19

‐ 677 (L)

Donna Browe, et al. v. CTC Corp., et al.

UNITED STATES COURT OF APPEALS

F OR THE S ECOND C IRCUIT

August Term, 2020

Argued: December 14, 2020 Decided: September 29, 2021

Docket No. 19

‐ 677

‐ cv, 19

‐ 813

‐ cv

D ONNA B ROWE

, T YLER B URGESS

, B ONNIE J AMIESON

, P HILIP J ORDAN

, E STATE OF

B EVERLY B URGESS

,

Plaintiffs

‐ Appellants

‐ Cross

‐ Appellees

,

L UCILLE L AUNDERVILLE

,

Plaintiff

‐ Counter

‐ Defendant

‐ Appellant

‐ Cross

‐ Appellee

,

— v.

—

CTC C ORPORATION

, B RUCE L AUMEISTER

,

Defendants

‐ Counter

‐ Claimants

‐ Appellees

‐

Cross

‐ Appellants

.

B e f o r e:

L IVINGSTON

, Chief Judge

, L YNCH and B IANCO

, Circuit Judges

.Former employees and officers brought this action under the Employee

Retirement Income Securities Act (“ERISA”) against a defunct photo

‐ finishing

company and its former CEO, Bruce Laumeister, alleging various violations and

breaches of fiduciary duties with respect to a deferred compensation plan (the

“Plan”). Following a bench trial, the United States District Court for the District

of Vermont (Reiss, J. ) entered judgment for Plaintiffs on their fiduciary duty and

reporting claims, denied their request for declaratory and injunctive relief, and

entered judgment for Defendants on Plaintiffs’ wrongful denial of benefits

claims. The district court also entered judgment for Defendants on their

counterclaim for contribution against Plaintiff Launderville, who was a Plan co

‐ fiduciary, and held her liable for 40% of the award without ordering joint and

several liability. The district court calculated damages based on the projected

balance of the Plan in 2004 and appointed a special master to distribute the

proceeds to former CTC employees on a per capita basis.

After considering the parties’ arguments, we hold as follows: (1) the

district court correctly rejected Defendants’ invocation of ERISA’s three

‐ year

statute of limitations for fiduciary claims because Defendants failed to prove that

all Plaintiffs had knowledge of the breaches more than three years prior to the

commencement of this suit; (2) Defendants waived any reliance on ERISA’s six

‐

year statute of repose by failing to assert it any time prior to their reply brief

before this Court; (3) the Plan is not exempt from ERISA’s funding, fiduciary, and

vesting requirements because it was not offered to a qualitatively select group of

employees; (4) the district court’s decision to limit damages on Plaintiffs’

fiduciary claims to the Plan’s projected balance as of 2004 was error, and

damages must be recalculated to reflect the Plan’s balance as it would have been

had its funds been prudently invested through the date of judgment; (5) it was

error for the district court not to assess the scope of CTC’s liability, if any, for the

claims asserted against it; (6) Laumeister is liable for the entire amount of the

restoration award, because liability under ERISA is joint and several; (7) while

the district court’s conclusion that Launderville is liable in contribution is

supported by sufficient evidence, that liability is to Laumeister, not to the Plan;

(8) there is no basis to impose liability on Launderville for her failure to comply

with ERISA’s reporting requirements, as no party with standing sued her for that

2failure; (9) the district court’s entry of judgment for Defendants on Plaintiffs’

wrongful denial of benefits claims was error, though we express no view on the

ultimate viability of those claims, which are appropriately assessed by the district

court in the first instance; (10) the district court’s order that the restoration award

be distributed on a per capita basis to Plan participants risks violating those

participants’ vested rights and is, in any case, inconsistent with ERISA; and

(11) Defendants’ evidentiary challenge is meritless. We leave the task of crafting a

process to assess eligibility for benefits under the Plan and to disburse such

benefits to the district court on remand. Accordingly, we AFFIRM IN PART and

VACATE IN PART the judgment below and REMAND this case for further

proceedings consistent with this opinion.

J OHN D. S TASNY

, Woolmington, Campbell, Bent & Stasny, P.C.,

Manchester Center, VT, for Plaintiffs

‐ Appellants

‐ Cross

‐ Appellees and Plaintiff

‐ Counter

‐ Defendant

‐ Appellant

‐ Cross

‐ Appellee

.

A. J AY K ENLAN

, A. Jay Kenlan, Esq., PLLC, Rutland, VT, for

Defendants

‐ Counter

‐ Claimants

‐ Appellees

‐ Cross

‐ Appellants

.

G ERARD E. L YNCH

, Circuit Judge :

Former employees and officers of the now

‐ defunct CTC Corporation

brought this action asserting various claims under the Employee Retirement

Income Securities Act (“ERISA”) against the corporation and its former CEO,

Bruce Laumeister, arising out of alleged mismanagement of the firm’s deferred

compensation plan (the “Plan”). Plaintiffs asserted claims for wrongful denial of

3benefits, breaches of fiduciary duties, and violation of ERISA’s reporting

requirements. Plaintiffs also sought a judgment declaring that they were entitled

to benefits under the Plan and injunctive relief in the form of the appointment of

an administrator for the Plan. Defendants countersued Plaintiff Launderville for

contribution and indemnity. After a bench trial, the United States District Court

for the District of Vermont (Christina C. Reiss, J. ) entered judgment for Plaintiffs

on their fiduciary duty and reporting claims and judgment for Defendants on the

remaining claims. The district court also entered judgment against Plaintiff

Launderville on Defendants’ contribution claim.

In a subsequent remedial opinion, the district court calculated the damages

on the fiduciary breach claims at $350,603 and appointed a special master to

administer the distribution of the award on a per capita basis to those Plan

participants who met certain qualifications. The district court further apportioned

liability for the award between Laumeister and Launderville at 60% and 40%,

respectively, without holding them jointly and severally liable, and ordered each

to pay $1,000 in damages for the reporting claims.

The parties cross appealed. Plaintiffs assert that the district court’s

limitation of damages to the Plan’s projected balance as of 2004 violates ERISA by

4failing to restore all Plan losses, and that the per

‐ capita distribution scheme that

the district court adopted violates their vested rights to benefits. Plaintiffs also

argue that the district court erred in holding Launderville liable, and that CTC

itself is jointly and severally liable for the losses. Finally, Plaintiffs contend that

the district court erroneously dismissed their wrongful denial of benefits claims

and that their benefits are vested and enforceable. Defendants argue that the

claims are time

‐ barred and, in any case, meritless because the Plan was exempt

from the relevant provisions of ERISA as a “top hat” plan. Defendants also assert

that the district court erred in admitting a 1997 statement of account balances

because it was hearsay not falling within any exception to the general rule

excluding hearsay evidence.

For the most part, we agree with Plaintiffs. Accordingly, for the reasons

stated below, we hold as follows: (1) the district court correctly rejected

Defendants’ invocation of ERISA’s three

‐ year statute of limitations for fiduciary

claims because Defendants failed to prove that all Plaintiffs had knowledge of the

breaches three years prior to the commencement of this suit; (2) Defendants

waived any reliance on ERISA’s six

‐ year statute of repose by failing to assert it;

(3) the Plan was not a top hat plan because it was not offered to a qualitatively

5select group of employees; (4) the district court’s decision to limit the restoration

award to the Plan’s projected balance as of 2004 was error, and damages must be

recalculated to represent the Plan’s balance had its funds been prudently

invested through the date of judgment; (5) it was error for the district court not to

assess the scope of CTC’s liability, if any, for the claims asserted against it;

(6) Laumeister is liable for the entire amount of the restoration award, as liability

under ERISA is joint and several; (7) while the district court’s conclusion that

Launderville is liable in contribution is supported by sufficient evidence, that

liability is to Laumeister, not to the Plan directly; (8) there is no basis to impose

liability on Launderville for her failure to comply with ERISA’s reporting

requirements, as no party with standing sued her for that failure; (9) the district

court’s entry of judgment for Defendants on Plaintiffs’ wrongful denial of

benefits claims was error, though we express no view on the ultimate viability of

those claims, which are appropriately assessed by the district court in the first

instance; (10) the district court’s order that the restoration award be distributed

on a per capita basis to Plan participants risks violating those participants’ vested

rights and is, in any case, inconsistent with ERISA; and (11) Defendants’

evidentiary challenge is meritless.

6We therefore AFFIRM IN PART and VACATE IN PART the judgment of

the district court and REMAND this case for further proceedings consistent with

this opinion. We DENY all pending motions as moot.

BACKGROUND

I. Factual Background

Except as otherwise noted, the following statement of facts paraphrases the

district court’s extensive findings. Because neither party argues that those

findings are clearly erroneous, we accept them as true for the purpose of this

opinion.

Defendant

‐ Counter

‐ Plaintiff

‐ Cross

‐ Appellant Bruce Laumeister formed

Defendant

‐ Counter

‐ Plaintiff

‐ Cross

‐ Appellant the CTC Corporation (“CTC”) in or

around 1979. Laumeister was CTC’s sole shareholder, Chief Executive Officer,

and the chairman of its board of directors throughout CTC’s existence. He served

as president of CTC from 1979

‐ 2000 and then from 2008 until its dissolution in

2014. From around 1979 until 2014, CTC operated a retail photo

‐ finishing facility

and retail store in Bennington, Vermont. CTC also operated between 23 and 26

one

‐ hour photo labs in Vermont, Connecticut, Massachusetts, New Hampshire,

7and New York (the “One

‐ Hour Labs”). The One

‐ Hour labs also operated as retail

stores selling photographic equipment and supplies.

The One

‐ Hour Labs were incorporated in the states in which they

conducted business, filed their own tax returns, and paid their employees

through three corporations, each of which held a separate bank account

controlled by CTC: VSL Corp. (New Hampshire); LWB Corp. (Massachusetts);

and BRL Corp. (Vermont and New York). The ownership structure of those

corporations was not clearly established in the record; while Laumeister testified

that they were wholly owned subsidiaries of CTC, he admitted on cross

‐

examination that LWB was not a wholly owned subsidiary but was instead

owned by Laumeister and a man named Christopher Belknap.

Between 1980 and 2000, CTC grew significantly. At its peak operation,

CTC’s Bennington facility operated three and sometimes four shifts per day,

depending on the seasonal volume of the film to be developed and printed.

During peak times, CTC and One

‐ Hour Labs employed additional workers,

typically on a part

‐ time basis. Although Defendants assert that CTC employed

196 people at its peak, that figure includes employees of the One

‐ Hour Labs. The

8district court found that CTC itself had no more than 60 full

‐ time employees as of

1997.

Many of the Plaintiffs began their careers at CTC at or around its inception.

Donna Browe was employed by CTC from its inception until on or about

November 12, 2012. Browe began at CTC as a “minimum

‐ wage” clerk in the

accounting department and eventually rose to manager of the department in

2000. Browe voluntarily left her job at CTC in 2012 for a position at Morris Repair

Company. Lucille Launderville also began her employment with CTC at its

inception. Launderville initially worked in customer service but was eventually

promoted to a number of senior positions, including President and Chief

Operating Officer. Launderville also came to hold a position on the company’s

board. She resigned from CTC in 2008 for a position at Plasan Industries. Beverly

Burgess, who died in November 2004, was employed by CTC from the time of its

formation in 1980 until approximately 2004. She is the mother of Plaintiffs Tyler

Burgess and Bonnie Jamieson. Philip Jordan worked at CTC from its inception

until January 4, 2008, excluding the period between October 1986 and October

1988. Jordan began as a salesman and eventually became sales manager.

9Sometime in late 1989 or early 1990, due to the company’s rapid growth

and success, CTC decided to offer certain employees a deferred compensation

plan (the “Plan”). Wayne Massari, who served as CTC’s Treasurer and Chief

Financial Officer and sat on CTC’s board until he suffered a stroke and became

permanently disabled in 1999, drafted the first plan agreement, dated December

10, 1990 (the “1990 Plan Agreement”). 1

1 Parts of the district court’s decision suggest that it may have concluded that

there were two different deferred compensation plans, one offered in 1990 and

the other in 1997. That, however, is inconsistent with the record. In 1997, CTC

drafted a new plan agreement

. While that agreement, discussed infra

, contains

some terms different from those of the 1990 Plan Agreement, nothing in the

record suggests that it was CTC’s intent to terminate the existing plan and

institute a new one, as opposed to simply amending the existing plan. To the

contrary, Laumeister testified that “there are two written plan agreements

governing the deferred compensation that is the subject of this lawsuit,”

12/6/2017 Tr. at 19:22

‐ 24, and that “CTC offered

. . . its employees an amended

deferred compensation plan agreement in 1997,” id. at 22:7

‐ 10.

The parties’ conduct is also inconsistent with the notion that CTC

terminated the existing deferred compensation plan in 1997; setting aside what

ERISA would require had the Plan terminated, under the terms of the 1990 Plan

Agreement, termination of the Plan would have required CTC to pay out each

participant’s account, which plainly did not happen. Instead, it appears that

participants who joined the Plan prior to the 1997 amendment continued their

participation in the normal course after signing an amended application.

Accordingly, we conclude that CTC offered one deferred compensation plan, the

Plan, governed by an agreement written in 1990 and amended in 1997. Cf. Dink v.

Dwyer, Costello & Knox, P.C.

, 33 F.3d 809, 811 (7th Cir. 1994) (“A plan need not be

in writing

. . . so long as the plan is a reality, meaning something more than a

mere decision to extend benefits.”).

10Laumeister intended the Plan to accomplish three objectives: (1) to reward

CTC’s senior managers for the performance and growth of the company; (2) to

incentivize CTC’s senior managers to remain as employees of CTC until their

retirement at age 65 or their death or disability while in CTC’s employ; and (3) to

encourage CTC’s senior managers to make annual contributions of a minimum of

three percent of their salary to their own Individual Retirement Accounts.

Moreover, Laumeister intended the Plan to be a“top hat” plan that was offered to

a select group of highly compensated managerial employees within the meaning

of ERISA. 2 However, the 1990 Plan Agreement did not state that it was a “top

hat” plan or a “non

‐ qualified plan,” 3 and it did not refer to ERISA. Moreover, as

explained below, the Plan covered whatever employees Laumeister chose to

include, regardless of their duties, job titles, or compensation levels.

To fund the Plan, CTC established accounts with the Massachusetts

2 As discussed in greater detail below, ERISA exempts plans that are unfunded

and offered to a select highly compensated group of managerial employees from

several of its provisions, including its fiduciary, vesting, and funding

requirements. Such plans are colloquially known as “top hat” plans.

3 A “non

‐ qualified plan” is an employee benefit or retirement plan that is

exempted from ERISA’s funding, fiduciary, and other requirements. That

category includes, but is not limited to, top hat plans.

11Mutual Life Insurance Company (“MassMutual”), into which it deposited funds

from which it intended to pay deferred compensation. Although the district court

made no specific findings on this point, there appears to be no dispute that CTC

regularly deposited funds into the Plan account until it began to experience

financial difficulties. Under the 1990 Plan Agreement, participants were required

to agree “to provide evidence, by way of direct payroll deduction or other, that a

minimum of 3% of their salary is deposited into an individual retirement

account. This allocation must continue for each year the employee is a participant

in this Plan.” J. App’x at 333. The 1990 Plan Agreement does not, however,

provide for any consequence for a participant’s failure to fulfill that requirement.

By 1997, Laumeister was dissatisfied with the investment returns

generated by the MassMutual accounts. As a result, CTC terminated its

relationship with MassMutual and issued a new plan agreement (the “1997 Plan

Agreement”), dated August 20, 1997. By no later than 2003, CTC had opened an

account with Mission Management & Trust, which held Plan funds for the

remainder of the Plan’s existence.

Massari drafted the 1997 Plan Agreement, which, like the 1990 Plan

Agreement, does not state that it is a “top hat” plan, does not indicate that it is

12“non

‐ qualified,” and contains no reference to ERISA. The 1997 Plan Agreement

continued the requirement that participants provide evidence of having

deposited 3% of their income into an IRA and further provides that “[i]n the

event that a Participant fails to continue funding the IRA, pursuant to this

agreement, the Employer will terminate funding the plan on behalf of the

Participant and all benefits accrued will be forfeited to the Employer. The

Employer will notify the Participant in writing thirty days prior to termination.”

J. App’x at 379.

Both the 1990 and 1997 Plan Agreements state, in relevant part, that they

are intended to provide an “employer paid fund,” to which CTC “agrees to

contribute funds which will

. . . be payable in accordance with Section 6” thereof.

J. App’x at 374

‐ 75, 378

‐ 79. Section 6 of both agreements provides that funds will

be payable upon the retirement, defined as “withdrawal from full time active

employment at or after age 65,” id. at 374, 378, or death of the participant (in the

latter case, with funds being paid to the participant’s designated beneficiary on

one of several schedules at CTC’s election).

Each employee to whom the Plan was offered signed an application to

13participate. 4 The application to participate under the 1997 Plan Agreement

provides that the applicant “understand[s] that the company funding of this plan

is contingent upon my annual contribution of a minimum of 3% of my base

salary to my personal individual retirement account for each year I participate in

the plan.” J. App’x at 344.

The district court determined that CTC invited eighteen employees to

participate in the Plan, seventeen of whom could be identified: (1) Wayne

Massari; (2) Lucille Launderville; (3) Donna Browe; (4) Philip Jordan; (5) Beverly

Burgess; (6) Sharon Fish; (7) Hope Leonard; (8) William Elliott; (9) Don Hollner;

(10) Eileen Bliss; (11) Ed Hojnowski; (12) Robin Secord; (13) Steven Brown;

(14) Garry Pleasant; (15) Donald Loseby; (16) Sue Carman or Caraman; and

(17) Pat DeCoff. All of these employees worked for CTC in Vermont; there is no

evidence that any employee of the One

‐ Hour Labs or any other affiliate was

offered an opportunity to participate. These employees varied widely in terms of

4 It is unclear whether participants signed applications to participate in the Plan

when it was governed by the 1990 Plan Agreement. Jordan testified to having

signed an application sometime between the mid

‐ 80s and early 90s and did not

recall signing an application in 1997. See 12/7/2017 Tr. at 119

‐ 20. Launderville

testified that she “definitely” signed applications in both 1990 and 1997. 12/8/2017

Tr. at 9

‐ 10

. However, the district court made no findings on this issue, and no

pre

‐ 1997 application is in the record.

14how much they were compensated and their level of managerial responsibility.

Massari and Launderville, for example, had significant responsibilities within

CTC and high salaries. On the other hand, Ed Hojnowski “fixed machines, was

not a ‘boss,’ and never gave any orders.” Browe v. CTC Corp. ( Browe I ), 331 F.

Supp. 3d 263, 287 (D. Vt. 2018). Ultimately, the district court concluded that there

was insufficient evidence that six of the eighteen employees who were invited to

participate in the Plan were either highly compensated or managerial employees.

CTC, at least until Massari’s departure in 1999, periodically provided the

Plan participants with account statements showing the amounts held in the Plan.

However, neither Plaintiffs nor Defendants retained copies of Plan statements

with the exception of one “worksheet” retained by Launderville, which the

district court admitted into evidence over Defendants’ objections as Plaintiffs’

Exhibit 3, and two documents retained by Laumeister. Launderville testified that

Massari prepared the worksheet and gave it to her at some point in 1997, and the

parties agreed that preparing Plan documents was within the scope of Massari’s

duties at CTC. The worksheet indicated a plan balance of $261,368.14 as of March

18, 1997, and total CTC funding for each individual Plaintiff as follows: (1) Lucille

Launderville: $40,104.75; (2) Donna Browe: $15,611.14; (3) Beverly Burgess:

15$19,906.23; and (4) Phil Jordan: $17,417.30. The district court found the worksheet

to be reliable for the following purposes: (1) to establish that Laumeister was the

primary decision

‐ maker with regard to the Plan; (2) to reflect account balances

adjusted to reflect the Plan account’s actual balance as of March 18, 1997; and

(3) to confirm that it was a document generated by Massari to project how the

Plan might perform under certain assumptions (several of which were

inconsistent with the actual terms of the Plan Agreements). It does not appear

from the record that CTC maintained separate accounts for each Plan participant,

but the worksheet suggests that the company maintained records earmarking

funds in the Plan account for each participant.

Between 1990 and 2014, CTC paid deferred compensation under the terms

of the Plan to four Plan participants: (1) Don Loseby, (2) Hope Leonard, (3) Eileen

Bliss, and (4) Wayne Massari. In addition, Sharon Fish and William Elliott were

permitted to retire early and received Plan benefits, notwithstanding the Plan

Agreement’s limitation of eligibility to employees’ reaching age 65, dying, or

becoming disabled.

Beginning in the early 2000s, CTC experienced a significant decline in sales

due to the advent of digital photography and internet photo

‐ finishing services.

16Beginning in 2004 and continuing every year until its dissolution, CTC’s

operating expenses exceeded its revenue. In 2004, Laumeister told Launderville

“that because of the deteriorating financial condition of CTC, the [P]lan was

being terminated and the funds would be used to pay business operating

expenses.” Browe I

, 331 F. Supp. 3d at 281 (alteration in original). However, CTC,

Laumeister, and Launderville did not “otherwise announce[] the termination of

the [] Plan.” Id.

From that point on, Browe and Launderville periodically advised

Laumeister of the extent of CTC’s operating shortfalls, and Laumeister directed

withdrawals from the Plan account to cover them. When CTC’s cash reserves

were exhausted, Laumeister made a series of personal loans to CTC to cover its

operating expenses; by 2014, CTC owed Laumeister approximately $600,000. In

or around 2006, Laumeister convened a meeting attended by Launderville and

other employees in which he explained that CTC was in financial distress and

asked employees to accept a twenty percent salary reduction.

By February 2008, the only remaining employees of CTC who were Plan

participants were Browe and Launderville. By this point, CTC’s cash flow was

insufficient to pay its general creditors or to fund its deferred compensation

17accounts. In 2014, at Laumeister’s direction, CTC ceased doing business and filed

Articles of Dissolution with the Vermont Secretary of State. At some point

thereafter, Laumeister ordered that CTC’s business records be destroyed. 5

Both Browe and Launderville maintained contact with Laumeister and

sought to recover their deferred compensation from him. In 2010, Laumeister

amended his will to include bequests for Browe and Launderville, which he

increased in 2014. In 2015, Launderville advised Laumeister that she “will be

pushed into retirement about a year or so sooner than anticipated” and asked

him to “take care of the commitment which was made so many years ago” in the

form of her deferred compensation account. J. App’x at 347. This suit followed

later that year.

II. Procedural History

Plaintiffs asserted six claims under ERISA for various breaches of fiduciary

duties, violation of ERISA’s reporting requirements, and wrongful denial of

5 As a result, a full financial reconstruction is not possible. We note, however, that

the district court did not find that this destruction of records justified an adverse

inference or was intended to hide any wrongdoing. Rather it found that “the true

impetus for their destruction was Mr. Laumeister’s desire not to leave them

behind in the Bennington facility[,] for which CTC had not paid its property

taxes.” Browe I

, 331 F. Supp. 2d at 282. Plaintiffs do not suggest that this finding

was clearly erroneous.

18benefits. Plaintiffs also sought an injunction appointing a new administrator for

the Plan and a declaration of their entitlement to future benefits.

Defendants admitted they appropriated the 1997 Plan’s assets to fund

CTC’s operating costs but denied liability, arguing that the Plan was a “top hat”

plan under ERISA and was therefore exempt from its funding, vesting, and

fiduciary liability provisions. See 29 U.S.C. §§ 1051(2), 1081(a)(3), and 1101(a)(1).

Defendants also asserted that the fiduciary claims were time

‐ barred under

ERISA’s three

‐ year limitations period and countersued Launderville for

contribution on the theory that, should the district court determine that the Plan

was not a top hat plan and that the claims were not time

‐ barred, she was liable as

a co

‐ fiduciary.

After a five

‐ day bench trial, the district court concluded that the 1997 Plan

was not a top hat plan because it was not offered to a quantitatively or

qualitatively select group of CTC employees. Browe I

, 331 F. Supp. 3d at 301. The

district court thus entered judgment for Plaintiffs on their fiduciary duty claims,

which were premised on Defendants’ withholding of Plan assets and using them

for CTC’s benefit, operating a plan that failed to comply with ERISA, and self

dealing, and rejected Defendants’ assertion that those claims were barred by

19ERISA’s three

‐ year statute of limitations. Id. at 305

‐ 310. The district court further

entered judgment for Plaintiffs on their reporting claims, and entered judgment

against Launderville on this claim as well. Id. at 311.

However, the district court entered judgment for Defendants on Plaintiffs’

wrongful denial of benefits claims as well as on their corresponding claim for a

declaratory judgment of their future entitlement to benefits, reasoning that, with

the exception of Bonnie Jamieson, who died in 2004, Plaintiffs had not “retired at

sixty

‐ five, died, or become disabled while in CTC’s employment and they have

not proffered evidence that they complied with the 1997 Plan’s 3% contribution

requirement.” Id. at 304. The district court separately held that Burgess and

Jamieson had not proved their entitlement to benefits as beneficiaries of their

mother because “[t]hey proffer no evidence of their mother’s application to

participate in the 1997 Plan, no evidence that their mother retained any Plan

documents, and no evidence that she entered into an agreement with CTC

regarding how death benefits would be paid.” Id. The district court declined to

award specific relief at that time and instead ordered supplemental briefing on

appropriate remedies.

In a subsequent remedial opinion, the district court rejected Plaintiffs’

20assertion that ERISA required restoration of Plan losses through judgment and

instead awarded $350,603 to be restored to the Plan. See Browe v. CTC Corp.

( Browe II ), No. 15

‐ cv

‐ 267, 2018 WL 5095677, at *6 (D. Vt. Oct. 18, 2018). That figure

represented the court’s assessment of the Plan’s 2004 year

‐ end balance had the

funds in the Plan account as of March 18, 1997 been prudently invested.

Although it was undisputed that CTC continued contributing to the Plan account

after 1997, the district court determined that it could not estimate the amount of

such contributions with sufficient confidence to include them in its calculation of

damages and therefore declined to do so. Plaintiffs do not challenge this

determination on appeal and instead seek damages based only on the 1997

balance of the Plan account.

The district court also held Launderville liable for contribution. To reflect

what it assessed as her and Laumeister’s relative fault, the district court held

Laumeister and Launderville responsible for 60% and 40% of the award,

respectively, to be paid directly to the Plan and without joint and several liability.

Id. at *8

‐ 12. The district court did not separately assess liability against CTC.

Having already concluded that no Plaintiff had demonstrated entitlement

to Plan benefits, the district court ordered that proceeds of the restoration award

21be distributed to all Plan participants on a per capita basis provided they met

certain criteria. Id. at *6

‐ 7. Specifically, to receive her share of the award, a

participant would have to prove that she was vested in the Plan by submitting a

sworn statement that: (1) she was a participant, (2) she worked for CTC for at

least six years after March 18, 1997, and (3) she had reached age 65 (or the date on

which she would). Id. at *8. Finally, the district court ordered Laumeister and

Launderville to pay damages of $1,000 each for violating ERISA’s reporting

requirements. Id. at *12

‐ 13. This appeal followed.

DISCUSSION

Because the parties challenge the district court’s conclusions of law, rather

than its findings of fact, we review all issues presented de novo, see LoPresti v.

Terwilliger

, 126 F.3d 34, 39 (2d Cir. 1997), except for Defendants’ evidentiary

challenge, which we review for abuse of discretion. See, e.g.

, Retirement Plan of

UNITE HERE Nat’l Retirement Fund v. Kombassan Holding A.S.

, 629 F.3d 282, 287

(2d Cir. 2010).

I. Statutes of Limitations and Repose

Defendants argue that Plaintiffs’ claims for breaches of fiduciary duties are

barred by ERISA’s three

‐ year statute of limitations and six

‐ year statute of repose

22and should therefore be dismissed. Considering the difficulties that the passage

of time has imposed on the adjudication of this case, many of the precise sort

against which statutes of limitations and repose are intended to guard, we are

sympathetic to Defendants’ arguments. Indeed, properly presented and proven,

those arguments might have been successful. On this record, however, we

conclude that Defendants have waived any reliance on the statute of repose, and

that the district court appropriately rejected their invocation of the statute of

limitations.

ERISA provides, in relevant part, that:

No action may be commenced

. . . with respect to a

fiduciary’s breach of any responsibility, duty, or

obligation

. . . after the earlier of—

(1) six years after (A) the date of the last action which

constituted a part of the breach or violation, or (B) in the

case of an omission the latest date on which the

fiduciary could have cured the breach or violation, or

(2) three years after the earliest date on which the

plaintiff had actual knowledge of the breach or

violation[.]

29 U.S.C. § 1113. As the Supreme Court recently reaffirmed, § 1113(1)’s six

‐ year

limitations period is a statute of repose that begins running either on the date of

the last action constituting a breach or the last date on which any omission could

23have been remedied, as applicable, irrespective of whether the injured party

knows of the conduct or injury. See Intel Corp. Inv. Policy Comm. v. Sulyma

, 140 S.

Ct. 768, 774 (2020). In contrast, § 1113(2)’s three

‐ year limitations period is a

traditional statute of limitations that begins running upon a plaintiff’s acquisition

of “actual knowledge” of the breach. See generally id. As we have previously held,

a “statute of limitations argument is an affirmative defense for which [the

defendant] bears the burden of proof.” United States v. Livecchi

, 711 F.3d 345, 352

(2d Cir. 2013). A statute of repose, in contrast, “is not a limitation of a plaintiff’s

remedy, but rather defines the right involved in terms of the time allowed to

bring suit.” P. Stolz Fam. P’ship v. Daum

, 355 F.3d 92, 102 (2d Cir. 2004).

At the outset, we note that Defendants did not raise the six

‐ year statute of

repose before the district court. Nor did they invoke it in their opening brief on

appeal. Instead, as far as we can discern, this argument makes its first appearance

in Defendants’ reply brief before this Court. While statutes of repose differ from

statutes of limitations in several key respects, most notably in that they are

mandatory and not subject to equitable exceptions, see id.

, statutes of limitations

and repose are both non

‐ jurisdictional claims

‐ processing rules, see Sec’y, U.S.

Dep’t of Labor v. Preston

, 873 F.3d 877, 883

‐ 88 (11th Cir. 2017) (holding that

24ERISA’s statute of repose is non

‐ jurisdictional). And “an objection based on a

mandatory claims

‐ processing rule may be forfeited if the party asserting it waits

too long to raise the point.” Fort Bend County v. Davis

, 139 S. Ct. 1843, 1849 (2019)

(internal quotation marks omitted).

Defendants waited too long to raise their objection under the statute of

repose. Even setting aside the fact that they did not invoke the statute of repose at

any point during the proceedings below, which itself is more than sufficient to

deem the issue forfeited, it is hornbook law that “[a]rguments may not be made

for the first time in a reply brief.” Knipe v. Skinner

, 999 F.2d 708, 710

‐ 11 (2d Cir.

1993) (collecting cases). Thus, though the statute of repose may well have

resolved the fiduciary duty claims had it been properly interposed, we hold that

Defendants forfeited their objection and we therefore decline to consider it

further.

That leaves Defendants’ argument under the three

‐ year limitations period,

which all parties agree is properly before this Court. As discussed above, a cause

of action for breach of fiduciary duties under ERISA accrues when the injured

party acquires actual knowledge of the facts underlying the breach. “[A] plaintiff

has actual knowledge of the breach or violation within the meaning of [§ 1113(2)]

25when he has knowledge of all material facts necessary to understand that an

ERISA fiduciary has breached his or her duty or otherwise violated the Act.”

Caputo v. Pfizer, Inc. 267 F.3d 181, 193 (2d Cir. 2001). The term “actual knowledge

is strictly construed and constructive knowledge will not suffice.” L.I. Head Start

Child Dev. Servs. v. Econ. Opportunity Comm’n of Nassau County

, 710 F.3d 57, 67 (2d

Cir. 2013), citing Caputo

, 267 F.3d at 193

‐ 94. Actual knowledge, however, does not

include knowledge of the underlying law. See id. ; see also Muehlgay v. Citigroup,

Inc.

, 649 F. App’x 110, 111 (2d Cir. 2016).

Defendants argue that several Plaintiffs had actual knowledge of the

breaches underlying the claim well over three years before this action was filed in

2015. True though that may be, § 1113(2) bars a suit brought more than “three

years after the earliest date on which the plaintiff had actual knowledge of the

breach or violation.” 29 U.S.C. § 1113(2) (emphasis added). Thus, a plaintiff who

did not have such knowledge more than three years before bringing suit cannot

be time

‐ barred because some other plaintiff (or potential plaintiff) had learned of

the breach at an earlier time. That makes sense because, as the district court

correctly pointed out (and as Defendants do not challenge on appeal), Plaintiffs’

fiduciary duty claims were brought in a representative capacity, on behalf of the

26Plan itself. 6 An individual participant’s failure to act in a timely way on her

knowledge of a fiduciary breach may prevent her from bringing suit but does not

forever foreclose others from vindicating the rights of all who are affected by the

breach. Thus, as the Ninth Circuit held, no other participant’s actual knowledge

of a fiduciary breach can be imputed to a plaintiff who lacked such knowledge.

See Landwehr v. DuPree

, 72 F.3d 726, 732

‐ 33 (9th Cir. 1995).

Accordingly, failure of proof as to any individual plaintiff’s actual

knowledge is sufficient to defeat Defendants’ statute of limitations argument. Put

another way, it was not enough for Defendants to prove that the limitations

period had run as to some Plaintiffs prior to the filing of this suit; rather,

6 Fiduciary breach claims under ERISA “may not be made for individual relief,

but instead are brought in a representative capacity on behalf of the plan.” L.I.

Head Start

, 710 F.3d at 65 (internal quotation marks omitted). ERISA’s civil

enforcement provisions empower three classes of individuals to bring such

claims: participants, beneficiaries, and fiduciaries. See 29 U.S.C. § 1132(a)(2).

There is no specific set of procedural steps that a prospective plaintiff must take

in order to proceed in a representative capacity; she must only “take adequate

steps under the circumstances properly to act in” that capacity. Coan v. Kaufman

,

457 F.3d 250, 261 (2d Cir. 2006). As noted, the district court concluded that

Plaintiffs took sufficient steps to act on behalf of the Plan. Because each Plaintiff

has an independent right of action to pursue claims on behalf of the Plan, the

statute of limitations must be analyzed separately as to each of them. See 29

U.S.C. § 1113(2) (fiduciary claims must be brought by “three years after the

earliest date on which the plaintiff had actual knowledge of the breach or

violation”) (emphasis added).

27Defendants had to prove that all Plaintiffs acquired “actual knowledge” of the

breaches outside the limitations period for the defense to succeed. On this record,

we conclude that they did not.

We agree with Defendants that Launderville and Browe had knowledge of

the fiduciary breaches underlying the claims. That conclusion flows directly from

the district court’s finding that both of them were actually aware of Laumeister’s

misappropriation of Plan assets. Moreover, Plaintiffs themselves alleged that

“Laumeister admitted to Launderville that he had been using Plan assets to pay

for CTC’s business expenses.” J. App’x at 63. 7 Thus, Browe’s and Launderville’s

fiduciary claims are, as a formal matter, time

‐ barred, and they would not have

been able to bring those claims if they were the only Plaintiffs. 8

7 Whether a participant in a plan presented as a top hat plan must also have

knowledge of facts sufficient to understand that the plan at issue is actually

subject to ERISA’s fiduciary requirements is, as far as we are aware, a question of

first impression. Though Launderville was aware of the identity of employees

who were invited to participate, it is unclear whether the same can be said of

Browe. Because, however, Defendants failed to prove that the remaining

Plaintiffs had actual knowledge of Laumeister’s misappropriation of Plan funds

and self

‐ dealing, which form the core of the fiduciary claims, we need not resolve

that question to decide this case and, accordingly, decline to do so.

8 It may therefore be appropriate for the district court, on remand, to dismiss

Browe and Launderville as plaintiffs with respect to the breach of fiduciary duty

claim. Because, as we conclude below, other plaintiffs can bring that claim

28We cannot, however, say the same for the remaining individual Plaintiffs.

As to Bonnie Jamieson and Tyler Burgess, there is no evidence in the record that

either knew anything about Laumeister’s “termination” of the Plan in 2004 and

his subsequent use of the deferred compensation funds for CTC’s operating

expenses. Burgess testified that he neither knew nor heard anything about the

Plan’s existence prior to 2015, and Defendants point to no evidence suggesting

otherwise. Although Jamieson testified that her mother (Beverly Burgess) told her

about the CTC deferred compensation plan “probably in the 1980s,” id. at 205,

there is no evidence that Jamieson saw any Plan documents or learned anything

else about the Plan or its administration before her mother’s death in 2004. Id. at

205

‐ 06. After her mother’s death, Jamieson, as executor of her mother’s estate,

asked Launderville whether anything was “available from [Beverly Burgess’s]

retirement plan,” and was told that “[t]here was nothing available.” Id. at 206.

But there was no evidence that Jamieson ever learned of the Plan’s terms or that

its assets had been misappropriated prior to the filing of this suit. Thus,

Defendants failed to prove that either Jameison or Burgess had actual knowledge

without running afoul of the statute of limitations, such a dismissal would have

no practical effect on the ultimate success of Defendants’ statute of limitations

defense to liability on the fiduciary claims.

29of the breaches more than three years prior to the commencement of this case.

Jordan likewise testified that he was never told at any point prior to 2015

that Laumeister and Launderville had ostensibly terminated the Plan and were

using its funds to cover CTC’s operating expenses. Further, he specifically

testified that the deferred compensation plan was not discussed at a 2006 meeting

during which Laumeister told CTC’s employees that the company was in

financial distress and proposed that employees take a 20% cut to their salaries.

Defendants proffered no evidence contradicting that testimony, and the district

court did not find that the Plan was discussed during that meeting. 9 See Browe I

,

331 F. Supp. 3d at 281. To the contrary, it found that CTC, Laumeister, and

9 Although oddly omitted from the joint appendix and not referenced in

Defendants’ arguments, we observe that Plaintiffs adduced testimony from

another witness that was inconsistent with Jordan’s testimony about this meeting

and, if believed, may have been sufficient to sustain the defense as against

Jordan. Specifically, Launderville testified that Laumeister told employees

present at the 2006 meeting that “deferred compensation money was being used”

to keep the company afloat. 12/8/2017 Trial Tr. at 11:4

‐ 13. The district court’s

findings of fact, however, tracked Jordan’s testimony that the Plan was not

discussed at the meeting. See Browe I

, 331 F. Supp. 3d at 281 (“In approximately

2006, Mr. Laumeister convened a meeting

. . . during which he explained that

CTC was in financial distress

. . . [and] proposed that employees accept a twenty

percent pay

‐ cut.”). Defendants do not argue that this finding was clearly

erroneous (or even mention it in their briefing) and we therefore decline to

consider the issue.

30Launderville did not announce the termination of the Plan. Id. Thus, Defendants

likewise failed to establish that Jordan had actual knowledge of the breaches

more than three years prior to the filing of this suit.

Because Defendants failed to establish that three of the Plaintiffs had actual

knowledge of the fiduciary breaches more than three years prior to the filing of

this case, the district court properly rejected their defense under ERISA’s three

‐

year limitations period. 10

II. Top Hat Status

Defendants argue that the Plan was a “top hat plan” within the meaning of

ERISA and therefore exempt from many of ERISA’s substantive provisions, and

that the district court erred in concluding otherwise. We agree with the district

court.

“ERISA’s coverage provisions, 29 U.S.C. §§ 1003, 1051, 1081, and 1101, state

10 As the Ninth Circuit noted in a similar case, one can conceive of cases in which

a party with knowledge of a fiduciary breach could manipulate the statute of

limitations, for example by withholding their knowledge from other participants

in order to prolong the limitations period. Landwehr

, 72 F.3d at 733 & n.2.

Defendants have not argued that Browe and Launderville failed to disclose

Laumeister’s fiduciary breach for such a manipulative purpose, and the district

court made no such finding. We therefore have no occasion to consider here the

potential effect of such a manipulation, and, like the Ninth Circuit, id

. at 733 n.2,

we reserve the question for a future case presenting such facts.

31that ERISA shall apply to any employee benefit plan, other than listed

exceptions.” Demery v. Extebank Deferred Comp. Plan (B)

, 216 F.3d 283, 286 (2d Cir.

2000). One such exception exists for plans that are “unfunded and [] maintained

by an employer primarily for the purpose of providing deferred compensation

for a select group of management or highly compensated employees.” Id. at 287,

quoting 29 U.S.C. §§ 1051(2), 1081(a)(3), 1101(a)(1). Such plans are commonly

referred to as “top hat” plans. “Top hat plans are exempt from the participation

and vesting provisions of ERISA, 29 U.S.C. §§ 1051

‐ 1061, its funding provisions,

29 U.S.C. §§ 1081

‐ 1086, and its fiduciary responsibility provisions, 29 U.S.C.

§§ 1101

‐ 1114, though not from its reporting and disclosure provisions, 29 U.S.C.

§§ 1021

‐ 1031, or its administration and enforcement provisions, 29 U.S.C. §§ 1131

‐

1145.” Id.

Following the statutory language, we assess top hat status based on

whether the plan at issue is: “(1) unfunded, and (2) maintained primarily for a

select group of management or highly compensated employees.” Id. 11

As a threshold issue, we note that the district court held that defendants

11 Because Plaintiffs do not challenge the district court’s conclusion that the Plan

was unfunded, we assume without deciding that it was unfunded for the

purpose of our analysis.

32bore the burden of establishing that the plan was a top hat plan. See Browe I

, 331

F. Supp. 3d at 294

‐ 95. We have yet to address this issue, and, as the district court

recognized, the circuits to consider it have reached conflicting results. Compare

Daft v. Advest, Inc.

, 658 F.3d 583, 596

‐ 97 (6th Cir. 2011) (observing that “the

defendant

‐ employer typically advocates for the top

‐ hat status of an ERISA plan

in order to avoid statutory liability, and therefore the defendant

‐ employer bears

the burden of proof on this issue in the district court”), with Sikora v. UPMC

, 876

F.3d 110, 113 (3d Cir. 2017) (finding that the Plaintiff “has the burden of showing

that the Plan is not a top

‐ hat plan to obtain relief under ERISA”). The parties do

not contest the district court’s allocation of this burden to Defendants and we

therefore assume, without deciding, that its decision to do so was proper. 12

We have previously explained that, in assessing whether a plan is offered

to a “select group of management or highly compensated employees” within the

meaning of ERISA, the district court must “conduct a fact

‐ specific inquiry,

analyzing quantitative and qualitative factors in conjunction.” Demery

, 216 F.3d

at 288, citing Duggan v. Hobbs

, 99 F.3d 307, 312 (9th Cir. 1996). Quantitatively,

12 In any event, our conclusion that the Plan is not a top hat plan would not

change if the burden were allocated to Plaintiffs.

33“the plan must cover relatively few employees.” In re New Valley Corp.

, 89 F.3d

143, 148 (3d Cir. 1996). “While plans offered to a very small percentage of an

employer’s workforce often qualify as top hat plans, there is no existing authority

that establishes when a plan is too large to be deemed ‘select

. ’” Demery, 216 F.3d

at 288 (emphasis added), citing Duggan

, 99 F.3d at 312. Qualitatively, the “plan

must cover only high level employees.” In re New Valley Corp.

, 89 F.3d at 148.

Whether a group is “select” is assessed based on the totality of the circumstances,

and does not lend itself to neat formulations.

Defendants contest the district court’s calculation of the total number of

CTC employees for the purpose of assessing the quantitative prong of the

analysis, arguing that the district court should have included the employees of

the corporations that ran the One

‐ Hour Labs and other parts of the business

instead of considering only those employed by CTC directly. In making this

argument, Defendants primarily rely on the Internal Revenue Code’s definition

of a “controlled group,” 26 U.S.C. § 1563. Setting aside the fact that Defendants’

recitation of the ownership structure of the One

‐ Hour Labs that purportedly

brings them within that definition relies on testimony that the district court

specifically rejected, Defendants proffer no reason why that definition should

34have any bearing on our analysis. The relevant provisions of ERISA do not cross

‐

reference or otherwise incorporate the Internal Revenue Code’s definition of a

“controlled group” (or, for that matter, use the term “controlled group”), and no

court of which we are aware has relied on that definition in this context. In other

words, it would be of no moment even if the One

‐ Hour Labs were part of a

“controlled group” under the Internal Revenue Code

– and the district court

found that they were not.

In any case, we agree with the district court that there is no reason to

include the One

‐ Hour Labs’ employees in assessing the percentage of CTC’s

workforce that was invited to participate in the Plan. The One

‐ Hour Labs

constituted separate entities with separate payrolls that operated separate

businesses. Further, there is no evidence that any employee of the One

‐ Hour

Labs

– of any level of seniority or compensation

– was considered for Plan

participation. Nor is it the case that CTC was structured such that only high

‐ level

employees of the enterprise worked directly for it; the array of CTC employees

invited to participate in the Plan ran the gamut from hourly store clerks to senior

managers.

Thus, quantitatively, we conclude that 30% of CTC’s employees (18 of 60)

35were invited to participate in the Plan. While this is a considerable percentage of

the overall workforce, we have never conclusively delineated when a group is

too large to be considered quantitatively select. But see Demery

, 216 F.3d at 289

(15.34% of workforce “is probably at or near the upper limit of the acceptable size

for a ‘select group’”). Further, the percentage of the workforce permitted to

participate must be considered with reference to the size of the corporation; CTC

had only 60 employees, and one could plausibly imagine a corporation of that

size in which roughly 30% of the employees hold sufficiently managerial

positions so as to render the group comprising them “select” within the meaning

of ERISA.

While we are therefore reluctant to hold that the sheer number of

employees included in the Plan categorically disqualifies it from “top hat” status,

the size of the Plan certainly does not weigh in favor of that status. Considered in

the light most generous to Defendants, the factor is, at best, neutral.

However, the group of employees actually invited to participate in the Plan

was by no measure qualitatively select. First, there is no evidence that these

employees were “highly compensated” in either the relative or absolute sense of

that term. Defendants argue that if we were to consider One

‐ Hour Lab

36employees, “the compensation levels of the employees to whom the Plan was

offered [would] range[] from two times to more than five times the compensation

paid to all other employees [of] CTC Corporation and its subsidiaries.” Defs.

‐

Cross

‐ Appellants’ Br. at 23. Even setting aside the fact that there is no basis to

consider the One

‐ Hour Labs’ employees, Defendants cite no evidence to support

that assertion, which the district court found was “uncorroborated by CTC’s

business records.” Browe I

, 331 F. Supp. 3d at 300. Defendants likewise do not

argue that this finding was clearly erroneous.

To the contrary, the district court found, and Defendants do not contest,

that a significant number of the employees who were permitted to participate in

the Plan had annual salaries of $30,000 or less, and that some employees did not

even have salaried positions when they were invited to participate in the Plan (or

at any point thereafter). See id. at 284

‐ 88.

Of course, companies vary greatly in size and profitability, and whether

the compensation paid to a group of participants tends to support the conclusion

that it is qualitatively select does not depend entirely on the absolute dollar

amount of those earnings. To qualify as “highly compensated,” however, there

must at least be some evidence “of a substantial disparity between the

37compensation paid to members of the [putative] top

‐ hat group and the

compensation paid to all other workers.” Alexander v. Brigham & Women’s

Physicians Org.

, 513 F.3d 37, 46 (1st Cir. 2008); see also Demery

, 216 F.3d at 289

(group was select where, inter alia

, “the average salary of plan participants was

more than double that of the average [employee’s] salary”). Here, however, the

record is largely silent as to the overall compensation of CTC’s employees. The

evidence, moreover, showed a substantial disparity in earnings among Plan

participants, who made anywhere from roughly $10,000 to over $100,000

annually, further tending to undermine the premise that they comprised a

“select” group.

Second, consistent with their modest salaries, many participants in the plan

had minimal managerial responsibilities, if they had any at all. Participants

included Sharon Fish, whose responsibilities involved transporting and logging

in products from CTC’s Rutland facility to its Bennington facility; Hope Leonard,

a print operator who never managed any employees; and William Elliott, whose

responsibilities primarily consisted of maintaining and repairing the equipment

used in CTC’s business. Indeed, the district court found that a third of the

employees invited to participate in the Plan were neither managerial nor highly

38compensated. Defendants do not argue that this conclusion was unsupported as

a matter of either fact or law, and we discern no basis in the record to upset it.

In other words, as the district court found, the evidence showed that

employees were considered for participation at Laumeister’s discretion, and that

he “employ[ed] an array of criteria including whether an employee contributed

to CTC’s success, did not need to be ‘coddled,’ knew his or her job, had a nice

home, and had a good reputation in the community.” Browe I

, 331 F. Supp. 3d at

301. Defendants do not meaningfully contest this finding, and there is ample

evidence to support it. While the group meeting these idiosyncratic criteria might

be “select” in some sense, it is not qualitatively select within the meaning of

ERISA.

Finally, as we have previously observed, the “[a]bility to negotiate [plan

terms] is an important component of top hat plans.” Demery

, 216 F.3d at 289. In

this case, the record contains no evidence of even “a single CTC employee who

negotiated any aspect of his or her Plan participation, nor

. . . any evidence that

CTC employees collectively had the bargaining power to negotiate the terms of

the [] Plan.” Browe I

, 331 F. Supp. 3d at 301.

In sum, we agree with the district court that the Plan was not a top hat

39plan. Considering the totality of the circumstances, including the significant

portion of the CTC workforce included; the broad range of compensation levels

among its participants, many of whom were not highly compensated; the

inclusion of a significant number of employees who lacked any indicia of

“management” status; the lack of coherent criteria for determining eligibility to

participate; and the inability of its participants to negotiate terms, we find no

error in the district court’s conclusion that those circumstances cannot be

reconciled with ERISA’s requirement that top hat plans be offered only to a

“select group of management or highly compensated employees.” 29 U.S.C.

§ 1051(2). That is so irrespective of whether the employees who were invited to

participate comprised 30% of CTC’s total workforce or approximately 10% of it.

III. Calculating the Restoration Award

Plaintiffs argue that the district court erred in limiting the restoration

award to the Plan’s projected balance as of the end of 2004, when Laumeister

began using its assets to fund CTC’s general operations. Plaintiffs are correct.

Section 409(a) of ERISA, codified at 29 U.S.C. § 1109(a), provides that

breaching fiduciaries “shall be personally liable to make good to such plan any

losses to the plan resulting from each such breach, and to restore to such plan any

40profits of such fiduciary which have been made through use of assets of the plan

by the fiduciary.” Under our precedent, this loss is calculated by comparing what

the Plan actually earned following the fiduciary breach with “what the Plan

would have earned had the funds been available for other Plan purposes.”

Donovan v. Bierwirth

, 754 F.2d 1049, 1056 (2d Cir. 1985).

The district court’s decision to limit the restoration award to the Plan’s

projected balance as of 2004 appears to flow from its conclusion that the Plan

was, at that point, “terminated albeit without proper disclosures.” Browe II

, 2018

WL 5095677, at *6. But a termination that complies with neither the requirements

of ERISA nor the terms of the operative plan itself is no termination at all. At a

bare minimum, Laumeister could not terminate the Plan without first amending

it to provide a date for its termination and, under the terms of the Plan (and

ERISA), providing notice of that amendment to all participants. See Frommert v.

Conkright

, 433 F.3d 254, 263 (2d Cir. 2006) (“[A]n ERISA ‘amendment’ to a plan

occurs only when the plan’s employees are informed of a change in the text of the

plan.”).

41Further, even setting aside any notices that might have been required, 13

terminating the Plan as a matter of law would have immediately vested any and

all benefits accrued as of the date of termination in the Plan’s participants

irrespective of whether they were otherwise vested under ERISA’s vesting

schedules. See, e.g.

, Matz v. Household Int’l Tax Reduction Inv. Plan

, 774 F.3d 1141,

1143 (7th Cir. 2014), citing 26 U.S.C. § 411(d)(3)(A); 26 C.F.R. § 1.401

‐ 6(b)(2).

Those vested benefits, and the remaining assets of the plan, would then have

been required to be distributed in accordance with the scheme set forth in 29

13 Whether and to what extent termination of the Plan would have implicated

ERISA’s notice provisions would depend on its precise classification under

ERISA. Although the parties agree that the Plan qualifies as an defined

contribution plan within the meaning of ERISA, a stipulation that we see no

reason to disturb, see 29 U.S.C. § 1002(34) (defining “defined contribution plan”),

ERISA requires specific written notice as a precondition to effective termination

for only certain types of defined contribution plans, see, e.g.

, 29 U.S.C. § 1054(h)

(requiring notice of termination for individual account plans subject to funding

standards of 26 U.S.C. § 412 such as, e.g.

, money purchase plans). But cf. Peralta v.

Hispanic Bus., Inc.

, 419 F.3d 1064, 1071

‐ 73 (9th Cir. 2005) (fiduciary breaches duty

by failing to notify participants of termination notwithstanding technical

compliance with ERISA). However, because Laumeister and CTC did not provide

any notice at all nor otherwise attempt to distribute Plan assets, we need not

engage in such granular classifications to resolve the issues in this appeal and

thus decline to do so. We note, however, that the district court erred insofar as it

concluded that the Plan was subject to the notice requirements in 29 U.S.C.

§ 1426(e) which, by its terms, applies only to certain insolvent multiemployer

plans. See Browe II

, 2018 WL 5095677, at *12, citing 29 U.S.C. § 1426; see also 29

U.S.C. § 1002(37) (defining “multiemployer plan”).

42U.S.C. § 1344. 14 Although the district court chalked up Laumeister’s failure to

engage in any aspect of this process to his good

‐ faith but mistaken belief that the

Plan was a top hat plan, his actions were also inconsistent with that professed

belief. Under the terms of the Plan, CTC was required to pay out each

participant’s benefits under one of three schedules following termination. In

other words, neither ERISA nor the Plan permitted Laumeister to do what he

actually did, i.e.

, divert the Plan’s assets to fund CTC’s general operating

expenses without so much as alerting participants. 15

Accordingly, the district court’s decision to limit the award to the amount

that would have been in the Plan’s account as of 2004 is irreconcilable with both

14 Section 1344, by its terms, applies only to the termination of a “single

‐ employer

plan,” which 29 U.S.C. § 1301(15) defines as, in relevant part, “any defined benefit

plan (as defined in [29 U.S.C. § 1002(35)]) which is not a multiemployer plan.”

(Emphasis added); see also 29 U.S.C. § 1321(b)(1) (excepting “individual account

plans” from provisions of Subchapter III of ERISA, including § 1344). However,

29 U.S.C. § 1103(d)(1) extends § 1344’s applicability to any plan that is made

subject to ERISA’s fiduciary provisions by 29 U.S.C. § 1101. Section 1101, in turn,

subjects to ERISA’s fiduciary provisions all retirement plans other than top hat

plans and plans providing payment to a retired partner or a deceased partner or

a deceased partner’s successor in interest as described in 26 U.S.C. § 736.

15 If the Plan had been a top hat plan, participants would have had no recourse to

challenge Laumeister’s misappropriation of Plan assets under ERISA’s fiduciary

provisions. They would have been free, however, to pursue a remedy in contract.

43the facts and the law. Had Laumeister effected a proper termination of the Plan,

the Plan would have paid out all accrued benefits at the time of the termination;

unless and until he paid those benefits, they would have remained in the Plan

account held in trust for participants and their beneficiaries. Since Laumeister did

not effectively terminate the Plan, the Plan funds likewise should have remained

in the Plan’s account earmarked for each participant until those participants (or

their beneficiaries) could claim them at retirement age or upon the occurrence of

other qualifying events. In either case, those funds would have been insulated

from CTC’s decline by virtue of their being held in trust and would have

continued to generate returns until they were distributed. And though it is

possible, perhaps even likely, that Defendants would have sought to terminate

the Plan at some point between 2004 and this lawsuit had they become aware of

the ramifications of their failure to do so, they did not; to limit liability on this

basis would breach the cardinal rule that uncertainties in fixing damages are to

be resolved against the breaching fiduciary. See, e.g.

, Donovan

, 754 F.2d at 1056

(collecting cases). 16

16 That rule long predates ERISA, and, for that matter, the founding of the United

States of America. See Armory v. Delamirie

, 93 Eng. Rep. 664 (1722) (“[U]nless the

defendant

. . . produce the jewel, and shew it not to be of the finest water, [the

44For that reason, when substantial time has passed after an act of

misappropriation, requiring the fiduciaries to restore to the plan only the amount

that they took

– which is, in effect, what the district court ordered

– does not

return the participants to the position that they would have occupied but for the

breach, as required by ERISA. Nor does requiring breaching fiduciaries to restore

all losses, including unrealized gains resulting from the breach, work a “penalty,”

as the district court suggested. Though Laumeister may have acted in good faith,

the law must allocate the risk that his good

‐ faith belief was mistaken. Restoring

only the amount misappropriated effectively allocates that risk to the Plan and its

participants, robbing them of future gains that they might have realized had their

money remained prudently invested rather than being diverted to unprofitable

ends (such as, in this case, the continued operation of CTC). ERISA, however,

allocates that risk to Laumeister, by requiring him (subject to rights of

contribution from other breaching co

‐ fiduciaries) to “make good

. . . any losses

. . .

resulting from” his breach. 29 U.S.C. § 1109(a) (emphasis added). We are not

entitled to disregard that legislative judgment.

jury] should

. . . make the value of the best jewels the measure of their

damages.”).

45We therefore vacate the restoration award and direct the district court to

recalculate it in order to capture losses through the date of judgment. On remand,

the district court should presume that Plan funds “would have been treated like

other funds being invested during the same period in proper transactions. Where

several alternative investment strategies were equally plausible, the court should

presume that the funds would have been used in the most profitable of these.”

Donovan

, 754 F.2d at 1056. While Plaintiffs urge us to adopt the value proposed

by their expert (whom the district court found credible), we believe the district

court is better positioned to engage in this inquiry in the first instance and we

remand the case to permit it to do so.

IV. Liability for the Restoration Award

The district court declined to address CTC’s liability for the restoration

award and ordered Laumeister and Launderville to pay 60% and 40% of that

award, respectively, directly to the Plan. Plaintiffs raise several objections to that

award. First, Plaintiffs argue that the district court erred in declining to extend

liability to CTC. Next, they contend that Laumeister’s liability is joint and several,

and thus, even if other fiduciaries are also liable, his liability cannot be capped at

60% of the total award. Finally, they argue that Launderville is not liable in

46contribution at all and that, to the extent that she is liable, that liability is to

Laumeister, not the Plan itself.

Plaintiffs are correct that the district court should have assessed CTC’s

liability, if any, for the claims asserted against it. They are also correct that

liability under ERISA is joint and several; as such, there is no basis to cap

Laumeister’s liability at only 60% of the total award. Finally, while we affirm the

district court’s conclusion that Launderville is liable for contribution as a co

‐

fiduciary, we agree that the district court erred in holding Launderville directly

liable to the Plan. We therefore remand for the district court to assess CTC’s

liability, if any, and the extent of Launderville’s liability to Laumeister. 17

A. CTC’s Liability

Plaintiffs sued both Laumeister and CTC, seeking to hold both jointly and

severally liable for any award. J. App’x at 66

‐ 77. The district court, however, did

not address CTC’s liability in either its merits or remedial opinions. While it is

not entirely clear to us what Plaintiffs seek to gain from pursuing a judgment

17 We note that both Laumeister and CTC sought contribution from Launderville.

Because the district court did not determine CTC’s liability, we have no occasion

to decide whether CTC is entitled to contribution from Launderville; the district

court may consider that issue on remand if necessary.

47against a defunct corporation, they are entitled to judgment on each of their

claims with respect to each named defendant. We therefore direct the district

court on remand to assess CTC’s liability, if any, as to each of Plaintiffs’ claims

against it.

B. Laumeister’s Liability

As discussed, the district court held Laumeister liable for 60% of the

restoration award, payable directly to the Plan, separate and apart from the

liability it assessed against Launderville. That was error.

Although the district court recognized that we have held that ERISA

permits suits among co

‐ fiduciaries for contribution, its 60/40 allocation of several

liability is in conflict with a fundamental rule from which that holding flows:

“Under ERISA, breaching fiduciaries are jointly and severally liable.” In re

Masters Mates & Pilots Pension Plan & IRAP Litg.

, 957 F.2d 1020, 1023 (2d Cir.

1992). Indeed, were liability under ERISA apportioned among fiduciaries

according to their relative responsibility for the loss, there would be no need to

recognize the right of contribution, as no single co

‐ fiduciary would be required to

pay damages in excess of his proportionate share of fault. Accordingly,

Laumeister bears liability for the full amount of the Plan’s losses, jointly and

48severally with any other Defendants found liable. Plaintiffs are entitled to seek

full satisfaction of the judgment from Laumeister, subject to Laumeister’s right to

seek contribution from Launderville, as discussed below.

C. Launderville’s Liability

Plaintiffs challenge the district court’s assessment of Launderville’s

liability, arguing that the district court’s findings of fact are insufficient to

support it. Plaintiffs further argue that the district court erred in holding

Launderville liable directly to the Plan because, in their view, to the extent that

Launderville is liable at all, she is liable only to Laumeister. While we disagree

with Plaintiffs on the underlying question of Launderville’s liability, we agree

that there is no basis to hold her directly liable to the Plan and vacate the

judgment as against her accordingly. On remand, the district court should assess

the extent of Launderville’s liability to Laumeister, taking into consideration, as

necessary, the recalculated restoration award. We also reverse the district court’s

determination to hold Launderville liable for violation of ERISA’s reporting

requirements, as no claim was brought against her for that failure.

ERISA provides that a fiduciary is vicariously liable for the acts of his co

‐

fiduciary where, inter alia

, “he has knowledge of a breach by such other fiduciary,

49unless he makes reasonable efforts under the circumstances to remedy the

breach.” 29 U.S.C. § 1105(a)(3). Separately, we held in Chemung Canal Trust Co. v.

Sovran Bank/Maryland that the federal courts are authorized to develop a federal

common

‐ law under ERISA concerning the allocation of liability among co

‐

fiduciaries with reference to traditional principles of trust law. 939 F.2d 12, 16

‐ 18

(2d Cir. 1991).

Plaintiffs’ argument that Launderville shares no blame for Laumeister’s

misappropriation of Plan assets rests on the district court’s finding that

Laumeister had sole control over those assets. Be that as it may, the district court

also found that, after learning of Laumeister’s breach, Launderville neither

notified other participants of Laumeister’s efforts to use Plan assets to fund

CTC’s operating shortfalls nor endeavored to take any steps to prevent him from

doing so. To the contrary, Launderville advised Laumeister of the extent of the

shortfalls, knowing that Laumeister would then direct that Plan assets be used to

cover them. That use of Plan assets directly benefitted Launderville

– she had a

lucrative position at CTC, and it was in her interest for the company to remain

afloat so that she could continue to collect her salary. Moreover, while she was

furthering Laumeister’s use of Plan assets to prop up CTC, Launderville was also

50working to secure her own interests, cutting a side deal with Laumeister to

ensure that she received compensation from his estate in lieu of what she would

have received through the Plan, while taking no steps to notify the other Plan

participants of Laumeister’s actions, or otherwise to protect their interests.

We agree with the district court that these facts are more than adequate to

support the conclusion that Launderville was sufficiently culpable to support an

assessment of liability against her. See Browe II

, 2018 WL 5095677, at *11

‐ 12. Not

only did she take no steps to remedy Laumeister’s breach, which is sufficient to

impose co

‐ fiduciary liability, but she also engaged in classic self dealing,

affirmatively furthering that breach in violation of her own fiduciary duties so as

to secure a continuing benefit for herself. Cf. Restatement (Second) of Trusts

§ 258(1)(b) (providing for contribution among co

‐ fiduciaries “if one of them

receives a benefit from the breach of trust”). Though she may be less culpable

than Laumeister, we cannot say on this record that she should escape liability

entirely.

However, the district court erred in holding Launderville directly liable to

the Plan. Although Plaintiffs had the option to sue Launderville in lieu of or in

addition to Laumeister (in which case she would have been liable to the Plan,

51alone or jointly and severally, for the entirety of the restoration award, subject to

her right to seek contribution from Laumeister), Plaintiffs instead sought to

recover from Laumeister who, in turn, sought contribution from Launderville.

Laumeister did not, however, bring his counterclaim against Launderville on

behalf of the Plan, nor did he seek to recover on behalf of the Plan for injuries to

it. 18 Consequently, there is no basis to hold Launderville liable directly to the

Plan; she is liable only to the party who sued her.

As to the extent of that liability, the district court assessed Launderville’s

liability at 40% of the restoration award. Because we have ordered the district

court to recalculate the restoration award, the district court may choose to revisit

the allocation issue. We therefore do not consider whether the district court

appropriately apportioned fault between Launderville and Laumeister, and we

express no view on that issue.

Finally, we vacate the $1,000 judgment against Launderville for failure to

18 Even if Laumeister had styled his counterclaim as seeking such relief, it is

questionable whether he would have standing to pursue relief on behalf of the

Plan given that he has consistently taken the position that the Plan no longer

exists. See Chemung

, 939 F.2d at 14 (“[ERISA] names only three classes of persons

who may commence an action [for fiduciary breaches], and a former fiduciary is

not one of them.”).

52comply with ERISA’s reporting provisions. While the district court’s findings of

fact may well be sufficient to have supported such liability for Launderville in

her capacity as a Plan administrator had anyone sought such a remedy against

her, the district court had no power to impose such a penalty sua sponte. ERISA

entitles only Plan participants and their beneficiaries to privately enforce ERISA’s

reporting requirements, and no participant or beneficiary sued Launderville

under that provision. See 29 U.S.C. § 1132(a)(4). Further, though Laumeister’s

counterclaim sought contribution from Launderville “to the extent[] that

Defendants

. . . are found liable on account of any of the claims of Plaintiffs

alleged in the Complaint,” J. App’x at 103, none of the allegations in that

counterclaim referenced ERISA’s reporting requirements or her failure to comply

with them. Cf. Port Dock & Stone Corp. v. Oldcastle N.E., Inc.

, 507 F.3d 117, 121 (2d

Cir. 2007) (a complaint’s “factual allegations must be enough to give the

defendant fair notice of what the claim is and the grounds upon which it rests”),

citing Bell Atl. Corp. v. Twombly

, 550 U.S. 544, 555 (2007). And we have never held

that contribution is available for ERISA claims other than those for fiduciary

breaches. Accordingly, we vacate the judgment of $1,000 against Launderville for

failure to comply with ERISA’s reporting requirements.

53V. Distributing the Restoration Award

The district court entered judgment for Defendants on Plaintiffs’ wrongful

denial of benefits claims and, having concluded that no Plaintiff had

demonstrated his or her entitlement to benefits under the terms of the Plan,

ordered the award distributed on a per capita basis to all participants to, inter alia

,

“reflect a recovery on behalf of the Plan as a whole as opposed to individual Plan

Participants.” Browe II

, 2018 WL 5095677, at *7. Plaintiffs contend that the district

court erred in granting judgment for Defendants on Plaintiffs’ claims of wrongful

denial of benefits because the evidence establishes that their rights under the Plan

were vested and enforceable, and that the per capita distribution scheme adopted

by the district court violates those vested rights.

We agree with Plaintiffs, at least in part. Although we do not hold that

Plaintiffs have established their entitlement to benefits

– as Defendants may have

viable defenses to those claims

– we conclude that the district court erred in its

conclusion that they had failed to establish their entitlement as a matter of law.

We further agree with Plaintiffs that the district court’s per capita distribution

scheme risks violating the vested rights of Plaintiffs and other participants and is,

in any case, inconsistent with ERISA. We address each issue in turn below.

54A. Wrongful Denial of Benefits Claims

ERISA provides that “[a] civil action may be brought by a participant or

beneficiary

. . . to recover benefits due to him under the terms of his plan, to

enforce his rights under the terms of the plan, or to clarify his rights to future

benefits under the terms of the plan[.]” 29 U.S.C. § 1132(a)(1)(B). “[T]he validity

of a claim to benefits under an ERISA plan is likely to turn on the interpretation

of terms in the plan at issue.” Firestone Tire & Rubber Co. v. Bruch

, 489 U.S. 101,

115 (1989).

The district court entered judgment for Defendants on Plaintiffs’ wrongful

denial of benefits claims because, in its view, Plaintiffs “ha[d] [not] satisfied the

conditions precedent to payments [under the Plan]. They [did] not retire[] at

sixty

‐ five, die[], or become disabled while in CTC’s employment and they [did]

not proffer[] evidence that they complied with the 1997 Plan’s 3% contribution

requirement to an IRA.” Browe I

, 331 F. Supp. 3d at 304. On review, however, we

are not persuaded that the district court’s conclusions are consistent with ERISA.

While we do not hold that Plaintiffs have established their entitlement to benefits

as a matter of law, the district court’s decision cannot stand on its own terms and

we therefore vacate the judgment on these counts and remand to the district

55court for further proceedings.

Beginning with the issue of “retirement,” the 1990 and 1997 Plan

Agreements both provide that the Plan will begin paying benefits upon, among

other events, the “Retirement of the Participant.” J. App’x at 375, 379. Both plans

define “Retirement” as “withdrawal from full time active employment at or after

age 65.” Id. at 374, 378. The district court, based on the testimony about the

parties’ understanding at the time the plan was drafted, construed this to signify

“retirement at CTC.” Browe I

, 331 F. Supp. 3d at 304. 19

Though it may be the case that this construction of the term “retirement”

best conforms with Laumeister’s intentions and the participants’

contemporaneous understanding, it cannot be squared “with the well

‐ established

idea that contracts necessarily incorporate the law as it stands at the time of

contract formation.” Sullivan v. Nassau County Interim Fin. Auth.

, 959 F.3d 54, 62

19 The district court also appeared to construe the Plan documents’ provision for

the payment of benefits “when a Participant dies before Deferred Compensation

payments start,” J. App’x at 375, 379, to embrace only employees who died while

employed by CTC. Browe I

, 331 F. Supp. 3d at 304 (“Tyler Burgess’s and Bonnie

Jamieson’s claim to benefits under the 1997 Plan depends on their mother’s status

at the time of her death both in terms of whether she was a Plan participant and

whether she was employed by CTC at the time of her death.”). That

interpretation also fails for the reasons discussed in this section.

56(2d Cir. 2020); see also Browe II

, 2018 WL 5095677, at *6 (“[C]ourts must interpret

plans to adhere to ERISA requirements.”) (alteration omitted). ERISA provides

that a participant’s benefits under a covered plan vest upon the earlier of her

attainment of normal retirement age (as defined in 29 U.S.C. § 1002(24)) or her

completion of a specified number of years of service. See 29 U.S.C. § 1053. Once

benefits vest, they are nonforfeitable, even if their receipt must await the

occurrence of future events such as retirement or death. That is so even if the

employee has “consent[ed] to plan provisions that would otherwise require

forfeiture.” Heinz v. Central Laborers’ Pension Fund

, 303 F.3d 802, 804 (7th Cir.

2002).

The district court thus erred in construing the term “retirement” to signify

retirement from CTC and entering judgment for Defendants on Plaintiffs’

wrongful denial of benefits claims insofar as that decision was premised on the

notion that Plaintiffs lost any claim to benefits by leaving CTC prior to reaching

retirement age. If Plaintiffs had vested benefits which, as discussed below,

appears to be the case, they are entitled to those benefits upon their retirement

irrespective of their employer at that time.

That, however, was not the only reason why the district court found

57Plaintiffs’ wrongful denial of benefits claims lacking; as discussed above, the

court also found that Plaintiffs failed to prove that they had deposited at least 3%

of their income into an IRA as required by the Plan. In other words, the district

court found that Plaintiffs never even participated in the Plan to begin with. It is

not clear, however, that the Plan provision sweeps that broadly; we therefore

cannot affirm the judgment on that alternate basis.

Of course, a party seeking to recover for wrongful denial of benefits under

ERISA bears the burden of proving her entitlement to those benefits. See, e.g.

,

Juliano v. Health Maint. Org. of N.J., Inc.

, 221 F.3d 279, 287

‐ 88 (2d Cir. 2000). But

whether a party is entitled to benefits under a Plan will depend on the terms of

the plan at issue. See, e.g.

, Bruch

, 489 U.S. at 115. And while both Plan Agreements

contain provisions requiring employees to present evidence of having

contributed 3% of their income to an IRA, we are less confident than the district

court that Plaintiffs’ failure to adduce evidence of their own contributions is fatal

to their claims.

As an initial matter, we reject Plaintiffs’ contention that CTC’s failure to

provide Plan participants with a summary plan description (“SPD”) setting forth

the requirement of 3% contributions precludes Defendants from relying upon or

58enforcing it. In order to succeed on this theory, Plaintiffs are required to show

that they were “likely to have been harmed as a result of a deficient SPD.” Wilkins

v. Mason Tenders Dist. Council Pension Fund

, 445 F.3d 572, 585 (2d Cir. 2006)

(emphasis omitted); see also Weinreb v. Hosp. for Joint Diseases Orthopaedic Inst.

, 404

F.3d 167, 171 (2d Cir. 2005) (“[A]n ERISA claim premised on the complete

absence of an SPD also requires a showing of likely prejudice.”). Here, however,

the record makes clear that Plaintiffs were separately informed of the 3%

requirement through their application to participate in the Plan. Wilkins

, 445 F.3d

at 585 (deficient SPD is harmless if “employee independently knew the

information that was wrongfully omitted from the SPD”). 20

That, however, does not settle the matter. Although the 1990 Plan

Agreement required participants to “agree to provide evidence,” J. App’x at 375,

of contributions to their IRA, it sets forth no consequences for their failure to do

so. The district court evidently construed the 3% contribution as a condition

precedent to the accrual of benefits. But “conditions precedent

. . . are not favored

20 Although it is unclear from the record whether that information was also

contained on the application to participate under the 1990 Plan Agreement (if any

such application existed), because Plaintiffs bear the burden of showing likely

prejudice, that failure of proof works to their detriment.

59and must be expressed in plain, unambiguous language.” Georges v. United

Nations

, 834 F.3d 88, 94 (2d Cir. 2016). The 1990 Plan documents contain no such

language. And the record demonstrates CTC itself was evidently not particularly

bothered by the apparent lack of clarity; it continued to deposit deferred

compensation earmarked for each participant in the Plan account and took no

steps to verify compliance with the 3% contribution requirement, suggesting that,

even if the requirement were intended as a condition, CTC was content to waive

it. 21 And under the terms of the 1990 Plan Agreement, CTC’s contributions were

to “ accrue and be payable.” J. App’x at 375 (emphasis added). That provision,

considered together with the absence of language expressly conditioning

participation on IRA contributions or expressly providing for forfeiture of

accrued unvested benefits in the event that any participant stops making

21 We note also that, although Laumeister testified that “without notification by

the employee of stopping paying the three percent, [CTC] would have no way of

knowing [that employees were failing to make contributions],” Dist. Ct. Dkt. 195

at 32:8

‐ 9, the 1990 and 1997 Plan Agreements require the presentation of evidence

of such contributions to CTC, and ERISA requires employers to “maintain

records with respect to each of [their] employees sufficient to determine the

benefits due or which may become due to such employees.” 29 U.S.C.

§ 1059(a)(1). CTC’s admitted failure to keep such documentation further supports

the conclusion that it waived the contribution requirement and counsels against

permitting it to invoke that requirement to avoid paying Plan benefits.

60contributions, and the absence of a no

‐ waiver clause, counsel against reading the

provision as imposing a condition precedent to participation. 22

Although the 1997 Plan Agreement is largely identical to the 1990 Plan

Agreement, it supplements the contribution requirement by providing that “[i]n

the event that a Participant fails to continue funding the IRA

. . . the Employer

will terminate funding the plan on behalf of the Participant and all benefits

accrued will be forfeited to the Employer. The Employer will notify the

Participant in writing thirty days prior to termination.” Id. at 379. While that

language may appropriately be construed as a condition, there remain obstacles

to its enforcement in this case.

Most notably, to the extent that the contribution requirement imposes a

condition upon participants as a precondition to continued employer

contributions, it likewise requires the employer to provide notice of its intent to

22 Moreover, we observe that at least one Plaintiff, Phil Jordan, specifically

testified that he had an IRA and that he stopped contributing 3% of his salary to

that IRA only sometime between 2002 and 2004. Assuming that this testimony is

credited (and the district court did not find otherwise), at most, that failure

would preclude Jordan from accruing additional benefits after he stopped making

such contributions; it could not effect a forfeiture of benefits that had already

vested. Moreover, as noted, Plaintiffs no longer seek to recover the value of

contributions made after March 1997, up to which point, according to Jordan, he

had been contributing 3% of his income to an IRA.

61terminate those contributions. But there is no evidence in the record that any

such notice was provided; to the contrary, Laumeister testified that he was not

aware of any such notices being sent, and Jordan testified that he had never

received one.

Accordingly, we cannot sustain the district court’s conclusion that

Plaintiffs’ failure to prove that they made IRA contributions renders them

ineligible for Plan benefits. We therefore vacate the judgment entered for

Defendants on Plaintiffs’ wrongful denial of benefits claims. We express no view

on the viability of Defendants’ remaining defenses to these claims, which are

appropriately addressed by the district court in the first instance.

B. The Distribution Scheme

The district court, citing uncertainties in calculating individualized benefits

with specificity, ordered that the restoration award be distributed to Plan

participants who met certain years

‐ of

‐ service eligibility criteria on a per capita

basis. While we are cognizant of the difficulties inherent in crafting and

administering an award in unusual cases such as this, in which most relevant

records have been destroyed and memories have faded considerably, the district

court’s distribution scheme is both inconsistent with ERISA and risks violating

62the vested rights of Plan participants. We therefore vacate that portion of the

judgment.

As the district court observed, the remedies available under ERISA for

fiduciary breaches are intended to provide relief to the subject plan as a whole, as

opposed to any individual participant (or her beneficiary). See, e.g.

, Mass. Mut.

Life Ins. Co. v. Russell

, 473 U.S. 134, 140

‐ 42 & n.9 (1985). Accordingly, the basis for

the district court’s authority to order a further distribution of that award to

Plaintiffs or the remaining Plan participants, absent proof of entitlement to Plan

benefits, is not clear to us, and we discern nothing in ERISA’s remedial

provisions authorizing such relief. Cf. Halo v. Yale Health Plan

, 819 F.3d 42, 59 (2d

Cir. 2016) (“[T]he federal judiciary will not engraft a remedy on a statute, no

matter how salutary, that Congress did not intend to provide.”), quoting Russell

,

473 U.S. at 145. The particular distribution scheme selected by the district court,

moreover, is inconsistent with the district court’s own finding that no Plaintiff

had made the requisite IRA contributions and its conclusion that they had not

established that they were wrongly denied Plan benefits to which they were

entitled. Though we have vacated the judgment on those counts for the reasons

discussed in the preceding section, under the district court’s own logic, Plaintiffs

63should not have received any portion of the restoration award. In other words,

the sole purpose of the restoration award should have been to make the Plan

whole so that benefits could be distributed to those participants to whom they

were due.

Further, assuming that some or all Plaintiffs have accrued benefits, which

the record suggests may be the case, we are puzzled by the district court’s

conclusion that Plaintiffs “introduced no testimony or other evidence regarding

the extent to which they were vested in the Plan.” Browe II

, 2018 WL 5095677, at

*7. As the district court itself recognized, under ERISA’s minimum vesting

schedules, a defined contribution plan participant’s accrued benefits fully vest

upon the completion of three or six years of full

‐ time service 23 excluding, inter

alia

, any years of service during which the employer did not offer the plan or a

predecessor plan. See 29 U.S.C. §§ 1053(a)(2)(B), 1053(b)(1)(C). Given that the Plan

was offered beginning in 1990 at the latest, the district court’s own findings of

fact confirm that all Plaintiffs’ accrued benefits had fully vested irrespective of

23 Whether benefits vest after three or six years of service depends on whether the

plan in question provides for “cliff vesting,” which provides for complete vesting

upon three years of service, or graduated vesting, which provides that an

employee’s benefits vest by 20% each year beginning at the end of the second

year of service.

64which vesting schedule applied, as each of them (or, in the case of Jamieson and

Burgess, their mother) completed well over six years of full

‐ time service with

CTC after 1990. See Browe I

, 331 F. Supp. 3d at 268

‐ 69.

For that reason, Plaintiffs are correct that the per capita distribution scheme

violates

– or at least risks violating

– their vested rights. Equally importantly,

even assuming that no Plaintiff was entitled to benefits, the per capita

distribution scheme ordered by the district court risks violating the vested rights

of other participants in the Plan not parties to this suit, whose benefits may well

exceed the amount that they would receive were the Plan’s assets distributed per

capita. We therefore vacate the judgment insofar as it ordered per capita

distribution and remand for the district court to craft a remedial scheme that

takes into account the vested rights of participants after conducting, to the extent

necessary, any additional fact

‐ finding. That remedial scheme should include a

mechanism enabling Plan participants not parties to this suit to receive any

benefits to which they may be entitled, similar to that adopted by the district

court in the first instance. The district court should also provide for an

appropriate disposition of excess funds, if any, remaining after claims have been

paid out. See generally Bennett v. Conrail Matched Savings Plan Admin. Comm.

, 168

65F.3d 671 (3d Cir. 1999) (discussing distribution of surplus funds in ERISA plan).

VI. Admission of Plaintiffs’ Exhibit 3

Finally, Defendants contend that the district court erred in admitting

Plaintiffs’ Exhibit 3, a summary chart prepared by Wayne Massari in or around

1997 showing then

‐ current Plan balances and projected payouts for participants.

“We review a district court’s rulings on the admissibility of trial evidence for

abuse of discretion.” United States v. Fazio

, 770 F.3d 160, 165 (2d Cir. 2014).

“Further, the admission of evidence in a bench trial is rarely ground for reversal,

for the trial judge is presumed to be able to exclude improper inferences from his

or her own decisional analysis.” BIC Corp. v. Far Eastern Source Corp.

, 23 F. App’x

36, 39 (2d Cir. 2001) (collecting cases). We discern no such abuse here.

Defendants spend a considerable portion of their briefing arguing that

Exhibit 3 was inadmissible as a business record under Federal Rule of Evidence

803(6) because Launderville’s testimony did not supply an adequate foundation

and because, as the district court recognized, the document contained certain

assumptions (such as a 15

‐ year payout schedule) that were inconsistent with the

terms of the Plan. Assuming, arguendo

, that Defendants are correct about Rule

803(6)

– and we have serious doubts that this is the case

– the dispute is an

66academic one. The district court held that Exhibit 3 was admissible both as a

business record and as an admission of a party

‐ opponent under Rule

801(d)(2)(D). And because Defendants do not argue that district court’s

admission of Exhibit 3 as a statement of a party opponent was error, 24 we need

not consider whether it was properly admitted as either a business record or an

opposing party’s statement. See, e.g.

, Thai

‐ Lao Lignite (Thailand) Co. v. Gov’t of Lao

People’s Democratic Republic

, 864 F.3d 172, 190 (2d Cir. 2017); see also Green v.

Mazzucca

, 377 F.3d 182, 183 (2d Cir. 2004) (“[W]hen a judgment rests on two

independent grounds, a failure to appeal either one of them justifies summary

affirmance.”).

In any case, the district court’s ruling that Exhibit 3 was admissible as an

opposing party’s statement under Rule 801(d)(2)(D) was not error. Rule

801(d)(2)(D) defines as nonhearsay any statement offered against a party made

“by the party’s agent or employee on a matter within the scope of that

relationship while it existed.” Fed. R. Evid. 801(d)(2)(D). A party seeking to admit

such a statement must establish “(1) the existence of the agency relationship,

24 Though, puzzlingly, they contend that Exhibit 3 was not admissible as a

statement against interest under Rule 804(3), a rule on which the district court did

not rely in admitting it.

67(2) that the statement was made during the course of the relationship, and (3) that

it relates to a matter within the scope of the agency.” Marcic v. Reinauer Transp.

Cos.

, 397 F.3d 120, 129 (2d Cir. 2005) (internal quotation marks omitted).

Defendants acknowledge that Massari was CTC’s Treasurer and Chief Financial

Officer, and that administering the Plan was within the scope of his duties. While

Defendants (in arguing that it was not a business record) claim that “it is

improbable that Trial Exhibit 3 was produced by Mr. Massari or provided by Mr.

Massari to Ms. Launderville,” Defs.

‐ Cross

‐ Appellants’ Br. at 39, the district court

explicitly credited Launderville’s testimony on that point. See Browe I

, 331 F.

Supp. 3d at 278 (“Ms. Launderville credibly testified that she was given the

undated worksheet identified as Plaintiffs’ Exhibit 3 by Mr. Massari.”). We must

defer to the district court’s credibility assessment absent a showing of clear error;

no such showing has been made here. 25 Accordingly, the record supports the

conclusion that all the requirements of Rule 801(d)(2)(D) are satisfied. The district

court’s admission of the exhibit pursuant to that rule was thus well within its

25 The district court further held Exhibit 3 admissible under Federal Rule of

Evidence 807(a)’s residual hearsay exception. In view of Defendants’ failure to

argue that the exhibit was not properly admitted as a party

‐ opponent’s

statement, we do not consider that alternate basis.

68discretion.

CONCLUSION

“ERISA is, of necessity, a highly complex and detailed statute.” Jankowski v.

Int’l Brotherhood of Teamsters Local No. 710 Pension Fund

, 673 F.2d 931, 936 (7th Cir.

1982), vac’d

, 463 U.S. 1222 (1983). Unsurprisingly, ERISA litigation often presents

novel and difficult legal issues. This case is no exception, and the difficulty of

adjudicating those issues is further compounded by the significant amount of

time that has passed since the underlying events occurred, during which relevant

records were lost or destroyed and memories faded. We are cognizant of the

difficult task that confronted the district court in resolving this case, and we

acknowledge its careful and diligent work.

Nonetheless, on review, we are constrained to conclude that the district

court erred with respect to several issues. Accordingly, and for the reasons

discussed above, we AFFIRM IN PART and REVERSE IN PART the judgment of

the district court and REMAND this case for further proceedings consistent with

this opinion. We further DENY all pending motions as moot.

69