Geller et al v. World Tech

Filing 17

ORDER granting 16 Motion for Default Judgment. The hearing scheduled for December 2, 2011, is VACATED. Judgment will be entered accordingly, and the Clerk shall then close this file. Signed by Judge Edward J. Davila on 11/17/2011. (ejdlc1, COURT STAFF) (Filed on 11/17/2011)

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IN THE UNITED STATES DISTRICT COURT

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FOR THE NORTHERN DISTRICT OF CALIFORNIA

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SAN JOSE DIVISION

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For the Northern District of California

United States District Court

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CASE NO. 5:11-cv-01732 EJD

MIKE GELLER and MIKE YARBROUGH
AS TRUSTEES OF THE
INTERNATIONAL BROTHERHOOD OF
ELECTRICAL WORKERS LOCAL 302
HEALTH AND WELFARE AND
PENSION TRUST FUNDS,

ORDER GRANTING PLAINTIFFS’
MOTION FOR DEFAULT JUDGMENT

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Plaintiff(s),
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v.
[Docket Item No. 16]

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WORLD TECH, a California Corporation,
doing business as GEIGLE ELECTRIC,

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Defendant(s).
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In this ERISA enforcement action, Plaintiffs Mike Geller and Mike Yarbrough, in their

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respective capacities as Trustees of the International Brotherhood of Electrical Workers Local 302

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Health and Welfare and Pension Trust Funds (“Plaintiffs”), move for entry of default judgment

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against Defendant World Tech, doing business as Geigle Electric (“Defendant”). Defendant has not

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submitted written opposition to the motion, and the time for such opposition haS expired. See Civ.

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L. R. 7-3(a).

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Having reviewed Plaintiff’s submissions, the Court finds this matter appropriate for decision

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without oral argument. See Civil L. R. 7-1(b). The hearing scheduled for December 2, 2011, is

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therefore vacated and the motion granted for the reasons stated below.

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I.

BACKGROUND

The International Brotherhood of Electrical Workers Local 302 Health and Welfare and
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CASE NO. 5:11-cv-01732 EJD
ORDER GRANTING PLAINTIFFS’ MOTION FOR DEFAULT JUDGMENT

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Pension Trust Funds are employee benefit plans as defined in the Employee Retirement Income

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Security Act of 1974 (“ERISA”). See Complaint, Docket Item No. 1, at ¶ 3. Defendant is an

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employer as defined in ERISA. See id., at ¶ 4.

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Plaintiffs allege that “at all times material hereto, there have been in full force and effect

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collective bargaining agreements covering the wages, hours and conditions of employment of certain

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employees of the Defendants.” See id., at ¶ 5. The collective bargaining agreement required

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Defendant to make contributions into certain funds. See id., at ¶ 6. Plaintiffs allege that Defendant

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failed to make a contribution payment in February, 2011, and also failed to pay liquidated damages

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and interest due on payments from March through September, 2010. See id., at ¶ 10.
Plaintiffs filed this action on April 8, 2011, and the Clerk entered Defendant’s default on

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For the Northern District of California

United States District Court

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June 23, 2011. See Docket Item No. 8. Plaintiffs now seek an order granting default judgment.
II.

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DISCUSSION

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A.

Legal Standard

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Pursuant to Federal Rule of Civil Procedure 55(b), the Court may enter default judgment

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against a defendant who has failed to plead or otherwise defend an action. “The district court’s

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decision whether to enter default judgment is a discretionary one.” Aldabe v. Aldabe, 616 F.2d

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1089, 1092 (9th Cir. 1980). The Ninth Circuit has provided seven factors for consideration by the

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district court in exercising its discretion to enter default judgment: (1) the possibility of prejudice to

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the plaintiff; (2) the merits of plaintiff's substantive claim; (3) the sufficiency of the complaint; (4)

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the sum of money at stake in the action; (5) the possibility of dispute concerning material facts; (6)

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whether default 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, 1471-72 (9th

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Cir. 1986). When assessing these factors, all factual allegations in the complaint are taken as true,

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except those with regard to damages. Televideo Sys., Inc. v. Heidenthal, 826 F.2d 915, 917-18 (9th

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Cir. 1987).

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B.

Jurisdiction and Service of Process

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Courts have an affirmative duty to examine their own jurisdiction - both subject matter and

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personal jurisdiction - when entry of judgment is sought against a party in default. In re Tuli, 172
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CASE NO. 5:11-cv-01732 EJD
ORDER GRANTING PLAINTIFFS’ MOTION FOR DEFAULT JUDGMENT

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F.3d 707, 712 (9th Cir. 1999). Here, this court has subject matter jurisdiction pursuant to 29 U.S.C.

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§ 1132(e). Personal jurisdiction arises from service upon Defendant in California. See Docket Item

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No. 4; Burnham v. Sup. Ct., 495 U.S. 604, 610-11 (1990).

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The court must also assess whether the Defendant was properly served with notice of this

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action. Plaintiffs served the Summons and Complaint on Thomas Geigle, who the Complaint

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reveals is the President and CEO of Defendant. See Docket Item No. 4; see also Complaint, at Ex.1.

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Thus, the court finds Plaintiffs properly effected service of process. Fed. R. Civ. P. 4(h)(1)(B) (a

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corporation may be served “by delivering a copy of the summons and of the complaint to an officer,

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a managing or general agent, or any other agent authorized by appointment or by law to receive
service of process.”).

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For the Northern District of California

United States District Court

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C.

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Application of each of the Eitel factors favors entry of default judgment against Defendant in

The Eitel Factors

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this case. First, if the motion were denied, Plaintiffs may be unable to recover and provide the

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contributions owed to beneficiaries and members of the pension fund. Failure to enter a default

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judgment therefore would result in prejudice to Plaintiffs as well as to the members they represent.

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Second, the Complaint is sufficient to support entry of a default judgment. Judgment by

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default cannot be entered if the complaint fails to state a claim. See Moore v. United Kingdom, 384

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F.3d 1079, 1090 (9th Cir. 2004). In the instant action, Plaintiffs claim that defendant violated

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Section 515 of ERISA by failing to pay contributions pursuant to the terms of the collective

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bargaining agreement. See Complaint, at ¶¶ 5-7, 10-13. The court finds these allegations sufficient

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to state a claim under Federal Rule of Civil Procedure 8(a).

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Third, the sum of money at stake is relatively small. In general, the fact that a large sum of

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money is at stake is a factor disfavoring default judgment. See Eitel, 782 F.2d at 1472 (the fact that

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$2,900,000 was at stake, when considered in light of the parties’ dispute as to material facts,

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supported the court’s decision not to enter judgment by default). In the instant case, Plaintiffs have

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asked for a total judgment of $106,228.26 - an amount far less than that contemplated by the court in

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Eitel. Because the sum of money at stake here is modest in comparison, this factor weighs in favor

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of entering a default judgment.
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CASE NO. 5:11-cv-01732 EJD
ORDER GRANTING PLAINTIFFS’ MOTION FOR DEFAULT JUDGMENT

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Fourth, there is no dispute of material fact. Indications that there is a dispute of material fact

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weigh against entry of default judgment. Eitel, 782 F.2d at 1471-72. Here, Defendant has not

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disputed any of Plaintiffs’ contentions, and all material facts pled in the Complaint are verifiable.

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See Decl. of Laramie Dorcy (“Dorcy Decl.”), Docket Item No. 11.

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Fifth, it is unlikely that default was the result of excusable neglect. This action was filed

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over six months ago and Defendant has been properly served. Moreover, as the payments due are

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pursuant to a collective bargaining agreement, Defendant is aware of the payment obligations for

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which it is responsible.

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Sixth, although federal policy generally disfavors the entry of a default judgment, all of the
Eitel factors weigh in favor of a default judgment here. Therefore, the motion to enter default

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For the Northern District of California

United States District Court

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judgment will be granted.

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D.

Damages

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As previously noted, Plaintiffs’ action is based on the statutory duty required under ERISA

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Section 515. That section states that an employer who is obligated to make contributions to a multi-

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employer plan must do so in accordance with the terms and conditions of such plan or such

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agreement. 29 U.S.C. § 1145. Section 502(g) of ERISA states that in an action to enforce § 1145,

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the court shall award the plan unpaid contributions, interest on the unpaid contributions, liquidated

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damages, reasonable attorney’s fees and costs, and equitable relief as the court deems appropriate.

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29 U.S.C. § 1132(g)(2).

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Plaintiffs seek interest and unpaid contributions, as well as liquidated damages, attorney’s
fees, and costs in the total amount of $106,228.26. According to the Ninth Circuit:
Section 1132(g) (2) of ERISA provides that when there is a judgment in favor of
an employment benefit trust, the court shall award the trust unpaid contributions,
interest on unpaid contributions, liquidated damages in some instances, and
reasonable attorney fees. The language “shall award” denotes that such an award
is mandatory. While attorney's fees are discretionary in the case of many ERISA
claims, we have recognized on numerous occasions that attorney's fees are not
discretionary in section 1132(g)(2) cases.
Operating Engineers Pension Trust v. A–C Co., 859 F.2d 1336, 1342 (9th Cir. 1988) (citations
omitted). It is clear, therefore, that Plaintiffs are therefore entitled to the award of unpaid

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CASE NO. 5:11-cv-01732 EJD
ORDER GRANTING PLAINTIFFS’ MOTION FOR DEFAULT JUDGMENT

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contributions in the amount of $62,101.30,1 interest in the amount of $391.23, as well as attorneys’

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fees and costs. The court finds Plaintiffs’ request for $2,085.50 in attorneys fees and costs a

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reasonable amount.

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What remains is Plaintiffs’ request for liquidated damages. In order to award statutory

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liquidated damages in this Circuit: (1) the fiduciary must obtain a judgment in favor of the plan, (2)

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unpaid contributions must exist at the time of suit, and (3) the plan must provide for liquidated

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damages. Once the provision applies, liquidated damages are mandatory. Idaho Plumbers & Pipe

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Fitters Health and Welfare Fund v. United Mech. Contractors, Inc., 875 F.2d 212, 215 (9th Cir.

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1989).
In this case, all three requirements for liquidated damages are satisfied. Default judgment in

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For the Northern District of California

United States District Court

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favor of the plan will be entered as determined above. Contributions for the month of August, 2011,

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were unpaid at the time of the motion was filed and presumably remain unpaid to date, considering

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Defendant failed to provide information suggesting otherwise. Furthermore, the agreement between

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Plaintiffs and Defendant provides for liquidated damages in the event of late payments. See

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Complaint, at ¶ 8; see also Dorcy Decl., at Ex. B. The court therefore finds that Plaintiffs should be

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awarded liquidated damages in the amount of $41,650.23.2

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In sum, Plaintiffs are entitled to an award of unpaid contributions and interest, liquidated
damages, and attorneys' fees and costs in the total amount of $106,228.26.

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III.

ORDER

Based on the foregoing, the hearing scheduled for December 2, 2011, is VACATED.

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Notably, Plaintiffs’ instant motion requests a judgment for contributions due in August,
2011, while the Complaint sought damages for contributions due in February, 2011. While it is
generally true, pursuant to Federal Rule of Civil Procedure 54(c), that “[a] default judgment must
not differ in kind from, or exceed in amount, what is demanded in the pleadings,” the court finds the
six-month discrepancy of no moment. Plaintiffs still request only one month of contributions.
Moreover, Defendants were placed on notice in the Complaint that Plaintiffs may seek relief for
continuing violations (see Complaint, at ¶ 13), and were served with notice of Plaintiffs’ modified
request well before the scheduled hearing date. See Docket Item Nos. 11, 14. But for the sake of
clarity and consistency, the court allows the Complaint to be amended to reflect the actual relief now
sought to the extent such an amendment is necessary. See Fed. R. Civ. Proc. 15(a)(2), (b)(2).
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For the same reasons stated in the preceding footnote, the court finds Defendants were
sufficiently noticed of the amount of liquidated damages requested in this motion, and allows
amended to the Complaint accordingly.
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CASE NO. 5:11-cv-01732 EJD
ORDER GRANTING PLAINTIFFS’ MOTION FOR DEFAULT JUDGMENT

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Plaintiffs’ motion for entry of default judgment is GRANTED in the amount of $106,228.26.

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Judgment will be entered accordingly, and the Clerk shall then close this file.

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IT IS SO ORDERED.

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Dated: November 17, 2011
EDWARD J. DAVILA
United States District Judge

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For the Northern District of California

United States District Court

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CASE NO. 5:11-cv-01732 EJD
ORDER GRANTING PLAINTIFFS’ MOTION FOR DEFAULT JUDGMENT