PRECEDENTIAL

UNITED STATES COURT OF APPEALS

FOR THE THIRD CIRCUIT

_____________

No. 16-1872

_____________

SECRETARY UNITED STATES DEPARTMENT 

OF LABOR

v.

RICHARD J. KWASNY; KWASNY AND 

REILLY, P.C.; KWASNY AND REILLY 401(K) 

PROFIT SHARING PLAN

Richard J. Kwasny,

Appellant

______________

On Appeal from the United States District Court

for the Eastern District of Pennsylvania

(District Court No. 2-14-cv-04286)

District Judge: The Honorable Eduardo C. Robreno

______________

Submitted Pursuant to Third Circuit L.A.R. 34.1(a)

November 7, 2016

______________

Before: McKEE and RESTREPO, Circuit Judges; HORNAK, 

District Judge.

*

(Opinion filed: April 5, 2017)

 

* Honorable Mark R. Hornak, District Judge for the United 

States District Court for the Western District of Pennsylvania, 

sitting by designation.
2

Richard J. Kwasny

1039 South Kimbles Road

Yardley, PA 19067

 Attorney for Appellant

Leonard H. Gerson

Thomas Tso

United States Department of Labor

Office of the Solicitor

Room N-4611

200 Constitution Avenue, N.W.

Washington, DC 20210

 Attorneys for Appellee

____________

OPINION OF THE COURT

____________

McKEE, Circuit Judge.

Richard Kwasny appeals the District Court’s order

granting summary judgment in favor of the Secretary of 

Labor and denying his cross-motion for summary judgment. 

Because the record shows no genuine issue of disputed fact 

regarding Kwasny’s violation of the Employee Retirement 

and Income Security Act of 1974 (“ERISA”) by directing 

employee 401(k) contributions into his Firm’s general assets, 

we hold that the District Court did not err in granting 

summary judgment. We will therefore affirm, but remand for 

a determination of whether the judgment against Kwasny 

should be offset by a previous Pennsylvania state court 

judgment entered against Kwasny for the same misdirected 

employee contributions.

I

Richard Kwasny is a former managing partner of the 

now-dissolved law firm Kwasny & Reilly, P.C. (the “Firm”). 

While Kwasny was a partner at the Firm, the Firm established 

a 401(k) Profit Sharing Plan (the “Plan”) for its employees, 
3

and Kwasny was named as a trustee and fiduciary of the 

Plan.1 Between September of 2007 and November of 2009, 

the Plan sustained losses in the amount of $40,416.302

because Plan contributions withdrawn from employees’ 

paychecks were commingled with the Firm’s assets and were 

not deposited into the Plan. 

In 2011, the Secretary of Labor received a 

substantiated complaint from a Plan member, which triggered 

an investigation. The Secretary eventually filed this action to 

recover the lost funds, remove Kwasny as trustee and 

fiduciary of the Plan, and enjoin Kwasny from acting as a 

plan fiduciary in the future. The Secretary and Kwasny 

thereafter filed cross motions for summary judgment. The 

District Court granted the Secretary’s motion for summary 

judgment and denied Kwasny’s. Kwasny appeals. 

II

The District Court had jurisdiction pursuant to 29 

U.S.C. § 1132(e). We have jurisdiction under 28 U.S.C. § 

1291. Our review of a District Court’s grant of summary 

judgment is plenary.3 Accordingly, we apply the same 

standard as the District Court.4 Summary judgment is 

appropriate where, construing all evidence in the light most 

favorable to the nonmoving party, “there is no genuine 

dispute as to any material fact and the movant is entitled to 

judgment as a matter of law.”5 Our function is not to “weigh 

the evidence and determine the truth of the matter but to 

determine whether there is a genuine issue for trial.”6

III

We must first decide whether the District Court 

correctly found that Kwasny violated the Employee 

Retirement and Income Security Act of 1974 (“ERISA”) by 

 

1 Under ERISA, a trustee who exercises control respecting the 

management or disposition of Plan assets is also a fiduciary. 

29 U.S.C. § 1002(21)(A).

2 $40,416.30 was never forwarded to the Plan and $2,099.06 

was forwarded late and without interest. 

3 Santini v. Fuentes, 795 F.3d 410, 416 (3d Cir. 2015).

4

Id.

5 Fed. R. Civ. P. 56(a); see also Daniels v. Sch. Dist. of 

Phila., 776 F.3d 181, 192 (3d Cir. 2015).

6 Santini, 795 F.3d at 416.
4

directing employee 401(k) contributions into the firm’s 

general assets. Next, we must determine whether the District 

Court erred in denying Kwasny’s motion for summary 

judgment based on his affirmative defenses. 

A

The District Court’s grant of the Secretary’s motion 

for summary judgment was based primarily on facts deemed 

admitted under Federal Rule of Civil Procedure 36(b).

7

Kwasny never sought to amend or withdraw the admissions, 

even upon invitation by the District Court.8 Kwasny likewise 

does not appeal the order deeming the issues admitted. In 

addition to Kwasny’s admissions, the District Court relied on 

testimony by the Firm’s former bookkeeper, Kathleen 

Meske.

9 Kwasny’s evidence, on the other hand, consists only 

of his own declaration, which he claims creates a genuine 

issue of material fact.

Matters deemed admitted due to a party’s failure to 

respond to requests for admission are “conclusively 

established” under Federal Rule of Civil Procedure 36(b),

10

and may support a summary judgment motion.11 Rule 36(b) is 

intended to narrow the triable issues in the case.

12 An 

admission is therefore an “unassailable statement of fact”13

and is binding on the non-responsive party unless withdrawn 

or amended.14 Because Kwasny did not appeal the District 

Court’s order deeming the issues admitted, the admissions 

 

7 Perez v. Kwasny, 159 F. Supp. 3d 565, 569 (E.D. Pa. 2016).

8

Id. at 568 n.5.

9

Id. at 570.

10 Fed. R. Civ. P. 36(b).

11 Anchorage Assocs. v. Virgin Islands Bd. of Tax Review, 

922 F.2d 168, 176 n.7 (3d Cir. 1990).

12 Fed. R. Civ. Proc. 36(b).

13 Langer v. Monarch Life Ins. Co., 966 F.2d 786, 803 (3d 

Cir. 1992) (quoting Airco Indus. Gases, Inc. v. Teamsters 

Health & Welfare Pension Fund, 850 F.2d 1028, 1037 (3d 

Cir. 1988)). 

14 Airco Indus. Gases, Inc., 850 F.2d at 1035–37 (“The new 

provisions give an admission a conclusively binding effect . . 

. unless the admission is withdrawn or amended.”) (quoting 

Fed. R. Civ. P. 36 advisory committee’s note).
5

continue to bind him in this appeal.15 Accordingly, the 

District Court was correct to treat Kwasny’s admissions as 

established fact. 

Kwasny’s admissions and Meske’s declaration 

together establish a prima facie case of an ERISA violation. 

Under ERISA, trustees of an ERISA retirement plan (such as 

a 401(k) plan) have the following duties: (1) ensure that plan 

assets are held in a trust account,16 (2) act solely in the 

interest of the plan participants and their beneficiaries,17 (3) 

act prudently,18 (4) prevent the plan from engaging in a direct 

or indirect transfer of plan assets for the benefit or use of a 

party in interest,19 and (5) refrain from dealing with the plan’s 

assets for the fiduciary’s own interest.20 Breach of these 

duties results in a violation and may trigger restitution or 

injunctive relief.21 Plan funds protected under the statute 

include money withheld from employees’ paychecks for 

purposes of the benefit plan but not yet delivered to the 

benefit plan.22 The Plan’s trustees are jointly and severally 

liable for money that is withheld but misdirected from a 

plan.

23

 

15 See State Nat’l Ins. Co. v. Cty. of Camden, 824 F.3d 399, 

404 (3d Cir. 2016) (“If an appeal is taken only from a 

specified judgment, this Court does not exercise jurisdiction 

to review other judgments that were not specified or ‘fairly 

inferred’ by the Notice.”).

16 29 U.S.C. § 1103.

17 § 1104(a)(1)(A).

18 § 1104(a)(1)(B).

19 § 1106(a)(1).

20 § 1106(b)(1).

21 § 1109(a).

22 29 C.F.R. § 2510.3-102 (“[T]he assets of the plan include 

amounts . . . that a participant or beneficiary pays to an 

employer, or amounts that a participant has withheld from his 

wages by an employer, for contribution or repayment of a 

participant loan to the plan . . . .”).

23 Struble v. N.J. Brewery Emps.’ Welfare Trust Fund, 732 

F.2d 325, 332 (3d Cir. 1984) (“These cases do not require, 

however, that the plaintiff name all of the trustees as 

defendants. It is a well-established principle of trust law that 
6

Here, the record establishes that: (1) “Between January 

2007 and December 2007 Richard Kwasny was a trustee of 

the Plan,” (2) “Between September 7, 2007 and November 

13, 2009, $41,936.73 was withheld from employee 

compensation but not deposited into the Plan,”

24 (3) “Richard 

Kwasny directed that employee withholdings intended for 

deposit into the Plan be commingled with the general assets 

of the Firm,” (4) “Richard Kwasny directed that the employee 

withholdings intended for deposit into the Plan be used for 

the benefit of the Firm, and (5) “Richard Kwasny was 

responsible for determining if payroll checks and contribution 

checks were issued . . . between January 2007 and December 

2009.”

25 Additionally, the Firm’s bookkeeper, Kathleen 

Meske, declared that Kwasny instructed her to send the 

employee contribution checks to the Plan asset custodian only 

after he paid employee wages, Kwasny himself, and the 

Firm’s outstanding bills. In sum, the facts establish that 

Kwasny, a Plan trustee, used withheld employee 

contributions—protected Plan funds under ERISA—for the 

benefit of himself and the Firm in violation of his fiduciary 

duties.

Kwasny argues that Meske’s declaration should be 

ignored because she was not privy to all conversations among 

the partners, and unbeknownst to Meske, the partners could 

have decided not to accept a paycheck and therefore did not 

have funds to contribute to the 401(k). However, the

possibility that the firm partners may have properly failed to 

contribute funds is irrelevant. The ERISA violation is 

prefaced on Kwasny’s directing employee contributions to be 

withheld from the employees’ paychecks, not the partners’. 

Similarly, Kwasny’s assertion that he was not the only trustee 

of the Firm and was therefore not solely responsible for Plan 

assets is irrelevant because, as we have already noted, trustee 

 

multiple trustees who are at fault may be held jointly and 

severally liable.”).

24 Kwasny is deemed to have admitted that $41,936.73 was 

withheld in employee contributions, but the Secretary alleges 

that only $40,416.30 was withheld and not repaid into the 

Plan.

25 J.A. at 117–18. 
7

liability is joint and several.26 Moreover, the fact that Kwasny 

was not permitted to cross-examine Meske is irrelevant for 

summary judgment purposes.27 We therefore conclude that 

the District Court’s grant of summary judgment in favor of 

the Secretary was correct. 

B

We also agree with the District Court’s conclusion that 

Kwasny is not entitled to summary judgment based on either 

of the two defenses he raises on appeal: (1) statute of 

limitations, and (2) res judicata. 

1. Statute of Limitations

Actions such as this one for breach of fiduciary duty 

may not be brought under ERISA after the earlier of “(1) six 

years . . . after the date of the last action which constituted a 

part of the breach or violation . . . or (2) “three years after the 

earliest date on which the plaintiff had actual knowledge of 

the breach or violation.”28 Put simply, Section 1113 creates “a 

general six year statute of limitations, shortened to three years 

in cases where the plaintiff has actual knowledge.”29 Actual 

knowledge “requires a showing that plaintiffs actually knew 

not only of the events that occurred which constitute the 

breach or violation but also that those events supported a 

claim of breach of fiduciary duty or violation under 

ERISA.”30

Kwasny asserts the statute of limitations has expired 

because Firm employees and the Department of Labor had 

actual knowledge of the withholdings before 2011, and 

 

26 Struble, 732 F.2d at 332.

27 Schiavone Const. Co. v. Time, Inc., 847 F.2d 1069, 1084 

(3d Cir. 1988)) (“[N]either a desire to cross-examine an 

affiant nor an unspecified hope of undermining his or her 

credibility suffices to avert summary judgment.” (quoting 

Nat’l Union Fire Ins. Co. v. Argonaut Ins. Co., 701 F.2d 95, 

97 (9th Cir.1983))).

28 29 U.S.C. § 1113.

29 Kurz v. Phila. Elec. Co., 96 F.3d 1544, 1551 (3d Cir. 1996).

30 Montrose Med. Grp. Participating Sav. Plan v. Bulger, 243 

F.3d 773, 787 (3d Cir. 2001) (quoting Int'l Union of Elec., 

Elec., Salaried, Mach. & Furniture Workers, AFL-CIO v. 

Murata Erie N. Am., Inc., 980 F.2d 889, 900 (3d Cir. 1992)).
8

therefore, the Secretary’s 2014 suit is barred. Kwasny relies 

on the following statements from his declaration: 

 Firm employees were aware that their 

contributions were not being deposited into the 

Plan as early as 2007 because it was widely 

known and documented in monthly statements 

to employees. 

 A Department of Labor investigator examined 

all the Firm’s Plan books and records at some 

point in 2010 in response to a complaint by 

Larry Haft, a previous employee of the Firm.

 The Employee Benefits Security Administration 

(EBSA) received complaint calls in 2006 and 

2010 regarding the failure to remit employee 

contributions to a 401(k) plan.

The Secretary’s evidence consists of the declarations

of two EBSA employees: Trudy Logan from the EBSA 

regional office and the regional director Norman Jackson. 

Logan declared that EBSA received complaints in 2006 and 

2010 but the callers submitted no evidence to substantiate 

their claims, and they did not identify the Plan at issue here. It 

was not until Fall 2011 that EBSA received a complaint that 

included substantiating evidence and sufficiently identified 

the Plan to allow it to be referred for enforcement. Consistent 

with Logan’s declaration, Jackson declared that there was no 

investigation into the Firm’s Plan contributions before 

November 2011. 

We conclude that the District Court correctly held that 

Kwasny’s evidence creates no genuine issue of material fact 

regarding whether the Secretary’s suit was brought within the 

statute of limitations. As the District Court correctly noted, 

whether or not Firm employees were aware of violations is 

legally irrelevant because the plaintiff in this case is the 

Secretary of Labor, not the Firm employees.31 Likewise, we 

 

31 See Landwehr v. DuPree, 72 F.3d 726, 732 (9th Cir. 1995) 

(“[T]he limitations period in an ERISA action begins to run 

on the date that the person bringing suit learns of the breach 

or violation.”) (emphasis added).
9

agree with the District Court that Kwasny’s self-serving 

declaration stating that someone from the Department of 

Labor examined the Firm’s books at some unspecified time in 

2010 is insufficient to create a triable issue of fact without 

personal knowledge or facts to substantiate the assertion.32

Lastly, we agree that as a matter of law, the 2006 and 

2010 EBSA complaint calls do not establish that the Secretary

had actual knowledge of the ERISA violation. Actual 

knowledge “requires that a plaintiff have actual knowledge of 

all material facts necessary to understand that some claim 

exists.”33 Logan declared that EBSA had no knowledge that 

the Plan was implicated by the complaints until 2011. 

Additionally, EBSA had no knowledge of the specific facts 

that made up the violation because no evidence was submitted 

to substantiate the complaints in 2006 or 2010. Accordingly, 

the District Court was correct in concluding that the 2006 and 

2010 phone calls to EBSA are insufficient to establish the 

Secretary’s actual knowledge of the ERISA claim against 

Kwasny. 

For all of these reasons, we hold that the District Court 

was correct to conclude that Kwasny’s statute of limitations 

defense does not prevent an entry of summary judgment in 

favor of the Secretary. 

2. Res Judicata

Res judicata includes the legal concepts of claim 

preclusion and issue preclusion. Claim preclusion prevents 

the relitigation of identical cases, whereas issue preclusion 

 

32 Blair v. Scott Specialty Gases, 283 F.3d 595, 608 (3d Cir. 

2002) (“In order to satisfy the standard for summary 

judgment the affiant must ordinarily set forth facts, rather 

than opinions or conclusions. An affidavit that is essentially 

conclusory and lacking in specific facts is inadequate to 

satisfy the movant or non-movant’s burden.”) (internal 

quotation marks and brackets omitted).

33 Gluck v. Unisys Corp., 960 F.2d 1168, 1177 (3d Cir. 1992).
10

prevents the relitigation of discrete issues.34 Here, Kwasny is 

only arguing claim preclusion as a defense.35

The preclusive effect of a state court judgment in a 

subsequent federal lawsuit is determined by the Full Faith and 

Credit Statute.36 The statute provides that state judicial 

proceedings “shall have the same full faith and credit in every 

court within the United States . . . as they have by law or 

usage in the courts of such State . . . from which they are 

taken.”37 The statute has been interpreted by the Supreme 

Court to require federal courts to look to state law to 

determine the preclusive effect of a prior state judgment.38

Accordingly, we must look to Pennsylvania law on claim 

preclusion to determine whether it applies in this case. 

Under Pennsylvania law, claim preclusion requires 

privity between the parties in the previous case and the 

current suit.39 In its broadest sense, privity is a “mutual or 

 

34 R & J Holding Co. v. Redevelopment Auth. of Cty. of 

Montgomery, 670 F.3d 420, 426–27, 429 (3d Cir. 2011).

35 Though Kwasny references issue preclusion in his brief, he 

does not outline how the doctrine applies to this case. Indeed, 

because the previous judgment was not in Kwasny’s favor, 

any issues actually litigated would not have been decided in 

his favor and would not advance his case here. Even so, under 

Pennsylvania law, like claim preclusion, issue preclusion

requires privity between the parties, so the result here is the 

same. See Metro. Edison Co. v. Pa. Pub. Util. Comm’n, 767 

F.3d 335, 351 (3d Cir. 2014), cert. denied, 135 S. Ct. 2372 

(2015) (outlining the requirements of issue preclusion under 

Pennsylvania law as including “privity with a party in the 

prior case”).

36 Metro. Edison Co., 767 F.3d at 350.

37 28 U.S.C. § 1738.

38 Marrese v. Am. Acad. of Orthopaedic Surgeons, 470 U.S. 

373, 380–81 (1985).

39 Blunt v. Lower Merion Sch. Dist., 767 F.3d 247, 276 (3d 

Cir. 2014), cert. denied sub nom. Allston v. Lower Merion 

Sch. Dist., 135 S. Ct. 1738 (2015) (outlining the requirements 

of claim preclusion as (1) a final judgment on the merits, (2) 

the same parties or their privities, and (3) a subsequent suit 

based on the same cause of action).
11

successive relationships to the same right of property, or such 

an identification of interest of one person with another as to 

represent the same legal right.”40

First, Kwasny argues that the Secretary is precluded 

from bringing its claim against him because a former 

employee of the Firm, Larry Haft, obtained a judgment from 

Bucks County Court of Common Pleas based, in part, on 

withheld employee 401(k) contributions. It is true that the 

Secretary’s suit seeks monetary recovery to vindicate the 

rights of all Firm employees (including Haft) for Kwasny’s 

withheld employee 401(k) contributions. But when the 

Secretary of Labor brings an ERISA suit, the government

seeks to vindicate broader interests than those of the

employees. As the Court of Appeals for the Seventh Circuit 

has noted, the Secretary’s interests also include “the 

reinforcement of public confidence in a private pension 

system” and “supervising the enforcement of the ERISA 

statute,” which “ensure[s] the financial stability of billions of 

dollars of assets which in turn have a monumental effect on 

not only the Treasury of the United States, but on the national 

economy and commerce as well.”41 A private litigant cannot 

represent these interests. Accordingly, the Court of Appeals 

for the Seventh Circuit and a number of appellate courts have 

held that the Secretary of Labor is not bound by the results 

reached by private litigants in ERISA suits.

42

We agree with our sister circuit courts of appeals that 

under ERISA’s statutory framework, “private plaintiffs do not 

adequately represent, and are not charged with representing, 

the broader national public interests represented by the 

Secretary” in ERISA suits.43 Because the Secretary’s interest 

in maintaining the integrity of, and public confidence in, the 

 

40 Greenway Ctr., Inc. v. Essex Ins. Co., 475 F.3d 139, 149 

(3d Cir. 2007) (quoting Ammon v. McCloskey, 655 A.2d 549 

(Pa. Super. Ct. 1995)).

41 Sec’y of Labor v. Fitzsimmons, 805 F.2d 682, 687–92 (7th 

Cir. 1986) (en banc). 

42 Id.; Wilmington Shipping Co. v. New England Life Ins. Co., 

496 F.3d 326, 340 (4th Cir. 2007); Donovan v. Cunningham, 

716 F.2d 1455, 1462 (5th Cir. 1983); Herman v. S.C. Nat. 

Bank, 140 F.3d 1413, 1424 (11th Cir. 1998).

43 Herman, 140 F.3d at 1424.
12

pension system is broader than the interests of private 

litigants, we conclude that in ERISA suits, the Secretary is 

not in privity with private litigants and is therefore not bound 

by the results reached by private litigation. Accordingly, we 

agree with the District Court’s conclusion that the Haft 

judgement does not preclude the Secretary from bringing suit. 

Kwasny also argues that, at the very least, the 

judgment in this case should be offset by the judgment 

awarded Haft in the previous litigation. The Secretary agrees 

that such an offset may be appropriate if the previous 

judgment was to recover withheld employee 401(k) 

contributions.44 The District Court concluded, however, that 

the judgment in this case should not be offset because the

Bucks County judgment dated August 29, 2012 references 

only punitive damages and “Kwasny does not provide any 

other signed court order indicating any other award against 

him.”45 This conclusion is only partially correct. While it is 

true that the August 29th order awards Haft punitive damages 

against Kwasny in the amount of $32,677.15, Haft also 

obtained a default judgment against Kwasny on November 

28, 2011, in the amount of $80,435.85. This amount appears 

to have been calculated including compensation for “401K 

payments withheld from plaintiff’s wages . . . never deposited 

in to the 401K plan.”46 It is unclear from the appellate record 

whether an offset of the Secretary’s judgement is appropriate 

in this case. We will therefore direct the District Court to 

consider the issue on remand.

IV

For the reasons set forth above, we will affirm the 

District Court’s grant of the Secretary’s motion for summary 

judgment except as to the amount of the judgment. We 

remand the matter for a determination as to whether the 

amount of the judgment should be offset by the Bucks County 

default judgment.

 

44 See Beck v. Levering, 947 F.2d 639, 642 (2d Cir. 1991) 

(holding that offset of a judgment obtained by the Secretary 

of Labor is only appropriate when private plaintiffs actually 

recover concurrent judgments).

45 Perez, 159 F. Supp. 3d at 574.

46 J.A. at 79.