Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-4_09-cv-02552/USCOURTS-cand-4_09-cv-02552-5/pdf.json

Nature of Suit Code: 791
Nature of Suit: Employee Retirement Income Security Act (ERISA)
Cause of Action: 29:1001 E.R.I.S.A.: Employee Retirement

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United States District Court

For the Northern District of California

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United States District Court

For the Northern District of California

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

DISTRICT COUNCIL 16 NORTHERN

CALIFORNIA HEALTH AND WELFARE TRUST

FUND, et al.,

Plaintiffs,

 v.

PEDRO GERARDO ROSAS ALVARADO,

Individually and dba ROSAS CARPETS,

Defendant. /

No. 09-02552 CW

ORDER GRANTING

DEFENDANT’S

MOTION TO SET

ASIDE DEFAULT

JUDGMENT

On June 2, 2010, Defendant Pedro Gerardo Rosas Alvarado moved

to set aside the default judgment, which was entered December 31,

2009. Plaintiffs oppose the motion. Having considered all of the

papers filed by the parties, the Court GRANTS Defendant’s motion.

BACKGROUND

The Court will not repeat many of the underlying facts of this

case, which were detailed in Magistrate Judge Spero’s well written

Report and Recommendation Re Plaintiffs’ Motion for Default

Judgment. Docket No. 32. 

In short, Plaintiffs filed this action on June 8, 2009. 

Plaintiffs allege that Defendant, as an ERISA employer, failed to

pay various contributions into ERISA trust funds. Defendant was

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personally served on June 15, 2009 and the proof of service was

filed with the Court on June 22, 2009. Docket No. 5. The summons

served upon Plaintiff stated, “If you fail to respond, judgment by

default will be entered against you for the relief demanded in the

complaint.” Defendant failed to plead, defend or appear in this

matter. Pursuant to Plaintiffs’ request, the clerk entered default

against Defendant on July 10, 2009. On August 26, 2009, Plaintiffs

filed their motion for entry of default judgment and Magistrate

Judge Spero issued his Report and Recommendation on the motion on

December 3, 2009. The Court adopted his Report and Recommendation

in full and entered default judgment in favor of Plaintiffs. The

Court awarded Plaintiffs $26,840.16 in unpaid contributions;

$2,684.06 in liquidated damages; $2,006.98 in interest; $2,480 in

audit fees; $3,033 in attorneys’ fees; and $581 in costs. To date,

Plaintiffs have been able to collect $21,000.97 of the judgment.

DISCUSSION

For good cause shown, the district court may set aside a

default judgment. Franchise Holding II LLC v. Huntington Rests.

Group, Inc., 375 F.3d 922, 925 (9th Cir. 2004). Federal Rule of

Civil Procedure 60(b)(1), the subsection pertinent here, grants

district courts discretion to relieve a party from a judgment or

order for reason of “mistake, inadvertence, surprise or excusable

neglect,” provided that the party moves for such relief not more

than one year after the judgment was entered. 

In applying the general terms of Rule 60(b) to default

judgments, the Ninth Circuit “has emphasized that such judgments

are ‘appropriate only in extreme circumstances; a case should,

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whenever possible, be decided on the merits.’” TCI Group Life Ins.

Plan v. Knoebber, 244 F.3d 691, 696 (9th Cir. 2001) (quoting Falk

v. Allen, 739 F.2d 461, 463 (9th Cir. 1984) (per curiam). Thus,

the finality interest in a judgment “should give way fairly

readily, to further the competing interest in reaching the merits

of a dispute.” Id. Three factors govern the vacating of a default

judgment under Rule 60(b): “whether the defendant’s culpable

conduct led to the default; whether the defendant has a meritorious

defense; and whether reopening the default judgment would prejudice

the plaintiff.” Id. The party seeking to vacate a default

judgment bears the burden of demonstrating that these factors favor

vacating the judgment. Id. 

A. Culpable Conduct

Defendant claims that he did not engage in culpable conduct

leading to the default judgment. He asserts that, prior to the

litigation, he received numerous letters from Plaintiffs’ counsel

asking for payments. Alvarado Decl. ¶ 7. After Plaintiffs’

counsel refused to accept Defendant’s explanations for why he did

not owe any money, Defendant stopped opening mail from the law

firm, assuming that they were simply more demand letters. Id. He

claims that he had no reason to suspect that the envelopes

Plaintiffs’ counsel sent him after the filing of this lawsuit

contained important information about the case. He assumed that

information about the case would come directly from the Court. It

was not until Defendant met with an attorney at the Legal Help

Center, a Volunteer Legal Services Program (VLSP) offered by the

Bar Association of San Francisco, that he learned that the Court

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would not mail him any documents. Defendant is not a native

English speaker and he has difficulty reading and writing in

English. Although he is a pro se Defendant, VLSP helped him write

this motion. 

Defendant does not dispute that he was adequately served with

the complaint and service of process in this case. Nor does

Defendant dispute that he was notified that failure to respond to

the complaint would result in a default judgment. “Neglectful

failure to answer as to which the defendant offers a credible, good

faith explanation negating any intention to take advantage of the

opposing party, interfere with judicial decisionmaking, or

otherwise manipulate the legal process is not ‘intentional’ under

our default cases, and is therefore not necessarily -- although it

certainly may be, once the equitable factors are considered --

culpable or inexcusable.” TCI, 244 F.3d at 697-98. Generally, a

defendant’s conduct is culpable “where there is no explanation of

the default inconsistent with a devious, deliberate, willful, or

bad faith failure to respond.” Id. at 697. 

Here, Defendant claims that his inexperience with the legal

system, difficulty comprehending English and past history with

Plaintiffs’ counsel led him to believe that he did not need to

address any correspondence that did not come from the Court. While

the summons did inform Defendant of his duty to answer the

complaint, given his language difficulty and lack of counsel, the

Court gives him the benefit of the doubt and concludes that his

conduct is not culpable.

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B. Meritorious Defense

A defendant seeking to vacate a default judgment must present

specific facts that would constitute a defense. See Madsen v.

Bumb, 419 F.2d 4, 6 (9th Cir. 1969). However, the burden to

present an adequate defense “is not extraordinarily heavy.” TCI,

244 F.3d at 700. Here, Defendant has met this burden. 

Plaintiffs claim that, when Kyn/Hill hired Defendant to

install flooring for Tri-Valley Orthopedic Specialists, Inc.,

Defendant employed several workers to help him complete the job. 

The contract between Kyn/Hill and Defendant states that “skilled

installation craftsmen, hereinafter ‘Installers,’ will be employed”

by Defendant. Alvarado Decl., Ex. A. Plaintiffs claim that, as an

employer, Defendant owes contributions to an ERISA trust fund. 

Defendant asserts that he does not meet the definition of an

employer under ERISA. 29 U.S.C. § 1002(5) (“The term ‘employer’

means any person acting directly as an employer, or indirectly in

the interest of an employer, in relation to an employee benefit

plan; and includes a group or association of employers acting for

an employer in such capacity.”). Defendant claims that, although

the contract with Kyn/Hill states that he “employed” Installers, he

merely supervised them. He claims that he had no control over when

and how long Installers worked, he couldn’t assign Installers work

beyond the flooring job and he had no control over how much or when

Installers were paid. Accordingly, under the lenient standard for

setting aside a default judgment, Defendant has alleged facts

sufficient to present a meritorious defense. 

However, the Court notes that Plaintiffs have presented

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persuasive arguments that Defendant’s case lacks merit. For

instance, Defendant signed a collective bargaining agreement, which

clearly requires employers and contractors to pay contributions to

the trust funds for the hours worked by employees and subcontracted

individuals. If Defendant continues to contest the case and loses,

he will be liable for damages and Plaintiffs’ increased attorneys’

fees too.

C. Prejudice to Plaintiffs

“To be prejudicial, the setting aside of a judgment must

result in greater harm than simply delaying resolution of the

case.” TCI, 244 F.3d at 701. Merely being forced to litigate on

the merits cannot be considered prejudicial for purposes of lifting

a default judgment. A default judgment in this case would give

Plaintiffs “something of a windfall by sparing [them] from

litigating the merits of [their] claim because of [their]

opponent’s failure to respond; vacating the default judgment merely

restores the parties to an even footing in the litigation.” Id.

Here, Plaintiffs’ ability to pursue their claim would not be

hindered if the Court were to set aside the default judgment. 

CONCLUSION

For the foregoing reasons, the Court grants Defendant’s motion

to set aside the default judgment. Docket No. 43. Defendant shall

respond to Plaintiffs’ complaint within fourteen days from the date

of this order. Failure to do so in a timely matter will result in

reinstatement of the Court’s Order of Default Judgment and

Judgment. Defendant must promptly respond to all future

correspondence and comply with all procedural deadlines. The

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parties shall appear for a Case Management Conference on September

14, 2010 at 2:00 p.m. The parties shall file a Joint Case

Management Statement on or before September 7, 2010. The Statement

shall address, among other things, a schedule for proceeding with

the action.

IT IS SO ORDERED.

Dated: 07/13/10 

CLAUDIA WILKEN

United States District Judge

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