Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-azd-2_08-cv-00874/USCOURTS-azd-2_08-cv-00874-4/pdf.json

Nature of Suit Code: 720
Nature of Suit: Labor Management Relations Act
Cause of Action: 29:1145 E.R.I.S.A.

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WO

IN THE UNITED STATES DISTRICT COURT

FOR THE DISTRICT OF ARIZONA

Dean Wine, as Trustee of the Plaintiff

Taft-Hartley trust funds; et al., 

Plaintiffs, 

vs.

SCH Electric, L.L.C., 

Defendant. 

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No. CV-08-0874-PHX-LOA

FINDINGS OF FACT

AND CONCLUSIONS OF LAW

After conducting an evidentiary default damages hearing pursuant to Rule 55

of the Federal Rules of Civil Procedure, the Court enters the following Findings of Fact and

Conclusions of Law. 

FINDINGS OF FACT

1. Defendant, SCH Electric, L.L.C. (the “Employer”), at all times relevant

herein, was and is transacting business within the State of Arizona as a construction

contractor, with its principal offices location in Maricopa County, Arizona.

2. Defendant Employer, all times relevant herein, was and is bound by the

terms of a collective bargaining agreement with Local Union No. 640 which is a labor

organization within the meaning of the federal labor laws. 

3. Plaintiff IBEW Local Union No. 640 and Arizona Chapter NECA Health

&Welfare Fund, a Taft-Hartley Trust; IBEW Local Union No. 640 and Arizona Chapter

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NECA Pension Fund, a Taft-Hartley Trust; National Electrical Benefit Fund, a Taft-Hartley

Trust; Phoenix Electrical Industry Joint Apprenticeship and Training Committee, a TaftHartley Trust (collectively “Trust Funds”) are each the designated payee of certain

contributions required to be made by each employer signatory to, and is bound by, a

collective bargaining agreement with Plaintiff IBEW Local Union 640. 

4. Plaintiff Trust Funds were established pursuant to an Agreement and

Declaration of Trust which is incorporated by reference in said collective bargaining

agreement. 

5. Plaintiffs Dean Wine and Debra Margraf (collectively “Trustees”) are each

duly-appointed trustees for the various Plaintiff Taft-Hartley trust funds.

6. As an electrical contractor and a signatory to the Letter of Assent, Exhibit

1, signed on April 25, 2007, by Stan Halls, President, owner and authorized agent of

Defendant Employer, Defendant Employer “agrees to comply with, and be bound by, all of

the provisions contained in said current and subsequent approved labor agreements.”

7. Defendant Employer is also required to comply with the 2005-2008 Inside

Agreement, Exhibit 4, between Plaintiff Local Union 640, International Brotherhood of

Electrical Workers, and the Arizona Chapter, National Electrical Contractors Association,

Inc. 

8. The collective bargaining agreement, to which Defendant Employer is

bound, requires it to file a contribution report form, titled Monthly Payroll Report for

Electrical Contractors similar to Exhibits 2 and 3, on a monthly basis, with the administrator

of the various Plaintiff Trust Funds. In said contribution report form, Defendant Employer

is required to list the names of each employee performing work covered by said collective

bargaining agreement and the number of hours worked by each of Defendant Employer’s

employees. 

9. The collective bargaining agreement, which Defendant Employer is required

to follow, mandates participating employers to pay “fringe benefit” contributions, for the

funding of employees’ retirement, health insurance, pension and apprenticeship training, to

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each of the various Plaintiff Trust funds based on the number of hours worked by each of

Employer’s employees.

10. The applicable Agreements and Declarations of Trust provide that

Defendant Employer is required to pay liquidated damages in the event that Defendant

Employer fails to timely pay all fringe benefit contributions due and owing.

11. Defendant Employer failed to file reports for hours worked by its

employees for the months of February, 2008 through and including July, 2008. 

12. Defendant Employer failed to pay contributions for any covered work

performed by its employees for the months of February, 2008 through and including July,

2008.

13. As of today’s date, Defendant Employer has failed to file a “Stop Card”

with the appropriate representative of Plaintiffs in the event Defendant Employer is out of

business.

14. Plaintiffs have expressly consented in writing to magistrate-judge

jurisdiction pursuant to 28 U.S.C. § 636(c). (docket # 8)

15. Plaintiffs’ attorney’s fees in the sum of $200.00 per hour, totaling

$2060.00 to date for 10.3 hours and costs incurred herein in the sum of $350.00 are

reasonable and reasonably related to this lawsuit. ERISA § 502(g)(2)(D), 29 U.S.C. §

1132(g)(2)(D); Lads Trucking Co. v Board of Trustees, 777 F2d 1371 (9th Cir. 1985).

CONCLUSIONS OF LAW

A. Appropriateness of Rule 55, FED.R.CIV.P., Relief

1. Defendant Employer has not appeared in this lawsuit and was properly

served with process on May 12, 2008. (docket # 5) The Clerk of Court has properly

entered Defendant Employer’s default. (docket # 9) 

2. After considering all the factors relevant to determining whether to enter

a default judgment, such factors favor entry of a default judgment in favor of Plaintiffs

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and against the Defendant Employer. See, Eitel v. McCool, 782 F.2d 1470, 1471-72 (9th

Cir. 1986).

3. In particular, entry of a default judgment against a non-responsive

employer which has not filed contribution reporting forms furthers Congress’ intent that

trust funds enjoy a speedy right to recover delinquent contributions. Kaiser Steel Corp. v.

Mullins, 455 U.S. 72, 87(1982) (Congress enacted ERISA § 515 “because ‘simple

collection actions brought by plan trustees [had] been converted into lengthy, costly and

complex litigation concerning claims and defenses unrelated to the employer’s promise

and the plan’s entitlement to the contributions,’ and steps [had to] be taken to ‘simplify

delinquency collection.’”). See, International Painters and Allied Trades Union and

Industry Pension Fund v. H. W. Ellis Painting Company, Inc., 288 F. Supp 2d. 22 (D.D.C.

2003); Flynn v. Jocanz, Inc., 480 F. Supp. 2d 218 (D.D.C. 2007).

B. Contract Claim

4. Count One of the Complaint seeks to enforce the terms of a collective

bargaining agreement. Accordingly, the Court has subject-matter jurisdiction pursuant to

Section 301 of the Labor Management Relations Act. 29 U.S.C. § 185; Hudson County

Carpenters Local Union No. 6 v. V.S.R. Construction Company, 127 F. Supp. 2d 565

(Failure to make contributions to Taft-Hartley trust funds as required by collective

bargaining agreement constitutes violations of both 29 U.S.C. § 185 and 29 U.S.C. §

1145)

5. Plaintiff Trust Funds have standing to assert the claim as third-party

beneficiaries to the collective bargaining agreement. Lewis v. Benedict Coal Corp., 361

U.S. 459 (1960)(Employee benefit plans are third-party beneficiaries to collective

bargaining agreement); Southwest Admrs., Inc. v. Rozay’s Transfer, 791 F.2d 769, 773

(9th Cir. 1986).

6. Defendant Employer breached the terms of its collective bargaining

agreement by not filing contribution reporting forms for the months of February, 2008

through, and including, July, 2008.

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7. Defendant Employer breached the terms of its collective bargaining

agreement by not paying contributions for any hours of covered work performed during

the months of February through July 2008.

C. ERISA § 515 Claim

8. Count Two of the Complaint arises under, and subject-matter jurisdiction

is conferred upon this Court, by virtue of § 502 of the Employee Retirement Income

Security Act (“ERISA”), 29 U.S.C. §1132.

9. ERISA § 515, 29 U.S.C. § 1145 provides:

Every employer who is obligated to make contributions to a

multiemployer plan under the terms of the plan or under the

terms of a collectively bargained agreement shall, to the

extent not inconsistent with law, make such contributions in

accordance with the terms and conditions of such plan or such

agreement.

See, Trustees of the National Automatic Sprinkler Industry Pension Fund v. Fairfield

CountySprinkler Co. 243 F. 3d 112 (2nd Cir. 2001) (ERISA § 515 creates independent

federal right of action distinct from contract on which the duty to contribute and report is

based.).

10. Plaintiff Trustees have standing to assert these claims. Laborers Health

& Welfare Trust Fund v. Advanced Lightweight Concrete Co., 484 U.S. 539, 547 (1988)

(liability created by ERISA § 515 may be enforced by the trustees of a plan by bringing

an action in federal district court pursuant to ERISA § 502.); Heffernan v. iCare Mgmt.,

LLC, 356 F. Supp. 2d 141, 150 (D. Conn. 2005).

11. Defendant Employer breached ERISA § 515, 29 U.S.C. § 1145, by not

filing contribution reporting forms for the months of February, 2008 through July, 2008.

12. Defendant Employer breached ERISA § 515, 29 U.S.C. § 1145, by not

paying timely contributions for any hours of covered work performed during the months

of February, 2008 through July, 2008.

D. Remedy for Past Breaches

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13. ERISA § 502(g)(2), 29 U.S.C. § 1132(g)(2), establishes the remedy

against an employer which is delinquent in meeting its contractual obligations. The

statutory remedies include: a mandatory award of prejudgment interest plus liquidated

damages in an amount at least equal to that interest, as well as attorney’s fees and costs.

Laborers Health & Welfare Trust Fund v. Advanced Lightweight Concrete Co., 484 U.S.

539, 547 (1988) (The legislative history of these provisions explains that Congress added

these strict remedies to give employers a strong incentive to honor their contractual

obligations to contribute and to facilitate the collection of delinquent accounts). 

14. As Defendant Employer has not filed contribution reporting forms for

the months of February, 2008 through July, 2008, Plaintiffs cannot calculate the amount

due. Accordingly, given the Court’s authority under, ERISA § 502(g)(2)(E), 29 U.S.C. § 

1132(g)(2)(E), to grant such “other legal or equitable relief as the Court deems

appropriate,” the Court concludes that it is fair and just to enter an order that Defendant

Employer shall file, within 10-days of service of certified copies of these Finding of Fact

and Conclusions of Law and Default Judgment upon its authorized agent, accurate

delinquent contribution reporting forms for the months of February, 2008 through July

2008 and shall pay all contributions shown to be due for such reported work for the

months of February, 2008 through July, 2008. 

15. Upon receipt of said delinquent reporting forms, Plaintiffs will be

entitled to seek entry of Amended Judgment for the additional remedies afforded by

ERISA § 502(g)(2), 29 U.S.C. § 1132(g)(2), provided such request is timely filed in

writing herein within thirty (30) days of Plaintiffs’ receipt of the delinquent contribution

reporting forms for the months of February, 2008 through July, 2008. 

16. Entry of this order requiring prompt submission of the delinquent

reporting forms and payment of delinquent contributions is not intended to eliminate

Plaintiffs’ right to consider demanding an audit should they reasonably question the

accuracy of the reporting forms submitted by the Defendant Employer. See, Central

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States, Southeast & Southwest Areas Pension Fund v. Central Transp., Inc., 472 U.S.

559, 571 (1985). Where a trust fund elects to sue and obtain a judgement to recover

delinquent contributions based on reports submitted without payment by an employer, the

trust funds generally are precluded from subsequently demanding audit for the same time

frame. International Union of Operating Engineers-Employers Constr. Indus. Pension,

etc. v. Karr, 994 F.2d 1426 (9th Cir. 1993). Unless contrary to law, Plaintiffs are not, and

should not be, forced to elect whether it is prudent to incur the cost of an audit absent the

opportunity to first review the accuracy of Defendant Employer’s representations in the

submitted reporting forms and thereafter be penalized for seeking additional judicial relief

from a non-compliant, recalcitrant employer.

E. Prospective Relief 

 17. The Court further finds that entry of an order requiring Defendant

Employer to prospectively file timely contribution forms and timely pay contributions is

appropriate under ERISA § 502(g)(2)(E), 29 U.S.C. § 1132(g)(2)(E), and constitutes

such “other legal or equitable relief as the Court deems appropriate.” Flynn v. Jocanz,

Inc., 480 F.Supp.2d 218 (D.D.C. 2007). 

F. Attorney’s Fees

18. Plaintiffs are hereby awarded their reasonable attorney’s fees incurred

through today’s date in the sum of $2060.00 and their costs incurred herein to date in the

sum of $350.00 against Defendant Employer.

G. Magistrate Judge Jurisdiction

19. The Court further finds that this United States Magistrate Judge has

jurisdiction to enter this default judgment against Defendant Employer who has neither

consented to magistrate-judge jurisdiction nor appeared in this lawsuit for purposes of 28

U.S.C. § 636(c)(1). United States v. Real Property, 135 F.3d 1312, 1316 (9th Cir. 1998)

(holding that in an in rem civil forfeiture action wherein the plaintiff consented,

magistrate judge had jurisdiction to enter a final judgment over defaulted-person who was

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technically not a “party” to the litigation); United States v. N. Golden State Blvd., 135

F.3d 1312, 1317 (9th Cir. 1998); Giove v. Stanko, 882 F.2d 1316, 1318 (8th Cir. 1989).

DATED this 27th day of August, 2008.

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