Board of Trustees v. Geminis Demolition & Construction

Background

The plaintiffs were employee benefit plans and their trustees, collectively referred to as the Trust Funds. The Trust Funds were created under written trust agreements and were covered by a labor agreement, memorandum of agreement, and letter of understanding that bound Geminis Demolition & Construction, Inc. to make hourly benefit contributions for covered work performed by its employees.

The agreements also required prompt payment of contributions, liquidated damages and interest for delinquent contributions, and payment of attorneys’ fees and collection costs. They authorized the Trust Funds to audit Geminis’s books and records to determine whether all required contributions had been paid.

The plaintiffs requested an audit on January 25, 2021, covering January 2019 through the last completed quarter. They alleged that Geminis did not provide the requested records or contribution reports. They also alleged that Geminis made late payments for January 2021, February 2021, and April through June 2021, and made no contributions for July through December 2021.

Procedural History

The plaintiffs filed suit on March 7, 2022. Geminis did not answer the complaint. At the plaintiffs’ request, the Clerk entered default on April 13, 2022, and the plaintiffs moved for default judgment.

Before considering default judgment, the court determined that it had federal-question jurisdiction because the plaintiffs sued under the Employee Retirement Income Security Act, or ERISA. The court also determined that it had personal jurisdiction over Geminis. A professional process server served the summons and complaint on Octavio Correa, whom the opinion identifies as authorized to accept service for Geminis.

Default Judgment

The court applied the factors used in the Ninth Circuit to decide whether to enter default judgment. Those factors include prejudice to the plaintiffs, the strength and sufficiency of the claims, the amount at stake, the likelihood of a dispute about material facts, whether the default resulted from excusable neglect, and the federal preference for decisions on the merits.

The court concluded that the factors favored default judgment. It found that denying judgment would likely leave the plaintiffs without another way to recover, that the complaint sufficiently alleged an ERISA Section 515 claim, that the requested amounts were reasonable, that a material factual dispute was unlikely, and that Geminis’s failure to respond after proper service was not likely excusable neglect. The court also concluded that deciding the case on the merits was impractical because Geminis had not appeared.

Relief Awarded

The court awarded $750 in liquidated damages for late-paid contributions, $900 in unpaid contributions, and $195.18 in interest, totaling $1,845.18 in damages. It also awarded $4,445 in attorneys’ fees and $538.15 in costs. The combined judgment was $6,828.33.

The court granted the plaintiffs’ request for an injunction compelling Geminis to submit its books and records for an audit covering January 2019 through the present. The court allowed the plaintiffs to file a detailed supplemental declaration seeking additional unpaid contributions, interest, liquidated damages, attorneys’ fees, and costs identified through the audit. The court retained jurisdiction so that the judgment could be amended, if appropriate, based on the audit’s results.

Disposition

Judge Jacqueline Scott Corley granted the plaintiffs’ motion for default judgment, awarded the specified damages, attorneys’ fees, and costs, granted the requested injunctive relief, allowed a supplemental request for additional audit-related damages, and retained jurisdiction pending completion of the audit. The court stated that it would enter judgment and that the Clerk would close the file.