### In the 

# United States Court of Appeals For the Seventh Circuit

____________________

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C AROL C HESEMORE , et al. , on behalf of themselves, individually , and on behalf of all others similarly situated, Plaintiffs

- Appell ees / Cross

- Appellants ,

v.

D AVID B. F ENKELL , Defendant

- Appell ant / Cross

- Appellee
, v.

A LLIANCE H OLDINGS , I NC

. , et al. , Defendants

- Appellees

.

____________________ Appeal s from the Unit ed States District Court for the Western District of Wisconsin

. No. 09

- cv

- 413

- wmc

— William M. Conley , Chief Judge

.

____________________
A RGUED M AY 18, 2015

— D ECIDED J ULY 21, 2016

____________________2 No s

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Before K ANNE and S YKES , Circuit Judges , and E LLIS , District Judge

. *
S YKES , Circuit Judge

. Trachte B uilding Systems, Inc., a Wisconsin manufactur er , established an employee stock ownership plan (“ESOP” ) in the mid

- 1980s when ESO Ps

were a popular employee

- benefits instrument

. I n the late 1990s, David Fenkell and A lliance Holdings, Inc., a company he founded and controlled, developed a niche special ty in buying and s elling ESOP

- owned, close ly held companies with limited marketability. In the typical transaction , Fenkel l would merg e the ESOP of an acquired company into Alliance’s own ESOP, hold the company for a few years with its management in place , and then spin it off at a profit ( assuming everything went as p lanned ).
In accordance with this business model , Alliance a cquired Trachte in 200 2 for $24 million and folded its ESOP into Alliance ’s ESOP. Fenkel l projected that the company would fetch around $50 million in five years . W hen th e time

came to sell , however, Trachte’s profits were flat, its growth had stalled , and no independent buyer would pay a nywhere near that price. So Fenkell off load ed the company to its employees in a complicated leveraged buyout

. G reatly simplified, the deal involved th r ee steps

. First, Fenkel l directed the creation of a new Trachte ESOP managed by
trustee s behol den to him . N ext, the accounts in the Alliance ESOP were sp un off to the new Trach te ESOP. F inally, the new Trachte ESOP use d the employees’ ac counts as collateral to incur debt to purchase Trachte’s equi ty back from All iance

. Multiple i nterlocking t ransactions to that effect closed

* Of the Northern District of Illinois, sitting by designation.No s

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o n the same day in August 2007. W hen all was said and done , Trachte and the new Trachte ESOP had paid $ 45 million for 100% of T rachte’s stock and incurred $36 mil lion in debt.

T h e purchase price was inflated and the debt l oad was unsustainable . B y the end of 2008 , Trachte ’s stock was wort hless. The losers in this deal

— the employe e participants in the

n ew Trachte ESOP

— sued Alliance, Fenkell, his hand picked trustees, and several other entitie s alleging breach of fiduc iary duty in violation of ERISA. The district court held a bench trial and issued a comprehensive opinion finding the defendants liable

. Chesem ore v. Alliance Holdings, Inc. ( Chesemore I ) , 886 F. Supp. 2d 1007 (W.D. Wis. 2012). After an additional hear ing , the judge craft ed a careful remedial order mak ing the class and a subclass whole. Chesemore v. Alliance Holdings, Inc. ( Chesemore II ) , 948 F. Supp. 2d 928 (W.D. Wis. 2013). The judge later awarded attorney’s fees and approved settlements among some of the parties.
Fenkel l appealed. He concedes liability but raises many objections to the remedial order, the award of attorney’s fees, and the settlement s by his codefendants. The only s ubsta ntial issue is a challenge to the judge’s order requiring him to indem ni fy his cofiduciaries. We held m ore than 30 years ago that ERISA al lows th is

. Free v. Briody , 732 F.2d 1331, 1337

– 38 (7th Cir. 1984)

. Since then a circuit split has arisen on th is subject , but we’re not persuaded that Free should be ove rruled. None of Fen kel l ’s other arguments has merit. The plaintiffs filed a cross

- appeal seeking a larger award of attorney’s fees and c ontesting the judge ’s refusal to award
costs a gainst Fenkel l . We reject these challenges

. Finally, while we’ve had this case under ad visement, the district4 No s

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court found Fenkel l in contempt for failing to comply with the remedial order

. Fenkel l app ealed that or der as well, but his arguments are frivolous . Accordingly, we affirm in all respects. I. Background Trachte Building Systems desi gns and manufactures steel self

- storage systems in Sun Prairie, Wisconsin

. In the 1980s Stephen Pagelow , the son

- in

- law of Trachte’s founder , a cquired a controlling interest in the company and took over

as president and chairman of the board

. In 1987 Pagel ow directed the establishment of an employee stock ownership plan , or ESOP , as a benefit to employees , selling some of his shares to the plan

. 1 Through out the 1990s Trachte exper ienced significant growth in both sales and operati ons. David Fenkell established Alliance in 1994 and at all rel evant times was its president, CEO, and sole director

. Fenkell also was president, CEO, and sole director of two Alliance subsidiaries , A.H.I., Inc., and AH Transition Corporation

. (We’ll refer to these companies collectively as “Alliance”

1 An ESOP is a trust into which the sponsoring company contributes stock, apportioning shares to its employees as a re tirement benefit; on retirement the employee’s equity is repurchased by the ESOP. See, e.g. , How an Employee Stock Ownership Plan (ESOP) Wo rks , N AT ’ L C TR

. F OR E MP

. O WNERSHIP , https://www.nceo.org/articles/ esop

- employee

- stock

ownership

- plan (last visited July 14, 2016). In the past company contrib utions were tax

- deductible to a point that made ESOPs popular as an employee

- benefits instrument, but their popularity has diminished in recent years. See ESOP (Employee Stock Ownership Plan) Facts , N AT ’ L C TR

. FOR E MP

. O WNERSHIP , http://www. esop .org (last visited July 14 , 2016) (“ Since the beginning of the 21st century there has been a decline in the number of plans but an increase in the number of participants

. ”).No s

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unless the context requires otherwise.) Alliance was in the business of buying and selling ESOP

- owned , closely held compa nies that might otherwise be difficult to sell . Alliance ’s business model was to fold the acquired company’ s ESOP into its own ESOP, leave the existing management in place , and spin off the company to another buyer a few years later , hopefully at a substantial profit

. In short , Fenkell and All iance made money by flipping ESOP

- owned, closely held companies with limited marketability. By 2002 Pagelow was looking for a way to gradually exit Trachte in anticipation of fully retiring in a few years

. Enter Alliance, which that year acquired 80% of Trachte ’s common stock for $24 million and all of its preferred stock f or $2 million. The 2002 transaction

— more accurately, a series of interlocking transactions

— involved folding t he Trachte ESOP into Alliance’s own ESOP by transferring the emplo yee s’ accounts to the Alliance ESOP and exchanging the Trachte stock for Alliance stock. Trachte employees thus became participants in the Alliance ESOP , and the old Trac hte E S OP was dissolved. Pagelow re tained 20% of Trachte’s

com mon stock and a 40% ownership interest in a subsidiar y

. He also agreed to stay on as chairman for five years

. In exchange he received a put option giving him the right to tender his Trachte shares to the company in 2007 at a price keyed to the prior year’s ap praised value

. After the 2002 transaction , Pagelow resigned as Trachte’s president and w as replaced by Jeffrey Seefeldt, a longtime Trachte manager . P age low immediately reduced his wor kweek and gradually began to cut back on his day

- to

- day management of the company. In the fall of 2005 , Pagelow exercise d part of his put option early . I n mid

- 2006 he brok e6 No s

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his hip, which radically reduced his involvement with the company. During this time , Trachte’s sales increased steadily bu t profit s remained flat

. Despite its stagnant profitability, the

on

- paper value of Trachte ’s stock rose dramatically , from $25.4 mil lion in 2003 to $44.9 million in 2006. Pagelow’s put option

— coming due in 2007

— w as pegged to the 2006 appraised valu e , but Alliance lacked the liquidity to satisfy it. Faced with the prospect of having to borrow to satisfy Pagelow’s option and with serious doubts about Trachte’s future performance, Fenkell decided it was past time to sell

. At the time of the 2002 transaction, Fenkell had projected that Trachte w ould sell for as much as $50 million in 2007

. T hroughout 2006 he looked for a buyer at or near that price , but he came up empty

- hand ed. Failing to find an indepen dent buyer at his desired price , Fenkell de vised and impl emented a complicated leveraged buyout to off

- load the company onto Trachte’s employees . The district court’s opinion meticulously d escribes t h e history and details of th is transaction , as well as the lack of any truly independent due diligence on behalf of Trachte’s employees

. Chesemore I , 886 F. Supp. 2d at 1021

– 40 . B ecause liability is uncontested here , a radically simplified summary w ill suffice

. First, o n August 22, 2007, Fenkel l orchestrated the r emoval of Trachte’s entire board of directors and installed Seefeldt and James Mastran gelo , the c hief o perating o fficer , as the sole board members. Id . at 1036. Then, following a pl an of Fenkell’s d evising , Seefeldt and Mastrangelo directed the creation of a new Trachte ESOP , install ing themselves and Pamela Klute , the company’s vice

- president of human

resources , a s trustees. Id

.No s

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The leveraged buy out itself involved 11 separate s teps , each of which occurred sequentially and was conditioned on the completion of all previous and subsequent steps. The district judge grouped the se steps into three baskets. First , in steps 1

– 3, t he accounts of the Trachte employees in the Alliance ESOP wer e spu n off to the new Trachte ESOP, and their Alliance shares were exchanged for Trachte shares held by A

. H

. I. Id . at 1037

– 38 . Next , in Steps 4

– 7, Trachte u s ed the new Trachte ESOP accounts as collateral for loans to pay off the “ phantom ” stock plan of All iance employees a nd redeem Trachte stock held by Alliance and Pagelow. Id. at 1038. Finally , in Steps 8

– 11, Trachte and the n ew Trachte ESOP acquired all Trachte equity held by Alliance , Alliance e mployees, and Page low. Id. at 1038

– 39. This series of interdependent transactions closed on August 29, 2007 . By the end of that day , Tra chte and the new Trach te ESOP had paid $45 million in consideration for Trachte’s total equity and incurred about $36 million in debt. Id. at 1039.
Trachte did not flourish after the 2007 leveraged buyout

. It held its own until May 2008 , but at that point project ed that it w ould n o t meet its loan covenants. By the end of 2008 , Trachte ’s stock was worthless.

T heir equity wiped out , a group of current and former Trachte employees filed this class action alleging breach of fiduciary duty in violation of ERISA. The class includes current and former employ ees who participated in the o ld Trachte ESOP , the Alliance ESOP , and the n ew Trachte ESOP. A subclass comprises t hose participa n t s in the new Trachte ESOP who would have remained employees of Alliance

— and thus participants in the Alliance ESOP

— but for the8 No s

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August 2007 transaction

. Fenkell and Alliance were the primary targets of the suit. The complaint also named t he trustees of the new Trachte ESOP as defendants. Pagelow , the n ew Trachte ESO P , and the Alliance ESOP were named

as nominal defendant s

. 2 After extensive litigation and a bench trial , t he judge found the defendants liable. Fenkell and Alliance had insis ted that they were not fiduciaries because all they did was spin off th e Alliance ESOP to the n ew Trachte ESOP. The judge was not per suaded. He found : Fenkell and Alliance (1) arranged the 2007 [t] ransaction so that it would only occur on terms favorable to th em and disfavorable to a minority interest [ ( i.e. , the Trachte legacy a ccounts ) ] in the Alliance ESOP ; (2) ensured no one on the other side of the transaction would look out for those interests after the spinoff; and (3) ensured that those charged with dec ision

- making authority on the other side of the

2 The plaintiffs also sued A lpha Investment Consulting Group, LLC, a consulting firm retained by the trustees of the new Trachte ESOP just before the leveraged buyout closed. The trustees asked Alpha to evaluate the transaction when they realized they were potentially personally exposed. Fenkell worried that advice from Alpha would delay or derail the deal. To mollify him, the trustees strictly limited the scope of the engagement to valuati on information provided by Alliance and asked the firm for a simple “yes or no” on the transaction. Based on this limited sphere of information, Alpha concluded that the deal was risky but not unreasonable and gave it thumbs up. T he judge cleared Alpha of liability and that ruling has not been challenged.No s

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transaction would remain answerable to All iance and Fenkell should they not go through with it. In short, it was a classic example of “heads I win, tails you lose.”
Chesemore I , 886 F. Supp. 2d at 1052

. The j udge continued :

“ Fenkell and Alliance designed the transaction so that either the accounts of the Trachte participants in the Alliance ESOP would be used as leverage to buy Trachte from Alliance or the accounts would revert to their prior situation with no change. ” Id. at 1053

. I n other words, i f there had been an actual independent fiduciary on the other side , Fenkell and Alliance wouldn’t have gotten away with it

. T hey in stalled t rust ees who “(1) had a conflict of interest that placed them under su bstantial duress during the negotiation and assessment of the deal; and (2) lacked the experience and the incentive to assess a deal of this type and complexity.” Id. at 1054. Al though the tr ustees formally made the decision to use the

new Trachte ESOP accounts as collateral for the buyout , Fenkell and Alliance controlled th at decision and orchestra ted the entire complex transaction. I n exercising th at control , the judge concluded, they violat ed fiduciary duties owed to the plaintiffs

. The judge also held, however, that the defendants’ fid uciary breach was not wholly responsible for Trachte’s total collapse; the 2008 financial crisis also played a role, although the inflated purchase price and excess debt placed treme ndous pressure on the company and sealed its fate. In the end , and after an extensive additional hearing, t he judge crafted an intricate remedial or der mak ing the class and the subclass whole. As relevant here, he ordered the trustees to restore10 No s

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$6,473,856.82 to the new Trachte ESOP, allocated to the class members’ accounts according to their shares as of the date of judgment

. Chesemore II , 948 F. Supp. 2d at 950. He ordered Fenkell and Alliance to restore $7,803,543 to the Alliance ESOP, allocated to the subclass members’ accounts according to their holdings as of August 29, 2007. Id. And h e ordered Fenkell to restore to Trachte the $2,896,000 he received in “phantom” stock proceeds from the 2007 transacti on. Id.

Because Fenkell and Alliance were most at fault, the judge ordered them to indemnify t he t rustee s

. Id . at 9 50. In particular, t he judge had th is to say about Fenkell : Each time he testifi ed, the court was increa singly im pressed by Fenkell’s complet e recall of minor details and sophisticated understanding of ERISA transactions, as well as the law go verning those transactions. After Pagelow was sidelined by the 2002 sale, Fenkell was easily the smartest person in the room. He held b etween a $2.5 and $ 3 million interest in the phantom stock plan for Alliance employees. He knew that under any alternatives to a leve raged ESOP purchase, he was unlikely to r eceive any immediate phantom stock payments and his interest in the phantom stock plan would follow T rachte to what he expected to be an unhappy ending.
Id . at 946. Accordingly, t he judge found that Fenkell “was far and away the most culpable party

. ” Id. Finally, t he judge assessed prejudgment interest, awar ded attorney’s fees , and approved settlements between theNo s

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plaintiffs and the Trachte ESOP t rustees , and between the plaintiffs and Alliance. Fenkell appealed, challenging various aspects of the r emedial order , the award of attorney’s fees, and the judge’s approval of the settlemen ts . The plaintiffs cross

- appeal ed seek ing a larger award of fees and costs against Fenkell.
In the meantime while we’ve had this case under a dvisement , Fenkell failed to comply with the order to restore the Alliance ESOP , so the judge found him in contempt

. Fenkell appealed the contempt order as w ell. W e’ve consol idated th at appeal with the earlier ones.
II. Discussion Although Fenkell does n o t c hallenge his liability , h is a ppeal contests aspects of the judge’s remed ial order in an attempt to zero out the actual cost of his liability. The only significant legal issue is his challenge to the judge’s i n demn if ication order. The remaining is sues , the is sues raised in the plaintiffs’ cross

- appeal, and the challenge to the contempt order are more straightforward

. A. Indemni fication/Contribution The judge ordered Fenkell t o indemnify Seefeldt, Mastrangelo, and Klute because his culpability vastly e xceeded theirs

. The judge found that Fenkell orchestrated their install ation a s trustees and directed their actions

. And they in turn did his bidding , both because they were inexp erienced as fiduciaries and because he called the shots as controlling owner, sole director, president, and CEO of Alliance

. In short, Fenkell had authority over the Trachte
t rustees and used th at authority and his control of the All iance ESOP assets to orchestrate the inflated leveraged bu y-12 No s

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out

. As the judge analogized , “Fenkell was the unquestioned conductor and the Trachte [t] rustees mere musicians.” Chesemore II , 948 F. Supp. 2d at 949.
Fenkel l doesn’t meaningfully contest the judge’s factual findings. He argues instead that ERISA doesn’t permit the court to order indemnification or contribution among c ofiduciaries. Although ERISA contemplate s the allocation of fiduciary obligations among cofid uciaries (thereby limiting subs equent losses ) , see 29 U.S.C. § 1105(b)(1)(B), it does n ’ t specif ically mention contribution or indemnity as a remedy. I nstead, it broadly permit s the court to fashion “ appropriate equitable relief” in response to a claim “by a participant, beneficiary, or fiduciary.” Id. § 1132(a)(3). The Supreme Court has explained that “appropriate equitable relief” here means “those categories of relief that, traditionally speaking ( i.e. , prior to the merger of law and equity) were typically available in equity.” CIGNA Corp. v. Amara , 563 U.S. 421, 439 (2011) (internal quotation marks omitted)

. In this context the Court has interpreted ERISA as gene rally incorporating the law of trusts. See id. (noting that ERISA “typically treats” a plan fiduciary “as a trustee” and a plan “as a trust”); see also Tibble v. Ediso n Int’l , 135 S. Ct. 1823, 1828 (2015) (“In determining the contours of an ERISA fiduciary’s duty, courts often must look to the law of trusts.”); Varity Corp. v. Howe , 516 U.S . 489, 497 (1996) (“[W] e believe that the law of trusts often will inform, but will not necessarily determine the outcome of, an effort to interpret ERISA's fiduciary duties .”); Firestone Tire & Rubber Co. v. Bruch , 489 U.S. 101, 110 (1989) (“ERISA abounds with the language and terminology of trust law.”); Cent . States, Se. &No s

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Sw. Areas Pension Fund v. Cent. Transp., Inc. , 472 U.S. 559, 570 (1985) (“ [R] ather than explicitly enumerating all of the powers and duties of trustees and other fiduciaries [in ERISA] , Congress invoked the common law of trusts to define the general scope of their authority and responsibi lity

. ”).

Thus , the district court’s remedial authority under ERISA includ es the power of courts under the law of trusts, which
vest s in them the author ity to fashion “traditional equitable remedies.” CIGNA , 563 U.S. at 440

. Indemnification and contribution are among those remedies. See, e.g. , Marine & River Phosphate Mining & Mfg. Co. v. Bradley , 105 U.S. 175, 182 (1881) (“[T] he necessity of enforcing [] a trust, marshalling assets, and equalizing contributions [] constitutes a clear ground of equity jurisdiction. ”); Hatch v. Dana , 101 U.S. 205, 208 (1879) (“[I] f the capital stock should be divided, leaving any debts unpaid, every stockholder receiving his share of the capital would in equity be held liable pro rata to contri bute to the discharge of such debts out of the funds in his own hands. This, however, is a remedy which can be obtained in equity only

... . ”); Dupont De Nemours & Co. v. Vance , 60 U.S. 1 6 2, 175

– 76 (1856) (explaining the common

- law development of contribution as a remedy in equity).
On the other hand, on the subject of fiduciary liability , ERISA s ays only that a fiduciary “shall be personally liable to make good to such plan ” for a breach of his duties. 29 U.S.C. § 1109(a) (emphasis added). If a fiduciary is liable
to restore an injured plan , this might imply that he cannot be liable to a cofiduciary. After all , a cofiduciary is not a plan.
We addressed this issue long ago and held that ERI SA’s grant of equitable remedial power and its foundation in14 No s

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principles of trust law permit the court s to order contrib ution or indemnification among cofiduciaries based on d egrees of culpability. Free , 732 F.2d at 1137

. Free involved a profit

- sharing plan with two trustees ; one fleeced the plan and the other did nothing. Id. The district c ourt found the
trustees jointly and severally liable because they both had breached their fiduciary dut y

. Id. But the court declined to order indemnification. We re versed , holding t hat ERISA include s the authority to order contribu tion or indemnific ation as allowed in the law of trusts. Id

. We noted in Free that § 1105 (b)(1)(B) expressly allows f iduciaries to allocate various responsibilities between the mselves and thereby insulate themselves from “liability for breaches of duties allocated to another trustee.” Id . at 1337. This demonstrates, we said, that “ Congress clearly did not intend trustees to act as insurers of co

- trustees’ actions.” Id

. The disputed question was no t whether co fiduciar ies may explicitly allocate and limit their liability under ERISA ( they may ) , but rather whether the protections of § 1105 are the exclusive means of doing so . We concluded that they were

n o t exclusive

. We reasoned that “Congress intended to codify the principles of trust law with whatever alterations were needed to fit the needs of employee benefit plans.” Id. at 1337

– 38. Because “[g]eneral principles of trust law pr ovide for indemnification under appropriate circumstances,” id. at 1338, we concluded that “courts [have] the power to shape an award so as to make the injured plan whole while at the same time apportioning the damages equitably b etween the wrongdoers,” id. at 1337.
Fenkell argues that Free was “implicitly overturned” in Summers v. St ate Street Bank & Trust Co. , 453 F.3d 404 (7th Cir.No s

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2006). We disagree. True, Summers said in passing that “a right of contribution” under ERISA “remains an open [que stion] in this circuit.” Id. at 413. But Summers d id not mention Free , let alone disturb or overturn it. Summers apparently overlooked Free , which had already considered and decided the question. Regardless , Summers specifically said that the issue w as “academic” in the context of that case, making its passing reference to c ontribution pure dicta. Id. at 412. One judge in t he Northern District of Illinois has su pposed in dicta that Free ha s been overturned by the Supreme Court in Massachusetts Mutual Life Ins urance Co. v. Russell , 473 U.S. 134 (1985). See BP Corp. N. Am. Inc. Sav. Plan Inv. Oversight Comm. v. N. Tr. Invs., N.A. , 692 F. Supp. 2d 980 (N.D. Ill. 2010). In Russell the Court held that section 409 of ERISA entitles claimants to equitable relief making them whole under their benefits plan but does not a llow recovery of extracontractual damages. The specific issue in Russell

was whether a court may award damages for “ mental or emotional distress ” due to an ERISA violation. 473 U.S. at 138. Th e Court said it may not. Nothing in Russell undermines Free . Indeed, Free wa s d ecided specifically in the context of a section 409 action , through which the court fashioned a n appropriate equitable remedy keyed to the plan in question . A co fiduciary seeking contribution or indemnification for a plan

- related a ward is not analogous to a plan participant seeking extracontractual damages under an implied right of action for, say, emotional distress or pain and suffering

. We think the district court in BP simply overread Russell

. We acknowledge , however, that t he circuits are not un iform on the ques tion of contribution and indemnification

.16 No s

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C onsistent with our holding in Free , the Second Circuit has long maintained that ERISA permits contribution

. See Chemung Canal Trust Co. v. Sovran Bank/M aryland , 939 F.2d 12, 15

– 16 (2d Cir. 1991) . The Eighth and Ninth Circuits disagree. See Tr avelers Cas. & Sur. Co. of Am. v . IADA Servs. Inc. , 497 F.3d 862, 864

– 66 (8th Cir. 2007); Kim v. Fujikawa , 871 F.2d 1427, 1432

– 33 (9th Cir. 1989 ). Fenkell hasn’t given us an y argument that wasn’t alrea dy addressed in Free and resolved against his position. A nd

o verruling circuit precedent simply to move from one side of a circuit split to the other is disfavored

. Buchmeier v. United States , 581 F.3d 561, 566 (7th Cir. 2009). Moreover, w e ’re not convinced that Free was wrongly decided. If we are to inte rpret ERISA according to the background principles of trust law

— a s the Supreme Court has repeated ly instructed us to do

— then indemnification and contribution are available equitable reme dies und er the statute

. Accordingly , the district court had the authority to order Fenkell to indemnify the new Trachte ESOP trustees. T hat remedy i s within the court’s equitable powers and is co nsistent with principles of trust law within which ERISA operates.
B. F enkell’s F iduciary Status
Fenkell argues in the alternative that he can’t be ordered
to indemni f y the trustees because he wasn’t a co fiduciary. This argument is highly formalistic. It’s true that Fenkell wasn’t a trustee or other named fiduciary of the new Trachte ESOP. But the judge found th at Fenkell used his position of authority over the Trachte t rustees to control the assets spun off from the Alliance ESOP

. He orchestrated the resignationNo s

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of the old Trachte board, directed t he creation of the new T

rachte ESOP , and installed trustees who were both inexp erienced and beholden to him. He then used his control over the trustees to implement a leveraged buyout at an inflated price, saddling Trachte with more debt than it could bear. The whole scheme was s et up to ensure that the trustees would do his dirty work and he would keep his hands clean , at least as a formal matter

. The judge saw through it , finding that th e spin

- off “ was atypical both in its terms an d the position of the parties.” Determining fidu ciary status under ERISA is a functional inquiry. Larson v. United Healthcare Ins. Co. , 723 F.3d 905, 916 (7th Cir. 2013) (“ERISA ... defines ‘fiduciary’ not in terms of formal trusteeship, but in functional terms of control and authority over the plan , thus expanding the universe of persons subject to fiduciary duties.”) (citations omitted)

. Even if Fenkell kept himself at a safe distance on paper , the whole of the deal was designed to occur only on terms favorable to him

. It was arranged so that no one on the other side of the deal would look out for the interests of Trachte or its employees post

- spin

- off ; indeed, the trustees of the new Trachte ESOP reported to Alliance and Fenkell. While Fe nkell may not have been a fiduciary on paper, he effectively

c ontrolled both sides of the transaction . E ither the spin

- off and the leveraged buyout would go through together or neither would

. That’s why any involvement by a truly independent fiduciary looking after the Trachte interest s would have scuttled the deal

.18 No s

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As a functional matter, then, Fenkell a nd Alliance were acting in a fiduciary capacit y for the whole of the 2007
t ransaction , as the judge found

. Th ere was no error. 3
C

. Restoration Order
Fenkell also challenges the court ’s restoration order . R ecall that t here are really two classes of plaintiffs here. The main class consists of all participants in the n ew Trachte ESOP at any time from the transaction on August 29, 2007 , to the time of class certification. The subclass comprises All iance employees who parti cipated in the Alliance ESOP at the time of the 2007 t ransaction and whose accounts were transferred to the n ew Trachte ESO P . The judge ordered restitution to the subclass in the amount of $7,803,543, which represents the value of the subclass’s Alliance ESO P accounts as of the closing in 2007. Restitution to t he main class was set at $6,473,856.82 , which represents the amount the partic ipants in the new Trachte ESOP overpa id for the Trachte stock minus the percentage representing the interests of the subc lass (because th eir interests were accounted for in the separate restitution order )

. The theory behind the judge’s order was that t here were two losses that need ed restoration

. T he first is the overpa yment in the leveraged buyout , which harmed the entire class

.

3 Fenkell also asserts in passing that he doesn’t owe indemnification because the Trachte trustees were insured and paid the settlement with insurance proceeds. He raised this point only briefly in the district court when he objected to the settlement, but the argument was factually and legally undeveloped. The judge took note of a possible subrogation claim lurking in the background but said the issue was not properly before the court. Because the issue wasn’t adequately developed either in the district court or here, we do not address it.No s

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T he second is the loss suffered by the subclass: plan partic ipants who would have stayed with the Alliance ESOP or been rolled into a third

- party buyer but for the spin

- off to the

n ew Trachte ESOP . I n either alternative scenario , these participants would still have pension plans. For the subclass the 2007 t ransaction was the factual cause of their total loss, which is why the court ordered them restored to their 2007 level in the Alliance ESOP

. Fenkell argues that the subclass was only enti tled to $ 1,893,650.61

— its share of the leveraged buyout overpa yment

. He says that a ny more would be a “windfall.” T his argument simply confuses the nature of the respective restitution orders . The subclass restitution order was sep arate from the class restitution o rder ; the judge subtracted the subclass’s share from the overpayment award precisely to avoid double recovery and windfalls

. D

. Pre j udgment Interest Moving along , Fenkell mounts two feeble challenges to the a ward of prejudgment interest. His first claim is that because the plaintiffs assigned their rights to Alliance as part of their settlement and the settlement occurred before final judgment was entered, he is wrongly being required to p ay prejudgment interest to a liable party

. In other words , he argu es that the award of prejudgment interest isn’t actually making the plaintiff s whole because the interest ac crued to Alliance from the time of settlement until the judgment was entered

. Fen kell cites no authority in support of the proposition that a prejudgment assignment of recovery halts the accrual of prejudgment interest. As a general matter, “[p] rejudgment20 No s

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interest ... is part of the actual damages sought to be reco vered.” Cement Div.
, Nat’l Gypsum Co. v. City of Milwaukee , 144 F.3d 1111, 1117 (7t h Cir. 1998) (quoting Monessen S w. Ry. Co. v. Morgan , 486 U.S. 330, 335 (1988) ) (emphasis added) ; s ee also Morrison Knudsen Corp. v. Ground Improvement Techniques, Inc. , 532 F .3d 1063, 1077 ( 10th Cir. 2008) (calling p rejudgment inter est “ an integral elemen t of compensatory damages ”).
Here th e award of prejudgment interest was a routine part of the plaintiffs’ restitution remedy . The plaintiffs, i n turn , assigned t heir right o f recovery to Alliance in conne ction with the court

- approved settlement s

. Alliance now stands in the plaintiffs’ shoes . Nothing about the settlement or assignment halted the accrual of prejudgment interest.
A lternative ly, Fenkell argues that the pre judgment

interest award amounts to overcompensation because the plaintiffs “redu ced” their recovery when they settled. He insists that he should only be held liable for interest on the total dam ages minus th e settlement amount

— that is, interest

on only a bout $60,000 , which he says is the “ actual ” dama ges award

. Fenkell provides no su pport for this claim. The cases he cites

— Zenith Radio Corp. v. Hazeltine Research, Inc. , 401 U.S. 321 (1971 ) , and Sands, Taylor & Wood Co. v. Quaker Oats Co. , 978 F.2d 947 (7th Cir. 199 2)

— stand for the unremarkable pr oposition that plaintiff s can’t recover more than their actual total damages. The plaintiffs assigned their whole recovery to Alliance. The award of prejudgment interest does n o t vio late this principle.No s

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E. Settlement
Fenkell also objects to the settlements , arguing that the assig nment of the plaintiffs’ recovery affects his position in future litigation. “The general rule, of course, is that a non

settling party does not have standing to object to a settl ement between other parties. Particularly, non

- settling d efendants in a [mult i]defendant litigation context have no standing to object to the fairness or adequacy of the settl ement by other defendants.” Agretti v. ANR Freight Sys

. , Inc. , 982 F.2d 242, 246 (7th Cir. 1992) (internal quotation marks omitted). A nonsettling party has s tanding to object o nly “when the nonsettling party ‘can show plain legal prejudice resulting from the settlement.’” Jamie S. v. Mi lwaukee Pub. Sch

. , 668 F.3d 481, 501 (7th Cir. 2012) (quoting Agretti , 982 F.2d at 246). “That a settling defendant creates a tactical disadvantage for another defendant is not sufficient to support standing to object; the prejudice to the nonsettling defendant must be legal, such as (for example) interference with contractual or contribution rights or the stripping away of a cro ss

- claim.” Id. The settlements do not prejudice Fenkell ’s interests in the sense required for standing to object . They do not interfere with any contractual or contribution rights he may have, nor do they eliminate any claim he has asserted in this suit. Fenkell has not established standing to challenge the settl ements.
F

. Attorney ’s Fees and Costs

W e have cross

- appeals before us on the issue of attorney ’s fees. The judge approved as reasonable almost $8 million in fees and ordered Fen kell to pay about $1

. 8 million of that22 No s

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total . This figure represents the portion of the approved fees that remained unpaid after the settlements , which included negotiated fee amount s to be paid by the Alliance defen dants , the Trachte trustees , and the common settlement fund

. The se negotiated amounts covered some but not all of the $8 million in approved fees . Fenkell, the remaining liable defendant, was ordered to pay the balance

. District judges have considerable discretion in awarding attorney’s fees under ERISA

. Hardt v. Re liance St andar d Life Ins. Co. , 560 U.S. 242, 245 (2010) . A court may , in its discr etion , award a reasonable attorney’s fee “ as long as the fee claimant has achieved ‘some degree of success on the me rits.’” Id. (quoting Ruckelshaus v. Sierra Club , 463 U.S. 680, 694 (1983) )

. Fenkell makes no independent argument on the issue of attorney’s f ees

. Instead , h is challenge rests entirely on the success of his other claims of error

. W e ’ve r ejected eve ry one of these arguments and need say no more

. T he p laintiffs , fo r their part , argue that the judg e ’s order shortchanges them because it confuse s fees under se ction 502(g) of ERISA , which belong to prevailing plaintiffs, and class fees , which belong to their attorn eys

. Se e F ED

. R. C IV

. P. 23(h). To the contrary, t he judge plainly understood the distinction. Indeed, he said he appreciate d th e plaintiffs’ argument in this regard but would not authorize recovery of fees in excess of the total amount he had approved as re asonable. He said that it would be di fficult to dif ferentiat e between fees incurred for claims against individual defen dants and also that fees were being paid through a complica ted system of overlap ping settle ments and payments b yNo s

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multiple parties

. He though t it be s t to play it safe and avoid redundant re covery

. I t’s clear to us that t he judge fully grasped the difference between ERISA section 502(g)(1) awards and class

- counsel awards under Rule 23(h) but simply de cided not t o award fees according to their separate legal bases because of the remedial complexities of the case . Instead, he set a total reasonable fee award

— nearly $8 million

— and ordered Fenkell to pay the amount that remained unpaid after the settlements. Th at cautio us approach was not an abuse of discretion

. Th e same is true of the judge’s refusal to assess costs against Fenkell. The plaintiffs asked for costs under ERISA section 502(g) and under Rule 54(d) of the Federal Rules of Civil Procedure. Under the rule “prevailing parties pr esumptively re cover their costs. ” Loomis v . Exelon Corp. , 658 F.3d 667, 674 (7th Cir. 2011). But as we noted in Loomis ,

“ [b] oth [Rule 54(d)] and [section 502(g)] give the district judge discretion to decide whether an award of costs is ap propriate , ” and costs and attorney’s fees need not be awarde d in tandem. Id. at 675.
Here, a lthough the judge held Fenkell responsible for the attorney’s fees that remained unpaid after the settlements , he declined to tax costs against him because the settlements had already covered the plaintiffs’ costs in full. In other words , there were no unsatisfied costs to be paid. That was hardly an abuse of discretion. G. Contempt Finally , we come to Fenkel l ’s appeal of the judge’s co ntempt order. As we’ve noted, t he judge’s approval of the24 No s

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settlements resulted in some adjustments to the restoration order. As relevant here, the final judgment ordered Fenkel l
to restore $2,044 ,014.42 to the Alliance ESOP as restitution to the subclass

. (This figure accounts for the portion covered by th e settlements.) Fenkell neither complied with this order nor posted a bond . So while we’ve had this case under advisement, Alliance and the Alliance ESOP returned to the district court and initiated contempt proceedings

. After contentious di scovery, exten s ive briefing, and pr otracted hearings, the judge found Fenkel l in contempt. T he proceedings were interrupted by Fenkell’s premature a ppe als of several intermediate orders, which we dismissed for lack of jurisdiction. The contempt order is now final, so the issue is properly before us. Based on abundant evidence, the judge found that Fe nkel l had substantial assets and “ was actually taking affirm ative steps to put his assets (at least technically) outside the reach of the [p] lan and other creditors.” The evasive steps consisted mainly of transferring ownership of various accounts to his wife. But Fenkel l maintained full control over the se assets via power of attorney, and his wife testified that she was almost entirely ignorant o f their financial affairs. Because Fenkel l was fully capable of making the ordered restitution and persisted in failing to do so, the judge found him in contempt , gave him a deadline to comply, and backed up his order with a fine of $500 per day, doubling every seven days. The parties then negotiated the terms of a supe rsedeas bond, and Fenkell appealed the contempt order. Fenkell does not challenge the judge’s factual findings. Rather, h e lodges a host of procedural objections to the contempt proceedings. He argues , for example, that AllianceNo s

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and the Alliance ESOP lack ed standing to pursue contempt sanction s . This argument is frivolous. The judgment requires Fenkel l to restore money to the Alliance ESOP , and Alliance is the administra tor of the plan. He als o argues that it was

error for the court to proceed under Rule 70(e) of the Federal Rules of Civil Procedure , which governs contempt, rather than Rule 69, which governs the enforcement of money judgments and incorporates the procedur al and other pr otection s of state execution law. This argument too is friv olous. It’s well established that an equitable decree of restit ution in an ERISA case may be enforce d by contempt. See Cent. States, Se . & Sw. Areas Pen sion Fund v. Wintz Prop s

. , Inc. , 155 F.3d 868, 876 (7 th Cir. 1998); Donovan v. Mazzola , 716 F.2d 1226, 1239 n.9 (9th Cir. 1983). Fenkell’s remaining arguments have been considered, are likewise frivolous, and do not require comment. The co ntempt order was procedurally and substantively sound.
A F FIRM ED

.