Board of Trustees of the Locals 302 and 612 of the Intermational Union of Operating Engineers Construction Industry Health and Security Fund v. Fenix Earthworks LLC

1 2 3 4 5 6 7 UNITED STATES DISTRICT COURT WESTERN DISTRICT OF WASHINGTON 8 AT SEATTLE 9 10 BOARD OF TRUSTEES OF THE CASE NO. C22-0799JLR LOCALS 302 AND 612 OF THE 11 INTERNATIONAL UNION OF ORDER OPERATING ENGINEERS 12 CONSTRUCTION INDUSTRY HEALTH AND SECURITY FUND, 13 et al., 14 Plaintiffs, 15 v. 16 FENIX EARTHWORKS LLC, 17 Defendant. 18 I. INTRODUCTION 19 Before the court is Plaintiffs Board of Trustees of the Locals 302 and 612 of the 20 International Union of Operating Engineers Construction Industry Health and Security 21 Fund, Locals 302 and 612 of the International Union of Operating Engineers-Employers 22 1 Construction Industry Retirement Fund, and Western Washington Operating 2 Engineers-Employers Training Trust Fund (collectively, the “Trusts”) motion for 3 summary judgment. (Mot. (Dkt. # 31); Reply (Dkt. # 34).) Defendant Fenix Earthworks 4 LLC (“Fenix”) did not respond to the motion. (See generally Dkt.) The court has 5 considered the motion, the relevant portions of the record, and the applicable law. Being 6 fully advised, the court GRANTS the Trusts’ motion for summary judgment. 7 II. BACKGROUND 8 The Trusts are joint labor-management funds established pursuant to Section 9 302(c) of the Labor Management Relations Act (“LMRA”), 29 U.S.C. § 186(c), and the 10 Employee Retirement Income Security Act (“ERISA”), 29 U.S.C. § 1001, et seq. 11 (Compl. (Dkt. # 1) ¶ 2.) The Trusts provide certain benefits to eligible employees 12 including health and welfare benefits, pension benefits, annuity benefits, and 13 apprenticeship benefits. (Keck Decl. (Dkt. # 32) ¶ 17.) The Trusts are primarily funded 14 by employer contributions. (Id. ¶ 7.) An employer’s obligation to contribute to the 15 Trusts arises from a collective bargaining agreement (“CBA”) and “Associate 16 Agreements,” the latter of which allow employers to contribute on behalf of 17 non-bargained employees. (Id. ¶¶ 9-10.) The employer reports its contributions to the 18 Trusts on a per hour paid basis. (Id. ¶ 11.) The Trusts periodically perform payroll audits 19 to confirm that employers are accurately reporting and contributing on behalf of its 20 bargained and non-bargained employees. (Id. ¶ 16.) 21 In 2017, Fenix executed four trust agreements (the “Trust Agreements”) through 22 which it bound itself to the terms and conditions of the CBA between Local 302 and 612 1 of the International Union of Operating Engineers and the Associated General 2 Contractors of Washington and the Associate Agreement with the Trusts. (Id. ¶¶ 18, 20; 3 see also id. ¶ 18, Ex. B (“Trust Agreements”); id. ¶ 21, Ex. C (“CBAs”).) As a signatory 4 employer, Fenix agreed to pay the Trusts monthly contributions as well as other funds as 5 set forth in the CBA, such as union dues and ancillary funds. (Keck Decl. ¶¶ 22-26. See 6 generally CBAs.) After signing the Trust Agreements, Fenix hired bargained and 7 non-bargained employees that performed work covered by the CBA and Associate 8 Agreement, triggering Fenix’s contribution and reporting obligations under the Trust 9 Agreements. (Keck Decl. ¶¶ 27-28.) 10 The Trusts filed this lawsuit against Fenix on June 8, 2022, claiming Fenix either 11 failed to pay or failed to timely pay contributions for the work months of August 2021 12 through the time of filing. (See generally Compl.) In its complaint, Fenix sought 13 (1) judgment on unpaid contributions, liquidated damages, and interest in connection 14 with the delinquent period of August 2021 through April 2022; (2) judgment on “all 15 outstanding contributions, liquidated damages, and interest due to [the Trusts] for the 16 months of May 2022 through current”; (3) reasonable attorneys’ fees and costs; and 17 (4) “such other and further relief as this court deems just and equitable.” (Compl. at 4.) 18 Fenix eventually appeared and answered the complaint. (See Answer (Dkt. # 24).) 19 On November 2, 2023, a Fringe Benefit Contributions Compliance Report (the 20 “Audit”) was issued, identifying specific dollar totals that Fenix underreported and/or 21 underpaid in fringe benefit contributions for the January 2021 through September 2022 22 Audit period. (Keck Decl. ¶ 30 & Ex. E (“Audit”).) The Audit also determined that, with 1 respect to the same time period, Fenix owed specified amounts of liquidated damages, 2 interest, ancillary funds, and Dues Check-off, but that it had overpaid on certain 3 contributions by nearly $50,000. (Keck Decl. ¶¶ 31-36. See generally Audit.) 4 On February 2, 2024, the parties filed a stipulated motion in which defense 5 counsel sought to withdraw from this matter due to Fenix’s “inability to continue to pay 6 legal counsel and the winding up of the business entity.” (Stip. Mot. (Dkt. # 30) at 4.) 7 Fenix consented to the withdrawal. (Id. at 8.) The court granted the motion to withdraw 8 but declined to extend unexpired case deadlines, as the parties had requested in their 9 motion. (2/5/24 Order (Dkt. # 30) at 4; see also Stip. Mot. at 5.) The Trusts timely filed 10 their motion for summary judgment, to which Fenix did not respond. (See generally 11 Mot.; Dkt.) The motion is now ripe for decision. 12 III. ANALYSIS 13 The court sets forth the relevant legal standard before turning to the merits of the 14 Trusts’ motion for summary judgment. 15 A. Legal Standard 16 Summary judgment is appropriate if the evidence viewed in the light most 17 favorable to the non-moving party shows “that there is no genuine dispute as to any 18 material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 19 56(a); see Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). A fact is “material” if it 20 might affect the outcome of the case. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 21 (1986). A factual dispute is “‘genuine’ only if there is sufficient evidence for a 22 reasonable fact finder to find for the non-moving party.” Far Out Prods., Inc. v. Oskar, 1 247 F.3d 986, 992 (9th Cir. 2001) (citing Anderson, 477 U.S. at 248-49). The moving 2 party bears the initial burden of showing there is no genuine dispute of material fact and 3 that it is entitled to prevail as a matter of law. Celotex, 477 U.S. at 323. If the moving 4 party meets its burden of production, the burden then shifts to the nonmoving party to 5 identify specific facts from which a factfinder could reasonably find in the nonmoving 6 party’s favor. Celotex, 477 U.S. at 324; Anderson, 477 U.S. at 250. 7 B. The Trust Funds’s Motion for Summary Judgment 8 This action is governed by ERISA, the principal purpose of which is to enable the 9 prompt collection of outstanding employer contributions. Cent. States, Se. & Sw. Areas 10 Pension Fund v. Cent. Transp., 472 U.S. 559, 580 (1985). ERISA provides in relevant 11 part as follows: 12 Every employer who is obligated to make contributions to a multiemployer plan under the terms of the plan or under the terms of a collectively bargained 13 agreement shall, to the extent not inconsistent with law, make such contributions in accordance with the terms and conditions of such plan or 14 such agreement. 15 29 U.S.C. § 1145. 16 A civil action may be brought . . . (3) by a participant, beneficiary, or fiduciary (A) to enjoin any act or practice which violates any provision of 17 this subchapter or the terms of the plan, or (B) to obtain other appropriate equitable relief (i) to redress such violations or (ii) to enforce any provisions 18 of this subchapter or the terms of the plan. 19 Id. § 1132(a)(3). 20 In any action under this subchapter by a fiduciary for or on behalf of a plan to enforce section 1145 of this title in which a judgment in favor of the plan 21 is awarded, the court shall award the plan— (A) the unpaid contributions, (B) interest on the unpaid contributions, (C) an amount equal to the greater 22 of— (i) interest on the unpaid contributions, or (ii) liquidated damages 1 provided for under the plan in an amount not in excess of 20 percent (or such higher percentage as may be permitted under Federal or State law) of the 2 amount determined by the court under subparagraph (A), (D) reasonable attorney’s fees and costs of the action, to be paid by the defendant, and 3 (E) such other legal or equitable relief as the court deems appropriate. 4 Id. § 1132(g)(2). Section 1132(g)(2) is “mandatory and not discretionary,” and it applies 5 when (1) the employer is delinquent at the time the action is filed, (2) the fiduciary 6 obtains a judgment in favor of the plan, and (3) the plan provides for such an award. Nw. 7 Adm’rs, Inc. v. Albertson’s, Inc., 104 F.3d 253, 257 (9th Cir. 1996) (quoting Operating 8 Eng’rs Pension Tr. v. Beck Eng’g & Surveying, Co., 746 F.2d 557, 569 (9th Cir. 1984)). 9 The Trusts “have a statutory and fiduciary duty to collect contributions that 10 are owed.” Operating Eng’rs Pension Tr. v. A-C Co., 859 F.2d 1336, 1343-44 11 (9th Cir. 1988). Where an employer overpays contributions, ERISA provides for 12 the return of those contributions only if the employer shows that they resulted 13 from a mistake of fact and that the equities favor restitution. British Motor Car 14 Distribs., Ltd. v. S.F. Auto. Indus. Welfare Fund, 882 F.2d 371, 374 (9th Cir. 15 1989). 16 The court now addresses the Trusts’ motion, guided by these general principles. 17 1. August 2021 Through June 2022 Delinquent Period 18 The Trusts assert that Fenix failed to pay certain contributions for the work 19 months of August 2021 through June 2022. (Mot. at 14.) The Trusts present evidence 20 that, in connection with the August 2021 through June 2022 delinquency period, Fenix 21 owes $318,546.82 in unpaid contributions. (Keck Decl. ¶ 12, Ex. A (remittance reports 22 for the delinquent period); id. ¶ 29, Ex. D (claim summary).) 1 The court has reviewed the Trusts’ materials and concludes that they have met 2 their burden of production on this claim. Because Fenix fails to rebut the Trusts’ 3 position, the court GRANTS summary judgment to the Trusts on their claim for 4 delinquent contributions stemming from the August 2021 through June 2022 delinquent 5 period, in the total amount of $318,546.82. 6 2. The January 2021 Through September 2022 Audit Period 7 The Trusts next assert that, pursuant to the Audit of the period extending from 8 January 2021 through September 2022, Fenix failed to report certain compensable hours 9 for its bargaining unit employees and therefore failed to pay the required contributions 10 for those unreported hours. (Mot. at 15.) The Audit also revealed that Fenix overpaid 11 certain contributions during the Audit period. (Id. at 17.) The Trusts provide evidence 12 that, in connection with the January 2021 through September 2022 Audit period, Fenix 13 owes $309,442.26 in unpaid Health, Pension, and Training contributions, $5,316.23 in 14 ancillary funds, and $13,640.05 for Dues Check-Off. (Canada Decl. ¶ 8; Keck Decl. ¶ 35 15 & Ex. F (accounting chart). See generally Audit.) The Trusts have also agreed to offset 16 the underpaid amounts by $1,506.59, which is the amount that Fenix overpaid as a result 17 of clerical error. (Mot. at 19; Keck Decl. ¶ 39); see British Motor Car Distribs., 882 F.2d 18 at 374. 19 The court has reviewed the Trusts’ materials and concludes that they have met 20 their burden of production on this claim. Because Fenix fails to rebut the Trusts’ 21 position, the court GRANTS summary judgment to the Trusts on its claim for unpaid 22 contributions and related ancillary funds and dues—less $1,506.59 in overpayments—in 1 connection with the January 2021 through September 2022 Audit period, in the total 2 amount of $326,711.95. 3 3. Liquidated Damages, Interest, and Attorney’s Fees and Costs 4 Finally, the Trusts assert that Fenix owes liquidated damages, interest, and 5 attorney’s fees and costs under ERISA and pursuant to the terms of the Trust 6 Agreements. (Mot. at 19); see also 29 U.S.C. § 1132(g)(2) (providing that, in the event a 7 fiduciary secures judgment in an action to collect delinquent contributions, the court 8 “shall award” interest on the unpaid contributions, liquidated damages, reasonable 9 attorney’s fees and costs, and other legal or equitable relief as appropriate). The Trusts 10 present evidence that Fenix owes $42,972.80 in liquidated damages and $69,079.20 in 11 interest for the August 2021 through June 2022 delinquent period (Keck Decl. ¶ 29 & Ex. 12 D (claim summary)), as well as $37,285.22 in liquidated damages, $71,713.74 in interest, 13 and $8,153.50 in Audit accounting fees for the January 2021 through September 2022 14 Audit period (Canada Decl. ¶ 9; id. ¶ 16, Ex. A (random fringe benefit contributions 15 compliance report)). The Trusts state their intention to file a motion for attorney’s fees 16 and costs at a later time “should it prevail on this motion for summary judgment.” (Mot. 17 at 23.) 18 The court has reviewed the Trusts’ materials and concludes that they have met 19 their burden of production on this claim. The court further concludes that an award under 20 Section 1132(g)(2) is mandated because the Trusts have established (1) their entitlement 21 to judgment, (2) that unpaid contributions existed at the time of suit, and (3) that the Trust 22 Agreements expressly “provide for the assessment of interest, liquidated damages, costs, 1 and attorney fees.” (Mot. at 19, 21; Trust Agreements at 83; Keck Decl. ¶¶ 42-47 & Exs. 2 G-J (revised trust agreements and collections policy).) See Albertson’s, Inc., 104 F.3d at 3 257. For this reason, and because Fenix fails to rebut the Trusts’ position, the court 4 GRANTS summary judgment to the Trusts on its claim for liquidated damages, interest, 5 and Audit accounting fees in connection with the August 2021 through June 2022 6 delinquent period and the January 2021 through September 2022 Audit period, in the 7 total amount of $229,204.46. The court likewise GRANTS summary judgment to the 8 Trusts on its claim for reasonable attorney’s fees and costs, in an amount to be 9 determined at a later date. 10 IV. CONCLUSION 11 For the foregoing reasons, the court GRANTS the Trusts’ motion for summary 12 judgment (Dkt. # 31). Specifically, the court ORDERS as follows: 13 1. The court GRANTS summary judgment in the Trusts’ favor and 14 VACATES the trial date and all remaining pretrial deadlines (see Sched Order (Dkt. 15 # 27)); 16 2. The court GRANTS the Trusts’ request for a judgment in the total amount 17 of $874,463.23, comprising: (1) $318,546.82 in delinquent contributions and associated 18 interest and liquidated damages stemming from the August 2021 through June 2022 19 delinquent period; (2) $326,711.95 in unpaid contributions and related ancillary funds 20 and dues, less overpayments, in connection with the January 2021 through September 21 2022 Audit period; and (3) $229,204.46 in liquidated damages, interest, and Audit 22 1 accounting fees for the August 2021 through June 2022 delinquent period and the 2 January 2021 through September 2022 Audit period. 3 3. The court GRANTS the Trusts’ request for reasonable attorney’s fees and 4 costs in an amount yet to be determined. The Trusts shall file a motion for attorney’s fees 5 by no later than April 26, 2024 and note the motion in accordance with Local Civil Rule 6 7(d)(3). See Local Rules W.D. Wash. LCR 7(d)(3). 7 Dated this 29th day of March, 2024. A 8 JAMES L. ROBART 9 United States District Judge 10 11 12 13 14 15 16 17 18 19 20 21 22