Construction Laborers Trust Funds for Southern California Administrative Company sued Garrison Demolition and Engineering Inc., seeking to audit the company's books and payroll records to determine whether it properly paid required contributions to employee benefit trust funds from February 2022 through August 2023. The trust fund company, acting as a fiduciary under the Employee Retirement Income Security Act, alleged that Garrison owed $30,812 in delinquent contributions but had refused to produce records for a complete audit.
Judge Snyder found that all seven factors under the Ninth Circuit's Eitel test favored entering default judgment against the demolition company. 'The Employer was given the opportunity to present additional documents,' she wrote, noting that Garrison 'was presented with the findings of the Audit, and given an opportunity to dispute it; it never did.' The judge emphasized that any delay would prejudice trust fund participants, writing that 'the continued well-being and security of millions of employees and their dependents are directly affected by these plans.'
Snyder rejected any argument that the case should proceed to trial on the merits, finding that Congress's policy of 'holding employers to the full and prompt fulfillment of their contribution obligations are proper and weighty within the framework of ERISA.' She noted that ERISA Section 515 was specifically designed 'to simplify trust fund collection actions by restricting the availability of contract defenses, which make collection actions unnecessarily cumbersome and costly.'
The case began when the trust funds requested an audit of Garrison's records but the company failed to comply. After filing suit in federal court, Garrison never appeared to defend itself despite multiple opportunities. The partial audit that the trust funds were able to conduct revealed the $30,812 in unpaid contributions, but because Garrison refused to produce all required records, Judge Snyder noted that 'there may be more, undiscovered damages.'
Garrison had argued implicitly through its non-participation that the trust funds should not be entitled to default judgment, but Judge Snyder found this position untenable. 'Defendant had multiple opportunities to appear and defend themselves in this action and has not done so,' she wrote. The judge determined that the company 'cannot complain now of its own violation of this Court's Order for an Accounting.'
The ruling appears consistent with other circuits that have enforced ERISA's streamlined collection procedures for employee benefit contributions. The Supreme Court has previously held in Central States v. Central Transport that Congressional concerns about ensuring prompt payment of employee benefits are 'proper and weighty within the framework of ERISA,' supporting courts that prioritize collection over procedural delays.
Beyond the monetary judgment, Judge Snyder issued a comprehensive injunction requiring Garrison to produce extensive payroll and business records, including certified payroll records, tax returns, bank statements, and collective bargaining agreements. The order specifically allows trust fund representatives to 'enter its premises' and access 'computer programs and/or files' where records are kept, with failure to comply potentially resulting in contempt of court.
The judgment reserves the court's jurisdiction to reopen the case if the ordered audit reveals additional unpaid contributions, meaning Garrison could face further liability. Judge Snyder specified that the ruling 'shall not operate as res judicata as to the amount of contributions due,' allowing for additional collection actions if warranted by the audit results.