Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_04-cv-04723/USCOURTS-cand-3_04-cv-04723-6/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.

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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

JOSE MORENO, et al.,

Plaintiffs,

 v.

 S. J. WEAVER CONTRACTING, INC., et al.,

Defendants.

______________________________________/

EDWARD T. BERGO, et al.,

Plaintiffs,

 v.

S.J. WEAVER CONTRACTING, INC., et al.,

Defendants. /

Nos. C 04-4699 SI; C 04-4723 SI

ORDER GRANTING IN PART

DEFENDANT’S MOTION FOR

ATTORNEYS’ FEES AND COSTS;

DENYING DEFENDANT’S REQUEST

FOR RULE 11 SANCTIONS

Defendant Steven Weaver has filed a motion for attorneys’ fees and costs in these related cases.

Pursuant to Civil Local Rule 7-1(b), the Court determines the matter is appropriate for determination

without oral argument, and accordingly VACATES the October 6, 2006 hearing. For the reasons set

forth below, the Court hereby GRANTS in part and DENIES in part defendant’s motion for fees and

costs, and DENIES defendant’s request for Rule 11 sanctions.

DISCUSSION

The background of these related cases is set forth in the Court’s August 9, 2006 order granting

summary judgment in favor of defendant Steven Weaver. Weaver now seeks his reasonable attorneys’

Case 3:04-cv-04723-SI Document 119 Filed 10/03/06 Page 1 of 5
United States District Court

For the Northern District of California

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fees and costs incurred in defending himself in this action. Weaver contends that he is entitled to these

fees and costs because he maintained from the inception of this litigation that he was not a proper

defendant in this ERISA case. As detailed in the Court’s summary judgment order, the Court agreed

that there was no factual basis to proceed against Weaver in his individual capacity. 

The Court has discretion to award fees and costs against an ERISA claimant. See 29 U.S.C.

§ 1132(g); Estate of Shockley v. Alyeska Pipeline Serv. Co., 130 F.3d 403, 407 (9th Cir. 1997). In

deciding whether to award fees, the Court considers the following factors, among others:

(1) the degree of the opposing parties’ culpability or bad faith; (2) the ability of the

opposing parties to satisfy an award of fees; (3) whether an award of fees against the

opposing parties would deter others from acting in similar circumstances; (4) whether

the party requesting fees sought to benefit all participants and beneficiaries of an ERISA

plan or to resolve a significant legal question regarding ERISA; and (5) the relative

merits of the parties’ positions.

Hummell v. S.E. Rykoff & Co., 634 F.2d 446, 453 (9th Cir. 1980). Contrary to plaintiffs’ assertions,

courts do not favor one side or the other in ERISA fee cases. See Estate of Shockley, 130 F.3d at 408.

Here, the Court finds that these factors, particularly the last factor regarding relative merits of

the parties’ positions, warrants a fee award. Throughout this litigation Weaver contended that plaintiffs

did not have any legal or factual basis to hold him individually liable. After defendant S.J. Weaver

Contracting, Inc. (“SJW”) filed for bankruptcy, Steven Weaver was the only defendant remaining to

defend both cases. The Court permitted limited discovery on the question of Weaver’s individual

liability. Weaver then filed a motion for summary judgment, contending that plaintiffs could not hold

Weaver liable under any theory. 

As detailed in the Court’s August 9, 2006 summary judgment order, notwithstanding the Court’s

direction to plaintiffs that they could only hold Weaver individually liable by piercing the corporate veil,

plaintiffs continued to argue inapposite labor law single employer and alter ego theories. Indeed, the

Court expressly allowed plaintiffs the opportunity to submit supplemental briefs on the veil piercing

issues; plaintiffs’ supplemental briefs continued to rely on single employer and alter ego theories, and

did not squarely address the factors necessary to pierce the corporate veil. The record demonstrates that

despite being provided with ample notice throughout this litigation that they did not have a basis to

proceed against Weaver in his individual capacity, plaintiffs nonetheless chose to pursue these cases,

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 The Court GRANTS defendant’s request for judicial notice, to which plaintiffs filed no

objection. (Docket No. 101 in 04-4699; Docket No. 104 in 04-4723 SI).

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forcing Weaver to incur substantial legal fees and costs.

Plaintiffs assert, without any evidentiary support, that “none of the trust funds is flush with

assets. . . . [and] [t]he trust funds cannot easily afford the penalty of paying defendant employers’ legal

fees.” Opposition at 9. As an initial matter, the Court affords this assertion little weight in light of

plaintiffs’ failure to submit any evidence regarding the Trust Funds’ actual ability to pay a fee award.

More importantly, Hummell states that the Court should consider, as one of many factors, “the ability

of the opposing part[y] to satisfy an award of fees,” not whether a party “can easily afford” to pay fees.

Here, as defendant notes, there are ten named plaintiff trust funds in these cases, and the publicly

available documents submitted by defendant suggests that the funds have the ability to pay a fee award.1

In contrast, defendant Weaver has submitted declarations stating that he depleted much of his personal

assets in attempting to keep SJW afloat and defending this lawsuit. See Weaver Summary Judgment

Reply Decl. ¶¶ 27-28.

The Court finds the other Hummell factors are either neutral or weigh in favor of a fee award.

Although plaintiffs sought to hold Weaver liable in order to recover monies for the funds, for the reasons

discussed supra and in the Court’s summary judgment order, they did not resolve a “significant legal

question regarding ERISA,” and to the contrary pursued a misguided theory of liability. Although the

Court does not find that plaintiffs engaged in bad faith, the Court is somewhat troubled by plaintiffs’

dogged pursuit of Weaver in his individual capacity in light of the factual record in these cases. Finally,

the Court concludes that the fee award will deter parties from pursuing claims for which they do not

have evidentiary support, but the fee award will not be so significant as to impose a chilling effect on

ERISA plaintiffs fulfilling their fiduciary duties. See Estate of Shockley, 130 F.3d at 408 (affirming

ERISA fee award to defendant and noting that district court appropriately considered “overdeterrence”

in setting fee award at percentage of total sought).

The Court concludes that Weaver should recover his reasonable fees and costs for work

performed on Weaver’s behalf after June 24, 2005, the date when the bankruptcy trustee effectively

closed SJW’s bankruptcy. The billing records submitted by defendant show that, prior to the filing of

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bankruptcy, defendant’s counsel performed work on behalf of both Weaver and SJW; some of the time

entries are clearly exclusively attributable to SJW (for example, entries related to the filing of the

bankruptcy), while others relate to both Weaver and SJW (for example, entries related to the crossmotions on the default judgment). The Court exercises its discretion and will not award fees and costs

incurred prior to the filing of the bankruptcy. However, after it was clear that SJW would not be an

active defendant in these cases, plaintiffs continued to proceed against Weaver individually despite

various indications that Weaver could not be held personally liable. Accordingly, the Court finds it

appropriate for Weaver to recover reasonable fees and costs incurred after June 24, 2005, and GRANTS

in part and DENIES in part defendant’s motion for attorneys’ fees and costs.

Finally, defendant requests that the Court impose Rule 11 sanctions against plaintiffs and their

counsel. The Court concludes that Rule 11 sanctions are not warranted, and further that such sanctions

are unnecessary in light of the fee award. Accordingly, the Court DENIES this aspect of defendant’s

motion.

CONCLUSION

For the foregoing reasons and good cause shown, the Court hereby GRANTS in part and

DENIES in part defendant Weaver’s motions for attorneys’ fees and costs. (Docket No. 100 in 04-4699

SI and Docket No. 103 in 04-4723 SI). By October 13, 2006, defendant shall submit a revised

declaration of counsel explaining the reasonableness of the fees and costs sought for the time period

afterJune 24, 2005, along with corresponding billing records. Counsel shall only include billing records

for time spent defending Weaver in these actions; to the extent counsel spent time after June 24, 2005,

date related to SJW or the bankruptcy, those entries shall be excluded (for example, a June 6, 2005 entry

“Review Request by trust funds for notice re bankruptcy . . . .”). 

IT IS SO ORDERED.

Dated: October 2, 2006 

SUSAN ILLSTON

United States District Judge

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