BOARD OF TRUSTEES OF TEAMSTERS LOCAL 631 SECURITY FUND FOR SOUTHERN NEVADA v. WORLD WIDE EXHIBITS INC (2025)

Order Denying Defendant's Motion to Set Aside Default Judgment

[ECF No. 15]

On July 19, 2024, I granted plaintiffs Board of Trustees of the Teamsters Local 631 Security Fund for Southern Nevada and Board of Trustees of the Teamsters Convention Industry Training Fund's motion for default judgment. Mot., ECF No. 13. Defendant World Wide Exhibits, Inc. now moves to set aside the default judgment against it. Mot., ECF No. 15. Plaintiffs responded to the motion. Opp'n, ECF No. 16. World Wide filed a reply. Reply, ECF No. 18. Because I find that there is no good cause to vacate the default judgment, I deny World Wide's motion.

I. Background

Plaintiffs are “employee benefit trust funds” and fiduciaries under the Employee Retirement Income Security Act of 1974 (“ERISA”), providing benefits to individuals employed by World Wide in Nevada. Compl., ECF No. 1 at 1–2. The employees were covered by a collective bargaining agreement (“CBA”) between World Wide and the International Brotherhood of Teamsters Local 631. Id.; ECF No. 12 at 3 n.1. The Collective Bargaining Agreement (CBA) requires World Wide to make employee benefit contributions to the plaintiffs on behalf of its covered employees. ECF No. 1 at 2. Plaintiffs are established by trust agreements. Id. Plaintiffs sued World Wide after it “failed to respond to [plaintiffs’] requests to make its books and records available for an Audit” as is required under ERISA and the trust agreements. Id. As plaintiffs alleged, “[i]f an employer signatory to the CBA fails to make its books and records available for an Audit, the Trust Agreements and the Trust Funds’ Collection Policy and Procedures permit [plaintiffs] to presume contributions in the amount of $100,000 for each year covered by the attempted audit.” Id. Plaintiffs brought claims against World Wide for its refusal to make its books and records available and for failing to meet its obligations to remit employee benefit contributions as required by the CBA and trust agreements. Id. at 2–3.

Before initiating this lawsuit, plaintiffs sent World Wide a series of demand letters explicitly requesting that World Wide's books and records be made available and threatening suit. Aug. 11, 2023 Letter, ECF No. 12-9; Sept. 1, 2023 Letter; ECF No. 12-10; Sept. 12, 2023 Letter, ECF No. 12-11. The last letter specified that without immediate action by World Wide, plaintiffs, by law, could assume contributions totaling more than $1.6 million. ECF No. 12-11 at 2. After filing suit on September 20, 2023, plaintiffs claim they prepared to serve World Wide through a registered agent in Nevada. ECF No. 16 at 6; Humes Decl., ECF No. 16-3 at 2. However, plaintiffs state that World Wide does not maintain a registered agent in Nevada, a violation of Nevada law, which requires all entities who conduct business in Nevada to maintain a registered agent. ECF No. 16 at 6 (citing Nev. Rev. Stat. § 80.060 (“Every foreign corporation owning property or doing business in this State shall appoint and keep in this State a registered agent ․”)). World Wide says nothing in its motion that would suggest that it does, in fact, maintain a registered agent in Nevada. See generally ECF No. 15.

Plaintiffs then claim to have utilized two methods to serve the summons and complaint on World Wide. First, they utilized process server Danica Gomboc to personally serve World Wide at its business address in Ontario, Canada on December 8, 2023. ECF No. 5. Gomboc wrote: “on 12/8/2023 at 11:10 AM at 1134 Aerowood Dr., # L4W 1Y5 Mississauga, Ontario Canada. US 00000 I served World Wide Exhibits, Inc. with the above-listed documents by personally delivering a true and correct copy of the documents by leaving with World Wide Exhibits, Inc.” Id. at 2. The summons stated “A lawsuit has been filed against you. Within 21 days after service of the summons on you ․ you must serve on the plaintiff an answer to the attached complaint or a motion under Rule 12 of the Federal Rules of Civil Procedure.” Id. at 1.

World Wide states in its motion that it never received this service. ECF No. 15 at 5. It insists that “[t]he Affidavit of Service does not specify who the Complaint and Summons was given to – or that it was actually given to a person. World Wide did not receive a copy of the Summons and Complaint, and in fact, World Wide's offices were closed during the month of December 2023.” Id. World Wide verified this information with declarations from Anita Parbhu, the General Manager of World Wide, and Neel Parbhu, the owner and CEO of World Wide. See id. (citing Neel Parbhu decl., ECF No. 15-1 and Anita Parbhu decl., ECF No. 15-2).

Plaintiffs also requested that the Ministry of the Attorney General in Ontario, Canada, serve the summons and complaint on World Wide in accordance with the Hague Service Convention and Federal Rules of Civil Procedure 4. ECF No. 16 at 6. They received word that the Ministry of the Attorney General effectuated service on World Wide on February 7, 2024. ECF No. 6. The summons was identical to the one sent in December. Compare ECF No. 5 at 1, with ECF No. 6 at 1. On the certificate, the Ministry of the Attorney General wrote that it served the documents on February 7, 2024, to “1134 Aerowood Drive, Mississauga, ON L4W 1Y5[.]” Id. at 2. It states that it executed service on Neel Parbhu, describing him as “Manager at Worldwide Exhibits Inc.” Id. Neel Parbhu claims to never have received this service, and because he is the owner and CEO of World Wide “[h]e would not have identified himself as the Manager.” Id. (citing Neel Parbhu decl., ECF No. 15-1 at 3).

Additionally, World Wide states that on February 6, 2024, “after receiving a demand letter from Plaintiff,” Anita Parbhu “sent Plaintiff correspondence with World Wide's Employers’ Reports of Contributions for years 2016–2023. World Wide also enclosed three (3) checks for owing contributions. These checks were cashed by Plaintiff.” ECF No. 15 a 5 (citing Anita Parbhu decl., ECF No. 15-2 and Letter from Anita Parbhu with checks, ECF No. 15-3). Plaintiffs admit that the checks were received, but assert that two of the three checks bounced, and none of the three checks or the attached documents were sufficiently responsive to plaintiffs’ audit demands. ECF No. 16 at 7 n.2.

Having received no response to either summons, plaintiffs requested—and were granted—entry of default. Mot, ECF No. 7; Order, ECF No. 10. In their subsequent motion for default judgment, plaintiffs requested relief for delinquent employee benefit contributions ($674,973), liquidated damages ($586,846.39), interest ($586,846.39), audit fees ($550.00) and attorneys’ fees ($18,786.50) for a total of $1,868,002.28. ECF No. 12 at 15. I granted default judgment in these amounts on July 19, 2024. ECF No. 13.

After being granted default judgment, plaintiffs retained counsel in Canada to assist in their collection. Humes decl., ECF No. 16-3 at 5. On January 16, 2025, World Wide was contacted by plaintiffs’ counsel in Canada attempting to collect on the default judgment. ECF No. 15 at 7. World Wide claims this is the first time it “became aware of the Default Judgment.” Id.; see also Neel Parbhu decl., ECF No. 15-1 at 3; Anita Parbhu decl., ECF No. 15-2 at 3. It then filed the instant motion. See ECF No. 15.

II. Legal standard

The court has discretion to set aside a default or default judgment. See Fed. R. Civ. P. 55(c), 60(b); Brandt v. Am. Bankers Ins. Co., 653 F.3d 1108, 1111–12 (9th Cir. 2011). The inquiry of whether to vacate default is an equitable determination “taking account of all relevant circumstances surrounding the party's omission.” Brandt, 653 F.3d at 1111–12 (quoting Pioneer Inv. Servs. Co. v. Brunswick Assocs. Ltd. P'ship, 507 U.S. 380, 395, 113 S.Ct. 1489, 123 L.Ed.2d 74 (1993)). When resolving a defendant's request to set aside default the court's “underlying concern ․ is to determine whether there is some possibility that the outcome of the suit after a full trial will be contrary to the result achieved by the default.” Hawaii Carpenters’ Tr. Funds v. Stone, 794 F.2d 508, 513 (9th Cir. 1986). “Crucially, however, [default] judgment [ ] is a drastic step appropriate only in extreme circumstances; a case should, whenever possible, be decided on the merits.” See United States v. Signed Pers. Check No. 730 of Yubran S. Mesle, 615 F.3d 1085, 1091 (9th Cir. 2010) (quotation omitted). Accordingly, the court resolves any doubt regarding whether to grant relief in favor of vacating default. See O'Connor v. Nevada, 27 F.3d 357, 364 (9th Cir. 1994).

A court may set aside default for “good cause.” See Mesle, 615 F.3d at 1091. The defendant bears the burden of showing good cause under this test. Hawaii Carpenters’, 794 F.2d at 513–14. To determine whether a defendant has shown good cause justifying vacating default, a court considers three factors: (1) whether the defendant engaged in culpable conduct that led to the default; (2) whether the defendant had a meritorious defense; and (3) whether reopening the default would prejudice the plaintiff(s). See Franchise Holding II, LLC. v. Huntington Rests. Grp., Inc., 375 F.3d 922, 925–26 (9th Cir. 2004). This standard is disjunctive; the court may deny the request to vacate default if it finds that the movant has not sufficiently argued any one of the three factors. Id.

III. Discussion

I find that, although the bar is low, World Wide has not demonstrated good cause to set aside the entry of default and default judgment against it.

A. World Wide engaged in culpable conduct.

Culpable conduct is intentional conduct. See Mesle, 615 F.3d at 1092. If a party is “legally sophisticated,” the court may deem its conduct culpable if it has “received actual or constructive notice of the filing of the action and failed to answer[.]” Franchise Holding II, 375 F.3d at 926; Mesle, 615 F.3d at 1093 (“When considering a legally sophisticated party's culpability in a default, an understanding of the consequences of its actions may be assumed, and with it, intentionality.”). If a party is not legally sophisticated, “the term ‘intentionally’ means that a movant cannot be treated as culpable simply for having made a conscious choice not to answer; rather, to treat a failure to answer as culpable, the movant must have acted with bad faith, such as an intention to take advantage of the opposing party, interfere with judicial decisionmaking, or otherwise manipulate the legal process.” Mesle, 615 F.3d at 1091 (internal quotation omitted).¹ “Neglectful failure to answer as to which the defendant offers a credible, good faith explanation ․ is therefore not necessarily—although it certainly may be, once the equitable factors are considered—culpable or inexcusable.” TCI Grp. Life Ins. Plan v. Knoebber, 244 F.3d at 697–98 (9th Cir. 2001), as amended on denial of reh'g and reh'g en banc (May 9, 2001), overruled on other grounds by, Egelhoff v. Egelhoff ex rel. Breiner, 532 U.S. 141, 121 S.Ct. 1322, 149 L.Ed.2d 264 (2001), as recognized by, Delgado v. Dempsey's Adult Care Homes, LLC, 2023 WL 3034263, at *1 (9th Cir. Apr. 21, 2023) (emphasis in original). Because I find that World Wide engaged in culpable conduct even under the less stringent test designed for parties not considered legally sophisticated, I do not analyze whether World Wide is a “legally sophisticated” entity.

World Wide argues that it had no knowledge of the instant case, so its failure to defend could not have been intentional. ECF No. 15 at 9. In support of this, it asserts that its office was closed when the process server allegedly served the complaint and summons in December 2023. Id. at 5. It provides no proof of this beyond the self-serving declarations of two of its corporate officers. See id. (citing Neel Parbhu decl., ECF No. 15-1 and Anita Parbhu decl., ECF No. 15-2). World Wide further contests the alleged service of the second summons and complaint, with both Neel Parbhu and Anita Parbhu alleging they did not receive it. Id. at 6. Its proof is that the returned, executed summons refers to Neel Parbhu as the manager of World Wide, and Neel Parbhu only would have referred to himself as owner and CEO, meaning that he could not have been served. Id. It also argues—in its statement of facts—that “even if service of the summons was effectuated” it was not proper because the second page states that “ ‘that the [unnamed] document has been served’ and then gives the date of February 7, 2024 and the location of the alleged service” and does not state that the complaint specifically was served. Id. (quoting ECF No. 6 at 2) (alteration made in brief). World Wide acknowledges that the attached summons refers to “the attached complaint” but nonetheless insists that the affidavit of service does not explicitly state what document was served on February 7, 2024. Id. (quoting ECF No. 6 at 1). It states—still in its statement of facts—that “[b]ecause World Wide was not properly served with the Summons and Complaint,” it never responded. Id. (emphasis added). In its argument section World Wide then avers, with no qualification in its language, that “it does not appear that a copy of the Complaint was served when the summons was allegedly served.” Id. at 9 (emphasis added). It insists that it could not have gained any advantage by not responding because “[w]hile World Wide could only have owed Plaintiff, at worst, a few thousand dollars for contributions, Plaintiff obtained a Judgment against World Wide for nearly two million dollars.” Id.

I find the arguments by World Wide entirely unconvincing. First, I note that, had World Wide maintained a registered agent in Nevada, as is required by law, it could have been served quickly and without incident. Instead, because it accepted the benefits of doing business in Nevada without adhering to the state's laws, plaintiffs were forced to effectuate service in Canada. There is evidence that two separate attempts were made, and World Wide's insistence that it received neither is not believable. As to the first, it insists that the company was closed for all of December 2023, so service could not possibly be effectuated. World Wide does not provide documentary evidence of this closure in the form of bills, paystubs, or even employee calendars; instead, it relies entirely on two self-serving declarations of its CEO and its manager. See ECF No. 15-1; ECF No. 15-2. As to the second, World Wide effectively accuses the Ministry of the Attorney General of Ontario, Canada of lying about service, insisting that Neel Parbhu could not have been served because he would not self-identify as a manager. ECF No. 15 at 6. This is ridiculous. Nowhere on the complaint does it refer to Neel Parbhu by name. See ECF No. 1. The summons does not refer to him by name, either. ECF No. 6 at 1. Thus, for me to believe World Wide, I would have to accept that the server from the Ministry of the Attorney General not only lied that World Wide was served but went out of their way to look up one of the company's officers names to list on the form. World Wide's story follows that, in all of the searching for Neel Parbhu, the process server still managed to get his job title incorrect. I find this story wholly unbelievable and unreasonable, especially because the far more likely explanation is that this process server was unfamiliar with World Wide's corporate structure and, after serving Neel Parbhu—a person in an executive role at the company—mistakenly wrote “Manager” instead of “CEO” or “owner.”

Even World Wide is apparently unconvinced by its own story, arguing in the alternative in its statement of facts that even if service was effectuated, it was done improperly because, although the top sheet describes there being an “attached complaint,” the affidavit does not specifically state which document was served. Id. Later, in its argument section, World Wide then spins this further, asserting not only that the form itself was improper, but that “it appears” no complaint was served at all. Id. at 9. Again, its only evidence is two self-serving declarations. See ECF No. 15-1; ECF No. 15-2.

It would strain all credulity to take World Wide at its word, not only because its several, conflicting explanatory stories are unbelievable, but also because the filing of this lawsuit was not a surprise. Prior to their two separate attempts to serve World Wide, plaintiffs sent three letters demanding that it open its books and threatening suit. See Aug. 11, 2023 Letter, ECF No. 12-9; Sept. 1, 2023 Letter; ECF No. 12-10; Sept. 12, 2023 Letter, ECF No. 12-11. Plaintiffs even itemized in their third letter exactly how much they would seek in court if World Wide did not comply. See Sept. 12, 2023 Letter, ECF No. 12-11. World Wide's two declarations do not claim that the company did not receive these letters, nor that it was unaware of the prior audit attempts.

Further, World Wide claims that “[o]n February 6, 2024, after receiving a demand letter from Plaintiff, Anita Parbhu, General Manager of World Wide, sent Plaintiff correspondence with World Wide's Employers’ Reports of Contributions for years 2016–2023. World Wide also enclosed three (3) checks for owing contributions. These checks were cashed by Plaintiff.” ECF No. 15 at 5 (citing ECF No. 15-2 at 3 and ECF No. 15-3). This statement cleverly neglects to mention when the demand letter was received, referencing only that Anita Parbhu received it sometime prior to February 6, 2024. The date the last demand letter was sent, as alleged by either party, was September 12, 2023. See ECF No. 12-11. Setting aside that plaintiffs allege two of the checks bounced (ECF No. 16 at 16 n.6), World Wide acknowledges that it “believes that it has paid nearly all amounts due for contributions ․” ECF No. 15 at 10 (emphasis added). The “Employers’ Report and Contributions for years 2016 – 2023” was likewise not sufficiently responsive to plaintiffs’ audit demands in their demand letters. ECF No. 15-3 at 2. For example, the August 11, 2023, letter demanded the following documents for April 1, 2016, to December 31, 2022:

1. Nevada State Employers Quarterly Contribution and Wage Reports including the List of Wages Paid pages showing employees and gross earnings.

2. List of all employees who worked in Southern Nevada and their classification, i.e. laborer, operator, office, etc.

3. Annual payroll records showing all Southern Nevada employees, their hours and earnings.

4. List of general contracts, if any.

5. List of sub-contractors, if any, including information describing work performed (subcontract agreements).

6. Monthly Union Trust Fund remittance reports.

7. Chart of accounts.

8. Copy of any bond, letter of credit, or cash deposit with the Trusts

9. A copy of the enclosed Management Representation Letter on company letterhead, executed by the individual most qualified in your organization to make the assertions listed.

ECF No. 12-9 at 2–3. In all, World Wide's position is that Anita Parbhu sent three checks that covered “nearly all amounts due for contributions” and reports that, at best, were responsive to one of the nine demands made in the demand letters sent five or more months prior. Between the time plaintiffs sent the letters and Anita Parbhu responded, plaintiffs had filed suit and attempted to serve World Wide.

Nothing about the record in this case suggests that the steps World Wide took to avoid this lawsuit were merely negligent, and its explanations are not credible in the face of the evidence. There is a clear pattern showing that World Wide did not intend to turn over its books as required under ERISA, believed it did not need to defend against this lawsuit, attempted to appease plaintiffs after the complaint was filed by sending some documents and checks, and ignored the ultimate judgment against it until plaintiffs came to collect in Canada. Then, when finally faced with the consequences of a judgment worth nearly $2 million, World Wide hastily filed this motion to set aside and labelled it an emergency.²

Based on the circumstantial and documentary evidence, I find that World Wide's actions have been taken in bad faith and thus it engaged in culpable conduct. Therefore the first factor weighs against setting aside default judgment.

B. World Wide does not present a meritorious defense.

“A defendant seeking to vacate a default judgment must present specific facts that would constitute a defense.” TCI Grp. Life Ins. Plan, 244 F.3d at 700 (citing Madsen v. Bumb, 419 F.2d 4, 6 (9th Cir. 1969)). “But the burden on a party seeking to vacate a default judgment is not extraordinarily heavy.” Id. (citing In re Stone, 588 F.2d 1316, 1319 n.2 (10th Cir. 1978)). Although this burden is low, World Wide does not reach it.

World Wide argues that it has a meritorious defense because, based on an accounting of what it owed plaintiffs, the amount of contributions comes out to less than $10,000 for the years 2016 to 2023. ECF No. 10–11. It states that it “believes that it has paid nearly all amounts due for contributions to Plaintiff. But even if an audit eventually shows World Wide owes something more, it is nowhere near the amount Plaintiff obtained in its Default Judgment.” Id. at 10.

None of this responds to plaintiffs’ claim that World Wide failed to produce its records for an audit in violation of ERISA and the parties’ contract. World Wide does not contest that it entered into an agreement with plaintiffs that it would “accept[ ] and agree[ ] to be bound by the Trust Agreement, the Plan, the rules, regulations and policies of the Trust Funds ․” See Tr. cont., ECF No. 12-3 at 2. It does not contest that the trust contract required that, if asked, World Wide was to allow for the audit of its books and records. See Sec. tr. fund agreement Art. III § 6, ECF No. 12-5 at 18; Training tr. agreement Art. III § 6, ECF No. 12-6 at 11–12. It does not contest that if it outright refused to comply under the contract, the parties’ Collection Policy expressly allowed plaintiffs to assume contributions in the amount of $100,000 per year for each year of the audit period. See Tr. funds’ collection policy § IV(L), ECF No. 12-7 at 9. World Wide instead insists only that this default judgment would result in “an absurdly large windfall” to plaintiffs “that will surely bankrupt World Wide.” ECF No. 15 at 11. This, World Wide states, is “manifestly unfair.”

None of this is a legal argument and provides me no room to conceptualize a viable defense that World Wide could make. Although $1.8 million is a significant sum given the contributions World Wide allegedly owed, plaintiffs did not base their claims on the amount owed, their claims were based on the provision of the parties’ contract that triggered upon breach. World Wide does not even suggest its defense would include equitable claims based on the fairness of the contract itself. World Wide has thus failed to clear the low bar to demonstrate it has a meritorious defense, so the second factor weighs against setting aside default judgment.

C. Setting aside default judgment would prejudice plaintiffs.

A party's ability to pursue a claim can be prejudiced by “loss of evidence, increased difficulties of discovery, or greater opportunity for fraud or collusion.” TCI Grp., 244 F.3d at 701. World Wide argues that “no evidence has been lost by the delay in Defendant's answering of the Complaint, and there is no other reason that Plaintiff's ability to pursue its claim will be hindered by setting aside the default.” ECF No. 15 at 11.

The purpose of allowing open access to an employer's books to allow for audits is to ensure that an accurate accounting of the contribution can take place. The more time elapses, the less likely the information is to be accurate. Plaintiffs sought the information going back to April 1, 2016. See ECF No. 12-9 at 2. By the time discovery could begin in this case, nearly a decade will have passed since that date. Further, based on its conduct over the course of this litigation, I have no faith in World Wide's assurance that no evidence has been lost. Therefore, the third factor weighs against setting aside default judgment.

Because all three factors weigh against setting aside default judgment, I find that there is no good cause to set aside default judgment.

IV. Conclusion

IT IS THEREFORE ORDERED that World Wide's motion to set aside default judgment [ECF No. 15] is DENIED.

FOOTNOTES

1.   First Am. Title Ins. Co. v. Com. Assocs., LLC, 2015 WL 4773566, at *2 (D. Nev. Aug. 13, 2015), the District of Nevada case to which plaintiffs cite for the proposition that “[a] party has constructive notice if service was effective under the Federal Rules and state procedural law, even if that party did not have actual notice,” relies on case law that precedes the “legally sophisticated” distinction (Pena v. Seguros La Comercial, S.A., 770 F.2d 811, 815 (9th Cir. 1985)) and does not reflect current case law on this issue. See, e.g., Martinez v. Auto Now Fin. Servs. Inc., 2022 WL 1395728, at *1–2 and n.2 (D. Ariz. Apr. 18, 2022) (recognizing Pena as no longer applicable in the wake of Mesle).

2.   I struck the “emergency” from the title of this motion because World Wide did not provide a single reason for the court to consider it on an emergency basis. Order, ECF No. 17 (citing LR 7-4).

Cristina D. Silva, United States District Judge