Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_05-cv-03410/USCOURTS-cand-4_05-cv-03410-2/pdf.json

Nature of Suit Code: 791
Nature of Suit: Employee Retirement Income Security Act (ERISA)
Cause of Action: 29:1145 E.R.I.S.A.

---

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

1

U

nite

d

States District C

o

u

rt

For the Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

John Bonilla as Chairman and Ken

Walters as Co-Chairman of the

Board of Trustees for the Operating

Engineers Health and Welfare Trust

Fund, et al,

 Plaintiffs,

 v.

Neville Structures dba Neville

Brothers, Inc., a business entity, and

Steve Neville, an individual, 

 Defendants.

_____________________________/

No. C-05-3410 CW (WDB)

ORDER FOR SUPPLEMENTAL

BRIEFING RE MOTION FOR

DEFAULT JUDGMENT

Judge Wilken has referred plaintiffs’ Motion for Default Judgment to the

undersigned. 

By Thursday February 2, 2006, at 3:00 p.m., plaintiffs must file with the

Court and serve on defendants a supplemental submission addressing the follow

issues. If, for economic or other reasons, plaintiffs do not address any of the

issues below, the court will conclude that plaintiffs have opted to waive the

omitted request or argument.

(1) Plaintiffs’ request for damages includes liquidated damages

pertaining to contributions for work performed in October 2004. It appears that

Case 4:05-cv-03410-CW Document 15 Filed 01/27/06 Page 1 of 5
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

2

contributions for this work were delinquent but were paid in December 2004,

before plaintiffs filed the Complaint in this action.

ERISA compels the court to award plaintiffs “liquidated damages provided

for under the plan in an amount not in excess of 20 percent . . . of the amount

determined by the court [as unpaid contributions].” 29 U.S.C. §1132(g)(2)(C)(ii). 

Liquidated damages are “mandatory and not discretionary” if “the following three

requirements [are] satisfied: (1) the employer must be delinquent at the time the

action is filed; (2) the district court must enter a judgment against the employer;

and (3) the plan must provide for such an award.” Northwest Administrators, Inc.,

v. Albertson’s Inc., 104 F.3d 253 (9th Cir. 1996) citing Idaho Plumbers &

Pipefitters v. United Mechanical Contractors, Inc., 875 F.2d 212 (9th Cir. 1989). 

If the first requirement is not met plaintiffs are not entitled to liquidated

damages under ERISA. Said another way, plaintiffs are not entitled to statutory

liquidated damages with respect to contributions that were delinquent but were

paid before the date the Complaint was filed.

Plaintiffs MUST recalculate their damages request to eliminate liquidated

damages pertaining to the October 2004 contributions. Additionally, plaintiffs

indicate that they have assessed interest on those liquidated damages. 

Accordingly, plaintiffs MUST also recalculate their request for interest to

eliminate interest on those liquidated damages.

(2) With respect to the October 2004 contributions, plaintiffs might,

however, be entitled to liquidated damages as a matter of contract. Idaho

Plumbers, 875 F.2d at 217 (§1132(g)(2) does not preempt the federal common law

of liquidated damages when that section does not apply); Board of Trustees v.

Udovch, 771 F.Supp. 1044 (N.D. Cal 1991).

A contractual “liquidated damages provision is enforceable in this setting,

and not void as a penalty, only if (1) ‘the harm caused by a breach [is] very

Case 4:05-cv-03410-CW Document 15 Filed 01/27/06 Page 2 of 5
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

3

difficult or impossible to estimate’ and (2) the fixed amount is ‘a reasonable

forecast of just compensation for the harm caused.’” Udovch, 771 F.Supp. at 1048

citing Idaho Plumbers, 875 F.2d at 217.

As stated in Udovch “[w]hen an employer is delinquent in paying

contributions into a fringe benefit trust fund, the fund suffers some kinds of harms

that are very difficult to gauge.” 771 F. Supp. at 1049. 

With respect to the second prong of the test, whether the fixed amount

represents a reasonable forecast for the harm caused, we focus on the “parties’

intentions.” Udovch, 771 F. Supp. at 1048. The negotiating parties “must make a

good faith attempt to set an amount equivalent to the damages they anticipate.” 

Idaho Plumbers, 875 F.2d at 217. For the reasons explained in Udovch we focus

“on the character of the process that led, at the time the contract language was

drafted, to the fixing of the liquidated damages figures or formulas.” 771 F.Supp.

at 1048. We look for evidence that “the drafters made a good faith effort to

determine that there would be a rational relationship between the damages that

would be paid under the clause and the harms that would be suffered in most of the

situations that were reasonably foreseeable.” 771 F. Supp. at 1049 (emphasis in

original). More specifically, we look for evidence:

(1) that the drafters gave some thought to the kinds of harms that the

liquidated damages provision would embrace, (2) that other more

direct provisions were not made for compensation for at least the bulk

of the harms intended to be so embraced, and (3) that it was not

obvious, at the time of drafting, that the figure or formula selected

would result, in a substantial percentage of instances in which it

might be triggered, in amounts of money flowing from defendants to

plaintiffs that clearly would be larger than necessary to compensate

for the kinds of harms the plaintiffs were likely to in fact suffer.

Udovch, 771 F.Supp. at 1048. Plaintiffs may not receive contractual liquidated

damages if such damages would constitute nothing more than a “penalty.”

Plaintiffs have submitted no evidence or argument that would support a

finding that the liquidated damages provision found in the governing contracts is

Case 4:05-cv-03410-CW Document 15 Filed 01/27/06 Page 3 of 5
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

4

‘a reasonable forecast of just compensation for the harm caused.’ If plaintiffs wish

to obtain a judgment for contractual liquidated damages with respect to the

October 2004 contributions they must submit supplemental evidence and

argument in support of that request.

(3) The governing contracts provide for interest at the rate of 12% per

annum. Plaintiffs state that interest is assessed each month at the rate of 1% and

that interest is assessed on previously accrued interest. Where in the collective

bargaining agreement and/or Trust Agreements are these practices authorized?

(4) Plaintiffs seek attorneys’ fees at the rate of $225 per hour. Plaintiffs

have submitted no information about the experience of the attorneys who

performed work on this case to justify the rate sought.

(5) Plaintiffs’ request for costs includes a charge for a “messenger fee.” 

What was being delivered and to whom?

(6) Plaintiffs request an audit. Plaintiffs must describe the procedure that

will be followed by the auditor and must state whether this procedure provides

defendants with an opportunity to participate and/or to object.

(7) Plaintiffs seek judgment against Steve Neville, individually, on the

ground that he constitutes the “employer” as that term is defined by ERISA and on

the alternate ground that he is a “fiduciary” who exercises control over plan assets. 

Motion at 5-6. In the Ninth Circuit, employer contributions do not become “plan

assets” “[u]ntil the employer pays the employer contributions over to the plan.” 

Cline v. The Industrial Maintenance Engineering & Contracting Co., 200 F.3d

1223, 1234 (9th Cir. 2000).

If plaintiffs do not submit additional authority on this subject the court will

assume that plaintiffs continue to pursue their contention that Mr. Neville is liable

as the “employer” but forego their alternate contention that he is liable as a

“fiduciary.” 

Case 4:05-cv-03410-CW Document 15 Filed 01/27/06 Page 4 of 5
1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

5

(8) Plaintiffs ask for a declaration that they are entitled to post-judgment

interest at the contract rate as well as attorneys’ fees and costs incurred to enforce

the judgment. Absent persuasive authority to the contrary, it is the court’s view

that this request is premature, and the court will recommend that Judge Wilken not

address these requests at this time. We also will recommend that Judge Wilken

not preclude plaintiffs from requesting post-judgment interest and/or fees and

costs incurred to enforce the judgment at the appropriate time after Judge Wilken

enters a final judgment.

If defendants wish to respond to plaintiffs’ February 2nd submissions

or any other matters set forth in plaintiffs’ Motion for Default Judgment,

then by Thursday, February 9, 2006, at 3:00 p.m., defendants must file with the

court and serve on plaintiffs a letter asking the court to grant defendants

permission to respond and to set a briefing schedule.

The Court ORDERS plaintiffs to serve a copy of this Order on

defendants immediately.

IT IS SO ORDERED.

Dated: January 27, 2006

/s/ Wayne D. Brazil 

WAYNE D. BRAZIL

United States Magistrate Judge

Copies to: 

Plaintiffs with direction to serve defendants, 

CW, wdb, stats

Case 4:05-cv-03410-CW Document 15 Filed 01/27/06 Page 5 of 5