Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-cand-3_14-cv-04159/USCOURTS-cand-3_14-cv-04159-0/pdf.json

Parties Involved:
Contractors Chemical, Inc.
Defendant
Laborers Pension Trust Fund for Northern California
Plaintiff
Laborers Training and Retraining Trust Fund for Northern California
Plaintiff
Laborers Vacation-Holiday Trust Fund for Northern California
Plaintiff
The Board of Trustees, in their capacities as Trustees of the Laborers Health and Welfare Trust Fund for Nothern California
Plaintiff

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United States District Court

Northern District of California

UNITED STATES DISTRICT COURT

NORTHERN DISTRICT OF CALIFORNIA

THE BOARD OF TRUSTEES, IN THEIR 

CAPACITIES AS TRUSTEES OF THE 

LABORERS HEALTH AND WELFARE 

TRUST FUND FOR NOTHERN 

CALIFORNIA, et al.,

Plaintiffs,

v.

CONTRACTORS CHEMICAL, INC.,

Defendant.

Case No. 14-cv-04159-JD 

ORDER GRANTING MOTION FOR 

DEFAULT JUDGMENT

Re: Dkt. No. 17

 The Board of Trustees (“Board”) for several employee benefit plans has moved for 

default judgment against defendant Contractors Chemical, Inc. The Court grants the motion.

I. BACKGROUND

Plaintiffs are the Board of Trustees for the following trust funds: the Laborers Health and 

Welfare Trust Fund for Northern California; the Laborers Vacation-Holiday Trust Fund for 

Northern California; the Laborers Pension Trust Fund for Northern California; and the Laborers 

Training and Retraining Trust Fund for Northern California. Dkt. No. 1 ¶ II. According to the 

complaint, defendant Contractors Chemical “was signatory and bound to a written collective 

bargaining agreement with the Northern California District Council of Laborers (hereinafter 

‘Union’), a labor organization within the meaning of section 301 of the Labor Management 

Relations Act (29 U.S.C. § 185).” Dkt. No. 1 ¶ IV. The Board alleges that Contractors Chemical

became subject to the terms of a Master Agreement after signing a Memorandum of Agreement 

with the Union. Id. The Master Agreement required Contractors Chemical to timely contribute 

certain amounts of money to the trust funds, based on hours worked by its employees. Id. The 

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Master Agreement also provides “for the payment of interest on all delinquent contributions, 

attorneys’ fees, and other collection costs, and for the audit of the signatory employer or 

employers’ books and records in order to permit the Plaintiffs to ascertain whether all fringe 

benefit contributions have been timely paid.” Id. ¶ V.

The Board initially filed suit on September 15, 2014. See Dkt. No. 1. The Board alleges 

that Contractors Chemical violated ERISA § 515 (29 U.S.C. § 1145) by failing to pay 

contributions and permit an audit pursuant to the Master Agreement. Dkt. No. 17 at 11. 

According to the Board, Contractors Chemical has not made timely fringe benefit contributions 

for the periods November 2013, January 2014, and June to July 2014. Id. at 7. It further alleges 

that “there also are liquidated damages and interest due and owing for the months of January 2010 

through March 2012, October 2013, December 2013, as well as February through April 2014 for 

contributions paid but paid late.” Id. at 8. Contractors Chemical failed to respond to this lawsuit, 

and the clerk of the court entered default against it on December 4, 2014. See Dkt. No. 15. The 

Board filed this motion for default judgment on June 24, 2015. Contractors Chemical has not 

responded or appeared in any way.

II. DISCUSSION

A. Jurisdiction

In default judgment proceedings, the Court is obliged to first consider whether jurisdiction 

is proper. See In re Tuli, 172 F.3d 707, 712 (9th Cir. 1999) (holding that in a default judgment 

proceeding, “a district court has an affirmative duty to look into its jurisdiction over both the 

subject matter and the parties”). The Court has subject matter jurisdiction under 29 U.S.C. § 1132, 

which authorizes ERISA plan fiduciaries to bring civil actions to enforce plan terms. The Court 

also has personal jurisdiction over Contractors Chemical because it is a California corporation 

engaged in business activities in California, and because “plan contributions are due and payable 

in the County of San Francisco.” Dkt. No. 17 at 10. Defendant was properly served because it 

was served with a copy of the summons and complaint via substituted service on October 2, 2014, 

a copy was mailed to it on October 3, 2014, and service was deemed complete ten days after 

mailing on October 13, 2014, pursuant to California Code of Civil Procedure § 415.20(a) and Rule 

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4(e)(1) of the Federal Rules of Civil Procedure. Id.

B. Default Judgment

Under Rule 55(b)(2) of the Federal Rules of Civil Procedure, a party may 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). The 

Court may consider the following factors in deciding whether to grant a motion for default 

judgment: 

(1) the 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).

1. The Merits of the Claim and the Sufficiency of the Complaint

The second and third Eitel factors -- the merits of the claim and the sufficiency of the 

complaint -- are generally considered together because after the entry of default, well-pleaded 

factual allegations in the complaint are taken as true, except as to the amount of damages. Fair 

Hous. of Marin v. Combs, 285 F.3d 899, 906 (9th Cir. 2002).

The Board’s complaint alleges that Contractors Chemical violated ERISA § 515 (29 

U.S.C. § 1145) by failing to pay contributions and permit an audit pursuant to the terms of the 

Master Agreement. Consequently, the allegations in plaintiff’s complaint, taken as true, make out 

a claim under ERISA. See 29 U.S.C. § 1145 (providing that “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 the law, make such 

contributions in accordance with the terms and conditions of such plan or such agreement”); id. § 

1132(a)(3) (authorizing, inter alia, a fiduciary to bring a civil action to enforce an employer’s § 

1145 obligation).

2. The Remaining Eitel Factors

The remaining factors, on balance, also weigh in favor of granting default judgment. The 

Board will be prejudiced if default judgment is not granted because it will likely be left without a 

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remedy. The sum of the money at stake (plaintiff seeks $41,837.54 in unpaid contributions, 

liquidated damages, interest, and attorneys’ fees and costs) is relatively small and weighs in favor 

of granting default judgment. Because defendant has not appeared, there is no indication that its 

default is due to excusable neglect, that the material facts are subject to dispute, or that a decision 

on the merits will be possible. Consequently, default judgment is warranted.

C. Plaintiff’s Requested Relief

1. Unpaid Contributions, Interest, and Liquidated Damages

29 U.S.C. § 1132(g)(2) mandates that when an employee benefit plan obtains judgment in 

its favor, the court shall award the plan (A) the unpaid contributions, (B) interest on the unpaid 

contributions, (C) an amount equal to the greater of the interest on the unpaid contributions, or

liquidated damages as specified in the plan (generally not to exceed 20 percent of the unpaid 

contributions), (D) reasonable attorneys’ fees and costs, and (E) other legal or equitable relief that 

the court deems appropriate. See 29 U.S.C. § 1132(g)(2). “To be entitled to a mandatory award 

under § 1132(g)(2), the following three requirements must be satisfied: (1) the employer must be 

delinquent at the time the action is filed; (2) the district court must enter a judgment against the 

employer; and (3) the plan must provide for such an award.” Nw. Adm’rs, Inc. v. Albertson’s, Inc., 

104 F.3d 253, 257 (9th Cir. 1996).

The Board is entitled to a mandatory award under § 1132(g)(2) for the unpaid 

contributions from November 2013, January 2014, June 2014, and July 2014. This is so because 

Contractors Chemical was delinquent at the time the action was filed, the Court will enter a 

judgment against Contractors Chemical, and the plan provides for such an award. See Dkt. No. 1 

¶ V. The Board has requested $11,520.80 in delinquent and unpaid contributions. See Dkt. No. 

17 at 9. The contribution amounts for November 2013 and January 2014 were self-reported by 

Contractors Chemical, while the amounts for June and July 2014 were calculated by averaging the 

contributions from October 2013 to March 2014 because the actual amounts are unknown. 

Declaration of Jennifer Peters ¶ 14-15, Dkt. No. 19. The unpaid contribution amounts have been 

adequately supported by proof, and the Court concludes that plaintiff is entitled to $11,520.80 in 

unpaid contributions. See Dkt. No. 19-11.

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For interest and liquidated damages under § 1132, the Board is entitled to “interest on the 

unpaid contributions” and “an amount equal to the greater of— interest on the unpaid 

contributions, or liquidated damages provided for under the plan in an amount not in excess of 20 

percent” of $11,520.80. See 29 U.S.C. § 1132. Although it appears that the Board may be entitled 

to “double interest” of $3,872.84, since the amount of interest on the unpaid contributions exceeds 

the amount of liquidated damages, it only requested interest and liquidated damages in the amount 

of $2,536.42 for the unpaid contributions. Consequently, the Court grants plaintiff’s request for 

$2,536.42 in interest and liquidated damages for the unpaid contributions.

2. Interest and Liquidated Damages for Contributions Paid, but Paid Late 

The Board has requested an additional $16,618.16 in interest and liquidated damages for 

contributions paid, but paid late. 29 U.S.C. § 1132(g)(2) does not apply to this request, because it 

is not for contributions that were unpaid at the time of this suit. Idaho Plumbers & Pipefitters 

Health and Welfare Fund v. United Mechanical Contractors, Inc., 875 F.2d 212, 215-17 (9th. Cir. 

1989) (“Because no contributions were ‘unpaid’ at the time of this suit, § 1132(g)(2) does not 

apply.”); Board of Trustees of Labor Health & Welfare Trust Fund for N. Cal. v. Shade Const. & 

Eng’g, No. C 06-6830 PJH, 2007 WL 3071003, at *7 (N.D. Cal. Oct. 19, 2007) (“Plaintiffs are not 

entitled to a statutory award of interest or liquidated damages because remedies under 29 U.S.C. § 

1132(g)(2) only apply to unpaid contributions.”).

In determining whether a liquidated damages clause is enforceable, the court must analyze 

if 1) “the harm caused by a breach [is] very difficult or impossible to estimate” and 2) “the amount 

fixed [is] a reasonable forecast of just compensation for the harm caused.” Idaho Plumbers, 875 

F.2d at 217.

The contractual terms state that “liquidated damages are assessed at a flat fee of $150 per 

month, along with simple interest of 1.5% per month on all unpaid contributions.” Peters Decl. ¶ 

12. The liquidated damages amount is proper because the harm caused by the breach is difficult to 

estimate, and the liquidated damages amount is a reasonable forecast of just compensation. See id. 

Consequently, the Board is entitled to $16,618.16 in interest and liquidated damages for 

contributions paid, but paid late. 

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3. Injunctive Relief

The Board has requested an injunction ordering Contractors Chemical to submit to an audit 

of its records for the period January 1, 2011, through the last completed quarter. The Board has 

also requested that the Court retain jurisdiction “in order to ensure payment of any further 

delinquent amounts discovered” during the audit. The Court grants these requests because the 

Contractors Chemical is contractually bound to allow the Board to conduct an audit of its records. 

See Peters Decl. ¶ 11; see also Santa Monica Culinary Welfare Fund v. Miramar Hotel Corp., 920

F.2d 1491, 1494 (9th Cir. 1990) (holding that a court can compel audit when the trust agreement 

terms allow for it). The Court will also retain jurisdiction to ensure payment of any further 

amounts discovered to be owing during the audit. See Board of Trustees of the Laborers Health 

and Welfare Trust Fund for Northern California v. Montes Bros. Const., Inc., No. C-14-1324 

EMC, 2014 WL 5768580, at *5-6 (N.D. Cal. Nov. 5, 2014).

The injunction is granted as follows, based on the terms of the relevant trust agreements:

Upon receipt of a written request from the plaintiff, defendant 

Contractors Chemical must permit an auditor designated by the 

plaintiff to enter upon the premises of Contractors Chemical during 

business hours, at a reasonable time or times, not less than 2

working days after the request was made, to examine and copy 

books, records or reports of Contractors Chemical necessary to 

determine whether Contractors Chemical is making full and prompt 

payment of all sums required to be paid by it to the Health and 

Welfare Trust Fund for Northern California, the Pension Trust Fund 

for Northern California, the Vacation-Holiday Trust Fund, and the 

Laborers Training and Retraining Trust Fund.

4. Attorneys’ Fees and Costs

The Board has requested $10,490 in attorneys’ fees and $672.16 in costs. Of the stated 

amounts, $9,110 of the attorneys’ fees and $672.16 of the fees are supported by documentation.

See Dkt. No. 18-1. Consequently, the Court will grant plaintiff’s request for $9,110 in attorneys’

fees and $672.16 in costs.

III. CONCLUSION

For the foregoing reasons, the Court grants plaintiff’s motion for default judgment. 

Judgment will be entered in favor of the Board against Contractors Chemical in the amount of 

$11,520.80 for unpaid contributions, $19,154.58 for interest and liquidated damages, and 

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$9,782.16 for attorneys’ fees and costs. Plaintiff is responsible for serving this injunction on 

Contractors Chemical.

IT IS SO ORDERED.

Dated: August 6, 2015

________________________

JAMES DONATO

United States District Judge

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