Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_15-cv-00411/USCOURTS-cand-3_15-cv-00411-1/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

Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

THE BOARD OF TRUSTEES FOR THE 

LABORERS HEALTH & WELFARE 

TRUST FUND FOR NORTHERN 

CALIFORNIA, et al.,

Plaintiffs,

v.

MICHAEL HEAVEY CONSTRUCTION, 

INC.,

Defendant.

Case No. 15-cv-00411-EDL 

REPORT AND RECOMMENDATION 

RE: PLAINTIFFS’ MOTION FOR 

DEFAULT JUDGMENT AND 

DEFENDANT’S MOTION TO SET 

ASIDE DEFAULT; ORDER 

REASSIGNING CASE

Re: Dkt. Nos. 15, 22

On January 28, 2015, Plaintiffs filed this action under section 502 of the Employee 

Retirement Income Security Act, as amended (“ERISA”), 29 U.S.C. § 1132, and section 301 of 

the Labor Management Relations Act, 29 U.S.C. § 185, seeking to recover allegedly unpaid trust 

fund contributions, liquidated damages, interest, attorneys’ fees and costs and an injunction 

requiring Defendant to submit its records for a compliance audit. Defendant was served with the 

summons and complaint on February 6, 2015. On March 19, 2015, the Clerk entered default. On 

June 8, 2015, Plaintiffs moved for entry of default judgment. On July 20, 2015, the day before the 

hearing on Plaintiff’s motion, Defendant filed a motion asking the Court to “set aside entry of 

default judgment,” which the Court construes as a motion to set aside the default because no 

judgment has yet been entered. Defendant failed to appear for the July 21, 2015 hearing on 

Plaintiffs’ motion. For the reasons set forth below, the Court recommends granting Plaintiffs’

motion, denying Defendant’s motion and entering judgment in the amount of $217,587.23. The 

case is hereby reassigned to a district judge. 

I. BACKGROUND

Defendant is a professional contracting company bound to a written collective bargaining 

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agreement and trust agreement (“the Agreements”) with Plaintiffs. (Cmpl. at 2; Peters Decl. ¶¶ 6-

7, Exs. D-G.) Plaintiffs are the boards of trustees of four trust funds. (Cmpl. at 2.) Plaintiffs

allege that they audited Defendant’s books and records for 2008 to 2010 and found that Defendant 

owed $79,922.36 in contributions, $32,861.62 in liquidated damages and interest, and $3,838.75 

in attorney’s fees and costs. (Peters Decl. ¶ 14, Ex. H; see also Cmpl. at 3-4.) At that time, the 

parties entered into a settlement agreement. (Peters Decl. Ex. H.) However, Plaintiffs allege that 

Defendant breached this agreement and now owes fringe benefits contributions in the amount of 

$58,085.99 and liquidated damages and interest in the amount of $8,064.29. (Cmpl. at 4.) 

Plaintiffs also allege that Defendants breached the trust agreements by failing to pay, and, in some 

cases, delinquently paying, contributions required by the agreements. (Cmpl. at 4-5.) Plaintiffs 

allege that Defendant owes contributions in the amount of at least $90,856.73, liquidated damages 

and interest for late contributions in the amount of $28,707.73, and liquidated damages and 

interest for unpaid contributions in the amount of $20,702.16. (Cmpl. at 4.) After the complaint 

was filed, Defendant submitted contribution reports indicating that Defendant owes Plaintiffs 

contributions in the amount of $94,887.52 for work performed from November 2013 to March 

2015. (See Peters Decl. ¶ 15, Ex. K.) Plaintiffs argue that Defendant owes liquidated damages 

and interest in the amount of $19,686.47 for unpaid contributions and $19,935.11 for late 

contributions. (Peters Decl. ¶ 15, Ex. M.)

Plaintiffs now seek default judgment in the amount of $217,587.23, which is the sum of: 

(1) $94,887.52 in unpaid contributions for worked performed from November 2013 through 

March 2015; (2) $19,686.47 in liquidated damages and interest for unpaid contributions during 

that time; (3) $19,935.11 in liquidated damages and interest for late contributions during that time; 

(4) $66,150.28 in unpaid contributions, liquidated damages and interest from the 2008-2010 audit; 

and (5) $16,370.00 in attorneys’ fees and $557.85 in costs.

II. DISCUSSION

A. Jurisdiction and Service of Process

In considering whether to enter default judgment, a court must inquire into its jurisdiction 

over the subject matter and the parties. Tuli v. Republic of Iraq, 172 F.3d 707, 712 (9th Cir. 

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1999). Plaintiffs have properly pled subject matter jurisdiction under 29 U.S.C. §§ 185 and 1132. 

Plaintiffs have also established personal jurisdiction and that service was appropriate. Plaintiffs 

allege that Defendant is an employer under 29 U.S.C. § 1002(5) and 29 U.S.C. § 152(2), and 

Plaintiffs arranged for Defendant to be served in San Francisco, California. 

B. Entry of Default and Default Judgment

Entry of default may only be set aside for “good cause shown.” Franchise Holding II, 

LLC. v. Huntington Restaurants Grp., Inc., 375 F.3d 922, 925 (9th Cir. 2004) (quoting Fed. R. 

Civ. P. 55(c)). This analysis requires consideration of “(1) whether [the defendant] engaged in 

culpable conduct that led to the default; (2) whether [the defendant] had a meritorious defense; or 

(3) whether reopening the default [] would prejudice [the plaintiff]. As these factors are 

disjunctive, the district court [is] free to deny the motion if any of the three factors [is] true.” Id. at 

925-26 (quoting American Ass'n of Naturopathic Physicians v. Hayhurst, 227 F.3d 1104, 1108 

(9th Cir. 2000)) (internal quotation marks omitted).

Additionally, upon default, the factual allegations of the complaint, except those relating to 

the amount of damages, will be taken as true. Televideo Systems, Inc. v. Heidenthal, 826 F.2d 

915, 917-918 (9th Cir. 1987) (per curiam) (citing Geddes v. United Financial Group, 559 F.2d 

557, 560 (9th Cir. 1977). Rule 55(b)(2) allows, but does not require, the court to conduct a 

hearing on damages, as long as it ensures that there is an evidentiary basis for the damages 

awarded in the default judgment. Action S.A. v. Marc Rich & Co. Inc., 951 F.2d 504, 508 (2nd 

Cir. 1991). Entry of default judgment1requires the consideration of several factors, including: (1) 

the possibility of prejudice to the Plaintiffs; (2) the merits of Plaintiffs’ substantive claim; (3) the 

sufficiency of the Complaint; (4) the sum of money at stake in the action; (5) the possibility of a 

dispute concerning material facts; (6) whether the default was due to excusable neglect; and (7) 

the strong policy underlying the Federal Rules of Civil Procedure favoring decisions on the merits. 

 

1 While a court may not enter default judgment against an unrepresented minor, an incompetent 

person, or a person in military service, Defendant is a corporation and therefore is none of these 

things and is not otherwise exempted from default judgment. See Fed. R. Civ. P. 55(b)(2); 50 

U.S.C. App. § 521(b)(1)

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See Eitel v. McCool, 782 F.2d 1470, 1471-72 (9th Cir. 1986).

These factors weigh in favor of entry default judgment and against setting aside the 

default. As discussed below, Plaintiffs’ claim is substantively supported by the text of the signed 

Agreements and ERISA. The complaint sufficiently outlines Plaintiffs’ request for relief. (See

Compl at 3-7.) The sum of money at stake, $217,587.23, is lower than other sums that courts have 

found reasonable. See Eitel, 782 F.2d at 1472 (“Eitel was seeking almost $3 million in 

damages”); see also Church Bros., LLC v. Garden of Eden Produce, LLC, 2012 WL 1155656, at 

*3 (N.D. Cal. Apr. 5, 2012) (Davila, J.) (holding that a sum of $212,259.21 was a “modest” 

amount). As Plaintiffs point out that their claims are based upon Defendant’s own contribution 

reports, as well a settlement agreement reached with Defendant, there is little risk of a dispute of 

material fact. Furthermore, Defendant was properly served and Defendant presents no evidence 

excusing his failure to appear earlier. Nor does Defendant offer an explanation for his failure to 

appear at the default judgment hearing. While Defendant vaguely claims in his motion that he 

“has defenses to this action” and that he disputes the amount of contributions due, Plaintiff’s right 

to liquidated damages and interest, and the reasonableness of Plaintiff’s attorney’s fees, Defendant 

provides no explanation or evidence for these assertions. This is insufficient. See Franchise 

Holding, 375 F.3d at 926 (“[Defendant] now contends that while it may have conceded liability, it 

nevertheless contested the extent of the deficiency owed. To justify vacating the default judgment, 

however, [Defendant] had to present the district court with specific facts that would constitute a 

defense. [Defendant] never did this. Instead, it offered the district court only conclusory statements 

that a dispute existed. A mere general denial without facts to support it is not enough to justify 

vacating a default or default judgment.” (internal quotation marks and citations omitted).) 

Additionally, although there is a strong policy favoring decisions on the merits, Plaintiffs 

persuasively argue that since they are entitled to these contributions, they will be prejudiced by 

further delay. Thus, the Court determines that these factors weigh in favor of an entry of default 

judgment for Plaintiffs.

C. Liability

Plaintiffs seek damages in the form of: (i) Defendant’s unpaid and delinquent trust fund 

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contributions; (ii) liquidated damages and interest on these contributions; (iii) attorneys’ fees and 

costs; and (iv) submission of Defendant’s books and records for an audit. All of these damages 

are appropriate. In addition to the text of the Agreements and relevant case law, ERISA states that 

when an employee benefit plan obtains judgment in its favor, the plan is to be awarded: 

(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 [...] (D) 

reasonable attorney’s fees and costs of the action, to be paid by the 

defendant, and (E) such other legal or equitable relief as the court 

deems appropriate.

29 U.S.C. § 1132 (g)(2)(A-E).

1. Differences in the Amounts Between the Complaint and the Motion for 

Default Judgment

Under Federal Rule of Civil Procedure Rule 54(c), a default judgment must not “differ in 

kind from, or exceed in amount, what is demanded in the pleadings.” Plaintiff’ complaint alleges 

that Defendant failed to pay contributions in the amount of $58,085.99 pursuant to the settlement 

agreement for the 2008-2010 audit period and that Defendant owes liquidated damages and 

interest in the amount of $8,064.29. (Cmpl. at 4.) It also alleges that Defendant owes 

contributions in the amount of “at least $90,856.73,” liquidated damages and interest for late 

contributions in the amount of $28,707.73, and liquidated damages and interest for unpaid 

contributions in the amount of $20,702.16. (Id.) The Prayer contains a demand for these 

monetary amounts. (Id. at 7.) Although Plaintiffs’ motion for default judgment seeks the same 

amounts for the 2008-2010 audit period, it also seeks $94,887.52 for work performed from 

November 2013 to March 2015 as well as liquidated damages and interest in the amount of 

$19,935.11 for late contributions and $19,686.47 for unpaid contributions. (Mot. at 19; see also

Peters Decl. ¶ 15, Exs. K, M.) Thus, while the kind of damages sought is identical, there is a 

difference of $4,030.79 between the demand for unpaid contributions in the complaint and the 

amount sought through default judgment. However, factoring in liquidated damages and interest,

Plaintiffs are actually seeking $5,757.52 less than demanded in the complaint.

Courts have awarded damages not specifically mentioned in complaints in ERISA cases 

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where the defaulting defendants were on notice of the amounts sought. See, e.g., Bricklayers 

Local No. 3 Pension Trust v. Martin, No. 13-CV-04293-VC, 2014 WL 1998047, at *3-4 (N.D. 

Cal. May 12, 2014); Bd. of Tr. of the Sheet Metal Workers Local 104 Health Care Plan v. Total 

Air Balance Co. (“Air Balance”), Case No. 08–2038 SC, 2009 U.S. Dist. LEXIS 89373, at *10–

*15 (N.D. Cal. June 17, 2009); Tr. of the Ironworkers Local Union No. 16 Pension Fund v. AS 

& L Indus. Servs. (“AS & L”), Case No. 12–2084, 2013 U.S. Dist. LEXIS 77721, at *3 (D.Md. 

May 31, 2013); Tr. of the St. Paul Elec. Constr. Indus. Fringe Ben. Funds v. Martens Elec. Co., 

485 F.Supp.2d 1063, 1064–69 (D.Minn. 2007); Ames v. Stat Fire Suppression, Inc., 227 F.R.D. 

361, 361 (E.D.N.Y.2005); cf. Tragni v. Souther Elec. Inc., Case No. 09–32 RS, 2009 U.S. Dist. 

LEXIS 86818, at *5–*7 (N.D.Cal. Sept. 2, 2009) (recommending that default judgment be 

denied because complaint was vague as to additional sums owed and Defendant lacked sufficient 

notice of additional amounts sought).

Here, Defendant was clearly on notice of the amounts sought as Plaintiffs are seeking a 

sum total of damages that is less than the amount demanded in the complaint. Moreover, 

Plaintiffs served Defendant by mail with all the filings in this case, including the motion for 

default judgment and supporting declarations, a fact that weighs in favor of awarding postcomplaint damages. Air Balance, 2009 U.S. Dist. LEXIS 89373 at *12–*13; AS & L, 2013 U.S. 

Dist. LEXIS 77721 at *4. 

2. Delinquent and Unpaid Trust Fund Contributions

Plaintiffs allege that Defendant owes $94,887.52 in delinquent and unpaid contributions

from specific months between November 2013 to March 2015. (Peters Decl. Ex. K (providing a 

breakdown of funds owed from each month).) Plaintiffs further allege that Defendant owes 

$58,085.99 in unpaid fees as revealed during Plaintiffs’ compliance audit of Defendant’s books 

and records. (Peters Decl. Ex. J (outlining amount owed and payment history).) These amounts 

are appropriate. Defendant received clear notice of these allegations upon service of Plaintiffs’ 

complaint. (Compl. at 3-6.) ERISA section 502(g)(2)(A) instructs the Court to award unpaid 

contributions if default judgment is granted, and determinations regarding contributions due to 

trust funds are to be construed in the funds’ favor. See Irwin v. Carpenters Health and Welfare 

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Trust Fund for California, 745 F.2d 553, 555-557 (9th Cir. 1984); Brick Masons Pension Trust v. 

Industrial Fence & Supply, Inc., 839 F.2d 1333 (9th Cir. 1988). This Court thus recommends 

awarding Plaintiffs the full $152,973.51 in delinquent and unpaid contributions.

3. Liquidated Damages and Interest

In addition to unpaid and delinquent contributions, Plaintiffs claim liquidated damages and 

interest on these contributions in accordance with ERISA and Defendant’s contract. Plaintiff 

seeks (i) $1,500 in liquidated damages and $18,186.47 in interest for reported but unpaid 

contributions from November 2013 to March 2015; (ii) $3,600 in liquidated damages and 

$16,335.11 in interest for contributions paid late between March 2011 and January 2015; and (iii) 

$8,064.29 in liquidated damages and interest for delinquent contributions during the audited 

period.2 It is appropriate to award Plaintiffs these damages.

ERISA section 502(g)(2)(C)(ii), the liquidated damages provision, “applies when (1) the 

fiduciary obtains a judgment in favor of the plan, (2) unpaid contributions exist at the time of the 

suit, and (3) the plan provides for liquidated damages.” Idaho Plumbers and Pipefitters Health and 

Welfare Fund v. United Mech. Contractors, Inc., 875 F.2d 212, 215 (9th Cir. 1989) (emphasis in 

original). As Plaintiffs have satisfied each factor here, liquidated damages are appropriate. 

Furthermore, the liquidated damages sought are less than the actual costs incurred by Plaintiffs in 

their attempt to recover such damages, and are appropriate in light of similar ERISA cases. See

Peters Decl. ¶ 12; see also, e.g., Bd. of Trs. v. KMA Concrete Constr. Co., 2011 WL 4031136, at 

*7 (N.D. Cal. Aug. 12, 2011) (Beeler, J.) (“[b]ecause the liquidated damages provision was part of 

the bargain and Section 1132(g) [of ERISA] specifically contemplates a liquidated damages award 

. . . the court finds the liquidated damages reasonable.”). In addition to liquidated damages, 

ERISA also explicitly allows for recovery of interest on unpaid or late contributions. 29 U.S.C. § 

1132 (g)(2)(B).

Further, the Trust Agreement of which Defendant is a signatory under the Northern 

California District Council of Laborers (“Trust Agreement”) explicitly provides for both 

 

2

Liquidated damages are assessed at a flat fee of $150.00 per month plus 1.5% per month on all 

unpaid contributions. (Peters Decl. ¶ 12.)

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liquidated damages and collection of interest in the event of delinquent payments. (Peters Decl. ¶ 

12; Peters Decl. Ex. A., Art. II, § 10.) Here, there is both contractual and statutory support for 

collection of liquidated damages and interest, as well as case law supporting the amount sought. 

Thus, the Court recommends awarding Plaintiffs the demanded amount of $47,685.87 in 

liquidated damages and interest. This is less than the amount of liquidated damages and interest 

sought in the complaint.

4. Attorney’s Fees and Costs

Plaintiffs seek $16,370.00 in attorney fees and $557.85 in costs. Recovery of these fees is 

supported by contract, statute and case law. Article 4, section 3 of the Trust Agreement states:

[i]f any Individual Employer defaults in the making of Contributions 

or payments and if the Board consults legal counsel, or files any suit 

or claim, there will be added to the obligation of the Individual 

Employer who is in default, reasonable attorney’s fees, costs and all 

other reasonable expenses incurred in connection with the suit or 

claim . . .

(Peters Decl. Ex. A., Art. IV § 3 at 9.) ERISA also calls for attorney’s fees and costs to be 

awarded in the case of favorable judgment for a trust fund. 29 U.S.C. § 1132(g)(2)(D). Further, 

when a collective bargaining agreement has provided that a defaulting employer will be 

responsible for reasonable attorney’s fees, the Court has the power to enforce such an award. See

Kemner v. District Council of Painting and Allied Trades No. 36, 768 F.2d 1115, 1120 (9th Cir. 

1985).

Here, the attorneys’ fees and costs demanded are reasonable. With attorney’s rates of 

$145, $290, and $345 per hour, Plaintiffs are demanding $14,745.00 for 46.5 hours spent on this 

case. (Mainguy Decl. at 2, Ex. A.) The costs sought reasonably consist of the filing fee for the 

complaint, service of documents upon Defendant and reproduction costs. (Id. Ex. B.) The sum of

fees and costs is less than other awards historically granted by this District. See, e.g., Bd. of Trs. v. 

Cal-Kirk Landscaping, No. C-08-3292, Dkt. No. 95 at 16 (N.D. Cal. Oct. 16, 2012) (Chen, J.) 

(awarding Plaintiff $34,853.63 in fees and costs).

The Court recommends that Plaintiffs be awarded the full amount of costs and fees sought.

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5. Audit of Defendant’s Books and Records and Request to Retain 

Jurisdiction

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). Plaintiffs seek an Order allowing them 

to conduct an audit of Defendant’s books and records to determine whether Defendant owes 

additional fees to Plaintiffs. By entering into the Agreements themselves, Defendant agreed to 

submit to an audit in order to ensure compliance with the Agreements. (See Compl. Ex. A § 8(G) 

(“Employer and Individual Employer agree that upon a written request . . . the Board of Directiors 

will direct an audit. . . .”).) Additionally, service of the Complaint constituted notice that Plaintiffs 

would seek an audit against Defendant. An audit is therefore appropriate and justified. Plaintiffs 

seek an audit:

covering the period January 1, 2011 to date, by auditors selected by 

the Trust Funds at Defendant’s premises during business hours, or

where the records are kept, at a reasonable time or times, and to 

allow said auditors to examine and copy such books, records, 

papers, reports of Defendant, that are relevant to the enforcement of 

the collective bargaining agreement or Trust Agreements, including 

but not limited to the following: Individual earning records 

(compensation); W-2 forms; 1096 and 1099 forms; reporting forms 

for all Trust Funds; State DE-3 tax reports; workers compensation 

insurance report; employee time cards; payroll journal; quarterly 

payroll tax returns (form 941); check register and supporting cash 

voucher; Form 1120- 1040 or partnership tax returns; general ledger 

– (portion relating to payroll audit).

(See Dkt. 19 (Proposed Judgment).) The Court recommends that judgment be entered 

compelling Defendant to submit to an audit for the purpose of determining amounts 

owed, and provide relevant records requested by the auditor, including those described 

above.

Plaintiffs further request that this Court maintain jurisdiction over the matter such that 

Plaintiffs may move to amend the judgment in the event that a timely audit reveals further 

delinquent amounts owed. In ERISA cases, the Court may retain jurisdiction for the purpose of 

adjusting damages awarded after a timely audit. See Bd. of Trs. v. KMA Concrete Constr. Co., 

2011 WL 7446345, at *6 (N.D. Cal. Dec. 20, 2011) (Spero, J.) (retaining jurisdiction to account 

for further delinquencies discovered by an audit after proper showing by the plaintiff); Bd. of Trs. 

v. RBS Washington Blvd., LLC, 2010 WL 145097, at *6-7 (N.D. Cal. Jan. 8, 2010) (Alsup, J.) 

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(same). The Court recommends granting this relief.

III. CONCLUSION

For the reasons discussed above, the Court recommends that Plaintiffs’ motion be granted. 

Any party may serve and file specific written objections to this recommendation within fourteen 

(14) days after being served with a copy. See 28 U.S.C. § 636(b)(1)(C); Fed. R. Civ. P. 72(b); 

Civil Local Rule 72-3. Failure to file objections within the specified time may waive the right to 

appeal the District Court’s order.

IT IS SO ORDERED.

Dated: August 13, 2015

________________________

ELIZABETH D. LAPORTE

United States Magistrate Judge

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