Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_05-cv-01161/USCOURTS-cand-4_05-cv-01161-4/pdf.json

Nature of Suit Code: 791
Nature of Suit: Employee Retirement Income Security Act (ERISA)
Cause of Action: 29:1132 E.R.I.S.A.: Employee Benefits

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1

U

nite

d

States District C

o

u

rt

For the Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

DISTRIBUTORS ASSOCIATION

WAREHOUSEMEN’S PENSION

TRUST AND, et al.,

 Plaintiffs,

 v.

FOREIGN TRADE ZONE 3, INC., 

 Defendant.

_____________________________/

No. C-05-1161 SBA (WDB)

REPORT AND

RECOMMENDATION RE

PLAINTIFFS' MOTION FOR

DEFAULT JUDGMENT

Plaintiffs are the administrators of multi-employer employee benefit plans. 

Complaint for Violation of ERISA, filed March 21, 2005, (“Complaint”) at ¶4. 

Defendant, Foreign Trade Zone 3, Inc., (hereafter “FTZ”) is bound by a collective

bargaining agreement and various trust agreements to make timely contributions to

plaintiff trust funds for work performed by FTZ’s employees. Complaint at ¶6;

Declaration of David McKenzie, filed August 18, 2005, (“McKenzie Decl.”) at

¶¶3-5.

On March 21, 2005, plaintiffs filed a complaint against FTZ primarily

seeking to collect unpaid contributions and other amounts due the multi-employer

benefit plans pursuant to the governing collective bargaining agreement. See,

Complaint. 

Case 4:05-cv-01161-SBA Document 51 Filed 12/01/05 Page 1 of 21
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1On March 30th, plaintiffs personally served defendant by delivering a copy of the

documents to the representative apparently in charge at defendant’s location. Plaintiffs also

served defendant via U.S. Mail on March 31st. Proof of Service of Summons.

Plaintiffs have served all filings related to this case on defendant at the following address:

Joseph Gerace, Foreign Trade Zone 3, Inc., Pier 23, San Francisco, CA 94111. The court was

concerned that “Pier 23" was too general of an address given that multiple businesses are located

at Pier 23. Plaintiffs’ counsel represented on the record that this is the proper address for FTZ

and that they are confident FTZ has received the filings because Mr. Gerace telephoned counsel

to discuss some of the documents after receiving them. See, Transcript 11-7-05 hearing.

Accordingly, we are satisfied that the mailing address is sufficient to provide FTZ the notice to

which it is entitled.

2

On March 30, 2005, plaintiffs served defendant with a copy of the

Complaint. See Proof of Service of Summons, filed April 15, 2005.1 Although

documents in the record indicate that defendant served plaintiffs with something

apparently styled an answer, defendant has not filed a response to the Complaint. 

See, Plaintiffs’ Motion to Strike Answer to Complaint, filed April 29, 2005. In

response to plaintiffs’ application for entry of default, the Clerk of the Court

entered default as to FTZ on July 1, 2005. 

On August 18, 2005, plaintiffs filed and served their Motion for Default

Judgment (“Motion”). See, Application for Default Judgment, filed August 18,

2005. On October 6, 2005, plaintiffs served defendant with additional materials

filed in support of their Motion. See, Proof of Service, filed October 7, 2005. On

October 18, 2005, plaintiffs served defendant with this court’s order scheduling a

hearing in connection with plaintiffs’ Motion for November 7, 2005. 

On November 7, 2005, this court conducted a hearing in connection with

plaintiffs' Motion. No appearance was made on defendant’s behalf. In their

Motion, plaintiffs seek a monetary judgment for unpaid delinquent contributions,

liquidated damages, interest, attorneys’ fees, and costs, as well as an order

compelling defendant to comply with the collective bargaining agreement, to

submit to an audit, to post a bond to secure future contributions, and for other

miscellaneous relief. Memorandum of Points and Authorities, filed August 18,

2005. In order to address questions raised by the court at the hearing, plaintiffs

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3

filed and served Supplemental Information re: Motion for Default Judgment, on

November 18, 2005 (“Supp. Info.”). 

I. Entry of Default Judgment

Plaintiffs seek entry of judgment by default against FTZ. 

The Clerk of the Court entered default as to defendant, and plaintiffs served

FTZ with their Motion for Default Judgment. See, Application for Default

Judgment. Although FTZ apparently served plaintiffs with a response to the

complaint, FTZ has failed to file any type of response with this Court or to appear

before the Court despite having been served with notice of these proceedings. 

Given defendant’s failure to appear before this court, the significant risk of

prejudice to the employee beneficiaries of the fringe benefit trusts when an

employer fails to make the required contributions, the sufficiency of plaintiffs’

Complaint, and the apparent merit of plaintiffs’ substantive claim, we

RECOMMEND that Judge Armstrong find that plaintiffs are entitled to judgment

by default against Foreign Trade Zone 3, Incorporated. See, F.R.C.P. 55(b); Eitel

v. McCool, 782 F.2d 1470 (9th Cir. 1986). We address the relief plaintiffs request

below.

II. Items of Relief Sought by Plaintiffs

Section 1132(g)(2) of ERISA provides that in an action for delinquent

contributions 

in which a judgment in favor of the plan is awarded the court shall

award the plan --

(A) the unpaid contributions,

(B) interest on the unpaid contributions,

(C) an amount equal to the greater of -- (i) interest on the unpaid

contributions, or (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 attorneys’ fees and costs of the action . . ., and

(E) such other legal or equitable relief as the court deems appropriate.

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2At some point in 2005, defendant lost its membership with IEDA for failure to pay its

dues. McKenzie Decl., at ¶6. FTZ, nonetheless, remains bound by the collective bargaining and

trust agreements. See Supp. Info., at Ex. B (“Subscriber’s Agreements” in which FTZ agrees

to be bound by the collective bargaining, Pension, and medical benefit agreements).

4

For purposes of this paragraph, interest on unpaid contributions shall

be determined by using the rate provided under the plan . . ..

29 U.S.C. §1132(g)(2) emphasis added. 

A. Unpaid contributions

Plaintiffs seek unpaid contributions in the amount $15,416.95 owing

pursuant to the governing collective bargaining and trust agreements (collectively

“CBA”). McKenzie Decl., at Ex. A; Supp. Info., at Ex. A. Defendant owes

contributions to two different trusts, the Pension Trust and the Medical Trust. 

Because the same rules appear to govern each trust, we do not differentiate

between them here and address plaintiffs’ aggregate request. We RECOMMEND

that Judge Armstrong order plaintiffs to properly allocate to the respective trusts

any sums recovered.

On October 8, 2003, an organization called Industrial Employers and

Distributors Association (IEDA) became signatory to a collective bargaining

agreement “for and on behalf of [its] present members.” At that time, FTZ was a

member of IEDA. McKenzie decl., at Ex. A, p.1 and A-1. That collective

bargaining agreement bound IEDA’s members, including FTZ, to pay specified

amounts into a Pension Trust and a Medical Trust on behalf of the members’

employees. See McKenzie Decl., at Ex. A, Art. IX. This agreement is in effect

from June 1, 2003, to May 31, 2007. Id., at §9.03.2 Accordingly, defendant is

obligated to pay contributions for covered work conducted by its employees for

the period October 8, 2003, through May 31, 2007. McKenzie Decl., at Ex. A. 

The evidence also supports a finding that FTZ’s contributions were due on

the last day of the month following the month in which the work was performed. 

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3We note for the record that we could not find a provision in the collective bargaining

agreement establishing the due date. However, plaintiffs have submitted evidence that the

parties interpreted the agreement such that contributions were due on the last day of the month

following the month in which the work was performed. McKenzie Decl., at ¶ 11; Supp. Info.,

at 2.

4We note for the record that these terms are different from those alleged in the Complaint.

The Complaint alleges that contributions for work conducted in the prior month are due on the

“13th day of each month” and that if not paid on the “13th day of the month are considered

delinquent.” Complaint at ¶12 emphasis added. While generally a defaulting defendant only

admits allegations well pleaded in the complaint, the defendant does not admit allegations about

damages -- those plaintiffs must prove. Moreover, the defendant owes less money under the

contract terms supported by the evidence than it would under the terms alleged in the Complaint.

Therefore, we have no reservations about recommending the findings supported by the evidence.

5Contributions delinquent as of that date would pertain to work performed before or

during August of 2005. Those contributions were due September 30, 2005, and became

delinquent October 30, 2005.

6Plaintiffs evidence in support of the amounts owing lists four categories of damages: (1)

“total delinquency contributions,” (2) “total delinquency charges,” (3) “total interest charges,”

and (4) “total Clyburn contributions/charges.” Supp. Info., at Ex. A. 

As we understand it, category (1) includes delinquent contributions, category (2) includes

liquidated damages, and category (3) includes accrued interest. Category (4) appears to include

both delinquent contributions and liquidated damages pertaining to one employee, Mr. Clyburn.

Because plaintiffs lumped delinquent contributions and liquidated damages pertaining to Mr.

Clyburn together, we are not sure how much of category (4) pertains to unpaid contributions and

how much pertains to liquidated damages. We’ve included the entire amount in plaintiffs’

category (4) in our recommended award for unpaid contributions and have not included any

portion of that amount in the recommended liquidated damages award. Our break down by type

of damages is, therefore, not entirely accurate. Because we recommend awarding the full

amount of unpaid contributions and liquidated damages sought, if Judge Armstrong adopts our

5

McKenzie Decl., at ¶11.3 Contributions did not, however, become “delinquent”

until thirty days after the due date. “If on the thirtieth day after any payment is

due, such amount is unpaid, the Subscribing Employer is deemed to be

delinquent.” McKenzie Decl., at Ex. A (collective bargaining agreement at

§9.05); Supp. Info., at 2.4

Plaintiffs seek unpaid contributions delinquent as of November 18, 2005, in

the amount $15,416.95.5 See, McKenzie Decl., at Ex. B; Supp. Info., at Ex. A,

note (1). Because such damages are supported by the evidence, we

RECOMMEND that the District Court enter judgment against FTZ in the amount

$15,416.95 for unpaid contributions.6

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recommendation, there will be no mathematical error in the total monetary judgment. However,

if Judge Armstrong does not adopt our recommendation with respect to unpaid contributions and

liquidated damages in full, we RECOMMEND that she require plaintiffs to further isolate the

components of the Clyburn damages to enable the Court to ensure that plaintiffs’ judgment is

accurate.

6

B. Interest

If the Court enters judgment in plaintiffs’ favor for unpaid contributions,

ERISA requires the Court to award plaintiffs “interest on the unpaid

contributions.” 29 U.S.C. §1132(g)(2)(B). “[I]nterest on unpaid contributions

shall be determined by using the rate provided under the plan.” 29 U.S.C.

§1132(g)(2). 

Plaintiffs seek interest on the delinquent contributions at the rate of 12%. 

McKenzie Decl., at ¶11. Plaintiffs’ evidence supports a finding that 12% is the

applicable interest rate under the Trust Agreements. McKenzie Decl., at Ex. A

(§9.07). 

Under the terms of the collective bargaining agreement the Trusts begin

charging interest only where (1) the contribution is delinquent by 120 days or

more or (2) the Trusts have filed a lawsuit to recover the delinquent contributions. 

McKenzie Decl., at Ex. A, §§9.05, 9.06, 9.07; Supp. Info., at 3. Plaintiffs counsel

represented on the record that, with respect to contributions delinquent less than

120 days but which are sought in the lawsuit, interest begins accruing from the

date on which plaintiffs filed the lawsuit, March 21, 2005. See, Transcript

November 7, 2005, hearing; Supp. Info., at 3. 

We RECOMMEND that the District Judge grant plaintiffs’ request for

judgment for interest on unpaid contributions at the rate of 12%, from the earlier

of (1) the date on which a contribution has been delinquent for 120 days or (2)

March 21, 2005, as set forth in Exhibit A of plaintiffs’ Supplemental Information,

through the date paid or, if still unpaid, through the date of judgment. In Exhibit

A of plaintiffs’ Supplemental Information, plaintiffs calculate interest through

November 18, 2005, and seek interest totaling $1,835.30. In the event Judge

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7

Armstrong adopts our recommendation, we also RECOMMEND that the Court

permit plaintiffs to file an additional submission calculating interest through the

date of judgment.

C. Liquidated Damages

Plaintiffs seek an item of relief that is referred to variously as

“administrative charges,” “penalties” and/or “liquidated damages.” McKenzie

Decl., at ¶12, Ex. A (§9.05), and Ex. B. In our view, whatever plaintiffs call these

charges, the charges all amount to “liquidated damages” as that term is understood

in this context.

Under the CBA the rate for these charges varies depending on the number

of days the contribution is past due and/or whether or not plaintiffs’ collection

counsel has filed a lawsuit to recover the delinquencies. McKenzie Decl., at Ex.

A. The rate is either 5%, 10%, 15% or 20% depending on those factors. Id.

For the purposes of determining whether plaintiffs are entitled to liquidated

damages, and if so, the amount, we group FTZ’s delinquent contributions into

three categories: (1) contributions that were late but that defendant paid before

plaintiffs filed the complaint, (2) contributions that were both late and unpaid at

the time the complaint was filed, and (3) contributions that came due after the

complaint was filed, became delinquent, and either were paid late or remain

unpaid.

As explained below, contributions in categories (2) and (3) are subject to

statutory liquidated damages under ERISA. Contributions in category (1),

however, are not subject to mandatory liquidated damages under ERISA. An

award of liquidated damages on contributions within category (1) is a matter of

contract.

//

//

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28 7Plaintiffs are entitled to liquidated damages on these amounts even if defendant paid

those contributions after the lawsuit was filed. Accord, Northwest, 104 F.3d at 258.

8

1. Statutory liquidated damages – categories (2) and (3)

ERISA requires the court to award plaintiffs “an amount equal to the greater

of -- (i) interest on the unpaid contributions, or (ii) liquidated damages provided

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

determined by the court [to constitute unpaid contributions].” 29 U.S.C.

§1132(g)(2)(C)(ii). 

Statutory 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). 

Plaintiffs have submitted evidence that supports a finding that there were

contributions that were delinquent and unpaid at the time plaintiffs filed their

lawsuit,7 and that the CBA provides for an award of liquidated damages on such

sums. McKenzie Decl., at Ex. A and B. Therefore, plaintiffs have satisfied the

first and third Northwest requirements. If Judge Armstrong enters judgment

against FTZ for unpaid contributions, plaintiffs will have satisfied the second

Northwest requirement. We recommend that, if Judge Armstrong enters judgment

against defendant for unpaid contributions, she also enter judgment for liquidated

damages in connection with the contributions that were delinquent and unpaid at

the time plaintiffs filed their lawsuit. 

The Ninth Circuit has not yet ruled with respect to whether plaintiffs can

recover statutory liquidated damages in connection with contributions that

matured after suit was filed where defendant was delinquent with respect to other

contributions at the time suit was filed. There has been a split among the lower

courts of this District on this issue.

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9

In Board of Trustees v. Udovch, 771 F.Supp. 1044 (N.D.Cal 1991), the

undersigned held that the Ninth Circuit’s opinion in Parkhurst v. Armstrong Steel

Erectors, Inc., 901 F.2d 796 (9th Cir. 1990), required the court to deny recovery of

statutory liquidated damages on contributions that had not matured at the time suit

was filed. We have since been persuaded by the reasoning set forth in Board of

Trustees v. Bridon, 1995 WL 573701 (N.D. Cal 1995), that it is impractical and

counterproductive to apply rigidly Parkhurst’s broad statements to the

circumstances before us, circumstances not considered by the Ninth Circuit in

Parkhurst. Therefore, we RECOMMEND that Judge Armstrong follow cases

such as Bridon and Roofers Local Union No. 81 v. Wedge Roofing, Inc., 811

F.Supp. 1398 (N.D.Cal. 1992), which adopt the more practical approach and

award liquidated damages on contributions that came due and became delinquent

after plaintiffs filed their Complaint. 

Pursuant to ERISA, statutory liquidated damages should be awarded at the

greater of the interest rate or the liquidated damages rate specified by the plan. 

The CBA assesses interest at the rate of 12% and liquidated damages at 20% --

where, as here, counsel files a lawsuit. Pursuant to ERISA, liquidated damages,

therefore, should be assessed at the higher rate of 20% on contributions in

categories (2) and (3).

2. Liquidated damages as a matter of contract – category (1)

If FTZ paid contributions that were delinquent before plaintiffs filed this

action, plaintiffs cannot satisfy the first requirement imposed by Northwest

Administrators. Udovch, 771 F.Supp. 1044; Idaho Plumbers and Pipefitters

Health and Welfare Fund v. United Mechanical Contractors, Inc., 875 F.2d 212

(9th Cir. 1989). Accordingly, plaintiffs would not be entitled to a mandatory

award of liquidated damages under §1132(g)(2) of ERISA. Id. Plaintiffs might,

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

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10

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); Udovch, 771 F.Supp. at

1047. 

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

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.

Plaintiffs satisfy the first prong of the test. “When 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.” Udovch, 771 F. Supp. at

1049. 

When we address the second prong of the test, whether the fixed amount is

“a reasonable forecast of just compensation 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

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11

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 those damages would constitute nothing more than a “penalty.”

Under the collective bargaining agreement in this case, the amount of

liquidated damages depends on the number of days the contributions are past due

and/or whether collection counsel has filed a lawsuit to recover the delinquency. 

Plaintiffs’ Supplemental Information supports an inference that liquidated

damages provided for in the CBA (at the rate of 5%, 10%, 15%, or 20%) represent

a good faith, rational attempt to estimate actual damages and do not represent a

mere penalty. Plaintiffs represent that they chose this escalating percentage scale

because, in their experience, the longer contributions are past due the more

difficult and costly they are to collect. Presumably, when contributions initially

become past due, Trust employees contact defendant in an effort to collect the

contributions. This effort likely costs the Trust very little -- the time the employee

diverts from his or her regular responsibilities and the cost of sending

correspondence, and the like. At some point, however, the Trust refers the matter

to a collection agency. Supp. Info., at 3. Pursuant to the Trust’s contract with the

collection agency, plaintiffs agree to pay the agency 30% of the delinquent amount

if the delinquency is collected without having to initiate litigation – but 40% of

amounts recovered if the agency had to file a lawsuit to collect. Supp. Info., at Ex.

C. None of the liquidated damage percentages found in the contract fully

compensate plaintiffs for this expense. This evidence supports an inference that

plaintiffs made a good faith effort to correlate the amount of liquidated damages

with increases in the cost of collection that would occur with the passage of time. 

The parties apparently recognized that the harm the Plans would suffer would

increase as the costs of collection increased. The fact that their calibration of

liquidated damage rates was imperfectly correlated with increases in collection

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8See, note 6, supra.

12

agency fees does not justify a finding that the provisions for liquidated damages

amounted to nothing more than penalties.

We RECOMMEND that Judge Armstrong grant plaintiffs’ request for

contract-based liquidated damages on contributions that were delinquent but that

FTZ paid before plaintiffs filed the lawsuit.

3. Total Liquidated Damages

Plaintiffs have submitted evidence that the total statutory and contract-based

liquidated damages currently owing is $9,777.50.8 Supp. Info., at Ex. A. 

Therefore, we RECOMMEND that Judge Armstrong grant plaintiffs’ request for

liquidated damages in the amount of $9,777.50.

D. “Additional Relief”

Section 1132 of ERISA authorizes the Court to award “such legal and

equitable relief as the court deems appropriate.” 29 U.S.C. §1132(g)(2)(E). 

We address each additional item of relief requested by plaintiffs below.

1. An order compelling defendant to “pay all contributions

due and owing as of the date of entry of judgment in this

action”

Plaintiffs seek an order compelling FTZ to “pay all contributions due and

owing as of the date of entry of judgment in this action.” Motion at 8. If Judge

Armstrong adopts our recommendation to enter monetary judgment in plaintiffs’

favor for all contributions that plaintiffs have demonstrated are due and owing, the

requested order would be redundant of the judgment. Therefore, such an order is

unnecessary. We RECOMMEND that Judge Armstrong deny plaintiffs’ request

for an order to this effect.

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13

2. An order compelling defendant to “pay post-judgment

interest at the maximum rate prescribed under the CBA or

governing law.”

Plaintiffs originally sought an order compelling FTZ to “pay post-judgment

interest at the maximum rate prescribed under the CBA or governing law.” 

Motion at 9. However, plaintiffs set forth no authority or evidence that would

support a finding that they are entitled to post-judgment interest or, if so, the rate

to which they are entitled.

Following the November 7, 2005, hearing, plaintiffs have opted not to

pursue post-judgment interest at this time. By doing so, plaintiffs do not waive

their right to seek post-judgment interest at a later date.

We RECOMMEND that the District Court not address at this time whether

plaintiffs are entitled to post-judgment interest.

3. An order compelling defendant to “perform and continue

performing its obligations under the CBA”

Plaintiffs seek an order compelling defendant to “perform and continue

performing its obligations under the CBA.” Motion at 9. Defendant regularly has

failed to pay contributions in a timely manner to the detriment of employees

covered by the Pension and Medical Trusts. Therefore, we RECOMMEND that

Judge Armstrong enter an order compelling defendant to perform its obligations

under the CBA.

4. An order compelling defendant to submit to an audit at

defendant’s expense

Plaintiffs request an order compelling defendant to submit to an audit at

defendant’s expense. Motion at 9. 

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We routinely grant requests for an audit in collection cases such as this. 

Usually, however, the governing collective bargaining agreement directly provides

for an audit at the Trustees’ election. Plaintiffs have not identified any provision

in the agreement that expressly authorizes an audit. Plaintiffs have, however, cited

two provisions that obligate defendant to reimburse plaintiffs for the cost of an

audit. Supp. Info., at 5-6 citing McKenzie Decl., at Ex. A (§§9.05 and 9.06). 

While we would have preferred that the drafters be more explicit about their

intentions, we RECOMMEND that the District Court find that the contract

sufficiently evidences the parties’ intentions that an audit may be performed and

that defendant will reimburse plaintiffs for the cost of that audit. Additionally, we

note that §1132(g)(2)(E) of ERISA permits the Court to award appropriate

equitable relief. Without an audit, plaintiffs would have no way of determining

the amount owed by recalcitrant delinquent employers.

Plaintiffs have submitted no evidence about the audit procedure. We

RECOMMEND that Judge Armstrong grant plaintiffs’ request for an audit and

enter judgment for additional unpaid contributions, interest and liquidated

damages found owing as a result of the recommended audit on the condition that

plaintiffs use a procedure that provides defendant reasonable notice of the

auditor’s findings and an opportunity to challenge the amount found owing.

5. An order compelling defendant to “pay costs of suit.”

Plaintiffs seek an order compelling FTZ to “pay costs of suit.” Motion at 9.

A request for equitable relief is an inappropriate vehicle for obtaining costs

of suit. ERISA requires the court to award reasonable “costs” as an element of

damages in conjunction with the attorney’s fee request when plaintiffs obtain a

judgment for delinquent contributions. 29 U.S.C. §1132(g)(2)(D). Therefore, if

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9Such a request is unnecessary in any event. Awards of costs generally are governed by

F.R.C.P. 54(d), Local Rule 54, and 28 U.S.C. §1920, et seq. To the extent plaintiffs sought

reimbursement of costs not awarded in connection with attorneys’ fees, but “allowable” under

the law, plaintiffs could seek an award of allowable costs by filing a bill of costs as contemplated

by Local Rule 54-1. 

15

reasonable, plaintiffs’ costs will become part of the monetary judgment, and

plaintiffs’ request for an order to this effect is unnecessary.9 See, section E, infra.

We RECOMMEND that the District Court deny plaintiffs’ request for a

separate provision in an order that would compel defendant to “pay costs of suit.” 

No such separate provision is needed.

6. An order compelling defendant to post a bond in the

amount of $6,956.28

Plaintiffs ask the court to order defendant to “post a bond pursuant to §9.08

of the Pension Agreement in the amount of $6,956.28 to approximate three months

of contributions as security for the prompt payment of Trust Fund contributions.” 

Motion at 9.

Section 9.08 of the CBA authorizes this form of relief within five days after

receipt by defendant of written notice requesting the posting of such a bond. On

November 8, 2005, plaintiffs mailed such a request to FTZ, and defendant has not

complied with its obligation. Supp. Info., at 6 and Ex. G. Accordingly, we

RECOMMEND that Judge Armstrong order defendant to post a bond in the

amount of $6,956.28 as section 9.08 of the collective bargaining agreement

obligates defendant to do.

E. Attorneys’ Fees and Costs

Section 1132(g) of ERISA requires the Court to award plaintiffs “reasonable

attorney’s fees and costs of the action” when plaintiffs obtain a judgment in their

favor or otherwise obtain the relief sought. 29 U.S.C. §1132(g)(2)(D); Northwest

Administrators, 104 F.3d at 258.

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Plaintiffs originally sought reimbursement of attorneys’ fees incurred

through October 6, 2005, in the amount $24,546.25, as well as costs in the amount

$829.43. Chavkin Decl., at ¶20; Supplemental Declaration of Laura Chavkin in

Support of Application for Default Judgment, filed October 7, 2005, (“Supp.

Chavkin Decl.”) at ¶5. In their “Supplemental Information,” plaintiffs revised

their fee request by adding additional fees and costs incurred after October 6th and

by subtracting certain fees and costs as discussed below. Plaintiffs now seek fees

in the amount $26,558.50 and costs in the amount $901.32. Supp. Info., at 2 and

Ex. D. 

1. Tasks conducted and number of hours spent on those tasks

Plaintiffs seek fees in connection with the following tasks: determining the

amount of the delinquency, drafting and filing the complaint, requesting default,

moving to strike an “answer” served on plaintiffs but never filed, and moving the

court for a judgment by default. Chavkin Decl., at ¶16; Supp. Chavkin Decl., at

¶4. 

We have reviewed counsel’s billing statements and RECOMMEND that the

District Court find that, except as noted below, the kinds of tasks conducted by

counsel were reasonably undertaken. We also RECOMMEND that Judge

Armstrong find that counsel expended a reasonable number of hours completing

those tasks for which compensation is warranted. Chavkin Decl., at Ex. C; Supp.

Chavkin Decl., at Ex. A.

We RECOMMEND that the District Court deny plaintiffs’ request for fees

in connection with billing entries relating to plaintiffs’ motion to strike, filed April

29, 2005, the billing entry for November 7, 2005, described as “prepare proposed

order,” and that Judge Armstrong eliminate two hours of work in connection with

plaintiff’s Supplemental submission. Supp. Info., at Ex. D.

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The non-lawyer representative of defendant served on plaintiffs but never

filed something referred to by plaintiffs as an “answer.” On April 29, 2005,

plaintiffs filed a Motion to Strike the “answer” together with papers supporting

that motion. Plaintiffs also filed a “reply to opposition” even though FTZ had

filed no opposition to their motion to strike. Judge Armstrong denied the motion

to strike because no answer was on file. 

We RECOMMEND that Judge Armstrong deny plaintiffs’ request for

reimbursement of fees incurred in connection with this work. The evidence

supports a finding that counsel was aware that FTZ had not filed the answer. 

Chavkin Decl., at Ex. C. (billing entry for 4/27/05 “review N.D. Cal. Docket for

filing of Answer (doesn’t appear on docket)”). It is unreasonable for an attorney

to file a motion to strike something that is not part of the Court record. 

Based on our review of the most recently submitted billing records, counsel

has eliminated hours expended on this task from the final fee request. Supp. Info.,

at Ex. D. 

Additionally, plaintiffs’ billing records reflect an entry charging $56.25,

dated November 7, 2005, described as “prepare proposed order.” Supp. Info., at

Ex. D. Based on our review of the docket, no proposed order was submitted to the

Court around that time. Therefore, we RECOMMEND that Judge Armstrong deny

plaintiffs’ request for reimbursement for that task.

Plaintiffs expended almost 3.5 hours drafting the Supplemental Information

and a similar amount of time ‘researching’ the information contained therein. In

our view, at least some of this work would not have been necessary if plaintiffs

had correctly presented provisions in the collective bargaining agreement in the

first instance. For this reason, we RECOMMEND that the District Court deny

plaintiffs’ request for compensation for two hours of the time Ms. Chavkin spent

preparing corrected information for the Court ($450.00). 

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28 10The Chavkin Declaration does not mention Mr. Triche, but his name appears on the

billing records. At the hearing plaintiffs’ counsel confirmed that Mr. Triche is an attorney.

18

We noted at the hearing that counsel’s billing statements contain two entries

described as “draft answers” or “draft answer.” Plaintiffs have explained that

these descriptions were the result of an error by the billing attorney and that the 

time spent was actually for drafting the complaint. Supp. Info., at 5. We,

therefore, do not recommend elimination of those hours. 

2. Hourly rates

Six attorneys and one law student performed legal work in connection with

this matter. Chavkin Decl., at ¶9 and Ex. C. Plaintiffs seek reimbursement at the

following hourly rates: Lee Trucker $425, Robert Schwartz $300 and $250, Marlo

Sarmiento $300, Ronald Triche $245,10 Laura Chavkin $225, Chris Pirrone $225,

and Jennifer Chung $125.

At the hearing the court notified plaintiffs that, in this court’s experience,

several of the billing rates sought exceed the prevailing market rate in the Bay

Area for lawyers and law clerk/paralegals of counsel’s skill and experience doing

the kind of work this matter involved. See, Transcript November 7, 2005, hearing. 

Specifically, this court has reviewed many cases of this kind and does not recall

seeing billing rates above $300.00 for an attorney’s work or above $95.00 for

paralegal assistance. Plaintiffs’ Supplemental Information does not persuade us

that these rates are reasonable.

We, therefore, RECOMMEND that the District Court reduce billing rates

for Mr. Trucker, Mr. Schwartz, and Mr. Sarmiento. Plaintiffs’ counsel already has

agreed to reduce Ms. Chung’s rate. 

Mr. Trucker performed only 1.25 hours of work in connection with this

case. He provided the initial consultation with his client and drafted the initial

letters requesting defendant pay the delinquent contributions. Supp. Info., at 4. 

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We RECOMMEND that the District Court reduce Mr. Trucker’s billing rate to

$250. If Judge Armstrong adopts our recommendation this will reduce plaintiffs’

fee request by $312.50.

Mr. Schwartz primarily billed at $250.00/hour. However, the evidence

indicates that 2.8 hours were billed at the rate of $300.00/hour. We

RECOMMEND that the District Court reduce the rate charged for these 2.8 hours

to $250.00/hour. If Judge Armstrong adopts our recommendation this will reduce

plaintiff’s fee request by $140.00.

Mr. Sarmiento billed at the rate of $300.00/hour. Plaintiffs represent that

most of Mr. Sarmiento’s work has been eliminated in connection with the Motion

to Strike. Supp. Info., at 4. Plaintiffs continue to seek reimbursement for .6 hours

in which Mr. Sarmiento “drafted a proposed order and assisted in the re-noticing

and re-serving of hearing matters.” Id. While Mr. Sarmiento appears to be highly

qualified, none of these tasks requires expertise beyond that of a very junior

associate. This is additional support for our view that $300.00/hour is excessive. 

In light of the low level of expertise required to perform the tasks for which

reimbursement is sought, we RECOMMEND that the District Court reduce Mr.

Sarmiento’s rate to $225.00/hour, the same rate charged by Ms. Chavkin. This

recommendation will reduce plaintiffs’ fee request by $45.00.

Jennifer Chung is a second year law student at the University of San

Francisco and performed the same kind of work as would a paralegal. Chavkin

Decl., at ¶9. As previously stated, plaintiffs’ counsel has agreed to reduce Ms.

Chung’s billing rate to $95.00/hour. This rate is commensurate with the

prevailing market rate in the Bay Area for paralegals of Ms. Chung’s skill and

experience doing the kind of work this matter has involved. The Supplemental

Information submitted by plaintiffs after the hearing indicates that the final fee

request reflects Ms. Chung’s reduced rate. Supp. Info., at 5 and Ex. D.

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28 11Plaintiffs represent that the cost described as “Attorney’s Diversified” is for service of

process. Supp. Info., at 5.

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For the reasons stated above, in the event that Judge Armstrong adopts this

court’s recommendation to enter judgment in favor of plaintiffs on their claim for

unpaid contributions, we RECOMMEND that Judge Armstrong award plaintiffs

attorneys’ fees in the amount $25,648.50.

3. Costs

Plaintiffs also seek costs in the amount $901.32. Supp. Info., at 2 and Ex.

D.

Plaintiffs seek reimbursement for the Court filing fee, messenger fees,

photocopying costs, postage expenses, something called “Attorney’s Diversified

Services for filing documents with Court,” “Overnight delivery expense,”

“telecopy expense” and “computerized legal research expense.” 

Based on our review of the billing records, plaintiffs have eliminated costs

associated with the Motion to Strike.

Civil L.R. 54-3 permits reimbursement of filing fees, service fees11 and

some photocopies. In addition, photocopies, postage and computerized legal

research are generally recoverable as out of pocket expenses. “Overnight delivery

expense” represents the cost of delivering copies per the District Court’s standing

order. Supp. Info., at 5. The items for which reimbursement is sought constitute

taxable costs and/or out-of-pocket expenses normally chargeable to the client. 

Civil L.R. 54-3. Accord, Harris v. Marhoefer, 24 F.3d 16 (9th Cir. 1994) (fee

award under 42 U.S.C. §1988). 

In the event that Judge Armstrong adopts this court’s recommendation to

enter judgment in favor of plaintiffs on their claim for unpaid contributions, we

RECOMMEND that Judge Armstrong also award plaintiffs costs in the amount

$901.32.

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12Plaintiff may update this amount to reflect interest accruing after November 18, 2005.

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III. Conclusion

For the reasons stated above, we RECOMMEND that Judge Armstrong:

| enter judgment for delinquent contributions, interest at the rate of

12% and liquidated damages at the statutory and contractual rates in a

total amount of $27,029.75,12

| enter an order compelling FTZ to submit to an audit and enter

judgment for additional amounts owing following an audit procedure

in which defendant has notice of the auditor’s findings and an

opportunity to respond, 

| enter an order compelling FTZ to perform and continue performing

its obligations under the collective bargaining agreement,

| enter an order compelling FTZ to post a bond pursuant to §9.08 of the

Pension Agreement in the amount of $6,956.28 to approximate three

months of contributions as security for the prompt payment of Trust

Fund contributions, and 

| enter judgment for attorneys’ fees and costs in the amount of

$26,549.82.

The Court ORDERS plaintiffs to serve a copy of this Report and

Recommendation on defendant immediately.

IT IS SO REPORTED AND RECOMMENDED.

Dated: December 1, 2005

/s/ Wayne D. Brazil 

WAYNE D. BRAZIL

United States Magistrate Judge

Copies to: 

Plaintiffs with direction to serve defendant, 

SBA, wdb, stats

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