Laborers Health and Welfare Trust Fund for Northern California et al v. North Coast Contracting, Inc.

Filing 20

ORDER by Judge Samuel Conti granting in part and denying in part 7 Motion for Default Judgment (sclc2, COURT STAFF) (Filed on 12/9/2008)

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1 2 3 4 5 6 7 8 9 10 For the Northern District of California UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA United States District Court 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 THE BOARD OF TRUSTEES, in their capacities as Trustees of the LABORERS HEALTH AND WELFARE TRUST FUND FOR NORTHERN CALIFORNIA; LABORERS VACATION-HOLIDAY TRUST FUND FOR NORTHERN CALIFORNIA; LABORERS PENSION TRUST FUND FOR NORTHERN CALIFORNIA; and LABORERS TRAINING AND RETRAINING TRUST FUND FOR NORTHERN CALIFORNIA, Plaintiffs, v. NORTH COAST CONTRACTING, INC., a California Corporation, Defendant. ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) Case No. 08-3577 SC DEFAULT JUDGMENT I. INTRODUCTION The present matter comes before the Court on the Motion for Default Judgment ("Motion") filed by the plaintiffs Board of Trustees et al. ("Plaintiffs"). Docket No. 7. Pursuant to Federal Rule of Civil Procedure 55(a), the Clerk of the Court has entered default against the defendant North Coast Contracting, Inc. ("North Coast" or "Defendant"). Docket No. 6. On December 1 2 3 4 5 6 7 8 9 10 For the Northern District of California 1, 2008, this Court issued an Order requesting additional evidence and documentation. Docket No. 17. On December 5, Plaintiffs submitted an affidavit addressing the concerns raised by the Court. Hagan Supp. Decl., Docket No. 18.1 For the following reasons, it is hereby ORDERED, ADJUDGED and DECREED that: JUDGMENT shall be entered in favor of Plaintiffs Board of Trustees et al., and against Defendant North Coast Contracting. II. BACKGROUND On July 25, 2008, Plaintiffs filed a suit under sections 1132 United States District Court 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 and 1145 of the Employee Retirement Income Security Act of 1974 ("ERISA"), 29 U.S.C. 1001 et seq., and under section 302 of the Labor Management Relations Act ("LMRA"), 29 U.S.C. 185. Docket No. 1, at 1-2. The suit was brought in response to Compl., Defendant's alleged failure to make the required payments to various trust funds and employee benefit plans in violation of a collective bargaining agreement and certain trust agreements. Defendant became subject to the terms and conditions of the Laborers Master Agreement ("Agreement") by virtue of signing a Memorandum of Agreement with the Northern California District Council of Laborers ("Union"). Compl. at 2; Exs. A, B. Although Plaintiffs served Defendant, Defendant failed to respond or otherwise defend the action. According to the Complaint, the Agreement and the Memorandum John Hagan is the Accounts Receivable Manager for the Laborers Funds Administrative Office of Northern California, Inc. He submitted a declaration in support of Plaintiffs' Motion, Docket No. 11, and one in response to this Court's December 1 Order. 2 1 1 2 3 4 5 6 7 8 9 10 For the Northern District of California of Agreement provided that Plaintiffs are permitted to audit and review all records relevant to the enforcement of the provisions of the various agreements. See Compl. at 3; Ex. A at 9. Pursuant to these provisions, Plaintiffs conducted an audit of Defendant's records for the period between January 2005 and December 2006. Compl. 11. The audit revealed that Defendant owed delinquent Id.; Hagan benefit contributions in the amount of $4,225.28. Supp. Decl. 5; Ex. A. In addition, per provisions in the Agreement and Memorandum of Agreement regarding delinquent contributions, liquidated damages and interest in the amount of $2,899.85 were assessed. Hagan Supp. Decl. 5-17; Ex. A-D. United States District Court 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Finally, pursuant to the Agreement and relevant statutes, the employer is responsible for reasonable attorneys' fees and costs. See Hagan Decl. 13; 29 U.S.C. 1132(g)(2). III. DISCUSSION A. Legal Standard After entry of default, the Court may enter a default judgment. Fed. R. Civ. P. 55(b). "However, entry of default does not automatically entitle the non-defaulting party to entry of a default judgment regardless of the fact that the effect of entry of a default is to deem allegations admitted." 132 B.R. 742, 746 (9th Cir. BAP 1991). In re Villegas, Rather, "the decision to Alan Neuman Prods., First, the enter a default judgment is discretionary." Inc. v. Albright, 862 F.2d 1388, 1392 (9th Cir. 1988). Court must "assess the adequacy of service of process on the party against whom default is requested." 3 Bd. of Trs. of the N. Cal. 1 2 3 4 5 6 7 8 9 10 For the Northern District of California Sheet Metal Workers v. Peters, No. C-00-0395 VRW, 2000 U.S. Dist. LEXIS 19065, at *2 (N.D. Cal. Jan. 2, 2001). Once the Court determines that service was sufficient, it may consider the following factors when exercising its discretion to enter a default judgment: (1) the possibility of prejudice to the plaintiff, (2) the merits of plaintiff's substantive claim, (3) the sufficiency of the complaint, (4) the sum of money at stake in the action, (5) the possibility of a dispute concerning material facts, (6) whether the default was due to excusable neglect, and (7) the strong policy underlying the Federal Rules of Civil Procedure favoring decisions on the merits. Eitel v. McCool, 782 F.2d 1470, 1471-72 (9th Cir. 1986). "The United States District Court 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 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." Geddes v. United Fin. Group, 559 F.2d 557, 560 (9th Cir. 1977). B. Analysis For the following reasons, the Eitel factors favor default judgment. 1. Service of Process Federal Service of process against Defendant was adequate. Rule of Civil Procedure 4(h) provides the standards for service upon corporations, associations, or partnerships. Copies of the summons and complaint were served via mail to Defendant's principal place of business, 67 Magnolia Avenue, # E, Petaluma, California, 94955. See Docket No. 3. This same address appears See Hagan Decl. on the Memorandum Agreement signed by Defendant. 4 1 2 3 4 5 6 7 8 9 10 For the Northern District of California Ex. B. 2. Prejudice Accepting the allegations in the Complaint as true, Plaintiffs would be prejudiced absent entry of default judgment. Defendant has failed and refused to make required payments into the various trust funds and employee benefit plans, in violation of a collective bargaining agreement and various trust agreements. This failure, if not remedied, will prejudice Plaintiffs. 3. Merits and Sufficiency of Complaint This factor also favors entry of default judgment. Plaintiffs have sufficiently pleaded claims under ERISA and the LMRA arising from Defendant's failure to make the required payments to the joint labor-management trust funds and the employee benefit plans. 4. Amount of Money at Stake United States District Court 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 The sum of money at stake weighs in favor of default judgment. Plaintiffs only seek the delinquent contributions owed by Defendant to the various plans, as calculated through an audit that had been previously agreed upon by both parties, in addition to interest and liquidated damages, which were also agreed upon by both parties pursuant to the Agreement. 5. Possibility of Dispute Concerning Material Facts Upon entry of default, all well-pleaded facts in the Complaint are taken as true. Geddes, 559 F.2d at 560. After review of the Complaint, the possibility of a dispute concerning material facts appears small. default judgment. 5 This factor also weighs in favor of 1 2 3 4 5 6 7 8 9 10 For the Northern District of California 6. Whether Default Was Due to Excusable Neglect Although the As noted above, Defendant was properly served. Defendant did not make an appearance or participate in any manner in this action, the Court finds that the possibility that default resulted from the excusable neglect of Defendant is remote. factor therefore weighs in favor of default judgment. 7. Policy for Deciding on the Merits This "Cases should be decided on the merits whenever possible." Eitel, 782 F.2d at 1472. The existence of Federal Rule of Civil Procedure 55(b), however, indicates that this preference alone is not dispositive. Where, as here, a defendant fails to respond to United States District Court 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 a complaint, a decision on the merits is impractical, if not impossible. Ultimately, the preference to decide cases on the merits does not preclude a court from granting default judgment. See, e.g., Pepsico, Inc. v. Cal. Sec. Cans, 238 F. Supp. 2d 1172, 1177 (C.D. Cal. 2002). 8. Attorneys' Fees and Costs In addition to the delinquent contributions and liquidated damages, Plaintiffs also seek reasonable attorneys' fees. Not only do the underlying agreements provide that all of these costs be borne by the Defendant in an action such as this one, but 29 U.S.C. 1132(g)(2) does as well. See Hagan Decl. 13. Plaintiffs seek attorneys' fees in the amount of $2,943.75. Lozano-Batista Decl., Docket No. 8, 4.2 These fees are based on an hourly rate for Plaintiffs' counsel of $250 and $275, 2 Concepcion E. Lozano-Batista is counsel for Plaintiffs. 6 1 2 3 4 5 6 7 8 9 10 For the Northern District of California respectively, and $125 for the paralegal. Id. 4, 7. To determine a reasonable attorney fee award, courts employ the lodestar method. 363 (9th Cir. 1996). Morales v. City of San Rafael, 96 F.3d 359, "The 'lodestar' is calculated by multiplying the number of hours the prevailing party reasonably expended on the litigation by a reasonable hourly rate." Id. There is a strong presumption that the lodestar figure constitutes reasonable fees, and only in exceptional cases will adjustment of the lodestar be appropriate. Pennsylvania v. Del. Valley Citizens' Council for Clean Air, 478 U.S. 568, 564-65 (1986). In assessing a reasonable hourly rate, courts should consider the prevailing market rate in the community for similar services by lawyers of reasonably comparable skill, experience, and reputation. Blum v. Stenson, 465 U.S. 886, 895 (1984); Cancio v. United States District Court 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 Fin. Credit Network, No. 04-3755, 2005 WL 1629809, at *1 (N.D. Cal. July 6, 2005). Courts within this district have used Compare Yahoo!, different methods and reached different results. Inc. v. Net Games, Inc., 329 F. Supp. 2d 1179, 1192 (N.D. Cal. 2004) (employing complex formula to determine that the average hourly rate in the San Francisco area around 2002 was $190 per hour), with Cancio, 2005 WL 1629809 at *3 (finding that precedent in the Northern District of California supported hourly rates in 2005 of $345 per hour and $435 per hour). Determination of a reasonable hourly rate also depends on the skill, experience and reputation of the attorney as well as the complexity of the litigation. Counsel, in her declaration, notes that Plaintiffs' senior counsel was admitted to practice in 1976 7 1 2 3 4 5 6 7 8 9 10 For the Northern District of California and for the last 22 years has specialized in ERISA cases. Batista Decl. 5. Lozano-Batista herself is a fifth-year Lozano- associate and has previously handled ERISA actions. Id. 6. In light of these facts and the relevant caselaw from this district, the Court concludes that the hourly rates of counsel for Plaintiffs are reasonable. The second lodestar factor is the reasonable number of hours counsel spent prosecuting the case. If the requested number of hours is greater than the number of hours reasonably competent counsel would have billed, then the court should reduce the requested number of hours accordingly. U.S. 424, 434 (1983). Hensley v. Eckerhart, 461 United States District Court 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 In the present case, counsel spent Lozano-Batista Decl. approximately 10 hours prosecuting the case. 4. The Court finds that such an amount is reasonable in prosecuting a default judgment case. For these reasons, the Court AWARDS attorneys' fees of $2,943.75 and filing and delivery costs of $498.25.3 /// /// /// /// /// /// Counsel also seeks $1,000 in estimated future costs, anticipating "an appearance at the hearing on the motion for default judgment." Lozano-Batista Decl. 11. This hearing, however, was vacated, and the Court took the matter under submission on the papers. Because counsel provides no other explanation to justify this $1,000, the Court declines to award it. 8 3 1 2 3 4 5 6 7 8 9 10 For the Northern District of California IV. CONCLUSION For the foregoing reasons, it is ORDERED, ADJUDGED, and DECREED that: JUDGMENT shall be entered in favor of Plaintiffs Board of Trustees et al., and against Defendant North Coast Contracting, Inc. Plaintiffs are AWARDED the following: 1. 2. 3. 4. 5. $4,225.28 in delinquent contributions; $2,899.85 in interest and liquidated damages; $2,943.75 in attorneys' fees; and $498.25 in costs. The injunctive relief sought by Plaintiffs is DENIED. United States District Court 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 IT IS SO ORDERED, ADJUDGED, and DECREED. Dated: December 9, 2008 UNITED STATES DISTRICT JUDGE 9

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