Free Declaration in Support - District Court of California - California

Case 3:07-cv-05045-MMC

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Filed 04/11/2008

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1 Muriel B. Kaplan, Esq. (SBN 124607) Michele R. Stafford, Esq. (SBN 172509) 2 SALTZMAN & JOHNSON LAW CORPORATION 120 Howard Street, Suite 520 3 San Francisco, CA 94105 (415) 882-7900 4 (415) 882-9287 ­ Facsimile [email protected] 5 [email protected] 6 Attorneys for Plaintiffs 7 8 9 10 11 GIL CROSTHWAITE, et al., as Trustees of the 12 OPERATING ENGNEERS HEALTH AND WELFARE TRUST FUND FOR NORTHERN 13 CALIFORNIA, et al., 14 Plaintiffs, 15 v. 16 JOHN TAYLOR NORTHROP, individually 17 and dba KRISTIN CONSTRUCTION, 18 19 Judge: The Honorable Maxine M. Chesney 20 21 22 23 I, Philip J. McNally, declare as follows: 1. I am a Senior Auditor in the Compliance Department of Hemming Morse, Inc. Defendant. Case No.: C07-5045 MMC DECLARATION OF PHILIP J. McNALLY IN SUPPORT OF MOTION FOR ENTRY OF DEFAULT JUDGMENT Date: May 16, 2008 Time: 9:00 a.m. Location: 450 Golden Gate Avenue San Francisco, California Courtroom: 7, 19th Floor UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF CALIFORNIA

24 ("HMI"), a certified public accounting firm which regularly conducts compliance inspections for 25 Plaintiffs and other employee benefit plans, to determine whether employers who are obligated to 26 make contributions to such plans have in fact made the required contributions. Such determination 27 28 DECLARATION OF P. McNALLY C07-5045 MMC
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entails an inspection of an employer's records and a compilation of what that inspection discloses

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1 in the form of a report. 2 3 4 5 6 7 3. According to my records, on or about January 8, 2007, this office was directed by 2. As a Senior Auditor in the Compliance Department, I am responsible for certain

inspections that are referred to HMI by the Operating Engineers Trust Funds, and supervise all of the work done on specific files, including the matter herein.

Wayne E. McBride, Collections Manager of the Operating Engineers Local Union No. 3 Trust

8 Funds, to perform a special audit of KRISTIN CONSTRUCTION payroll records for the period 9 January 1, 2004 through date of inspection. Paystubs for one employee for whom contributions 10 were reportedly not made, Steve Logan, were provided to HMI for use in the audit, to assist in 11 12 4. 13 14 or about April, 2007, for the period January 1, 2004 through March 31, 2007. An analysis of our An appointment was made with defendant, and the audit review was conducted in determining any contributions due and unpaid on his hours worked.

15 findings revealed a total due of $38,164.48, which includes unpaid contributions, liquidated 16 damages, interest, wage violations and auditors fees. Our report was issued on or about July 20, 17 2007 and was sent to Wayne McBride, Collections Manager. A true and accurate copy of that 18 report is attached hereto as Exhibit A. 19 20 with the Collective Bargaining Agreement, and interest was calculated at the rate of 12% per 21 22 annum on the combined contributions and liquidated damages, also in accordance with the 5. Liquidated damages were calculated at 15% of unpaid contributions in accordance

23 Collective Bargaining Agreement. Those amounts are shown on the attached Exhibit A. 24 6. On April 23, 2007, Defendant provided to HMI all of the documents he was able to

25 gather for the review period of January, 2003 through March, 2007. Those documents consisted of 26 27 28 DECLARATION OF P. McNALLY C07-5045 MMC
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envelopes of a large number of handwritten pay stubs not in any order of either check date or check number; California Quarterly DE-6's; Annual Federal reports for 2006; and a few months of

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1 2004 Laborers' Trust Fund reports, to distinguish the laborer employees from the operating 2 engineer employees. 3 4 5 6 7 data written on the paystubs had to be recorded in an excel spreadsheet, by individual and by year, then pieces of information had to be input for each employee as that information was sporadically 7. Paystubs without hours or withholding information on them were explained by

Defendant to be "advance" payments which were subtracted from the employee's next pay. All

8 determined from the paystubs. The analysis revealed that paystubs were not necessarily written or 9 paid when actual work was performed, and were not always issued in sequential check order. 10 Nevertheless, total annual hours determined as worked by each employee were compared with the 11 12 amounts were broken down by month. Nevertheless, there were numerous paystubs with one pay 13 14 date, whose check number correlated to a check date several months later. Some checks issued in total annual hours reported to the Plaintiff Trusts, and for the employee totals that matched, the

15 one month had hours reported a few months later. In those cases we credited the payment to the 16 month of hours worked so that hours owed and paid would balance. All underreported hours were 17 charged to the defendant based on the difference between paystubs and hours reported to the Trust 18 Funds, with the exception only of one employee, Steve Logan. 19 20 4, the HMI auditor compared on a separate spreadsheet the hours noted on the paystubs with a 21 22 daily log book of his hours provided by Mr. Logan. The underreported hours for Mr. Logan 4. For Steve Logan, shown on attached Exhibit A at 2006 Exhibit 3, and 2007 Exhibit

23 consist of hours taken from the paystubs and hours taken from the log book. It was also noted that 24 Mr. Logan was not paid the correct wage rate listed on his dispatch record for the time period 25 starting August 23, 2006, and ending March 31, 2007 when our testing period stopped. A wage 26 27 28 DECLARATION OF P. McNALLY C07-5045 MMC
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violation exhibit was created showing those amounts, at the last 2 pages of the attached Exhibit A. ///

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1

5.

The disorder of the paystubs and the practice of advance payment required

2 extraordinary review time, in attempting to systematize the records to do our analysis. Reasonable 3 4 5 6 7 unreported hours and calculating the resulting underpayments due, at the proper contribution rates for each employee's work level in accordance with the collective bargaining agreement in effect auditors fees in the amount of $11,377.69 are included in the audit, representing the extensive time spent in organizing, reviewing and analyzing the disordered records, summarizing the extensive

8 for each time period. 9 I declare under penalty of perjury that the foregoing is true and correct and that if called

10 upon as a witness, I could testify to the foregoing on the basis of my personal, direct knowledge. 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DECLARATION OF P. McNALLY C07-5045 MMC
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Executed this 11th day of April, 2008, at San Francisco, California.

_______________/s/_____________ Philip J. McNally

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1 2 3 4 5 6 7 8 9 10 I, the undersigned, declare:

PROOF OF SERVICE

I am a citizen of the United States and am employed in the County of San Francisco, State of California. I am over the age of eighteen and not a party to this action. My business address is 120 Howard Street, Suite 520, San Francisco, California 94105. On April 11, 2008, I served the following document(s): DECLARATION OF PHILIP J. McNALLY IN SUPPORT OF MOTION FOR ENTRY OF DEFAULT JUDGMENT on the interested parties in said action by placing a true and exact copy of each document in a sealed envelope with postage thereon fully prepaid, in a United States Post Office box in San

11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 DECLARATION OF P. McNALLY C07-5045 MMC
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Francisco, California, addressed as follows: John Taylor Northrop dba Kristin Construction 1781 Autumn Meadows Fairfield, California 94585

I declare under penalty of perjury that the foregoing is true and correct and that this declaration was executed on this 11th day of April, 2008, at San Francisco, California.

______________/s/__________________ Vanessa de Fábrega