Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_09-cv-01386/USCOURTS-cand-3_09-cv-01386-3/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

---

United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

GIL CROSTHWAITE and RUSS BURNS, in their

respective capacities as Trustees of the

OPERATING ENGINEERS’ HEALTH AND

WELFARE TRUST FUND, PENSION TRUST

FUND FOR OPERATING ENGINEERS,

PENSIONED OPERATING ENGINEERS’

HEALTH AND WELFARE FUND, OPERATING

ENGINEERS AND PARTICIPATING

EMPLOYERS PRE-APPRENTICESHIP,

APPRENTICE AND JOURNEYMEN

AFFIRMATIVE ACTION TRAINING FUND,

HEAVY AND HIGHWAY COMMITTEE, and

OPERATING ENGINEERS LOCAL 3,

Plaintiffs,

 v.

SANCHEZ GRADING, a California Corporation,

and LEO SANCHEZ, an Individual,

Defendants. /

No. C 09-01386 WHA

ORDER GRANTING

PLAINTIFFS’

MOTION FOR 

DEFAULT JUDGMENT

INTRODUCTION

In this action under the Employee Retirement Income Security Act, plaintiffs Gil

Crosthwaite, Russ Burns, Operating Engineers’ Health and Welfare Trust Fund, Pension Trust

Fund for Operating Engineers, Pensioned Operating Engineers’ Health and Welfare Fund,

Operating Engineers and Participating Employers Pre-Apprenticeship, Apprentice and

Journeymen Affirmative Action Training Fund, Heavy and Highway Committee, and Operating

Case 3:09-cv-01386-WHA Document 40 Filed 05/06/10 Page 1 of 8
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

2

Engineers Local 3 move for default judgment against defendants Sanchez Grading and Leo

Sanchez. For the following reasons, the motion is GRANTED.

STATEMENT

The facts alleged by plaintiffs are as follows. Plaintiffs Operating Engineers’ Health

and Welfare Trust Fund, Pension Trust Fund for Operating Engineers, Pensioned Operating

Engineers’ Health and Welfare Fund, Operating Engineers and Participating Employers

Pre-Apprenticeship, Apprentice and Journeymen Affirmative Action Training Fund, Heavy and

Highway Committee (hereinafter “plaintiff benefit plans”) are employee-benefit plans as defined

in the Employee Retirement Income Security Act of 1974 (“ERISA”). Plaintiffs Crosthwaite and

Burns are co-chairman of the Joint Boards of Trustees of plaintiff benefit plans and are authorized

to act on behalf of all trustees. Operating Engineers Local 3 is a labor organization as defined in

the National Labor Relations Act.

On June 1, 2001, defendants Sanchez Grading and Leo Sanchez (the employer) executed a

written collective bargaining agreement with the union. This agreement incorporated the terms of

several other agreements and required signatory employers to do the following:

1. Make timely contributions into plaintiff benefit plans at a specified

rate per hour worked by, or paid to, all employees performing work covered by

the agreement;

2. Report the number of covered hours worked by, or paid to, each

employee covered by the agreement and the amounts owed for that work; and

3. Allow an audit of their books and records to allow plaintiff benefit

plans to determine whether the employer is making full and prompt payment of

the required contributions.

In accordance with this agreement, defendants submitted to an audit for the period of

January 2005 to December 2006. This audit showed that defendants owed $6,992.95 in unpaid

contributions. Due to this delinquency, plaintiff benefit plans assessed $2,080.14 in liquidated

damages, $3,433.70 in interest, and $1,199.51 in audit costs, pursuant to the agreement. 

A subsequent audit showed that defendants owed $2,717.44 in unpaid contributions in August

Case 3:09-cv-01386-WHA Document 40 Filed 05/06/10 Page 2 of 8
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

3

and September 2008. Plaintiff benefit plans assessed $704.28 in liquidated damages and $588.38

in interest for these delinquencies. The agreement also provided for the recovery of attorney’s

fees and costs in an action to recover unpaid contributions and enforce the terms of the

agreement. Plaintiff benefit plans accrued $6,550.50 in attorney’s fees and $470.67 in costs. 

On March 30, 2009, plaintiffs commenced the instant action. On June 2, plaintiffs filed

an amended complaint and served defendants via personal service on June 4. Proof of service

was filed on June 22. Defendant failed to answer. At the request of plaintiffs, the clerk entered

default against defendants on June 30.

Plaintiffs now move for default judgment against defendants (Dkt. No. 24) and request a

judgment granting plaintiffs the following relief:

1. $9,710.39 in unpaid contributions; 

2. $2,784.42 in liquidated damages;

3. $4,022.08 in interest;

4. $1,199.51 in audit costs;

5. $6,550.50 in attorney’s fees; and

6. $470.67 in costs.

ANALYSIS

Under FRCP 55(b)(2), a party can apply to the court for entry of judgment by default. 

“The district court’s decision whether to enter a default judgment is a discretionary one.” 

Aldabe v. Aldabe, 616 F.2d 1089, 1092 (9th Cir. 1980). In determining whether default judgment

is appropriate, the following factors are considered:

(1) [T]he possibility of prejudice to plaintiff, (2) the merits of

plaintiff’s 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 the 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.

Eitel v. McCool, 782 F.2d 1470, 1471–72 (9th Cir. 1986). For the following reasons, these

factors favor granting default judgment. 

Case 3:09-cv-01386-WHA Document 40 Filed 05/06/10 Page 3 of 8
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

4

1. MERITS OF SUBSTANTIVE CLAIMS AND 

SUFFICIENCY OF THE COMPLAINT.

After the entry of default, all well-pleaded factual allegations in the complaint are taken

as true, except as to the amounts of damages. Fair Housing of Marin v. Combs, 285 F.3d 899,

906 (9th Cir. 2002). The merits of plaintiff’s substantive claims and the sufficiency of the

complaint are thus considered together.

The terms of the collective bargaining agreement are controlling. With regards to

delinquent payments, ERISA states:

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.

29 U.S.C. 1145. The Ninth Circuit has read Section 1145 as creating a federal cause of action

against employers who do not make timely contributions as required under a collective

bargaining agreement, such as the one involved in this action. See, e.g., Trustees of the Screen

Actors Guild-Producers Pension & Health Plans v. NYCA, Inc., 572 F.3d 771, 776–77 (9th Cir.

2009). Moreover, when damages are “certain,” as in this case where covered work has been

performed and the only question is the amount of contribution due, the burden is on the employer

to prove that the plaintiff’s damage estimate is incorrect. Motion Picture Industry Pension &

Health Plans v. N.T. Audio Visual Supply, Inc., 259 F.3d 1063, 1065–67 (9th Cir. 2001). 

In other words, the determination regarding the amount due is to be construed in favor of the

benefit plans.

As explained, contributions that defendants owed under Section 1145 are delinquent. 

The damages that are to be recovered by the benefit plans in such an action are set forth in

29 U.S.C. 1132(g)(2):

In any action under this subchapter by a fiduciary for or on behalf

of a plan to enforce section 1145 of this title 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 —

Case 3:09-cv-01386-WHA Document 40 Filed 05/06/10 Page 4 of 8
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

5

(i) interest on the unpaid contributions, or

(ii) liquidated damages provided for under the plan in

an amount not in excess of 20 percent (or such higher

percentage as may be permitted under Federal or State

law) of the amount determined by the court under

subparagraph (A),

(D) reasonable attorneys 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.

For purposes of this paragraph, interest on unpaid contributions

shall be determined by using the rate provided under the plan, or, if

none, the rate prescribed under section 6621 of Title 26.

The Ninth Circuit has interpreted Section 1132(g)(2) to mean that, when an employer is

found liable for delinquent contributions, an award of the unpaid contributions, interest,

liquidated damages, and reasonable attorney’s fees and costs is mandatory. See Northwest

Adm’rs, Inc., v. Albertson’s, Inc., 104 F.3d 253, 257–58 (9th Cir. 1996); Teamsters Pension

Trust Fund-Board of Trustees of the Western Conference v. Allyn Transp. Co., 832 F.2d 502,

507 (9th Cir. 1987).

In short, plaintiffs’ complaint sufficiently states a meritorious cause of action for breach

of fiduciary duty under ERISA.

2. REMAINDER OF THE EITEL FACTORS.

The remainder of the Eitel factors favor entering default judgment in favor of plaintiffs. 

If this motion is not granted, plaintiffs will be left without a remedy or a means to prevent

defendants’ continued delinquency. Defendants never answered or otherwise responded to the

complaint, so it is unclear whether there would be any dispute over material facts. There is no

evidence that defendants’ failure to respond was the result of excusable neglect.

It is true that a large sum of money at stake would disfavor default judgment. See Eitel,

782 F.2d at 1472 (stating that a three million dollar judgment at stake, considered in light of the

parties’ dispute as to material facts, supported the court’s decision not to enter default judgment). 

At present, plaintiffs request a default judgment against defendants in the amount of $24,737.57. 

Case 3:09-cv-01386-WHA Document 40 Filed 05/06/10 Page 5 of 8
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

6

The requested amount is reasonable considering the liquidated damages and interest mandated

by Section 1132(g)(2).

Finally, although federal policy does favor a decision on the merits, Rule 55(b) allows

entry of default judgment in situations such as this, where the defendant has refused to litigate. 

On balance, the Eitel factors weigh in favor of granting default judgment.

3. DETERMINATION OF RELIEF.

Plaintiff seeks a judgment granting the following relief: (1) $9,710.39 in unpaid

contributions; (2) 2,784.42 in liquidated damages; (3) $4,022.08 in interest; (4) $1,199.51 in

audit costs; (5) $6,550.50 in attorney’s fees; and (6) $470.67 in costs.

A. Unpaid Contributions.

As stated above, the Ninth Circuit has held that when an employer is found liable for

delinquent contributions, an award of the unpaid contributions, interest, liquidated damages,

and reasonable attorney’s fees and costs is mandatory, pursuant to Section 1132(g)(2). 

Northwest Adm’rs, 104 F.3d at 257–58; Teamsters Pension Trust Fund, 832 F.2d at 507. 

The audit performed revealed that defendants owed $6,992.95 in unpaid contributions in

January 2005 to December 2006 . A subsequent audit revealed that defendants owed $2,717.44

in unpaid contributions in August and September 2008. Therefore, plaintiffs’ request for

$9,710.39 in unpaid contributions is hereby GRANTED.

B. Liquidated Damages and Interest.

Section 1132(g)(2) provides that liquidated damages and interest are recoverable. 

First, liquidated damages may not exceed “20 percent (or such higher percentage as may be

permitted under Federal or State law)” of unpaid contributions. 29 U.S.C. 1132(g)(2)(C)(ii). 

The collective bargaining agreement provided a rate of 15 percent for liquidated damages

(McBride Decl. Exh. C at 5). Second, interest on unpaid contributions must be calculated

“by using the rate provided under the plan, or, if none, the rate prescribed under section 6621

of Title 26." 29 U.S.C. 1132(g)(2). The collective bargaining agreement provided an interest

rate of 12 percent per annum (McBride Decl. Exh. C at 5). 

Case 3:09-cv-01386-WHA Document 40 Filed 05/06/10 Page 6 of 8
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

7

Plaintiffs seek an award of liquidated damages in the amount of $2,080.14 for

January 2005 to December 2006 and $704.28 for August and September 2008 (Br. 3). 

Plaintiffs also seek an award for interest in the amount of $3,433.70 for January 2005 to

December 2006 and $588.38 for August and September 2008 (ibid.). Plaintiffs, however,

do not specify how the liquidated damages or the interest were calculated — whether under

the collective bargaining agreement or some other formula. As a result, this order cannot tell

whether the requirements of Section 1132(g)(2) were complied with and therefore, cannot award

the requested damages at this time.

Accordingly, plaintiffs’ request for liquidated damages in the amount of $2,784.42 and

interest in the amount of $4,022.08 is hereby DENIED. Plaintiffs may submit a proper

explanation of the requested amounts of liquidated damages and interest on the unpaid

contributions for January 2005 to December 2006 and August and September 2008 in

accordance with Section 1132(g)(2) by NOON ON FRIDAY, MAY 14, 2010. Following such a

submission, the Court will then determine whether the requested relief is appropriate.

C. Audit Costs.

The collective bargaining agreement provided that the employer shall pay for reasonable

audit costs (McBride Decl. Exh. C at 5). Plaintiffs seek $1,199.51 in audit costs. Plaintiffs have

explained the audit costs incurred in this action and why such amounts are reasonable (Bradley

Decl. ¶ 5). Therefore, plaintiffs’ request for $1,199.51 in audit costs is hereby GRANTED.

D. Attorney’s Fees and Costs.

Plaintiffs seek $6,550.50 in attorney’s fees and $470.67 in costs. Defendant has failed

to appear in this case, and the requested amounts appear reasonable. Plaintiffs have also

explained the costs and fees incurred thus far in this action and why such amounts are reasonable

(Kaplan Decl. ¶ 10). Therefore, plaintiffs’ request for $6,550.50 in attorney’s fees and $470.67

in costs is hereby GRANTED.

Case 3:09-cv-01386-WHA Document 40 Filed 05/06/10 Page 7 of 8
United States District Court

For the Northern District of California

1

2

3

4

5

6

7

8

9

10

11

12

13

14

15

16

17

18

19

20

21

22

23

24

25

26

27

28

8

CONCLUSION

For the forgoing reasons, plaintiffs’ motion for default judgment is hereby GRANTED. 

Defendant is hereby ORDERED to pay plaintiff $9,710.39 in unpaid contributions, $1,199.51 in

audit costs, $6,550.50 in attorney’s fees, and $470.67 in costs.

Plaintiffs’ request for liquidated damages in the amount of $2,784.42 and interest in the

amount of $4,022.08 is hereby DENIED. Plaintiffs may submit a proper explanation of the

requested amounts of liquidated damages and interest on the unpaid contributions for January

2005 to December 2006 and August and September 2008 in accordance with Section 1132(g)(2)

by NOON ON FRIDAY, MAY 14, 2010. Following such a submission, the Court will then

determine whether the requested relief is appropriate.

IT IS SO ORDERED.

Dated: May 6, 2010. WILLIAM ALSUP

UNITED STATES DISTRICT JUDGE

Case 3:09-cv-01386-WHA Document 40 Filed 05/06/10 Page 8 of 8