REPORT AND RECOMMENDATION TO GRANT PLAINTIFFS' MOTION FOR ENTRY OF DEFAULT JUDGMENT

Re: Dkt. No. 27

ELIZABETH D. LAPORTE, Magistrate Judge.

Plaintiffs in this Employee Retirement Income Security Act ("ERISA") case move for entry of default judgment against Defendant Westech Roofing. The Court recommends GRANTING Plaintiffs' motion.

I. BACKGROUND

Plaintiffs are the Board of Trustees for the National Roofing Industry Pension Plan and the Roofers & Waterproofers Research & Education Fund ("Trust Funds"). FAC ¶ 2. The Trust Funds are employee benefit plans created by a written Trust Agreement and subject to and pursuant to the Labor Management Relations Act ("LMRA"), 29 U.S.C. § 185, and employee benefit plans within the meaning of ERISA, 29 U.S.C. §§ 1002, 1003, and 1132. The Trust Funds are administered by a Board of Trustees, which may bring this action in the name of the Trust Funds pursuant to the express provisions of the Trust Agreements. FAC ¶ 2.

Defendant was an employer within the meaning of ERISA and LMRA. FAC ¶ 3. Defendant was a signatory to collective bargaining agreements ("CBA") with Local Union Nos. 40 and 81 of the United Union of Roofers, Waterproofers and Allied Workers, AFL-CIO ("Union"), a labor organization within the meaning of LMRA. FAC ¶ 4. The CBAs incorporated the Trust Agreements by reference. FAC ¶ 4.

Pursuant to the CBAs, Defendant promised to contribute and pay to Plaintiffs certain required hourly amounts based on the hours paid for or worked by any of its employees. FAC ¶ 5. The CBAs and Trust Agreements require prompt payment of required contributions and provide for the payment of interest on delinquent contributions, liquidated damages, attorneys' fees and other collection costs, and for an audit of the delinquent employer's books and records. FAC ¶ 6.

On August 25, 2017, Defendant informed Plaintiffs that it was delinquent in paying the contributions owed to the Trust Funds from 2015 through June 2017. FAC ¶ 8. Defendant informed Plaintiff that it owed the Trust Funds $68,849.03 in principal contributions. FAC ¶ 8. Defendant paid Plaintiffs $17,111.93 and agreed to enter into an installment plan (the "Settlement Agreement"), to pay Plaintiffs a "comparable amount" every month for the next three months. FAC ¶ 8. Defendant also promised to remain compliant with the directive of the National Roofing Industry Benefit fund, which provided for simple interest to accrue at the rate of 12% per year, to timely remit contributions owed to the Trust Funds, and to pay Plaintiffs' attorney's fees relating to the collection of installments owed under the Settlement Agreement and any contributions not timely paid going forward. FAC ¶ 8.

Defendant made two more successful payments, in the amounts of $16,628.72 and $14,585.02. FAC ¶ 9. However, Defendant's third payment, in the amount of $15,523.36, was returned by the bank as "NSF," non-sufficient funds. FAC ¶ 9. Defendant sent Plaintiffs a replacement check, but not until March 18, 2018. FAC ¶ 9. Defendant also remitted its contributions for the months of July 2017 and January 2018 late. FAC ¶ 9.

II. PROCEDURAL HISTORY

On February 16, 2018, Plaintiffs filed their complaint. On March 7, 2018, Plaintiffs served Defendant with their complaint. Defendant did not respond. On May 2, 2018, the Clerk entered default against Defendant at Plaintiffs' request.

On June 12, 2018, Plaintiffs filed their First Amended Complaint and served that complaint on Defendant. Plaintiffs allege breaches of the settlement agreement and the CBAs. Defendant did not respond to the first amended complaint. On August 8, 2018, the Clerk entered default against Defendant at Plaintiffs' request.

On September 24, 2018, Plaintiffs moved for entry of default judgment awarding damages and injunctive relief. They served Defendant with this motion. Defendant did not respond. On November 6, 2018, the Court held a hearing on Plaintiffs' motion. Plaintiffs informed the Court that the parties had verbally agreed to settle the case and were in the process of reducing the agreement to writing. Plaintiffs requested that the Court continue the hearing on their motion to November 27, 2018. At that hearing, Plaintiffs informed the Court that they had been unable to reduce the settlement to writing and requested that the Court move forward with entering default judgment.

III. LEGAL STANDARD

After entry of a default by the clerk, a court may enter a default judgment. See Fed. R. Civ. P. 55(b)(2). "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). As a preliminary matter, the court must determine whether it has subject matter jurisdiction over the action and personal jurisdiction over the defendant. In re Tuli, 172 F.3d 707, 712 (9th Cir. 1999). In addition, "the Court must `assess the adequacy of the service of process on the party against whom default judgment is requested.'" Disney Enterprises, Inc. v. Vuong Tran, No. 12-5030 S.C. 2013 WL 1832563, at *1 (N.D. Cal. May 1, 2013) (Conti, J.) (quoting Bd. of Trs. of N. Cal. Sheet Metal Workers v. Peters, No. C-00-0395 VRW, 2000 U.S. Dist. LEXIS 19065, at *2 (N.D.Cal. Jan. 2, 2001)). If the Court determines that service was sufficient, it should consider whether the following factors support the entry of default judgment:

Eitel v. McCool, 782 F.2d 1470, 1471-72 (9th Cir. 1986). In considering the above factors, the Court takes all factual allegations in Plaintiff's complaint as true, except for those relating to damages. TeleVideo Systems, Inc. v. Heidenthal, 826 F.2d 915, 917-18 (9th Cir. 1987). Relief granted under a default judgment "must not differ in kind from, or exceed in amount, what is demanded in the pleadings." Fed. R. Civ. P. 54(c).

IV. ANALYSIS

A. Jurisdiction

Before entering a default judgment, a court has "an affirmative duty to look into its jurisdiction" over the subject matter of the action and the parties involved. Tuli, 172 F.3d at 712. Here, the Court has subject matter jurisdiction because Plaintiffs assert their claims under ERISA, 29 U.S.C. § 1132(e)(1), which provides that the federal district courts have exclusive jurisdiction over this type of ERISA claim, as well as under LMRA 29 U.S.C. § 185(a), which allows Plaintiffs to seek enforcement of collective bargaining agreements in federal court. The Court also has personal jurisdiction over Defendant because its principal place of business is in California. See BNSF Ry. Co. v. Tyrrell, ___ U.S. ___, 137 S.Ct. 1549, 1558 (2017); FAC ¶ 1.

B. Procedural Requirements

Once a defendant has been found in default, a court may enter default judgment against it. Fed. R. Civ. P. 55(b)(2). Before a court may consider whether to enter default judgment, it must be satisfied that the procedural prerequisites, including adequate service of process, have been met. See, e.g., PepsiCo, Inc. v. California Sec. Cans, 238 F.Supp.2d 1172, 1175 (C.D. Cal. 2002). Further, a court may not enter a default judgment against an unrepresented minor, an incompetent person, or a person in military service. See Fed. R. Civ. P. 55(b)(2); 50 U.S.C. App. § 521(b)(1).

On March 13, 2018, Plaintiffs filed an executed summons, showing that they served Defendant on March 7, 2018 through personal service on Defendant's registered agent. Dkt. No. 7. Defendant never responded. Plaintiffs moved for entry of default on February 28, 2018. Dkt. No. 21. On May 2, 2018, the Clerk entered default against Defendant. Dkt. No. 11. On June 12, 2018, Plaintiffs filed their first amended complaint, and served Defendant by U.S. mail the same day. Dkt. No. 17, 18.

On August 1, 2018, Plaintiffs requested entry of default, which the Clerk entered on August 8, 2018. Dkt. Nos. 19, 25. On August 13, 2018, Plaintiffs served Defendant with the notice of entry of default via U.S. mail. Dkt. 26. On September 24, 2018, Plaintiffs moved for entry of default judgment. Dkt. 27. They served this motion on Defendant via U.S. mail. Dkt. No. 32. Defendant is a corporation, and therefore not an unrepresented minor, incompetent person, or person in the military. Accordingly, Plaintiff has satisfied the procedural requirements for entry of default judgment against Defendant.

C. Eitel Factors

1. Prejudice to Plaintiffs

The first Eitel factor is whether Plaintiffs will suffer prejudice if default judgment is not entered. Here, Plaintiffs will likely be without other recourse for recovery if their motion for default judgment is not granted. See Pepsico, Inc., 238 F. Supp. 2d at 1177. This factor weighs in favor of default judgment.

2. Merits and Sufficiency of the Complaint

Under the second and third Eitel factors, the court considers the merits and sufficiency of Plaintiffs' complaint, specifically whether Plaintiffs "state a claim on which [they] may recover." Pepsico, 238 F. Supp. 2d at 1175. Here, Plaintiffs assert claims for breach of contract, governed by ERISA, 29 U.S.C. § 1132, and LMRA, 29 U.S.C. § 185, for breach of the Bargaining and Trust Agreements by failure to make required contributions. The elements of a claim for unpaid contributions are: (1) the trust fund is a multi-employer plan as defined by 29 U.S.C. § 1002(37); (2) the defendant is an employer obligated to contribute under the term's plans; and (3) the defendant failed to contribute in accordance with the plan. Board of Trustees v. RBS Washington Blvd. LLC, 2010 WL 145097, at *2 (N.D. Cal. Jan. 8, 2010). Here, Plaintiffs state a claim for unpaid contributions: the trusts are multiemployer benefit plans within the meaning of ERISA; the collective bargaining agreement required Defendant to make contributions to the plans; and Defendant did not make timely payments.

LMRA permits Plaintiffs to sue for breaches of a collective bargaining agreement. Federal courts apply federal common law principles to determine the enforceability of contract provisions like liquidated damages provisions. See Idaho Plumbers & Pipefitters Health & Welfare Fund v. United Mech. Contractors, Inc., 875 F.2d 212, 216 (9th Cir. 1989). Plaintiffs' complaint sufficiently alleges a contractual obligation to make contributions, including amounts for liquidated damage and interest accruals, and a breach of that obligation.

Finally, Plaintiffs allege that Defendant breached the Settlement Agreement. To state a claim for breach of a settlement agreement, a party must plead: (1) the existence of the contract; (2) performance by the alleging party or excuse for nonperformance; (3) breach by the opposing party; and (4) damages. Constr. Laborers Tr. Funds for S. California Admin. Co. v. Lucky Water Trucks, LLC, No. CV1702160SJOJPRX, 2017 WL 7846983, at *5 (C.D. Cal. Nov. 30, 2017) (citing First Comm'n Mortg. Co. v. Reece, 89 Cal.App.4th 731, 745 (2001)). Plaintiffs allege they entered into the Settlement Agreement, that Plaintiffs did everything they were required to do under the Settlement Agreement, that Defendant breached the Settlement Agreement by failing to make the third required payment, and that Plaintiffs suffered damages in the form of attorney's fees spent to attempt to collect the final payment, liquidated damages, and interest. FAC ¶¶ 9-13. They sufficiently allege breach of the Settlement Agreement. Accordingly, the second and third Eitel factors favor entry of default judgment.

3. Amount of Money at Stake

Under the fourth Eitel factor, the court should consider "the amount of money at stake in relation to the seriousness of Defendant's conduct." PepsiCo, Inc., 238 F. Supp. 2d at 1176. A large amount of claimed damages weighs against an entry of default judgment. Eitel, 782 F.2d at 1472. To determine if an amount is reasonable, the court considers the plaintiff's "declarations, calculations, and other documentation of damages." Truong Giang Corp. v. Twinstar Tea Corp., No. C 06-03594 JSW, 2007 WL 1545173, at *12 (N.D. Cal. May 29, 2007) (White, J.). Here, Plaintiffs seek to recover a total of $23,271.88 in unpaid contributions, liquidated damages and interest in the amount of $35,463.10, attorney's fees in the amount of $18,172.50, and costs in the amount of $602.53, for a total recovery of $77,510.01.

This amount is less than or comparable to the amounts at stake in other ERISA cases in this District in which the amounts have been awarded as a default judgment. See, e.g., Bd. of Trs. of the Laborers Health & Welfare Tr. Fund for N. Cal. v. Cal.-Kirk Landscaping, Inc., No. C-08-3292 EMC, 2012 WL 5869619, at *11 (N.D. Cal. Nov. 19, 2012) (awarding $230,1130.27 for damages in addition to 434,853.63 in attorneys' fees and costs). The amount requested is also narrowly tailored to Defendant's specific misconduct. See Bd. of Trs. v. Charles B. Harding Constr., Inc., No. C-14-1140 EMC, 2014 WL 7206890, at *5 (N.D. Cal. Dec. 18, 2014), amended to reflect the defendant's correct name, No. 14-CV-01140-EMC, 2015 WL 8752561 (N.D. Cal. Dec. 15, 2015) (awarding $81,208.95 as a default judgment in addition to 15,108.16 in attorneys' fees and costs). This factor weighs in favor of default judgment.

4. Likelihood of Dispute over Material Facts

The fifth Eitel factor asks the court to consider the likelihood of a dispute regarding the material facts. Here, the Parties are unlikely to dispute the material facts of the case because the issues are straightforward: whether Defendant failed to make timely contributions and what damages Plaintiffs are entitled to. See Bd. of Trustees of N. California Sheet Metal v. Efficient Energy Concepts, Inc., 2011 WL 7062493, at *10 (N.D. Cal. Dec. 22, 2011), report and recommendation adopted sub nom. Bd. of Trustees of N. California Sheet Metal Workers Health Care Plan v. Efficient Energy Concepts, Inc., 2012 WL 159951 (N.D. Cal. Jan. 17, 2012). Further, Defendant received a letter regarding its breach of the Settlement Agreement, the Summons and Complaint, the First Amended Complaint, and this motion, which afforded it ample opportunity to contest Plaintiffs' allegations should it have wished to dispute the material facts. Because a dispute over material facts is unlikely, this factor weighs in favor of entry of default judgment.

5. Excusable Neglect

The sixth Eitel factor asks the court to consider whether a defendant's default resulted from excusable neglect. Eitel, 782 F.2d at 1472. "Where a defendant `[was] properly served with the Complaint, the notice of entry of default, as well as the papers in support of the instant motion,' this factor favors entry of default judgment." Pearson v. Nationstar Mortgage, LLC, 2016 WL 5496268, at *6 (C.D. Cal. Sept. 26, 2016) (quoting Shanghai Automation Instrument Co. Ltd. v. Kuei, 194 F.Supp.2d 995, 1005 (N.D. Cal. 2001)). Similarly, excusable neglect is unlikely when a plaintiff makes numerous attempts to contact the defendant to resolve the matter. See PepsiCo, Inc., 238 F. Supp. 2d at 1177. Here, Defendant was properly served with the Summons, Complaint, the First Amended Complaint, and the Clerk's Notice of Entry of Default. After Plaintiffs filed suit, Defendant sent Plaintiffs a valid check for the final payment under the Settlement Agreement, but Defendant never responded to the complaint. Defendant also participated in settlement negotiations with Plaintiffs. Because Defendant was aware of the action against it and chose not to respond, it is unlikely that there was excusable neglect. Therefore, this factor weighs in favor of default judgment.

6. Policy Favoring Decision on the Merits

Although courts prefer to issue judgments on the merits, a defendant's failure to answer a complaint "makes a decision on the merits impractical, if not impossible." PepsiCo, Inc., 238 F. Supp. 2d at 1177. Termination of a case before hearing the merits is allowed when a defendant fails to defend an action. Id. Here, Defendant's failure to answer the complaint or otherwise appear makes a decision on the merits virtually impossible.

Taken together, the Eitel factors support an entry of default judgment.

D. Recovery

1. Damages: Unpaid Contributions, Liquidated Damages, & Interest

The plaintiff "has the burden of proving damages through testimony or written affidavit." Bd. of Trustees of the Boilermaker Vacation Tr. v. Skelly, Inc., 389 F.Supp.2d 1222, 1226 (N.D. Cal. 2005). Plaintiffs state they are entitled to the relief sought under 29 U.S.C. § 1132(g)(2), which provides that a court shall award a fiduciary who prevails in a § 1145 claim (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 attorney's fees and costs; and (E) other appropriate legal or equitable relief.

Plaintiffs' entitlement to these amounts is supported by the declarations of Robbie Goodrich, who reviewed Defendant's file and account. Goodrich Decl. ¶ 5. Plaintiffs conducted an audit of Defendant's books in September 2018. Goodrich Decl. Ex. I. Plaintiffs' audit revealed that Defendant had missed an additional $23,271.88 in contributions. Goodrich Decl. Exhibit I at 1. With liquidated damages and interest through September 2018, the total due owed is $37,161.87. Id. Plaintiffs also assessed $3,289.54 in liquidated damages, interest, and attorney's fees owed as a result of Defendant's late contributions between July 2017 and January 2018 and the months of May and June 2018. Id.

Plaintiffs attached the audit report they sent to Defendant in May 2018 to support their calculations for damages from 2014 to the end of 2017. Goodrich Decl. Ex. H at 5. They also included a copy of the summary of all outstanding amounts owed by Defendant with their calculations. Goodrich Decl. Ex. I. Finally, Plaintiffs calculated that their damages from Defendant's breach of the Settlement Agreement total $25,674.82, including $6,384.93 in liquidated damages for late payments, $12,646.14 in interest, and $6,643.75 in attorney's fees. Id. Plaintiffs submitted their detailed billing records to support the requested attorney's fees. Goodrich Decl. Exhibit J. Those attorney's fees cover work performed from August 2015 to April 2018. Id. The parties entered into the Settlement Agreement on August 25, 2017, and the agreement allowed for recovery of attorney's fees relating to the collection of installments owed under the Settlement Agreement and any contributions not timely paid going forward. FAC ¶ 8.

2. Attorney's Fees & Costs

A reasonable hourly rate is that prevailing in the community for similar work performed by attorneys of comparable skill, experience, and reputation. Camacho v. Bridgeport Fin., Inc., 523 F.3d 973, 979 (9th Cir. 2008). The relevant community is "the forum in which the district court sits," here, the Northern District of California. Id. The party requesting fees must produce satisfactory evidence that the rates are in line with community rates. See Blum v. Stenson, 465 U.S. 886, 895 n. 11 (1984). The Ninth Circuit has found that rates between $375-$400 were in line with rates charged by ERISA counsel in 2007. See e.g. Welch v. Metropolitan Life Ins. Co., 480 F.3d 942, 947 (9th Cir. 2007). Other courts have approved hourly rates for paralegals that are comparable to the $135 per hour sought here. See e.g. Echague v. Metro. Life Ins. Co., 69 F.Supp.3d 990, 996 (N.D. Cal. 2014) (approving $150/hour for paralegal, $250/hour for an associate, and $650/hour for lead attorney in an ERISA case); Oster v. Std. Ins. Co., 768 F.Supp.2d 1026, 1034 (N.D. Cal. 2011) (approving $150/hour for paralegal, $400/hour for an associate, and $600/hour for lead attorney in an ERISA case).

Plaintiffs submitted a declaration showing their entitlement to fees and costs. Attorney Tracy Mainguy, whose hourly rate is $275, was admitted to the bar in 1995 and has practiced in labor law and real estate since for the last twenty years. Id. at ¶ 6. Paralegals Judy Castillo and Aaron Nathan, whose hourly rates are $100, are both senior paralegals with over a decade of experience. Id. at ¶¶ 9-10. These hourly rates are reasonable.

Reasonable hours expended on a case are hours that are not "excessive, redundant, or otherwise unnecessary." McCown v. City of Fontana, 565 F.3d 1097, 1102 (9th Cir. 2009). The party requesting fees must provide detailed time records documenting the tasks completed and the time spent. See id.; Welch, 480 F.3d at 945-46. Mainguy billed 38.75 hours in this case. Mainguy Decl. ¶ 5. Castillo and Nathan spent a combined 1.25 hours on this case. Id. at ¶ 5. Mainguy submitted detailed billing records to support their hours. Mainguy Decl. Ex. A. These hours are reasonable.

3. Injunctive Relief

Plaintiffs also seek to conduct an audit of Defendant's records in order to discover if there are additional amounts owing. ERISA states that employers must "maintain records with respect to each of [its] employees sufficient to determine the benefits due or which may become due to such employees" and provide this information to the plan administrators. 29 U.S.C. § 1059(a)(1). Because Plaintiffs seek records for the purpose of determining benefits due to employees under the trusts, Plaintiffs are entitled to these records. Further, the records are necessary to enable Plaintiffs to conduct an audit as provided for in the Trust Agreements.

Plaintiffs ask the court to retain jurisdiction so that Plaintiffs can amend the judgment if the audit reveals further amounts owed.

V. CONCLUSION

The Court recommends entering default judgment in Plaintiffs' favor and awarding the requested relief of $77,510.01. The Court also recommends that the District Court retain jurisdiction of this case. This case is reassigned to a District Judge. Any party may serve and file specific written objections to this recommendation within fourteen (14) days after being served with a copy. See 28 U.S.C. § 636(b)(1)(C); Fed. R. Civ. P. 72(b); Civil Local Rule 72-3. Failure to file objections within the specified time may waive the right to appeal the District Court's order.

IT IS SO ORDERED.