there may have been around $2,500.00 of employee contributions inadvertently not paid over to
the funds. However, defendants represent that as soon as an exact figure is determined, they will
pay these over to plaintiffs. Thus, because employee contributions are no longer at issue, even if
the court were to accept plaintiffs’ legal argument regarding holding officers personally liable as
fiduciaries for employee contributions, it is now or will become moot.

As for the employer contributions, plaintiffs’ argument appears to be based on the dicta
from the Sullivan case, that somehow defendants “acted in concert with a fiduciary [presumably
Astro] to breach a fiduciary duty.” Plaintiffs rely on Bd. of Trustees of the Airconditioning and
Refrigeration Indus. Health and Welfare Trust Fund y. J.R.D. Mech. Serv., Inc., 99 F. Supp. 2d
1115, 1120 (C.D. Cal. 1999), which noted that although the trust agreements did not specify that
unpaid employer contributions were vested assets of the funds, the concept that they became trust
assets immediately after employees earned their wages was “inherent” in the trust agreements
where the employer contributions were due and owing within a certain time period after the
responsibility for such contributions was incurred. Plaintiffs also rely on United States v.
LaBarbara, 129 F.3d 81, 88 (2d Cir. 1997) (“Once wages were paid to Local 66 members,
Strathmore had contractual obligations to the Funds that constituted ‘assets’ of the Funds by any
common definition.”).

J.R.D.’s holding appears to have been overruled by Cline v. The Indus. Maintenance
Eng’g & Contracting Co., 200 F.3d 1223, 1234 (9" Cir. 2000) (“Until the employer pays the
employer contributions over to the plan, the contributions do not become plan assets over which
fiduciaries of the plan have a fiduciary obligation[.]”). But, if not, its holding would seem to be

limited to reliance on the contract language itself to determine whether employer contributions


1186 (7" Cir. 1989), and reasoning that an employer’s obligations to make contributions stem
from the terms of the collective bargaining agreement, to which the officer, as a separate identity
from his corporation, is generally not a party). The Seventh Circuit subsequently affirmed this
principle in Sullivan v, Cox, and also noted in dicta that there may be exceptions to holding the
corporate officer personally liable where the corporate official “committed fraud or acted in
concert with a fiduciary to breach a fiduciary duty.” 78 F.3d 322, 325 (7" Cir. 1996). Plaintiffs’
in their response to the motion to dismiss argued that employee contributions were at issue in the
complaint as well as employer contributions and, relying on cases from other circuits as well as
the dicta from the Sullivan case, argued that defendants can be held personally liable in this case
for both.

As noted in the court’s prior order, the question of whether a entity is a fiduciary tums on
whether he “exercises any authority or control [over] . . . disposition of [plan] assets.” 29 U.S.C.
§ 1002(21)(A). As regulation 29 C.F.R. § 2510.3-102(a) provides, employee contributions paid
to the employer or that are withheld from paychecks are considered plan assets as of the earliest
date that they can be reasonably segregated from employer’s assets. Most of the cases cited by
plaintiffs involved holding officers personally liable where employee contributions were
involved. See LoPresti v. Terwilliger, 126 F.3d 34, 40 (2d Cir. 1997) (instead of forwarding
deductions from employee paychecks to funds, corporate officer used funds to pay company’s
creditors); Yeseta v. Baima, 837 F.2d 380 (9" Cir. 1988) (action brought by employees to recover
their vested interest in pension plans); United States v. Grizzle, 933 F.2d 943, 948 (11" Cir.
1991) (corporation’s president withheld money from employees’ paychecks which were to be

forwarded to funds). Since the motion to reconsider was filed, defendants have represented that


are to be considered plan assets. Indeed, the contract language, not solely a general statement
about contribution receivables, also appeared to be the basis for Judge Shadur’s conclusion that
employer contributions were plan assets in Chicago Dist. Council of Carpenters Pension Fund v.
Angulo, 150 F. Supp. 2d 976, 978 (N.D. Ill. 2001) (noting that definition of “Trust Fund”
included “all employer contributions made or due to the trustees”); see also Trustees of the Nat’l
Elevator Indus. Pension v. Lutyk, 140 F. Supp. 2d 407, 411 (E.D. Pa. 2001) (agreements
contained language that “Trust Fund shall consist of . .. such sums of money as shall be paid to
{the plan] by the Employers... .”). The court agrees with those cases that rely on specific
contract language, and notes that the trust agreement language cited by plaintiffs in their response
to the motion to dismiss does not purport to make employer contributions plan assets.' Thus, the
plaintiffs fail even to allege that the employer contributions are fund assets under the trust
agreements.

Even if they were, there is a question as to whether merely alleging that the corporate
officers paid other corporate debts would be sufficient to state a claim that they exercised
control over those assets to render them fiduciaries. Judge Shadur answered “no” in Angulo,
albeit without citation to authority. The Lutyk court also answered “no,” reasoning that piercing
the corporate veil allegations are also required under the fiduciary duty analysis to hold a
corporate officer personally liable. See Lutyk, 140 F. Supp. 2d at 412 (relying on language of 29

U.S.C. § 1002(9) that definition of “person” does not include corporate officer). In its prior

‘Trust Fund” means “individual Trust Funds for the defined benefit and defined contribution Plans created
by this Trust Agreement and shall mean generally monies and other things of value which comprise the corpus of and
contributions to each Fund” (Pension Agt., Art. I, Sec. 10.) The agreements also provide that the employer shall not
have any right or interest to the Trust Funds. (/d., Section Art. VII, Sec. 1; Welfare Agt., Art. VIII, Sec. 1.)

5


Minute Order Form (06/97)

United States District Court, Northern District of Mlinois

virty Magistrate Judge Joan H. Leficow “than Assigned ude
CASE NUMBER 01 C 2096 DATE 4/16/2002
CASE Motion Picture Laboratory Technicians, et al. vs. Astro Color Laboratories, Inc., et al.
TITLE
[In the following box (a) indicate the party filing the motion, e.g., plaintiff, defendant, 3rd party plaintiff, and (b) state briefly the nature
MOTION: of the motion being presented.]
DOCKET ENTRY:
gM oa Filed motion of [ use listing in “Motion” box above.]
(2) o Brief in support of motion due
(3) im} Answer brief to motion due___. Reply to answer briefdue___.
(4) oO Ruling/Hearing on setfor at
(5) oO Status hearing[held/continued to] [set for/re-set for] on__setfor__at
(6) o Pretrial conference[held/continued to] [set for/re-set for]on__setfor___—at__—.
(7) a Trial(set for/re-set for] on___—_at
(8) Oo [Bench/Jury trial] [Hearing] held/continued to___—_at
(9) a This case is dismissed [with/without] prejudice and without costs[by/agreement/pursuant to]
COFRCP4(m) OGeneral Rule21 CUFRCP41(a)(1) [1 FRCP41(a)(2).
(10) MM {Other docketentry] Enter Memorandum Opinion and Order. Plaintiff’s motion for reconsideration

[23-1] is denied. Defendants’ motion to strike with respect to the fiduciary duty claims (Counts II and III) is
granted. Further, in light of plaintiffs’ attorney’s representations to the court, made during the hearing on April
15, 2002, regarding the remaining claims, it permitted plaintiffs to respond to the defendants’ motion to strike
as to the remaining counts. Thus, the court grants in part the motion to strike and reserves ruling on whether the
remaining counts should be stricken until briefing is complete.

(a1) @ [For further detail see order attached to the original minute order.]

No notices required, advised in open court,

2

i red.
No notices required, umber of notices

APR 1 y 2002

date docketed

oY | Notices mailed by judge’s staff.

Notified counsel by telephone.

Docketing to mail notices, anes

Mail AO 450 form.

Copy to judge/magistrate judge.

osss
date mailed notice
courtroom: ne of:
MD deputy’s lit tbs MD
initials
Date/time received in
central Clerk’s Office malting deputy initials



opinion, this court was, likewise, hesitant to hold as such. It considers the Lutyk court’s holding
persuasive. Moreover, the court perceives that to hold otherwise would fail to recognize the
separate status of the corporation and its officers and collapsing the two would run up against the
Seventh Circuit’s holding in Niedrich, 891 F.2d at 1300-01. Thus, the court denies the motion to
reconsider.
Motion to Strike Amended Complaint [#30

In light of its decision denying the motion to reconsider, the court grants the defendants’
motion to strike with respect to the fiduciary duty claims (Counts II and Ii). Further, in light of
plaintiffs’ attorney’s representations to the court, made during the hearing on April 15, 2002,
regarding the remaining claims, it permitted plaintiffs to respond to the defendants’ motion to
strike as to the remaining counts. Thus, the court grants in part the motion to strike and reserves

ruling on whether the remaining counts should be stricken until briefing is complete.

Enter: April 16, 2002 Enter: fe 70 tpnge—

N HUMPHREY LEFKOW
ited States District Judge



ke

UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS
EASTERN DIVISION

MOTION PICTURE LABORATORY
TECHNICIANS AND FILM EDITORS
LOCAL 780 PENSION FUND and
MOTION PICTURE LABORATORY
TECHNICIANS AND FILM EDITORS
LOCAL 780 WELFARE FUND,

DOCKETED

APR 17 2099

v. No. 01 C 2096

ASTRO COLOR LABORATORIES,
INC., WILLIAM SCHEER and

)

)

)

)

)

)

)

Plaintiffs, )
)

)

)

)

SCOTT R. DEHLENDORF, )
)

)

Defendants.

MEMORANDUM OPINION AND ORDER

On March 26, 2001, plaintiffs, Local 780 Motion Picture Laboratory Technicians and
Film Editors Local 780 Pension Fund, and Motion Picture Laboratory Technicians and Film
Editors Local 780 Welfare Fund, filed a five-count complaint against defendants Astro Color
Laboratories, Inc., its president, William Scheer, and CEO, Scott R. Dehlendorf, for monies
allegedly owed to the plaintiffs in the form of delinquent contributions. Count J alleged an
ERISA claim against Astro and the remaining counts alleged personal liability against Scheer and
Dehlendorf either as fiduciaries under ERISA (Counts II and IV) or under a piercing the
corporate veil type theory (Counts III and IV).

On May 31, 2001, defendants Scheer and Dehlendorf moved to dismiss Counts II and IV,

arguing that under Plumbers Pension Fund Local 130 v. Niedrich, 891 F.2d 1297 (7" Cir. 1989),

32


corporate officers, who are not parties to a pension plan or collective bargaining agreement,
could not be personally liable for a corporation’s failure to make contributions unless there were
facts warranting piercing the corporate veil. Defendants moved to dismiss Counts III and V,
arguing that the conclusional allegations were insufficient to state a claim.

On February 5, 2002, the court dismissed counts II-V and gave plaintiffs an opportunity
only to replead Counts II and V (the piercing the corporate veil claims) with additional facts if
they could do so. Plaintiffs moved on February 15, 2002 for reconsideration of the court’s
dismissal of its fiduciary duty counts (Counts Il and IV). Subsequently, on March 18, 2002,
while the motion to reconsider was pending, plaintiffs filed a First Amended Complaint adding
back the fiduciary duty claims (noting they were pending on a motion to reconsider) as well as
various other claims, but choosing not to re-allege the piercing the corporate veil claims. On
April 8, 2002, defendants moved to strike the amended complaint or in the alternative to extend
time to respond.

Motion to Reconsider [#23

The court denies plaintiffs’ motion to reconsider its February 5, 2002 ruling, but clarifies
its rationale as follows. Defendants noted in their motion to dismiss that it appeared that only
employer contributions were at issue in the complaint and had argued that corporate officers
cannot be held personally liable for delinquent employer contributions unless there was some
allegation that the officer was a party to the collective bargaining agreement or there was
evidence of piercing the corporate veil or another like state law theory. See Plumbers’ Pension
Fund, Local 130 v. Niedrich, 891 F.2d 1297, 1300-01 (7" Cir. 1989) (relying on 29 U.S.C.

§ 1145, administrative interpretation of ERISA, and Levit v. Ingersoll Rand Fin. Corp., 874 F.2d