployer pension plan’s unfunded vested benefits, subject
to certain adjustments and a de minimis reduction as outlined in 29 U.S.C. § 1389.
Withdrawal liability assessments are calculated based on statutory formulas set forth in
29 U.S.C. § 1386 (for complete withdrawals) and § 1391 (for partial withdrawals). A
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UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES – GENERAL
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Case No.
2:18-cv-01602-CAS (AJMx)
June 18, 2018
Title
GCIU–EMP’ RET. FUND AND BD. OF TRS. OF THE GCIU–EMP’ RET.
FUND v. ABCO PRINTING
complete withdrawal occurs whenever a participating employer permanently ceases to
have an obligation to contribute under the plan. 29 U.S.C. § 1383(a)(1). A partial
withdrawal occurs when there is a 70 percent contribution decline for any plan year. Id. §
1385(a)(1). A 70 percent contribution decline occurs for a plan year if, during that year
and the two years immediately preceding (the so-called “three-year testing period”), the
employer’s contributions do not exceed 30 percent of its contributions for the high base
year. Id. §§ 1385(b)(1)(A) and 1385(b)(1)(B)(i). The contribution for the high base year
is the average of the two high contribution years within the five plan years immediately
preceding the beginning of the three-year testing period. Id. § 1385(b)(1)(B)(ii).
Here, plaintiffs determined that defendant completely withdrew from the Fund in
2013, when it ceased participating in the plan, and partially withdrew in three consecutive
years (2012 to 2014) due to a 70 percent contribution decline triggered in 2010, 2011,
and 2012. Knore Decl. ¶ 10. Plaintiffs calculated defendant’s complete withdrawal
liability as $170,780. Compl. ¶ 16, Ex. 3. To do so, plaintiffs’ actuary used the “Rolling5 Method” as specified in the Fund’s Withdrawal Liability Procedures and permitted by
29 U.S.C. § 1391(c)(3). Knore Decl., Ex. 3. Plaintiffs calculated defendant’s partial
withdrawal liability as (1) $424,112 for the year 2012, (2) $72,963 for the year 2013, and
(3) $394,243 for the year 2014. Compl. ¶ 16, Ex. 3. Plaintiffs provided defendants with
payment schedules for each of the assessments, as required by 29 U.S.C. § 1399. Had
defendant made payments according to these schedules, its partial withdrawal liability
assessment for 2012 and 2014 would have been capped after the first twenty annual
payments, pursuant to 29 U.S.C. § 1399(c)(1)(A)(i).2 However, defendant failed to make
any payments and defaulted, and so is now obligated to pay the full amount pursuant to
29 U.S.C. § 1399(c)(5). Knore Decl., Ex. 3. Plaintiffs have provided copies of the
relevant agreements, company procedures, and actuarial calculations used to determine
the above figures. The Court finds this documentation sufficient to prove up the amount
requested.
2
This cap did not apply to the 2013 partial withdrawal liability assessment, nor the
2013 complete withdrawal liability assessment, because the schedule of payments for
each did not exceed twenty years.
CV-549 (10/16)
CIVIL MINUTES – GENERAL
Page 11 of 15
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES – GENERAL
Case No.
2:18-cv-01602-CAS (AJMx)
Title
GCIU–EMP’ RET. FUND AND BD. OF TRS. OF THE GCIU–EMP’ RET.
FUND v. ABCO PRINTING
b.
Date
‘O’
June 18, 2018
Audit Injunction
Plaintiffs seek injunctive relief in the form of an order compelling defendant to
submit to an audit for the period of April 1, 2010 through June 30, 2013, so that plaintiffs
can ensure defendant’s contributions were made in accordance with the requirements of
the CBA and the Trust Agreement. Knore Decl. ¶ 24; Trust Agreement; Compl., Ex. 2.
As previously mentioned, “the right of employee benefit plaintiffs to enforce a power to
audit pursuant to a trust agreement is well established.” Carpenters Sw. Admin. Corp. v.
Comstock Concrete LLC, No. 2:17-cv-03835 CAS (ASx), 2017 WL 4022392, at *5
(C.D. Cal. Sept. 11, 2017). The Trust Agreement also obligates defendant to permit
plaintiffs to “audit the payroll books and records, [including all] records which reflect the
hours and wages or other compensation of the employees.” Knore Decl. ¶ 25; Trust
Agreement at 27. Based on the plain terms of the Trust Agreement, plaintiffs have the
right to audit defendant’s records. Accordingly, the Court orders defendant to produce its
books and records for the period in question within thirty days of entry of judgment.
c.
Underpaid Minimum Annual Contributions
Plaintiffs seek a total of $1,977.37 in underpaid minimum annual contributions for
the period beginning January 1, 2013 through December 31, 2013. Knore Decl. ¶¶ 33–
34. Pursuant to the Trust Agreement and Rehabilitation Plan to which defendant was
bound as result of its CBA, this amount is calculated based on a base contribution rate
determined by defendant’s contributions for the period from September 1, 2008 through
August 31, 2009, which totaled $5,626. Trust Agreement; Knore Decl. ¶¶ 31–32.
Because defendant only participated in the Fund for six months in 2013, its minimum
contribution for 2013 was pro-rated to $2,813. Knore Decl. ¶ 33. However, defendant
only contributed $835.63 in 2013, and therefore underpaid its minimum annual
contribution by $1,977.37. Id. ¶ 34. Plaintiffs have provided a detailed written
declaration by the Fund’s third-party administrator indicating when and by how much
defendant underpaid the contributions it had agreed to make under the terms of the CBA.
Id. ¶¶ 31-35. The Court finds this declaration sufficient to prove up the amount requested
to cure that underpayment.
CV-549 (10/16)
CIVIL MINUTES – GENERAL
Page 12 of 15
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES – GENERAL
Case No.
2:18-cv-01602-CAS (AJMx)
Title
GCIU–EMP’ RET. FUND AND BD. OF TRS. OF THE GCIU–EMP’ RET.
FUND v. ABCO PRINTING
d.
Date
‘O’
June 18, 2018
Interest and Liquidated Damages
Plaintiffs seek prejudgment interest on defendant’s withdrawal liability assessment
in the amount of $38,486.42, prejudgment interest on the underpaid minimum annual
contributions in the amount of $864.44, and $395.48 in liquidated damages.
1.
MPPAA Withdrawal Liability
Pursuant to 29 U.S.C. § 1399(c)(5), in cases where an employer defaults, plan
sponsors are entitled to prejudgment interest on withdrawal liability accruing from the
due date of the first payment that was not timely made. Interest is calculated based on
prevailing market rates for comparable obligations pursuant to regulations promulgated
by the Pension Benefit Guaranty Corporation. 29 U.S.C. § 1399(c)(6). The Fund’s
administrative office calculates prejudgment interest for each calendar quarter at an
annual rate equal to the average quoted prime rate on a short-term commercial loan.
Knore Decl., Ex. 3 at 6. Prejudgment interest is calculated from July 17, 2017, the date
when defendant defaulted. Knore Decl. ¶ 19. From July 17, 2017 through December 31,
2017, the annual rate was 4.25 percent. From January 1, 2018 through May 15, 2018,
when the instant motion was filed, the rate was 4.5 percent. Id. ¶ 21. Pursuant to the
Fund’s withdrawal liability procedures, interest equals the principal amount multiplied by
the annual interest rate multiplied by the time periods involved (calendar quarter, month,
or day). Id. ¶ 20.
Using this formula, plaintiffs calculate that prejudgment interest totals $38,486.42.
Plaintiffs note that interest will continue to accrue through June 18, 2018, the date of the
hearing on the instant motion. Id. ¶ 22. Plaintiffs calculate per diem interest to be
$130.96, for a total of $4,452.64 for the period in question. Per their calculations,
plaintiffs state that they are entitled to $42,939.06 in total accrued interest on defendant’s
withdrawal liability. However, using the formula provided by plaintiffs, the Court
calculates prejudgment interest on defendant’s withdrawal liability to be $38,486.50 and
per diem interest to be $132.76. See Knore Decl. ¶ 20. Accordingly, the Court finds that
accrued interest for the period from May 15, 2018 to June 18, 2018 is $4,513.84, and
total accrued interest is $43,000.12.
CV-549 (10/16)
CIVIL MINUTES – GENERAL
Page 13 of 15
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES – GENERAL
Case No.
2:18-cv-01602-CAS (AJMx)
Title
GCIU–EMP’ RET. FUND AND BD. OF TRS. OF THE GCIU–EMP’ RET.
FUND v. ABCO PRINTING
2.
Date
‘O’
June 18, 2018
Underpaid Minimum Annual Contributions
Pursuant to plaintiffs’ Trust Agreement and 29 U.S.C. § 1132(g)(2), if defendant
fails to pay its agreed-upon minimum annual contributions, it is liable for the outstanding
balance owed, as well as for interest on delinquent contributions, at a rate of 10 percent
per annum. Id. ¶ 36. As discussed above, defendant underpaid for the year 2013 by
$1977.37. Plaintiffs state that interest on this amount totals $864.44, at a rate of 54 cents
per day for the period beginning January 1, 2014 through May 15, 2018. Id. ¶ 35.
Plaintiffs note that interest will continue to accrue through June 18, 2018, and calculate
that defendant therefore owes an additional $18.36. Plaintiffs calculate the total interest
on defendant’s underpaid minimum annual contributions to be $882.80. However, using
the formula provided by plaintiffs, the Court calculates prejudgment interest on
defendant’s delinquent contributions to be $864.08. See Knore Decl. ¶ 36. The Court
further calculates accrued interest for the period from May 15, 2018 to June 18, 2018 to
be $18.42. Thus, the total accrued interest is $882.50.
The Ninth Circuit has held that an award of liquidated damages pursuant to 29
U.S.C. § 1132(g)(2) is “mandatory and not discretionary.” Operating Eng’rs. Pension
Trust v. Beck Eng’g. & Surveying Co., 746 F.2d 557, 569 (9th Cir. 1984). A plaintiff is
entitled to mandatory liquidated damages if the following requirements are satisfied: (1)
the fiduciary obtains a judgment in favor of the plan; (2) unpaid contributions exist at the
time of the suit; and (3) the plan provides for liquidated damages. Idaho Plumbers &
Pipefitters Health & Welfare Fund v. United Mech. Contractors, Inc., 875 F.2d 212, 215
(9th Cir. 1989). Plaintiffs’ Trust Agreement provides for liquidated damages equal to 20
percent of the delinquent contributions. Per plaintiffs, defendant is therefore liable for
$395.48 in liquidated damages. However, the Court calculates liquidated damages to be
$395.47 based on a rounding error.
e.
Fees and Costs
Plaintiffs request reasonable attorneys’ fees and costs pursuant to 29 U.S.C. §
1132(g)(2)(D). Local Rule 55–3 provides that where a statute authorizes an award of
attorneys’ fees, and the amount in judgment exceeds $100,000, fees are calculated at
$5,600 plus two percent of the amount over $100,000. C.D. Cal. L.R. 55–3. Here, based
on the Court’s calculations, defendant’s total delinquency is $1,108,353.46, which is
CV-549 (10/16)
CIVIL MINUTES – GENERAL
Page 14 of 15
UNITED STATES DISTRICT COURT
CENTRAL DISTRICT OF CALIFORNIA
CIVIL MINUTES – GENERAL
Date
‘O’
Case No.
2:18-cv-01602-CAS (AJMx)
June 18, 2018
Title
GCIU–EMP’ RET. FUND AND BD. OF TRS. OF THE GCIU–EMP’ RET.
FUND v. ABCO PRINTING
comprised of withdrawal liability, underpaid minimum annual contributions, accrued
interest, and liquidated damages for all relevant periods up to the date judgment is
entered. Thus, attorneys’ fees total $25,767.07. In addition, costs total $583. Knore
Decl., Ex. 4. Accordingly, plaintiffs are entitled a total amount of $26,350.07 in fees and
costs.
V.
CONCLUSION
In accordance with the foregoing, the Court GRANTS plaintiffs’ motion for
default judgment. Plaintiffs are directed to submit a revised proposed judgment
consistent with this Order.
The Court further ORDERS that defendant shall submit to an audit pursuant to the
terms of the CBA and Trust Agreement for the period beginning April 1, 2010 through
June 30, 2013.
IT IS SO ORDERED.
00
Initials of Preparer
CV-549 (10/16)
CIVIL MINUTES – GENERAL
01
CMJ
Page 15 of 15
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