1 2 3 4 IN THE UNITED STATES DISTRICT COURT 5 FOR THE NORTHERN DISTRICT OF CALIFORNIA 6 7 BOARD OF TRUSTEES OF THE BAY Case No. 24-cv-08468-MMC AREA ROOFERS HEALTH & 8 WELFARE TRUST FUND, et al., ORDER DENYING DEFENDANT'S 9 Plaintiffs, MOTION TO SET ASIDE DEFAULT AND DEFAULT JUDGMENT; 10 v. VACATING HEARING

11 ELITE WATERPROOFING & EPOXY FLOORING,

12 Defendant. 13 14 Before the Court is defendant Elite Waterproofing & Epoxy Flooring's ("Elite") 15 Motion, filed May 8, 2025, "to Vacate Entry of Default and Default Judgment." Plaintiffs1 16 have filed opposition, to which Elite has replied. Having read and considered the papers 17 filed in support of and in opposition to the motion, the Court deems the matter suitable for 18 decision on the parties' respective written submissions, VACATES the hearing scheduled 19 for June 20, 2025, and rules as follows. 20 As set forth in the Court's order granting default judgment, plaintiffs alleged the 21 following in their Complaint:

22 (1) [P]laintiffs are the Board of Trustees of five "Trust Funds" and a Trustee of those funds, all of which funds are "employee 23 benefit plan[s]" (see Compl. ¶¶ 10, 12); (2) Elite is an employer that is a party to a collective bargaining agreement titled 24 "Working Agreement" (hereinafter, "the CBA"), as well as a 25 1 Plaintiffs are the Board of Trustees of the Bay Area Roofers Health & Welfare 26 Trust Fund, Pacific Coast Roofers Pension Plan, East Bay/North Bay Roofers Vacation Trust Fund, Bay Area Counties Roofing Industry Promotion Fund, and Bay Area Counties 27 Roofing Industry Apprenticeship Training Fund, as well as Carlos Opfermann, a Trustee party to a "Trust Agreement," under which agreements Elite is 1 required to "make contributions" to the Trust Funds on behalf of "certain of [Elite's] employees" (see Compl. ¶¶ 10, 16, 20; 2 see also Compl. Ex. A (CBA), Art. XVIII-XXII, Ex. B (Individual Employer Agreement), and Ex. C (Trust Agreement) ¶ III); 3 (3) under the Trust Agreement, plaintiffs are authorized "to request and review a broad range of business records to 4 determine whether an employer has satisfied all obligations to the Trust Funds" (see Compl. ¶ 20; see also Ex. [C] ¶¶ III.D); 5 (4) on or about October 2, 2023, plaintiffs' auditor notified Elite that "the Trust Funds would be conducting an audit of Elite for 6 the period of January 1, 2022, through December 31, 2022," and requested "six categories of documents," but Elite "never 7 produced any documents to the auditor" (see Compl. ¶ 21); (5) thereafter, on various dates beginning in April 2024, 8 plaintiffs' counsel made written and telephonic demands that Elite produce the requested documents, but Elite did not do so, 9 and had not done so as of November 26, 2024, the date on which plaintiffs filed the instant action (see Compl. ¶¶ 22-24). 10 (See Order, filed April 10, 2025 [Doc. No. 21] at 2:1-18.) Based on the above, plaintiffs 11 asserted that Elite had violated the terms of the CBA and Trust Agreement, and that, 12 under the Employee Retirement Income Security Act ("ERISA"), they were entitled to an 13 order directing Elite to submit to the requested audit. 14 After Elite was served with the summons and Complaint, the Clerk of Court, upon 15 request by plaintiffs after the time for Elite to file a response had passed, entered the 16 default of Elite. Thereafter, plaintiffs filed a motion for default judgment, which motion the 17 Court granted by order filed April 10, 2025. The order (1) required Elite "to submit to an 18 audit on no less than two weeks written notice from plaintiffs," and further required Elite to 19 "make available to the auditor, for the period January 1, 2022, through December 31, 20 2022, the six categories of documents identified in the letter the auditor previously 21 provided to Elite on or about October 2, 2023" (see id. at 3:18-21), (2) afforded plaintiffs 22 leave to request "a potential award of monetary relief in amounts to be determined 23 according to proof . . . if warranted by the results of the audit" and afforded Elite an 24 opportunity to respond to any such request (see id. at 3:22-4:4), (3) awarded plaintiffs 25 fees and costs in the total amount of $6,229 (see id. at 4:5-6), and (4) retained jurisdiction 26 over the matter "for purposes of enforcing the . . . order and amending the judgment to 27 include, following the audit, the sums, if any, determined by the Court to be due and 1 owing" (see id. at 4:7-9). The Clerk of Court thereafter entered judgment on the order 2 granting default judgment. (See Doc. No. 22.) 3 By the instant motion, Elite seeks an order setting aside the entry of default and 4 the default judgment. 5 In determining whether to set aside an entry of default or to set aside a default 6 judgment, district courts consider the same factors, namely, (1) "whether the party 7 seeking to set aside the default engaged in culpable conduct that led to the default," 8 (2) "whether it had no meritorious defense," and (3) "whether reopening the default 9 judgment would prejudice the other party." See United States v. Signed Personal Check 10 No. 730 of Yubran S. Mesle,

(9th Cir. 2010). The "standard" is 11 "disjunctive," and, consequently, a "finding that any one of [the] factors is true is sufficient 12 reason for the district court to refuse to set aside the default." See

13 Here, the Court first considers whether Elite has identified a meritorious defense. 14 In that regard, although "the burden on a party seeking to vacate a default judgment is 15 not extraordinarily heavy," the party "must present specific facts that would constitute a 16 defense." See TCI Group Life. Ins. Plan v. Knoebber,

, 700 (9th Cir. 2001). 17 The defenses identified by Elite in its motion pertain to the scope of the documents 18 sought by plaintiffs.2 In its written demand for an audit, plaintiffs' auditor stated that the 19 Trust Funds sought to examine specified "records for the period January 1, 2022 through 20 December 31, 2022," e.g., "time cards," "[p]ayroll journals," "Federal and California 21 quarterly tax returns, W-2's, and 1099s," "[p]ersonnel records of employees indicating job 22 classifications and dates of hire and termination," and "cash disbursement journals." 23

24 2 Elite has attached to its motion a proposed Answer, which pleading, in addition to raising defenses arising from the scope of the documents sought by plaintiffs, lists a 25 number of other defenses, such as "Comparative Negligence," "Equitable Estoppel," "Laches," and "Unclean Hands." (See Def.'s Mot. Ex. A.) The proposed answer, 26 however, does not include any facts, let alone the requisite "specific facts," see TCI Group Life Ins. Plan, 244 F.3d at 700, in support of the other defenses. Indeed, Elite, in 27 its motion, does not contend that any defense unrelated to its challenge to the scope of 1 (See Wahidi Decl. Ex. A.) According to Elite, such request was "ultra vires and outside 2 the scope of the documents and information that the Union and the Plaintiff Trust Funds 3 may request pursuant to the CBA and Trust Agreements" and that, under such asserted 4 circumstances, the Trust Funds, rather than Elite, "breached the CBA and Trust 5 Agreements." (See Def.'s Mot. at 10:4-10.) In particular, according to a declaration 6 submitted by Elite's owner, plaintiffs' auditor had requested Elite produce "all records for 7 all employees for the entire year of 2022" (see Wahidi Decl. ¶ 5), "not just union 8 employees" (see id. ¶ 3), and, Elite's owner contends, providing the auditor with the 9 requested documents could subject Elite to being "sued" by its employees (see id. ¶ 5). 10 Plaintiffs do not dispute that their auditor's request sought documents for all 11 employees, but argue that such request was not improper and was one with which Elite 12 was obligated to comply. As set forth below, the Court agrees. 13 First, contrary to Elite's characterization of the request for records of all employees 14 as "ultra vires" and "outside the scope" of the parties' agreements, the Trust Agreement 15 expressly provides that, when conducting an audit, plaintiffs have the power to inspect, 16 inter alia, "time cards for all employees," "individual earnings for all employees," and "all 17 other documents reflecting the hours and wages and/or piecework records of employees 18 (whether or not such documents are privileged)." (See Compl. Ex. C at III.D.) Elite cites 19 no language in the Trust Agreement or the CBA that the "employees" identified in the 20 above-quoted provision of the Trust Agreement are limited to employees the employer 21 asserts have performed work covered by the CBA. 22 Moreover, as plaintiffs point out, the Supreme Court already has decided the issue 23 Elite seeks to raise as a defense and has rejected it. In Central States, Southeast and 24 Southwest Areas Pension Fund v. Central Transport, Inc.,

(1985), the 25 Supreme Court considered "whether an employer who participates in a multiemployer 26 plan that is governed by [ERISA] must allow the plan to conduct an audit involving the 27 records of employees who the employer denies are participants in the plan," see

at 1

(considering trust agreement providing trustee with right to inspect employer 2 records that contained "the names and current addresses of [company's] Employees, 3 their Social Security numbers, the hours worked by each Employee and past industry 4 employment history in its files"). In explaining why the employer was required to turn 5 over records of employees it contended were not participants in the union's benefit plans, 6 the Supreme Court held that an audit of the records of all employees "is highly relevant to 7 legitimate trustee concerns," see

, namely, to "verify[ ] that the employer has 8 accurately determined the class of covered employees," see

; see also

at 9 568 (finding trustee's request for records of all employees "fully conform[ed] to generally 10 accepted auditing standards"). In sum, the Supreme Court found "there is no reason in 11 ERISA or the plan documents [at issue] why the kind of audit requested [by the trustee] 12 should, as a matter of law, be considered outside the scope of proper plan 13 administration." See

.3 14 In attempting to avoid the holding set forth in Central States, Elite observes that 15 the Supreme Court stated it was not "determin[ing] whether ERISA would independently 16 confer on the trustees a right to perform the sort of audit demanded [therein] in the face 17 of trust documents that explicitly limit the audit powers of trustees." See

. The 18 Trust Agreement at issue in the instant action, however, does not contain any language 19 "explicitly," or for that matter, implicitly, limiting the audit powers of the Trust Funds to 20 inspecting only records of employees that an employer contends are performing covered 21 work. Indeed, in addition to the express right to inspect the employer's records of "all 22 employees," the Trust Agreement provides that plaintiffs have the power to "require any 23 person with obligations or rights [under the Trust Agreement] to furnish, or permit an audit 24

25 3 Although, as noted, Elite contends it could be liable to its employees if it were to provide the auditor with the requested information, Elite fails to identify any law under 26 which an employee would have a right to bring such claim. Moreover, as also noted, the Supreme Court, in Central States, required the employer in that case to provide the 27 trustees with the names, current addresses, social security numbers, and work histories 1 of, any reasonable information, data, and documents which are pertinent in verifying the 2 || accuracy of contributions and acting upon claims for benefits, or which are otherwise 3 || pertinent in administering th[e] Trust." (See Compl. Ex. C at VI.D.) 4 Accordingly, the Court finds Elite has not identified a meritorious defense, and, 5 || consequently, the motion is hereby DENIED.* 6 IT IS SO ORDERED. 7 8 || Dated: June 2, 2025 . AKINE M. CHESNEY 9 Unitéd States District Judge 10 11 12

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17 18 19 20 21 22 23 24 25 26 * in light of the above finding, the Court does not address herein the parties’ respective arguments pertaining to the remaining two factors, namely, whether, as Elite 27 || asserts, its failure to appear is the result of negligence rather than culpable conduct, and whether, as plaintiffs assert, they would be prejudiced if the default and default judgment 2g || were to be set aside.