Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_04-cv-05084/USCOURTS-cand-3_04-cv-05084-2/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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IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

KEN WALTERS, et al.,

Plaintiff(s),

 vs.

WORLD SWEEPING, INC.,

Defendant(s). /

No. C 04-5084 VRW (MEJ)

REPORT AND RECOMMENDATION

RE: PLAINTIFFS' MOTION TO

DETERMINE THE AMOUNT OF

DAMAGES

I. INTRODUCTION

Before the Court is Plaintiffs' Motion to Determine the Amount of Damages, filed on January

26, 2006. Doc #32. After consideration of Plaintiff's papers, Chief Judge Walker's previous default

judgment order in this matter, the applicable statutory and case law authorities, and good cause

appearing, the Court hereby RECOMMENDS that the District Court order Defendant to pay

Plaintiffs the following: (1) $11,527.39 in unpaid fringe benefits; (2) $1,753.45 in liquidated

damages; (3) $1,146.01 in interest - minus a credit of $1,104.00, for a total amount due of

$13,322.85; and (4) an additional $1,462.50 in attorney's fees and $79.50 in costs related to the

instant motion.

II. BACKGROUND

Plaintiffs, which are various employee trust funds and their respective trustees, brought this

ERISA action on December 1, 2004, alleging that defendant World Sweeping, Inc. ("Defendant")

violated a collective bargaining agreement ("CBA") and various trust agreements (Doc #19, Ex B;

Doc #22) by not paying fringe benefit contributions to the trust funds and not submitting to an audit. 

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Doc #1. Although served on December 15, 2004 (Doc #3), Defendant never filed an answer or

responsive pleading, and the Clerk of Court entered default on March 30, 2005. Doc #14.

On June 13, 2005, Plaintiffs filed a Motion for Default Judgment (Doc #17), which the

Honorable Chief Judge Vaughn R. Walker granted on January 6, 2006. Doc #30. In granting

Plaintiffs' motion, Chief Judge Walker: (1) ordered Defendant to pay Plaintiffs' $3,692.50 in

attorneys' fees and $234.50 in costs; (2) enjoined Defendant to submit to an audit of its books and

records, as required by the CBA and trust agreements, and to pay the amount due under the audit,

plus interest; (3) permanently enjoined Defendant to submit all monthly contribution reports and

payments required under the CBA and trust agreements; and (4) ordered Defendant to provide

Plaintiffs with an accounting of Defendant's transactions with Plaintiffs. Id. Chief Judge Walker

also referred this matter to a magistrate judge for a report and recommendation to determine the

amount, if any, that Defendant owes plaintiffs for fringe benefit contributions, liquidated damages

and interest. Id.

On January 26, 2006, Plaintiffs filed a Motion to Determine the Amount of Damages (Doc

#32), as well as the Declaration of Nicole M. Phillips (Doc #33) and Wayne McBride (Doc #36) in

support thereof. Defendant filed no opposition. On March 2, 2006, the Court held a hearing on the

matter. Nicole Phillips appeared on behalf of Plaintiffs. Defendant made no appearance.

III. DISCUSSION

A. Unpaid Benefit Contributions

In their complaint, Plaintiffs seek unpaid contributions in the amount of $11,527.39. These

contributions were calculated based on amounts set out in the Operating Engineers Local Union No.

3 Sweeper Agreement for Northern California ("Sweeper Agreement"), which Defendant signed on

August 13, 2002. Decl. of Wayne McBride, Doc #36, ¶4, Ex. B. Section 6.01.00 of the Sweeper

Agreement requires that employers contribute into each of the Plaintiff Trust Funds at specified rates

for each hour worked by employees performing work covered by the collective bargaining

agreement. Id. The Sweeper Agreement also lists the applicable rates into each of the Plaintiff

Trust Funds. For example, Section 6.02.00 sets the rate of benefit contributions into the Health and

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Welfare Plan. Section 6.02.01 sets the rate for benefit contributions into the Pensioned Health and

Welfare Plan, etc. Id.

In or around March 2004, the Trust Funds' auditor, Hemming Morse, conducted an audit of

Defendant. On April 17, 2004, Hemming Morse created a Summary of Liabilities detailing the

amounts owed by Defendant. Id. at ¶10, Ex. C. The audit report revealed that Defendant employed

employees performing work covered under the Sweeper Agreement between August 15, 2002 and

September 2003, and underreported to the Trust Funds on hours performed by their employees. The

audit revealed that between October 2002 and December 2002, Defendant failed to report 247.50

hours worked by its employees and failed to make the following contributions: $1,163.25 to the

Health and Welfare Trust Fund at a rate of $4.70 an hour, $269.78 to the Pensioned Health and

Welfare Trust Fund at a rate of $1.09 an hour, $990.00 to the Pension Fund at a rate of $4.00 an

hour, $153.45 to the Affirmative Action Training Fund at a rate of $0.62 an hour, $99.00 to the

Annuity Trust Fund at the rate of $0.40 an hour, and $61.88 to the Industry and Stabilization Trust

Fund at a rate of $0.25 an hour, for a total of $3,340.34 in delinquent contributions, plus

supplemental dues and vacation pay in the amount of $804.38, $556.50 in 12% interest, $602.99 in

15% liquidated damages, for a total of $4,701.22 The auditor deducted $1,104.00 for over-reported

hours, for a total of $3,597.22. Id. ¶11, Ex. C.

The audit also revealed that between January 2003 and December 2003, Defendant failed to

report 535.50 hours worked by its employees and failed to make the following contributions:

$1,828.35 to the Health and Welfare Trust Fund at a rate of $5.10 an hour, $534.17 to the Pensioned

Health and Welfare Trust Fund at a rate of $1.49 an hour, $2,142.00 to the Pension Fund at a rate of

$4.00 an hour, $222.27 to the Affirmative Action Training Fund at a rate of $0.62 an hour, $143.40

to the Annuity Trust Fund at the rate of $0.40 an hour, and $89.63 to the Industry and Stabilization

Trust Fund at a rate of $0.25 an hour, for a total of $3,340.34 in delinquent contributions, plus

supplemental dues and vacation pay in the amount of $1,176.23, $589.51 in 12% interest, and 15%

liquidated damages in the amount of $1,150.46, for a total of $9,725.63. Id. at ¶12, Ex. C.

According to the auditor's Summary of Liabilities, the total amount of delinquent

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contributions for 2002 and 2003 is $11,527.39 in fringe benefits, $1,753.45 in liquidated damages,

and $1,146.01 in interest, for a total of $14,426.85, minus $1,104.00 for over-reported hours, for a

grand total of $13,322.85. Id. at Ex. C.

B. Liquidated Damages

Liquidated damages are authorized under the Sweeper Agreement, as well as the Trust

Agreements establishing the Trust Funds, where the employer has failed to make timely benefit

contributions, not as a penalty, but as a reasonable attempt to cover damages incurred by the Trust

Funds. Id. at Ex. B. Pursuant to Section 07.01.00 of the Sweeper Agreement, the Trust Funds may

assess liquidated damages against delinquent employers because the regular and prompt payment of

amounts due each Trust is essential and, in light of the substantial but varied expense incurred in the

administration of the Trusts due to delinquencies, it is extremely difficult, if not impracticable to fix

the payments in full within the time provided. Id. By signing the Sweeper Agreement, Defendant

agreed that the amount of damage resulting from any failure to pay would be by way of liquidated

damages, and not as a penalty to each Trust, in the amount of $35.00 or 15% of the amount due and

unpaid to each such Trust, whichever is greater. Id. at Ex. B, Section 07.01.00.

Further, a trust fund may collect liquidated damages under ERISA Section 515, 29 U.S.C. §

1145. Contractual liquidated damages are valid so long as the harm caused by a breach is difficult

or impossible to estimate, and the amount fixed is a reasonable forecast of just compensation for the

harm caused. Idaho Plumbers and Pipefitters Health and Welfare Fund v. United Mechanical

Contractors, 875 F.2d 212, 217 (9th Cir. 1989). The parties' intentions determine whether this

second requirement is satisfied - they must make a good faith attempt to set an amount equivalent to

the damages they anticipate. Id.

Here, the current rate of 15% was set both by the Sweeper Agreement and by the Board of

Trustees. McBride Decl., ¶5, Ex. B. The liquidated damages provision in the Sweeper Agreement

covers the time frame during which contributions became due and owing, and such provision was

collectively bargained by all parties. Id., ¶4, Ex. B. As Defendant was delinquent in payment of

Trust Fund contributions between August 2003 and December 2004, the Court finds $1,753.45 in

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liquidated damages and $1,146.01 in interest appropriate per Section 07.01.00 of the Sweeper

Agreement.

C. Attorney's Fees and Costs

In his January 6 Order, Chief Judge Walker referred this matter for a determination of the

amount owed in fringe benefit contributions, liquidated damages, and interest. However, as part of

their motion, Plaintiffs request an additional $1,962.50 in attorneys' fees and $79.50 in costs in

connection with the present motion. Given the additional briefing and court appearance by Plaintiffs

since Judge Walker's order, the Court finds it appropriate to consider Plaintiffs' request. Under

Section 07.01.02 of the Sweeper Agreement, Plaintiffs are entitled to an award of attorneys' fees and

costs. Doc #36, Ex. B. Further, Plaintiffs have provided sufficient evidence to support their request

for fees and costs, both of which appear to be reasonable. Doc #33. One exception, however, is the

$450 request for "Review of Opposition, legal research, preparation, and filing of Reply brief." Id.

at 2:12. As no opposition was filed, an award of $450 is inappropriate. Accordingly, the Court

recommends an award of $1,462.50 in attorneys' fees and $79.50 in costs.

IV. CONCLUSION

Based on the foregoing analysis, the Court hereby RECOMMENDS that the District Court

order Defendant to pay Plaintiffs the following: (1) $11,527.39 in unpaid fringe benefits; (2)

$1,753.45 in liquidated damages; (3) $1,146.01 in interest - minus a credit of $1,104.00; (4)

$1,462.50 in attorneys' fees; and (5) $79.50 in fees. 

Pursuant to Federal Rule of Civil Procedure 72(a), Defendant may serve and file objections

to this Report and Recommendation within ten days after being served with a copy of it; Defendant

may not thereafter assign as error a defect in the report to which objection was not timely made.

IT IS SO RECOMMENDED.

Dated: March 2, 2006 

MARIA-ELENA JAMES

United States Magistrate Judge

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