The Board of Trustees et al v. SLR Concrete Construction, Inc

Filing 18

ORDER by Judge Samuel Conti denying 13 Motion for Default Judgment (sclc1, COURT STAFF) (Filed on 12/9/2009)

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For the Northern District of California

UNITED STATES DISTRICT COURT NORTHERN DISTRICT OF CALIFORNIA

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) ) BOARD OF TRUSTEES, in their ) capacities as Trustees of the ) CEMENT MASONS HEALTH AND WELFARE ) TRUST FUND FOR NORTHERN ) CALIFORNIA, CEMENT MASONS PENSION ) TRUST FUND FOR NORTHERN ) CALIFORNIA, CEMENT MASONS ) VACATION/HOLIDAY TRUST FUND FOR ) NORTHERN CALIFORNIA, CEMENT MASONS ) APPRENTICESHIP AND TRAINING TRUST ) FUND FOR NORTHERN CALIFORNIA, ) ) Plaintiffs, ) ) v. ) ) S L R CONCRETE CONSTRUCTION, INC., ) A California Corporation, ) ) Defendant. ) ) )

No.09-2005 SC ORDER REQUIRING DEFENDANT TO SUBMIT TO AUDIT; DENYING DEFAULT JUDGMENT

I.

INTRODUCTION

Before the Court is the Motion for Default Judgment ("Motion") submitted by Plaintiffs Board of Trustees of the Cement Masons Health and Welfare Trust, et al. ("Plaintiffs"). No. 13. Docket

Defendant S L R Concrete Construction, Inc. ("SLR"), was See

duly notified of these proceedings, but has not participated. Proof of Service, Docket No. 4. been filed. Docket No. 7.

An Entry of Default as to SLR has

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Although the Court concludes that Plaintiffs may be entitled to default judgment as to the amount at issue, Plaintiffs have requested that this Court enforce Plaintiffs' contractual right to audit SLR's records pertaining to a significant amount at issue in this dispute. The Court concludes that the audit is appropriate,

and ORDERS SLR to comply with an audit by Plaintiffs' auditors. However, given the need for an audit and the possibility that the amount due to Plaintiffs might be affected by this audit, the Court concludes that a final default judgment would be premature. Plaintiffs may submit a second motion for default judgment after the audit of SLR's records is complete.

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II.

BACKGROUND In 2005, SLR executed an agreement with Plaintiffs, binding

it to a collective bargaining agreement. Exs. A ("CBA"), B ("Mem. of Agreement").1

See John Hagan Decl. Plaintiffs contend that

SLR is bound by the CBA to abide by the Cement Masons Master Agreement, Hagan Decl. Exs. C, D (collectively, "Master Agreements"), and the requirements of the Employee Retirement Income Security Act of 1974 ("ERISA"). 2. Compl., Docket No. 1, at

SLR is thereby required to make monthly payments to Plaintiffs

on behalf of SLR's employees, in amounts that are determined according to the hours worked by SLR's employees. Id. at 3.

Plaintiffs allege that SLR has missed a number of payments

John Hagan ("Hagan"), Accounts Receivable Manager for the Laborers Funds Administrative Office of Northern California, submitted a declaration in support of the Motion. Docket No. 15. 2

1

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that have become due under the Master Agreements.

Id. at 3-4.

Plaintiffs filed their Complaint in May of 2009, seeking the payments due, liquidated damages, attorney fees, an order that SLR submit to a contractually required audit to determine if additional fees are due, and an order requiring SLR to timely submit all required monthly contribution reports. Compl. at 6.

III. LEGAL STANDARD After entry of default, the Court may enter a default judgment. Fed. R. Civ. P. 55(b)(2). The default judgment "must

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not differ in kind from, or exceed in amount, what is demanded in the pleadings." Id. 54(c). The Court's decision whether to enter Aldabe v. Aldabe, 616

a default judgment, while "discretionary,"

F.2d 1089, 1092 (9th Cir. 1980), is guided by several factors. First, the Court must "assess the adequacy of the service of process on the party against whom default is requested." Bd. of

Trs. of the N. Cal. Sheet Metal Workers v. Peters, No. C-00-0395, 2000 U.S. Dist. LEXIS 19065, at *2 (N.D. Cal. Jan. 2, 2001). If

the Court determines that service was sufficient, it may consider the following factors, if present, in its decision on the merits of a motion for 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). 3 "The

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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 Therefore, for the purposes of this

557, 560 (9th Cir. 1977).

Motion, the Court accepts as true the facts as alleged in the Complaint.

IV.

DISCUSSION Plaintiffs properly served SLR with the Complaint and Summons

in this action on May 23, 2009.

See Proof of Service.

The Proof

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of Service indicates that the documents were delivered to Laura Romanazzi, who is recorded with the California Secretary of State as SLR's designated agent for service. Id.; Hagan Decl. Ex. E.

This service complies with Rule 4(h)(1)(B) of the Federal Rules of Civil Procedure. Accepting the allegations in the Complaint as true, as it must, the Court finds that the Eitel factors favor default judgment. The Plaintiffs' substantive claims appear solid on the Section

merits, and are pled sufficiently in the Complaint.

502(a) of the Employee Retirement Income Security Act of 1974 ("ERISA") gives the participants and beneficiaries of an ERISAgoverned pension plan a cause of action in federal court where an employer violates the terms of the plan. 1132(a)(1)(B), (a)(3). See 29 U.S.C. §

Plaintiffs have further shown that, by

failing to make timely contributions, SLR has violated the terms of the CBA and Master Agreements. Mot. at 2. It is unlikely that

there can be a dispute over any of the factual issues that cannot 4

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be resolved by reference to SLR's own records, which Plaintiffs now seek to access. Part of the amount of money at issue will be The rest of the amount that Plaintiffs

based upon these records.

are seeking is recorded in the Complaint, which SLR has declined to challenge; Plaintiffs have demonstrated or will demonstrate that they are entitled by contract to this amount.2 SLR's default cannot be said to be the result of excusable neglect. As previously noted, SLR was properly served. While it

is preferable to decide cases on the merits whenever possible, this preference is not dispositive. Where a party fails to defend

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against a complaint, as SLR has failed to do here, Rule 55 authorizes the Court to enter default judgment. Kloepping v.

Fireman's Fund, No. C 94-2684, 1996 U.S. Dist. LEXIS 1786, at *10 (N.D. Cal. Feb. 14, 1996). Plaintiffs have submitted evidence (based on a prior audit of SLR's records) that SLR is delinquent in the amount of $3925.42 for the period between August of 2005 and June of 2007. 4; Hagan Decl. ¶ 11, Ex. F. Mot at 3-

Plaintiffs calculate that they are

entitled to liquidated damages and interest totaling $8125.01 for this period. Hagan Decl. ¶ 11, Ex. G. Although Plaintiffs have

firmly established that SLR owes the base amount due for this period ($3925.42), they have not cited to the portions of the agreements, or the rate-setting decisions of the various funds, that set the amount of liquidated damages or interest rates. makes it difficult for the Court to independently confirm The Court notes that Plaintiffs have apparently sought to enforce less than the full amount stated in the Complaint. 5
2

This

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Plaintiffs' liquidated damage calculations.

When Plaintiffs

submit a second motion for default judgment, they must include enough information to allow the Court to independently confirm their liquidated damages calculations. Plaintiffs have also submitted evidence that SLR has reported that it owes Plaintiffs an additional $13,151.50 for the period between December of 2008 and February of 2009. Id. ¶ 13, Ex. H.

The liquidated damages for this period have been calculated at $6840.54. Id. ¶ 13, Ex. I. Plaintiffs request that the Court Plaintiffs have

order SLR to submit to an audit for this period.

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demonstrated that they are contractually entitled to such an audit upon a written request by Plaintiffs. § 8(g). See Master Agreements

Under 29 U.S.C. § 1132(g)(2)(E), this Court is authorized The

to award whatever equitable relief it deems appropriate.

Court GRANTS Plaintiffs' request for this injunctive relief. Hagan has attested to the importance of conducting an audit for the period between December of 2008 and February of 2009. Hagan Decl. ¶ 18. While the Court believes that Plaintiffs have

submitted sufficient documents to establish that SLR is liable in the amount of $17,076.92 (the total base amount due for all periods at issue), the Court finds it inappropriate to grant judgment based on this amount before Plaintiffs have completed their audit. In addition, the Court expects that Plaintiffs will

be able to claim an additional $14,965.55 in liquidated damages after they submit further documentary support for this figure; this amount may also be altered by Plaintiffs' audit of SLR's records. The Court therefore finds that judgment in this matter 6

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-- including Plaintiffs' request for attorney fees -- is premature.

V.

CONCLUSION For the foregoing reasons, the Court DENIES Plaintiffs'

Motion for Default Judgment without prejudice.

Plaintiffs must

serve SLR with this Order in a manner that complies with the requirements for service of summons and complaints set out in Rule 4 of the Federal Rules of Civil Procedure. SLR is ORDERED to submit to an audit by the auditors selected by Plaintiffs at SLR's premises during business hours, or where the records are kept, by scheduling within twenty (20) days of the date that SLR is served with this Order, an appointment with Plaintiffs' auditor, in accordance with the auditors' availability. SLR shall permit the auditor to review all records

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that are relevant to enforcement of the Collective Bargaining Agreement and Master Agreements. Upon completion of the audit of

SLR's records, Plaintiffs may submit to this Court a second motion for default judgment. Any request for attorney fees must be in

accordance with the local rules.

IT IS SO ORDERED.

December 9, 2009

UNITED STATES DISTRICT JUDGE

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