Automotive Industries Pension Trust Fund v. L.A. Smith & Son Inc.

Background

The Automotive Industries Pension Trust Fund and its Board of Trustees sued L.A. Smith & Son Inc., Kirk D. Smith, and Michael Shane Leasure doing business as Auto Body Express. They sought money damages for withdrawal liability under Section 4203 of the Employee Retirement Income Security Act of 1974, or ERISA. The plaintiffs and Leasure jointly stipulated to his dismissal. The default-judgment request concerned L.A. Smith and Kirk D. Smith.

The plaintiffs alleged that the Pension Fund was a multiemployer plan governed by ERISA and that L.A. Smith was a contributing employer. They alleged that L.A. Smith completely withdrew from the Pension Fund in April 2021. The plaintiffs twice notified L.A. Smith and Kirk D. Smith of the withdrawal-liability amount and demanded payment. L.A. Smith did not request review or begin arbitration concerning the assessment. The court stated that an employer that does not begin arbitration cannot later dispute the assessed amount.

The plaintiffs also alleged that Kirk D. Smith was L.A. Smith’s sole owner and a member of the controlled group. The court found that the common-control requirement was met. It also found that Kirk D. Smith met ERISA’s “trade or business” requirement because he leased the 903 Williams Street Property to L.A. Smith.

Jurisdiction, service, and default

The court found subject-matter jurisdiction under 29 U.S.C. § 1132, which allows ERISA plan fiduciaries to bring civil actions to enforce plan terms. It found personal jurisdiction over L.A. Smith and Kirk D. Smith under ERISA’s nationwide service-of-process provision.

After documented service attempts, the court authorized service by publication and through the California Secretary of State. Kirk D. Smith was served by publication, and L.A. Smith was served through the Secretary of State. The clerk entered default against both defendants.

Court’s analysis

Under Federal Rule of Civil Procedure 55(b)(2), the court may enter default judgment. After default is entered, well-pleaded factual allegations are treated as true, except for the amount of damages. Applying the factors identified in Eitel v. McCool, the court found that the plaintiffs had sufficiently stated an ERISA withdrawal-liability claim and supported it with corroborating evidence.

The court found that the remaining factors also favored default judgment. The plaintiffs had no other avenue for recovery and would be prejudiced without judgment. Because the defendants had not appeared, the court found no indication of excusable neglect or a material factual dispute. Although the amount at stake was approximately $1.5 million, the court found it reasonable, documented, and justified.

Relief awarded

The court awarded $1,127,398.00 in unpaid withdrawal liability. It awarded $131,239.47 in interest, including interest calculated from September 30, 2022, through December 27, 2023, and additional interest that had accrued at $216.21 per day.

The court awarded $225,479.00 in liquidated damages, representing 20% of the unpaid withdrawal liability. It also found the plaintiffs entitled to attorney’s fees and costs. The plaintiffs requested $16,660.43, consisting of $13,103.50 in attorney’s fees and $3,556.94 in costs. The court found the proposed billing rates, hours, and documented costs reasonable and awarded $13,103.50 in fees and $3,556.94 in costs.

Disposition

Judge James Donato granted the plaintiffs’ motion for default judgment. The order states that judgment would be entered separately.