Board of Trustees of the Western States Insulators and Allied Individual…

Background

The plaintiffs are employee benefit plans and their trustees. They alleged that A1 Insulation Mechanical, L.L.C. was an employer bound by a collective bargaining agreement and related trust agreements. Those agreements required A1 to submit monthly reports and pay contributions to the plans based on hours worked by its employees. The plaintiffs alleged that A1 failed to report and pay contributions for work performed between June 2023 and June 2024, and sought unpaid contributions, interest, liquidated damages, audit fees, attorneys’ fees, costs, and an order requiring production of books and records.

A1 did not appear after being served. The Clerk entered A1’s default, and the plaintiffs moved for default judgment under Federal Rule of Civil Procedure 55(b)(2). The court stated that well-pleaded allegations about liability are treated as admitted after default, but allegations concerning the amount of damages are not automatically accepted as true.

Service and jurisdiction

The court found that service was sufficient because the plaintiffs personally served the complaint and summons on A1’s agent, Angel Aguilar, in Arizona, and filed proof of service. The court also found subject-matter jurisdiction under the Employee Retirement Income Security Act, which allows plan fiduciaries to bring civil actions to enforce plan terms. It found personal jurisdiction because the statute allows service in any district where an ERISA defendant resides or may be found, and because the trust funds were administered in California.

Default judgment

The court applied the seven factors used in the Ninth Circuit to evaluate default judgment. It found that the plaintiffs would lack another effective remedy if judgment were denied; the complaint adequately alleged that A1 was obligated to contribute and failed to do so; the requested amount was tied to A1’s alleged misconduct and the parties’ agreements; no material factual dispute was apparent because A1 did not respond; and A1’s failure to respond was unlikely to be excusable neglect after proper service. The policy favoring decisions on the merits was neutral because A1’s nonparticipation made such a decision impractical. Overall, the factors favored default judgment.

Damages and other awards

The plaintiffs initially requested $369,803.96. In supplemental briefing, they sought $400,032.87, including a 20 percent liquidated-damages amount and recalculated interest. The court awarded $299,470.84 in unpaid contributions based on the plaintiffs’ accounting of reportable hours and wage rates. It awarded $15,618.18 in interest, calculated under the trust agreement’s 7 percent annual interest rate.

The court ruled that liquidated damages were available but rejected the agreement’s increase from 10 percent to 20 percent after a lawsuit was filed. It found that the 20 percent amount was not a reasonable forecast of compensation for harm and that litigation costs were already addressed through attorneys’ fees and costs. The court found the 10 percent amount reasonable and awarded $29,947.08 in liquidated damages.

The court also awarded $13,448.90 in attorneys’ fees, finding the documented 34.2 hours and the requested hourly rates reasonable. It awarded $10,855.78 in audit fees for examining books and records, and $745.00 in filing and service-of-process costs.

Disposition

The court granted the motion for default judgment and awarded the plaintiffs a total recovery of $370,085.78: $299,470.84 in damages, $29,947.08 in liquidated damages, $15,618.18 in interest, $10,855.78 in audit fees, $13,448.90 in attorneys’ fees, and $745.00 in costs.