Operating Engineers' Health and Welfare Trust Fund for Northern California v…

Background

The plaintiffs, employee-benefit plans and their trustees, alleged that Mark J. Hansen, doing business as “M&M Hansen Communications Contracting,” failed to timely pay all required contributions based on hours worked by his employees. The parties’ Master Agreement, Independent Agreement, and Trust Agreements required contribution payments and provided for interest, liquidated damages, attorneys’ fees, and costs when payments were late or unpaid.

The plaintiffs filed the lawsuit in 2019 to compel an audit of Hansen’s payroll records and payment of amounts owed. Hansen did not answer or otherwise appear. The plaintiffs obtained entry of default from the clerk and then moved for default judgment. Although Hansen communicated with the plaintiffs about the audit and later submitted some payment, he did not respond to the lawsuit or the motion.

Default judgment

The court found that Hansen was properly served by personal service and had notice of the lawsuit. It also found subject-matter jurisdiction under the Employee Retirement Income Security Act and federal jurisdiction over the contract-related claims. The court concluded that it had personal jurisdiction over Hansen under the statute’s nationwide service-of-process provision.

Under Federal Rule of Civil Procedure 55, a court may enter default judgment after a defendant fails to respond. The court applied the factors used in the Ninth Circuit to evaluate default judgment. It found that denying judgment would leave the plaintiffs without a remedy, the complaint adequately stated an Employee Retirement Income Security Act claim, the requested amount was generally reasonable in relation to the alleged violations, no material factual dispute had been presented, and Hansen’s failure to respond did not appear to result from excusable neglect. The policy favoring decisions on the merits was neutral because Hansen’s failure to participate made such a decision impractical.

Damages

The court did not automatically accept the plaintiffs’ claimed damages. It found support for $5,321.02 in unpaid contributions and interest, along with contractual liquidated damages and interest for other late-paid contributions. The court determined that the agreements’ 10% liquidated-damages provision was enforceable as a reasonable forecast of potential harm.

The court declined to apply the provision increasing liquidated damages from 10% to 20% after a lawsuit was filed. The plaintiffs had not explained why the increase reasonably forecast additional harm, and the court noted that attorneys’ fees were separately available for collection efforts. The court also ruled that statutory liquidated damages did not apply to certain contributions that had been paid before the lawsuit was filed, although contractual remedies could still apply.

After recalculating the amounts at the 10% rate, the court awarded $28,426.72 in damages. It also found the requested $39,800.70 in attorneys’ fees reasonable under the lodestar method, which calculates fees by multiplying reasonable hours by reasonable hourly rates. The court awarded the requested $4,478.63 in costs, including filing, service, and investigation expenses.

Disposition

Judge Jacqueline Scott Corley granted the plaintiffs’ motion for default judgment and awarded $28,426.72 in damages, $39,800.70 in attorneys’ fees, and $4,478.63 in costs, for a total award of $72,706.05.