Ibew Local 595 Health & Welfare Trust Fund et al v. ACS Controls Corporation

Filing 23

REPORT AND RECOMMENDATIONS re 13 MOTION for Default Judgment as to filed by Contractors Administration Fund, IBEW Local 595 Apprentice & Training Fund, Electrical Contractors Trust, IBEW Local 595 Health & Welfare Trust Fund, Victor Uno, IBEW Local 595 Money Purchase Pension Trust Fund, Labor Management Cooperation Fund, Electrical Industry Service Corporation, IBEW Local 595 Vacation Fund, Don Campbell Objections to R&R due by 5/25/2010. Signed by Judge Laporte on 5/11/10. (edllc1, COURT STAFF) (Filed on 5/11/2010)

1 2 3 4 5 6 7 8 9 10 United United States District Court For the Northern District of California 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 BACKGROUND On December 15, 2009, Plaintiffs filed a complaint under Sections 502 and 515 of the Employee Retirement Income Security Act of 1974 ("ERISA") and 29 U.S.C. § 1132 and § 1145, alleging that Defendant ACS Controls, Inc. ("ACS") violated a Collective Bargaining Agreement ("CBA") and certain Trust Agreements. The complaint sought an order requiring Defendant to pay delinquent employee fringe benefit contribution amounts for the months of June through October 2009, as well as liquidated damages, interest, reasonable attorneys' fees, and costs, and for other IBEW LOCAL 595 HEALTH & WELFARE TRUST FUND; IBEW LOCAL 595 MONEY PURCHASE PENSION TRUST FUND; IBEW LOCAL 595 VACATION FUND; IBEW LOCAL 595 APPRENTICE & TRAINING FUND; ELECTRICAL CONTRACTORS TRUST; CONTRACTORS ADMINISTRATION FUND; AND LABOR MANAGEMENT COOPERATION FUND; ELECTRICAL INDUSTRY SERVICE CORPORATION; VICTOR UNO in his capacity as Trustee of the IBEW LOCAL 595 TRUST FUNDS and Officer of the ELECTRICAL INDUSTRY SERVICE CORPORATION; and DON CAMPBELL in his capacity as Trustee of the IBEW LOCAL 595 TRUST FUNDS and Officer of the ELECTRICAL INDUSTRY SERVICE CORPORATION, Plaintiffs, v. ACS CONTROLS, INC., Defendant. / No. C-09-5870 EDL REPORT AND RECOMMENDATIONS RE: PLAINTIFF'S MOTION FOR DEFAULT JUDGMENT IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF CALIFORNIA

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relief as the court deems proper. On December 23, 2009, Defendant was served with the complaint. See Docket No. 5. Defendant failed to answer the complaint or otherwise defend the action. On January 28, 2010, upon Plaintiff's request, the Clerk of this court entered Defendant's default under Federal Rule of Civil Procedure 55(a). See Docket No. 8. By its default, Defendant is deemed to have admitted the well-pleaded averments of the complaint except those as to the amount of damages. See Fed. R. Civ. P. 8(b)(6). In this Motion for Default Judgment, Plaintiff seeks judgment in the amount of the delinquent employee benefit contributions, liquidated damages, interest, attorney's fees and costs. Plaintiff's application for default judgment against Defendant came on for hearing on May 11, 2010. Plaintiff appeared at the hearing through counsel Phil A. Thomas and Christine S. Hwang. Defendant did not appear for the hearing. Defendant has not consented to magistrate judge jurisdiction pursuant to 28 U.S.C. § 636(c). This matter will therefore be reassigned to a district judge with the following report and recommendation for default judgment. DISCUSSION In an action to enforce payment of delinquent contributions, "the court shall award the plan (A) the unpaid contributions, (B) interest on the unpaid contributions, (C) . . . (ii) liquidated damages provided for under the plan in an amount not in excess of 20 percent . . . of the amount determined by the court under subparagraph (A), (D) reasonable attorney's fees and costs . . . ." 29 U.S.C. § 1132(g)(2). An award under section 1132(g)(2) is appropriate based on the amount of contributions that were delinquent at the time of suit, even if the defendant tendered the unpaid contributions prior to judgment. See Northwest Adm'rs, Inc. v. Albertson's, Inc., 104 F.3d 253, 258 (9th Cir. 1996) (quoting Carpenters Amended and Restated Health Benefit Fund v. John W. Ryan Constr. Co., Inc., 767 F.2d 1170, 1175 (5th Cir. 1985)) ("[M]andatory fees are available under § 1132(g)(2) `notwithstanding the defendant's post-suit, pre-judgment payment of the delinquent contributions themselves.'"). A. Plaintiff is Entitled to Default Judgment

A court may not enter a default judgment against an unrepresented minor, an incompetent person, or a person in military service. See Fed. R. Civ. P. 55(b)(2); 50 U.S.C. App. § 521(b)(1). 2

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As a corporation, Defendant is not a unrepresented minor or incompetent person, or a person in military service, or otherwise exempted from default judgment. See Compl. ¶ 7 (Defendant is a California corporation). In determining whether to grant a default judgment, a court should consider the following factors: (1) the substantive merits of the plaintiff's claim(s); (2) the sufficiency of the complaint; (3) the amount of money at stake; (4) the possibility of prejudice to the plaintiff if relief is denied; (5) the possibility of dispute as to any material facts in the case; (6) whether default resulted from excusable neglect; and (7) the strong policy of the Federal Rules of Civil Procedure favoring decisions on the merits. Eitel v. McCool, 782 F.2d 1470, 1471-1472 (9th Cir. 1986). ACS has failed to respond to the complaint or otherwise to appear in the proceedings. By its default, ACS is deemed to have admitted the well-pleaded averments of the complaint except those as to the amount of damages. See Fed. R. Civ. P. 8(d). Accordingly, ACS concedes that it had a contractual duty to make benefit contributions, and that it failed to make such payments. See Compl. ¶¶ 9, 10. The probability of dispute as to any material facts is low because the parties executed written agreements, and the default does not appear to be the result of any excusable neglect. Plaintiffs will suffer prejudice if relief is not granted because they have been forced to expend approximately $10,345.81 in costs and fees to enforce the CBA and trust agreements. Given ACS's failure to appear or to settle the dispute, the sufficiency of Plaintiffs' Complaint, and the apparent merit of Plaintiffs' substantive claims, the Court recommends that default judgment be entered against ACS. See Fed.R.Civ.P. 55(b); Eitel, 782 F.2d 1470. B. Plaintiff's Entitlement to Liquidated Damages, Interest, Costs and Fees

Plaintiffs have the burden of proving their entitlement to relief through testimony or written affidavit. To that end, Plaintiff submitted the declarations of: Maria Carrillo of Zenith Administrators, an entity that provides administrative services for Plaintiffs and is the Fund Manager for the Trust Funds, Phil A. Thomas, Plaintiff's counsel, Christine S. Hwang, Plaintiff's counsel, and Victor Uno, Plaintiffs' business manager. Defendant was bound by the terms and conditions of the CBA and Trust Agreements with IBEW Local 595, which require that contributions be paid on behalf of covered employees to Plaintiffs. See Compl. ¶ 8; Carrillo Decl. Exs. A, C; Uno Decl. ¶¶ 23

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4, Ex. A. The agreements provide for liquidated damages and interest on delinquent employee benefit contribution amounts. See Carrillo Decl. Ex. C; see also Second Carrillo Decl. ¶ 4, Ex. B. Defendant failed to submit benefit contributions in the amount of $29,749.36 for hours worked from June 2009 to present. See Carrillo Decl. ¶ 5, Ex. B; Second Carrillo Decl. ¶¶ 5-8, Ex. A. Plaintiff seeks liquidated damages on those delinquent employee benefit contributions in the amount of $2,538.74. See id. Plaintiff seeks interest on the contributions in the amount of $1,1779.72 as of May 10, 2010. See id. Attorney's fees and costs of action may be awarded to a Trust Fund or Employee Benefit Plan that receives a judgment in its favor, and the CBA provides for the recovery of attorney's fees and costs. See 29 U.S.C. § 1132(g)(2)(D); Carrillo Decl. Ex. C. Plaintiff has submitted the declarations of attorney Phil A. Thomas and Christine Hwang to establish attorney's fees and costs. Mr. Thomas originally calculated that his firm spent 47 hours of attorney time and 20 hours of paralegal time in prosecuting this action. See Thomas Decl. ¶ 2. Plaintiff also originally claimed costs incurred in connection with this matter in the amount of $545.00. See Thomas Decl. ¶ 2. However, attorney Christine Hwang has submitted a subsequent declaration claiming 38.6 hours of attorney time at a rate of $250.00 per hour, as well as 1.3 hours of paralegal time at a rate of $150.00, for a total of $9,845.00. The Hwang declaration also seeks $500.81 in costs. The Court finds that the costs and rates charged are reasonable, but that the attorney hours spent are higher than usual in this type of case and it appears from the evidence before the Court that Plaintiffs' counsel could have been more efficient in litigating this action. The Court therefore finds that a 10% reduction of the amount of attorneys fees claimed by Plaintiffs is warranted, and awards fees in the amount of $8,860.50. CONCLUSION For the reasons set forth above, and for good cause shown, it is hereby recommended that default judgment be entered in the amount of $29,749.36 in delinquent contributions, $2,538.74 in liquidated damages, $1,779.72 in interest, $8,860.50 in attorney's fees, and $500.81 in costs. Any party may serve and file specific written objections to this recommendation within ten (10) days after being served with a copy. See 28 U.S.C. § 636(b)(1); Fed. R. Civ. P. 72(b); Civil 4

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Local Rule 72-3. Failure to file objections within the specified time may waive the right to appeal the District Court's order. Dated: May 11, 2010 ELIZABETH D. LAPORTE United States Magistrate Judge

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