Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_04-cv-02559/USCOURTS-cand-3_04-cv-02559-1/pdf.json

Parties Involved:
John Bonilla
Plaintiff
Statewide Concrete Barrier, Inc.
Defendant
Ken Walters
Plaintiff
Charles Wells
Defendant

Document Text:

United States District Court

For the Northern District of California

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1 The defendant, Charles Wells, is anindividualwho owns, operates and controls defendant Statewide

Concrete Barrier, Inc. Collectively Defendants constitute a single employer for the purposes of the Default

Judgment. 

IN THE UNITED STATES DISTRICT COURT

FOR THE NORTHERN DISTRICT OF CALIFORNIA

KEN WALTERS, JOHN BONILLA, in their

respective capacities as Trustees of the

OPERATING ENGINEERS HEALTH AND

WELFARE TRUST FUND, PENSION FUND

FOR OPERATING ENGINEERS, PENSIONED

OPERATING ENGINEERS HEALTH AND

WELFARE FUND, OPERATING ENGINEERS

VACATION AND HOLIDAY TRUST FUND,

NORTHERN CALIFORNIA PREAPPRENTICE,

APPRENTICE AND JOURNEYMAN

AFFIRMATIVE ACTION TRAINING FUND,

OPERATING ENGINEERS CONTRACT

ADMINISTRATION FUND FOR NORTHERN

CALIFORNIA, OPERATING ENGINEERS

INDUSTRY STABILIZATION TRUST FUND

AND OPERATING ENGINEERS MARKET

PRESERVATION TRUST FUND, 

Plaintiffs,

 vs.

STATEWIDE CONCRETE BARRIER, INC., a

California corporation; and CHARLES WELLS, an

Individual,

Defendants.

 /

Case No. C 04-2559 JSW (MEJ)

REPORT AND RECOMMENDATION RE:

PLAINTIFFS' MOTION FOR DEFAULT

JUDGMENT

I. INTRODUCTION

Before the Court is plaintiffs Ken Walters, et al.’s (“Plaintiffs”) Motion for Default Judgment, filed

on February 2, 2005. After careful consideration of Plaintiffs' papers, relevant statutory and case authority,

and good cause appearing, the Court hereby RECOMMENDS that the District Court grant default

judgment against Statewide Concrete Barrier, Inc. and Charles Wells (collectively “Defendants”)1.

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II. BACKGROUND

The Court incorporates the factual background of this case as set forth in Plaintiffs’ moving papers.

Plaintiffs are trustees of the Trust Funds named in the caption. Each of the Trust Funds is an employeebenefit plan organized pursuant to Sections 302(c)(5), 302(c)(6), 302(c)(9) of the Labor Management

Relations Act of 1947 ("LMRA"), 29 U.S.C. §§ 186(c)(5), (c)(6), (c)(9). The Trust Funds were created

pursuant to the written collective bargaining agreements ("Master Labor Agreements") entered into

between employers associations for the building and construction industry and the Operating Engineers

Local Union No. 3 of the International Union of Operating Engineers (“Union”). 

Defendant Statewide Concrete Barrier, Inc. is a corporation with its principal place of business

located in Oakland, California. At all relevant times, it has been an employer within the meaning of Sections

3(5) and 515 of the Employee Retirement Income Security Act ("ERISA"), 29 U.S.C. §§ 1002(5), 1145,

and an employer in the industry affecting commerce within the meaning of Section 3(1) of the LMRA, 29

U.S.C. § 185.

On September 30, 1993, Defendants and the Union entered into a collective bargaining agreement

("Bargaining Agreement") which incorporates, by reference, select provisions of the Master Labor

Agreements in existence between the Union and the Associated General Contractors of California, Inc.

("Association"). As a member of the Association, Defendants agreed to comply with all the terms and

conditions contained in the provisions of the Master Labor Agreements relating to the payment of employee

benefit contributions to the Trust Funds. Defendants further agreed to be bound by all future terms

negotiated between the Union and the Association, and to submit to periodic audits of appropriate trust

records to ensure compliance and to allow Plaintiffs to verify the balance owing on such payments. The

Bargaining Agreement between Defendants and the Union has never been terminated. 

According to Plaintiffs, Defendants either failed, neglected, or refused to make timely benefit

contributions as required under the terms of the Bargaining Agreement. Plaintiffs also believe that additional

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contributions may be due and owing, but cannot confirm the amounts until Defendants submit to an audit

review. 

Plaintiffs filed their Complaint, seeking compensatory damages for any unpaid contributions,

liquidated damages, interest, attorney fees and costs. In addition to the monetary relief sought, Plaintiffs also

seek an injunctive order directing Defendants to make accounting to Plaintiffs in order to verify and

substantiate any contributions outstanding and due. Since this action commenced, Defendants have failed to

respond to the Summons and Complaint served to them on February 9, 2005. Plaintiffs assert that

Defendants are operating as an ongoing business and are fully capable of making a court appearance should

they choose to do so. Default has been entered under Fed. R. Civ. P. 55(b)(1), and Plaintiffs now move

this Court to grant default judgment against Defendants pursuant to its authority under Fed. R. Civ. P.

55(b)(2).

III. JURISDICTION

When considering a motion for default judgement, the court must determine whether it has both

subject matter and personal jurisdiction over the case. In re Tuli, 172 F.3d 707, 712 (9th Cir. 1999) ("To

avoid entering a default judgment that can later be successfully attacked as void, a court should determine

whether it has the power, i.e., the jurisdiction to enter judgment in the first place."). Also in deciding

whether to grant or deny a default judgment, a court must assess the adequacy of the service of process on

the party against whom default is requested. Board of Trustees of the N. Cal. Sheet Metal Workers v.

Peters, 2000 U.S. Dist. LEXIS 19065, at *2 (N.D. Cal. January 2, 2001). Here, Defendants were served

with the Summons and Complaint on February 9, 2005. Furthermore, proper service of the Summons and

Complaint is uncontested. 

This Court has subject-matter jurisdiction pursuant to Section 501(e)(1) of ERISA, 29 U.S.C. §

1132(e)(1) and Section 301(a)(c) of the LMRA, 29 U.S.C. §§ 185(a), (c) which expressly provides the

federal district courts a jurisdictional basis over any actions arising under a claim for the recovery of unpaid

or delinquent employee benefit contribution. In addition, defendant Statewide Concrete Barrier, Inc. was at

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all times a corporation, with its principal place of business located in Oakland, California. Moreover,

Defendants conduct their business within the Northern District of California, and the events giving rise to

this suit occurred within the Northern District of California. Therefore, the Court has personal jurisdiction. 

IV. LEGAL ANALYSIS

The Federal Rule of Civil Procedure 55(b)(2) authorizes a court to order a judgment against a

defendant following an entry of default that was made pursuant to Rule 55(a). The decision to grant or deny

a plaintiff’s motion for default judgment is within the court’s sound discretion. See Aldabe v. Adabe, 616

F.2d 1089, 1092 (9th Cir. 1980). However such judgments are appropriate where the defendant has never

appeared in the action, its failure to defend is unexplained, and the plaintiff would suffer prejudice if the

default were not entered. See Chrysler Credit Corp. v. Macino, 710 F.2d 363, 367 (7th Cir. 1983). 

The Ninth Circuit has enumerated several factors which the court may consider in exercising its

discretion as to whether an entry of default judgment is proper: (1) the possibility of prejudice to the

plaintiff; (2) the merits of the plaintiff’s substantive claim and the sufficiency of the complaint; (3) the sum of

money at stake; (4) the possibility of dispute concerning material facts; (5) whether default was due to

excusable neglect; and (6) the strong policy underlying the Federal Rules of Civil Procedure favoring

decisions on the merits. Eitel v. McCool, 782 F.2d 1470, 1471 (9th Cir. 1986). 

In applying this discretionary standard, the factual allegations contained in the plaintiff’s complaint

will be taken as true, except for those relating to the amount of damages. TeleVideo Systems, Inc. v.

Heidenthal, 826 F.2d 915, 917 (9th Cir. 1987). 

A. Possibility of Prejudice to the Plaintiff

The first Eitel factor considers whether the plaintiff will suffer prejudice if default judgment is not

granted. PepsiCo, Inc. v. Cal. Sec. Cans, 238 F. Supp. 2d 1172, 1177 (C.D. Cal. 2002). Here the

parties entered into collective bargaining agreements, whereby Defendants were obligated to make timely

contributions to Plaintiffs’ trust funds. According to Plaintiffs, Defendants breached their obligations under

the contract by failing to make any payments as required under the terms of the Bargaining Agreement. In

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refusing to answer Plaintiffs’ Complaint, Defendants are deemed to have admitted the truth of Plaintiffs’

averments in the instant action. See Phillip Morris USA, Inc. v. Castworld Products, Inc., 219 F.R.D.

494, 499 (C.D. Cal. 2003). Because Defendants defaulted on their regular payment schedule, Plaintiffs 

have suffered damages not only in the delinquent amounts, but also any interest that would have accrued on

the contributed funds. If default judgment is not entered in favor of Plaintiffs, Plaintiffs will be left with no

alternative recourse against Defendants and would be unable to collect the amounts owed to them under the

Bargaining Agreement. Thus, the failure to grant Plaintiffs motion for default judgement would result in

substantial prejudice to Plaintiffs. 

B. Substantive Merits and the Sufficiency of Plaintiffs' Complaint 

The second factor in the Eitel analysis addresses the probability of the plaintiff succeeding on the

merits of its underlying claim as it is set forth in the complaint. A party seeking default judgment must state a

valid claim upon which it may recover. PepsiCo, 238 F. Supp. 2d at 1175. If the court finds that the

plaintiff would have likely succeeded on the merits of its substantive claim had the defendant not defaulted,

then default judgment would be appropriate. See Aldabe, 616 F.2d at 1089. 

Title 29 U.S.C. § 1145 provides, in part, that, “every employer who is obligated to make

contributions to a multiemployer plan 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 agreement.” In the instant case, Plaintiffs brought this ERISA action pursuant to 29 U.S.C.

§1132(g), which grants the fiduciaries of an employee-benefits fund a federal cause of action to enforce the

employer’s obligations imposed by 29 U.S.C. §1145. In order to prevail on a claim for unpaid

contributions under an ERISA plan, a plaintiff must prove that: (1) the trust funds are a qualified multiemployer plan as defined by 29 U.S.C. §1002(37); (2) the defendant is an employer obligated to

contribute under the plan’s terms; and (3) the defendant failed to contribute in accordance to the plan.

Board of Trustee of the Sheet Metal Workers Health Care Plan of N. CA v. Gervasio Environmental

Systems, 2004 WL 1465719, at *2 (N.D. Cal. May 21, 2004). 

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Here, in their Complaint, Plaintiffs have alleged all the facts necessary to establish the elements of

their claim. Plaintiffs represent various heath and welfare trust funds, and is a multi-employer employee

benefit pension plan within the meaning of 29 U.S.C. §1002(37). On September 30, 1993, Plaintiffs

entered into the Bargaining Agreement with Defendants. Under the Bargaining Agreement, Defendants

were required to make contributions to Plaintiffs’ trust funds on behalf of their employees. Shortly

thereafter, Defendants failed to pay the amounts owing to Plaintiffs. Accepting all factual allegations as true,

the Complaint establishes that Defendants are in clear violation of the terms of the contract. Therefore

Plaintiffs have adequately demonstrated a substantial likelihood of success on the merits of their claim.

C. Sum of Money at Stake

The third Eitel factor assesses the reasonableness of the potential award if a default judgment is

entered against the defendant. Under this analysis, the court is directed to take into account the amount of

money at stake in relation to the seriousness of the defendant’s conduct. PepsiCo, 238 F. Supp. 2d at

1176; See also Eitel, 782 F.2d at 1471. If the sum of money at issue is reasonably proportionate to the

harm caused by the defendant’s actions, then default judgment is warranted. See Board of Trustees of

Cal. Metal Trades v. Pitchometer Propeller, 984 F. Supp. 978, 978 (N.D. Cal. 1997). The court may

further take into consideration whether “the amount of money at stake is reasonable, properly documented

and contractually justified." See Board of Trustees of N. Cal. Sheet Metal Workers v. Peters, 2000 U.S.

Dist. LEXIS 19065, at *5 (N.D. Cal. December 29, 2000).

In the instant action, the remedy sought by Plaintiffs is limited to the damages that would be

reasonably expected to put Plaintiffs in the same position had Defendants' contractual obligations been

fulfilled. These damages include (1) the unpaid contributions owing to them under the terms of the

Bargaining Agreement; (2) the interest that would have accrued on such amounts had they been paid; (3)

the liquidated damages as set forth and agreed upon by the parties in the Bargaining Agreement; and (4) the

attorney fees and other expenses representing the cost of enforcing Plaintiffs’ contractual entitlements. All

these amounts have been documented by Plaintiffs and set forth in a declaration by Plaintiffs' counsel, James

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P. Watson. Defendants have not challenged the accuracy of the unpaid contribution. Furthermore,

Defendants have not disputed that an award of accrued interest or attorney fees would be unduly harsh.

Finally there is no indication that liquidated damages set forth under the Bargaining Agreement were

unreasonable or punitive. 

Given the nature of Defendants' conduct in failing to pay the amounts owed, such resulting damages

are reasonable and would naturally be expected to flow from Defendants' breach of contract. Moreover,

because Plaintiffs only seek to recover the amount of money owed to them pursuant to the Bargaining

Agreement, the sum of money at stake is reasonably proportionate to the harm caused to them by

Defendants' breach. 

D. Possibility of Dispute Concerning Material Facts

The fourth Eitel factor considered the possibility of dispute as to any material facts of the case. In

refusing to answer Plaintiffs’ Complaint, Defendants are deemed to have admitted the truth of Plaintiffs’

averments in the instant action. See Phillip Morris, 219 F.R.D. at 494. Upon the entry of default, all wellpleaded facts in the complaint are taken as true, except those relating to damages. See Televideo, 826

F.2d at 917. 

Here, Plaintiffs sufficiently alleged all the facts necessary to maintain their claim for relief under

ERISA. The allegations of Defendant's breach of Bargaining Agreement is supported by the signed

declaration of James P. Watson, who attested to the fact that Defendants have been delinquent in their

contributions at the time of the suit. Accordingly, the Court accepts all the factual allegations contained in

Plaintiffs’ Complaint. Since Defendants have not made any attempts to challenge the accuracy of the

Complaint, there exists no dispute of material facts that would preclude the Court from granting Plaintiffs’

motion for default judgment. 

E. Possibility of Excusable Negligence

The fifth Eitel factor contemplates the possibility that the defendant’s default was the result of

excusable neglect. Under this analysis, the court considers whether the defendant was put on adequate

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notice to apprise them of the pendency of the action brought against it. Phillip Morris, 219 F.R.D. 494 at

500. In addition, the court also considers whether the circumstances surrounding the defendant’s failure to

answer the complaint are sufficient to excuse or justify its default. See Shanghai Automation Instrument

Co. v. Kuei, 194 F. Supp. 2d 995, 1005 (N.D. Cal. 2001) (no excusable neglect because defendant was

served with complaint and the notice of entry of default); See also Pepsico, 238 F. Supp. 2d at 1177

(because the defendant contacted the plaintiff’s counsel to discuss settling the matter after being served with

the complaint, the defendant’s acquiescence of the lawsuit precluded the possibility of excusable neglect);

But See Eitel, 782 F.2d at 1472 (defendant’s failure to answer is excused because the parties were

engaged in settlement negotiations). 

In the instant case, Defendants were properly served with both the Complaint and the Notice of the

Motion for Default Judgment. Defendant Statewide Concrete Barrier Inc. is an ongoing business that has

not entered into bankruptcy or dissolved as a corporate entity. Consequently, Defendants are perfectly

capable of responding to any legal action. Despite Plaintiffs' numerous attempts to contact Defendants

regarding the pending action, Defendants, nevertheless, refused to answer the Complaint. Furthermore,

Defendants have resisted Plaintiffs’ multiple requests for correspondence. Because Defendants were

properly served with the Notice of Motion for Default Judgment, and at all times, Defendants had the ability

and the reasonable opportunity to oppose such action, the possibility of excusable neglect is remote. 

F. Policy for Deciding on the Merits

The final Eitel factor directs the court to consider the policy of the federal courts which ordinarily

disfavors the use of default judgments as the principal method of resolving disputes. As a general rule, in

civil actions, “cases should be decided on the merits whenever reasonably possible.” Eitel, 782 F.2d. at

1472. However this preference alone is not dispositive; rather the court still has great latitude in exercising

its discretion with regards to the relative weight of the remaining Eitel factors. Pepsico, 238 F. Supp. 2d at

1177. Furthermore, the “defendant’s failure to answer the plaintiff’s complaint makes a decision on the

merits of a case impractical, if not impossible. Id at 1177. Because of this difficulty in proceeding in an

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action with an unresponsive party, “default judgments are more often granted than denied.” PepsiCo v.

Triunfo-Mex, Inc., 189 F.R.D. 431, 432 (C.D. Cal. 1999). As a consequence, the policy of encouraging

decision of cases on the merits does not necessarily preclude a court from granting a default judgment when

the defendant fails to respond. 

Here, Defendants have refused to participate in the proceedings brought against them, despite

adequate notice and opportunity to do so. Because the Court cannot reach the merits of the instant case

without Defendants' participation, default judgement is appropriate despite the policy preferring decision to

be made on the merits of a case . Accordingly the Court hereby RECOMMENDS that the District Court

grant Plaintiffs' Motion for Default Judgment. 

V. REMEDIES

Generally a court has great discretion in determining damages; however any award in an ERISA

action to collect delinquent contributions must be governed by 29 U.S.C. §1132, which considerably

circumscribes the latitude given to courts in structuring an appropriate remedy. If the court enters a default

judgment in favor of the plaintiff, an award under that section is mandatory, not discretionary. Northwest

Administrators, Inc. v. Albertson’s Inc., 104 F.3d 253, 257 (9th Cir. 1996). When a judgment in favor

of the plan is awarded the district court shall award the plan pursuant to 29 U.S.C. §1132(g)(2): 

(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 (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 attorney’s fees and cost of the action, to be paid by the defendant; 

(E) such other legal or equitable relief as the court deems appropriate. 

These statutory remedies provide the exclusive remedies for actions to recover delinquent

contributions. Parkhurst v. Armstrong Steel Erectors, Inc., 901 F.2d 796, 797 (9th Cir. 1990). 

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Under the language of the statute, an award pursuant to §1132(g)(2) is mandatory if the following three

requirements are satisfied: (1) the plan must provide for an such award; (2) the employer must be

delinquent at the time the action is filed; (3) the district court must enter a judgment against the employer.

Northwest Administrators, 104 F.3d at 257; see also Parkhurst, 901 F.2d at 797. In the instant case,

all the conditions necessary for an award under §1132(g)(2) are satisfied. Plaintiffs have shown that the

Bargaining Agreement contains specific provisions for calculating the contributions to be made as well as

the interest and liquidated damages to be paid in the event of delinquency. Since there is no dispute as to

the material facts alleged in this case, the Court accepts Plaintiffs’ allegation that Defendants have failed to

pay their contributions in a timely fashion as required under the Bargaining Agreement. Therefore, because

the Court finds Plaintiffs' Motion for Default Judgement should be granted, the statutory damages

specifically provided by §1132(g)(2) are appropriate.

Having determined that statutory damages are appropriate, the Court now looks to the amount of

the award requested. Generally, upon the entry of default by the court, the factual allegations in the

complaint are taken as true. See Televideo, 836 F.2d at 917. However, the same presumption does not

apply to the allegation of damages. Id. As a result, the plaintiff has the burden of proving up the damages

that it has purportedly sustained. See Board of Trustees of Pipe Trades Dist. Council No. 36 v. Drexal

Power, Inc., 2004 U.S. Dist. LEXIS 15657, at *5 (N.D. Cal. July 26, 2004). 

Here, Plaintiffs have failed to meet their burden of proof with respect to the amount of monetary

damages requested. The only proof offered in support of the requested relief is the declaration of James P.

Watson. This declaration merely affirms the amount and type of award demanded by Plaintiffs: $14,019.14

of unpaid contributions; $128,081.41 in liquidated damages accrued before the filing of the suit;

$10,240.00 of additional liquidated damages accrued after the suit was filed; $6,876.00 of prejudgment

interest; $3,757.50 of attorney fees; and $1,568.02 of total costs. This declaration, however, does not

provide the court with any real information as to how the submitted amounts were arrived upon. 

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In their moving papers, Plaintiffs failed to specify the periods in which Defendants were believed to

be delinquent, and failed to enumerate the amounts of each delinquency. In addition, no accounting has

been offered showing the calculations of accrued interest and liquidated damages. Simply providing the final

monetary amount, without more, is not sufficient to meet the burden of proving damages. 

With respect to Plaintiff's request for injunctive relief, the federal district courts are authorized by 29

U.S.C. §1132(g)(2)(E) to award other forms of legal or equitable relief as the court deems appropriate. In

this case, because Defendants have been unresponsive to Plaintiffs requests for audits as required under the

terms of the Bargaining Agreement, Plaintiffs did not have the opportunity to review Defendants' books and

records. Thus, the delinquencies submitted to the Court do not necessarily represent the total amount of

funds owed to Plaintiffs. In consideration of these circumstances, the Court recommends granting Plaintiff’s

request for an injunctive order, requiring Defendants to submit to an audit of the appropriate trust fund

records so that Plaintiffs may ascertain the total amount of contributions owed.

VI. CONCLUSION

Based on the foregoing factors, Federal Rule of Civil Procedure 55(b)(2), statutory law, and case

law authority, the Court hereby RECOMMENDS that the district court GRANT Plaintiffs' Motion for

Default Judgment but STAY the effect of this judgement until the amount of damages can be determined

upon further production of information from Plaintiffs. The Court further RECOMMENDS that the District

Court GRANT Plaintiffs' request for injunctive relief and order Defendants to produce all books and

records necessary to conduct an audit under the terms of the Bargaining Agreement. 

Pursuant to Federal Rule of Civil Procedure 72, a party may serve and file objections to this Report

and Recommendation within ten days of being served with a copy of said report.

IT IS SO RECOMMENDED.

Dated: September 2, 2005 

MARIA-ELENA JAMES

United States Magistrate Judge

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