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No. 17-1261 

IN THE UNITED STATES COURT OF APPEALS
 

FOR THE EIGHTH CIRCUIT
 

U.S. Department of Labor, 

Plaintiff-Appellee, 

v. 

Michael P. Harris, 

Defendant-Appellant. 

On Appeal from the U.S. Bankruptcy Appellate Panel
 

for the Eighth Circuit
 

APPELLEE’S BRIEF 

NICHOLAS C. GEALE EIRIK CHEVERUD 

Acting Solicitor of Labor Trial Attorney 

G. WILLIAM SCOTT Plan Benefits Security Division 

Associate Solicitor Office of the Solicitor 

for Plan Benefits Security U.S. Department of Labor 

200 Constitution Ave. NW, N-4611 

THOMAS TSO Washington, DC 20210 

Counsel for Appellate 202.693.5516 (t) | 202.693.5610 (f) 

and Special Litigation cheverud.eirik.j@dol.gov 

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TABLE OF CONTENTS 

Page
 

TABLE OF CONTENTS.................................................................................. ....i
 

TABLE OF AUTHORITIES .............................................................................. iii
 

APPELLEE’S SUMMARY OF THE CASE........................................................1
 

APPELLEE’S STATEMENT OF ISSUES ..........................................................2
 

STATEMENT OF THE CASE.............................................................................3
 

A. Factual Background.................................................................................3
 

B.	 The U.S. District Court Determined Harris Violated ERISA and Is
 

Liable to the Plan for the Losses He Caused It to Suffer ........................6
 

C.	 The Bankruptcy Court Determined Harris’s ERISA Judgment Debt Is
	

Nondischargeable under 11 U.S.C. § 523(a)(4) ......................................9
 

D. The Bankruptcy Appellate Panel Affirmed the Bankruptcy Court’s
	

Decision................................................................................................. 12
 

SUMMARY OF THE ARGUMENT ................................................................ 14
 

ARGUMENT ..................................................................................................... 17
 

I.	 At the Time of His Defalcation of ERISA Plan Assets, Harris Was
 

Acting in a Fiduciary Capacity to the Plan and Its Assets (the Trust 

Res) that Predated His Defalcation. .................................................. 18
 

A.	 ERISA Created an Express or Technical Trust to which Harris
 

Had Fiduciary Duties.................................................................... 18
 

B.	 Harris’s Fiduciary Status Predated his Defalcation .................... 23
 

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C.	 Harris was “Personally” Acting as a Fiduciary under Section
	

523(a)(4)........................................................................................ 26
 

D.	 Hunter v. Philpott Is Inapposite .................................................... 28
 

II.	 Harris Committed Defalcation When He Intentionally or 

Recklessly Used Funds Withheld from Employee Paychecks for 

Health Insurance Premiums to Pay Himself and Other Corporate 

Expenses............................................................................................... 35
 

CONCLUSION.................................................................................................. 43
 

CERTIFICATE OF SERVICE .......................................................................... 44
 

CERTIFICATE OF COMPLIANCE................................................................. 45
 

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TABLE OF AUTHORITIES
 

Cases: 

Ahlberg v. Chrysler Corp., 

481 F.3d 630 (8th Cir. 2007) ......................................................................... 18 n.1 

Arvest Mortg. Co. v. Nail (In re Nail), 

680 F.3d 1036 (8th Cir. 2012) ....................................................................... 18, 19 

Baker v. Wentland (In re Wentland), 

410 B.R. 585 (Bankr. N.D. Ohio 2009)................................................................28 

Barclays Am./Bus. Credit, Inc. v. Long (In re Long), 

774 F.2d 875 (8th Cir. 1985) ................................................................... 18–19, 26 

Bd. Trs. Ohio Carpenters’ Pension Fund v. Bucci (In re Bucci), 

493 F.3d 635 (6th Cir. 2007) ................................................................................34 

Blatt v. Marshall & Lassman, 

812 F.2d 810 (2d Cir. 1987) .................................................................................26 

Blocker v. Patch (In re Patch), 

526 F.3d 1176 (8th Cir. 2008) ..............................................................................17 

Bullock v. BankChampaign, N.A., 

133 S. Ct. 1754 (2013).................................................................................. passim 

Cent. Laborers’ Pension, Welfare & Annuity Funds v. Addison-Awalt Constr., 

Inc., 

CIV. No. 06-930-GPM, 2007 WL 4269260 (S.D. Ill. Nov. 19, 2007) ................34
 

Cent. States, Se. & Sw. Areas Pension Fund v. Cent. Transp., Inc., 

472 U.S. 559 (1985)..............................................................................................19 

Chao v. Gott (In re Gott), 

387 B.R. 17 (Bankr. S.D. Iowa 2008) ....................................................... 2, 21, 34 

CIGNA Corp. v. Amara, 

563 U.S. 421 (2011)..............................................................................................19 

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(Cases Continued): 

Davis v. Aetna Acceptance Co.,
 

293 U.S. 328 (1934)..............................................................................................23
 

Devaney v. Dloogoff (In re Dloogoff),
 

600 F.2d 166 (8th Cir. 1979) ................................................................................23
 

Eavenson v. Ramey,
 

243 B.R. 160 (N.D. Ga. 1999)..........................................................................2, 22
 

Firestone Tire & Rubber Co. v. Bruch,
 

489 U.S. 101 (1989)..............................................................................................19
 

FirsTier Bank, N.A. v. Zeller,
 

16 F.3d 907 (8th Cir. 1994) ........................................................................... 21, 27
 

Graphic Commc’ns Int’l Union Upper Midwest Local 1M Health & Welfare Plan 

v. Bjorkedal,
 

516 F.3d 719 (8th Cir. 2008) ......................................................................... 20, 30
 

Hunter v. Phillpott, 

373 F.3d 873 (8th Cir. 2004) ........................................................................ passim 

IBEW Local 231 v. Pottebaum (In re Pottebaum),
 

2013 WL 5592368 (Bankr. N.D. Iowa Oct. 9, 2016)...........................................38
 

In re Baylis,
 

313 F.3d 9 (1st Cir. 2002).....................................................................................37
 

In re Collins,
 

137 B.R. 754 (Bankr. E.D. Ark. 1992).................................................................26
 

In re N.S. Garrott & Sons,
 

772 F.2d 462 (8th Cir. 1985) ................................................................................23
 

In re Roussel,
 

504 B.R. 510 (E.D. Ark. 2013)...................................................................... 26, 37
 

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(Cases Continued): 

In re Speight, 

16 F.3d 287 (8th Cir. 1994) ........................................................................... 18 n.1 

In re Talcott,
 

29 B.R. 874 (Bankr. D. Kan. 1983)......................................................................23
 

In re Thompson,
 

458 B.R. 504 (B.A.P. 8th Cir. 2011) ....................................................................18
 

ITPE Pension Fund v. Hall,
 

334 F.3d 1011 (11th Cir. 2003) ............................................................................31
 

Jafarpour v. Shahrokhi (In re Shahrokhi),
 

266 B.R. 702 (B.A.P. 8th Cir. 2001) ....................................................................17
 

Kansas v. Nebraska,
 

135 S. Ct. 1042 (2015)..........................................................................................37
 

LoPresti v. Terwilliger,
 

126 F.3d 34 (2d Cir. 1997) ............................................................................ 21, 39
 

Mertens v. Hewitt Assocs.,
 

508 U.S. 248 (1993)..............................................................................................19
 

Meyer v. Rigdon,
 

36 F.3d 1375 (7th Cir. 1994) ................................................................................26
 

Morgan v. Musgrove (In re Musgrove),
 

187 B.R. 808 (Bankr. N.D. Ga. 1995) ..................................................................22
 

Morissette v. United States, 

342 U.S. 246 (1952)....................................................................................... 40 n.4 

Navarre v. Luna (In re Luna),
 

406 F.3d 1192 (10th Cir. 2005) ............................................................................34
 

NLRB v. Amax Coal Co.,
 

453 U.S. 322 (1981)....................................................................................... 20, 39
 

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(Cases Continued): 

Nuchief Sales, Inc. v. Harper (In re Harper), 

150 B.R. 416 (Bankr. E.D. Tenn. 1993)...............................................................28 

Olson v. E.F. Hutton & Co., 

957 F.2d 622 (8th Cir. 1992) ................................................................................26 

Prudential Ins. Co. of Am. v. Doe, 

76 F.3d 206 (8th Cir. 1996) ..................................................................................19 

Quaif v. Johnson, 

4 F.3d 950 (11th Cir. 1993) ..................................................................................22 

Rahm v. Halpin (In re Halpin), 

566 F.3d 286 (2d Cir. 2009) .......................................................................... 29, 31 

Raso v. Fahey (In re Fahey), 

482 B.R. 678 (B.A.P. 1st Cir. 2012)............................................................... 31-32 

Raso v. Fahey (In re Fahey), 

494 B.R. 16 (Bankr. D. Mass. 2013) ................................................................2, 37 

Secretary U.S. Dep’t of Labor v. Kwansy, 

_____ F.3d _____ (3d Cir. 2017) .................................................................. 32–33 

Stoughton Lumber Co. v. Sveum, 

787 F.3d 1174 (7th Cir. 2015) ..............................................................................36 

Trs. of Colo. Ironworkers Pension Fund v. Gunter (In re Gunter), 

304 B.R. 458 (Bankr. D. Colo. 2003)........................................................... passim 

Tudor Oaks Ltd. P’ship v. Cochrane (In re Cochrane), 

124 F.3d 978 (8th Cir. 1997) ..................................................................... 2, 18, 35 

United States v. Van Elsen, 

652 F.3d 955 (8th Cir. 2011) ........................................................................ passim 

Woods v. City National Bank & Trust Co., 

312 U.S. 262 (1941)..............................................................................................33 

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(Cases Continued): 

Woodworking Enters., Inc. v. Baird (In re Baird),
 

114 B.R. 198 (B.A.P. 9th Cir. 1990) ....................................................................27
 

Statutes:
 

Title 11, Bankruptcy:
 

11 U.S.C. § 523(a)(4)....................................................................................... passim
 

11 U.S.C. § 727..........................................................................................................9
 

Employee Retirement Income Security Act of 1974 (Title I),
 

29 U.S.C. § 1001 et seq.:
 

Section 3(9), 29 U.S.C. § 1002(9) ...........................................................................27
 

Section 3(21)(A), 29 U.S.C. § 1002(21)(A) ..................................................... 19, 33
 

Section 3(21)(A)(i), 29 U.S.C. § 1002(21)(A)(i).......................................................7
 

Section 403, 29 U.S.C. § 1103.......................................................................... 19, 21
 

Section 404(a), 29 U.S.C. § 1104(a)........................................................................19
 

Section 404(a)(1), 29 U.S.C. § 1104(a)(1) ..............................................................33
 

Section 404(a)(1)(A), 29 U.S.C. § 1104(a)(1)(A) ...............................................7, 20
 

Section 404(a)(1)(A)(i), 29 U.S.C. § 1104(a)(1)(A)(i)............................................33
 

Federal Regulations: 

29 C.F.R. § 2510 ......................................................................................................32
 

29 C.F.R. § 2510.3-102..................................................................................... 21, 33
 

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(Federal Regulations Continued): 

29 C.F.R. § 2510.3-102(a) ................................................................................ 20, 39
 

29 C.F.R. § 2510.3-102(c) .......................................................................................20
 

Miscellaneous: 

44 Fed. Reg. 50,363 (Aug. 28, 1979).......................................................................21
 

44 Fed. Reg. 50,365 (Aug. 28, 1979).......................................................................21
 

53 Fed. Reg. 17,628 (May 17, 1988) .......................................................................21
 

53 Fed. Reg. 17,629 (May 17, 1988) .......................................................................21
 

61 Fed. Reg. 41,220 (Aug. 7, 1996).................................................................. 21, 32
 

61 Fed. Reg. 41,222 (Aug. 7, 1996).........................................................................32
 

61 Fed. Reg. 41,227 (Aug. 7, 1996).........................................................................21
 

61 Fed. Reg. 41,228 (Aug. 7, 1996).........................................................................21
 

DOL Adv. Op. No. 93-14A
 

1993 WL 188473 (May 5, 1993) ..........................................................................31
 

DOL Adv. Op. No. 2005-08A
 

2005 WL 1208695 (May 11, 2005) ......................................................................31
 

Department of Labor’s Field Assistance Bulletin No. 2008-1, at 1-2,
 

http://www.dol.gov/ebsa/regs/fab2008-1.html .................................................... 31
 

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APPELLEE’S SUMMARY OF THE CASE
 

On November 9, 2015, the U.S. District Court for the District of Minnesota 

issued a decision in favor of the U.S. Department of Labor and against debtorappellant Michael Harris. The district court concluded that Harris violated his 

fiduciary duty of loyalty under the Employee Retirement Income Security Act of 

1974 (“ERISA”) when he decided to use the money withheld from his employees’ 

paychecks, meant to pay the premiums for their health insurance, to instead pay 

himself and corporate expenses. The district court found Harris liable for 

$67,839.60 in his employees’ withheld but unpaid premium payments, plus 

prejudgment interest. Harris did not appeal the judgment. 

Instead, two weeks later, Harris filed a Chapter 7 bankruptcy petition in the 

U.S. Bankruptcy Court for the District of Minnesota, listing the November 9, 2015 

judgment as a dischargeable debt. The U.S. Secretary of Labor (“Secretary”) filed 

an adversary proceeding, arguing that the November 9, 2015 judgment was 

nondischargeable under 11 U.S.C. § 523(a)(4) because it arose from “defalcation 

while acting in a fiduciary capacity.” The bankruptcy court agreed with the 

Secretary and granted his motion for summary judgment. On appeal, the U.S. 

Bankruptcy Appellate Panel for the Eighth Circuit agreed with the Secretary and 

affirmed the bankruptcy court’s decision. This appeal now follows. The Secretary 

respectfully requests 15 minutes for oral argument. 

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APPELLEE’S STATEMENT OF ISSUES PRESENTED
 

1. Whether the bankruptcy court and the bankruptcy appellate panel 

correctly determined that appellant acted in a fiduciary capacity under 11 U.S.C. 

§ 523(a)(4), when Harris had a fiduciary responsibility for ERISA plan assets 

withheld from his employees’ paychecks that preexisted his diversion of those 

assets to pay himself and other corporate expenses? 

Apposite Cases: 

Tudor Oaks Ltd. P’ship v. Cochrane (In re Cochrane), 124 F.3d 978, 984 (8th Cir. 

1997); 

Chao v. Gott (In re Gott), 387 B.R. 17 (Bankr. S.D. Iowa 2008); 

Trs. of Colo. Ironworkers Pension Fund v. Gunter (In re Gunter), 304 B.R. 458 

(Bankr. D. Colo. 2003); 

Eavenson v. Ramey, 243 B.R. 160 (N.D. Ga. 1999). 

2. Whether the bankruptcy court and the bankruptcy appellate panel 

correctly determined that appellant committed defalcation when he decided to use 

plan assets withheld from his employees’ paychecks to pay himself and other 

corporate expenses instead of remitting those assets to his employees’ health 

insurance provider, as required by ERISA and his employees’ health plan? 

Apposite Cases: 

Bullock v. BankChampaign, N.A., 133 S. Ct. 1754 (2013);
 

Raso v. Fahey (In re Fahey), 494 B.R. 16 (Bankr. D. Mass. 2013);
 

United States v. Van Elsen, 652 F.3d 955 (8th Cir. 2011).
 

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STATEMENT OF THE CASE
 

A. Factual Background 

In 2001, debtor-appellant Michael Harris became the Chief Executive 

Officer, President, and Board Chairman of Faribault Woolen Mills Company 

(“Faribault”). J.A. at 602 (Statement of Uncontested Facts), ¶ 2. Faribault 

sponsored the Faribault Woolen Mills, Inc. Fully Insured Hospital Life Welfare 

Plan (“Plan”) to provide health insurance for its employees. Id. ¶¶ 9–10. The Plan 

contracted with HealthPartners Health Insurance Company (“HealthPartners”) to 

provide healthcare benefits for Plan participants. Id. ¶ 11. The Plan was solely 

funded by contributions from the employee-participants. Id. at 603, ¶ 14. 

Participants paid 100% of all premiums owed by the Plan to HealthPartners; the 

employer, Faribault, did not contribute any money to the Plan. Id. Faribault 

withheld the premium payments from the employee-participants’ paychecks and 

then remitted the amount owed to HealthPartners from its general operations 

account on the first of each month. Id. ¶¶ 12–13, 15–17. Faribault also paid its 

general corporate expenditures from the same general operations account. Id. ¶ 17. 

Harris had ultimate authority during at least the first quarter of 2009 to 

determine which of Faribault’s expenses would be paid. J.A. at 620–22 (District 

Court Decision), ¶¶ 23–25. Harris’s approval was thus necessary to remit 

employee contributions to HealthPartners. Id. at 635–37, ¶¶ 13–16. Indeed, Harris 

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signed the checks Faribault sent to HealthPartners to pay the Plan’s insurance 

premiums on behalf of the employees. See id. at 606–07, ¶¶ 24–25, 29. 

In 2008, Faribault began having difficulty remitting timely premium 

payments to HealthPartners. J.A. at 606–09, ¶¶ 22–24, 39. Faribault failed to 

timely remit premium payments on ten occasions in 2008; each time, 

HealthPartners sent Faribault a letter indicating its monthly payment was late. Id. 

at 606, ¶ 22. Gary Glienke, Faribault’s Vice President of Human Resources, 

received each late-payment notice and would inform Harris about it. Id. at 602, 

606, ¶¶ 3, 23. Harris would usually respond by asking Glienke to obtain an 

extension on payment. Id. In 2008, Faribault sent two checks—both signed by 

Harris—to HealthPartners, which HealthPartners returned for insufficient funds; 

Faribault was able to later remit full payment on both occasions, thereby 

preventing a loss of the Plan’s insurance coverage. Id. at 606–07, ¶ 24. 

On January 27, 2009, Faribault issued a check signed by Harris to 

HealthPartners for $22,593.02 to pay the premiums owed for January 2009. J.A. at 

607, ¶ 25. HealthPartners returned the check for insufficient funds. Id. In a 

February 28, 2009 letter, HealthPartners informed Glienke of this fact and its 

intention to cancel the Plan’s insurance if Faribault did not pay in full. Id. ¶ 26. 

HealthPartners also sent letters to Plan participants dated February 28, 2009, 

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informing them that Faribault had failed to remit their January 2009 premium 

payments. Id. ¶ 27. As a Plan participant, Harris received that letter. Id. ¶ 28. 

On February 27, 2009, Faribault issued a check signed by Harris to 

HealthPartners for $19,466.91 to pay the premiums owed by the Plan for February 

2009. J.A. at 607, ¶ 29. HealthPartners returned the February 27 check to 

Faribault. Id. at 607–08, ¶ 30. In an accompanying letter dated March 3, 2009, 

HealthPartners informed Carmen Dorr, Faribault’s Chief Financial Officer, that it 

would accept only wire payments due to the insufficient-funds checks it had 

received. Id. at 602, 607–08, ¶¶ 4, 30. 

On March 26, 2009, Harris personally called HealthPartners and asked for 

an extension to pay the January and February 2009 premiums. J.A. at 608, ¶ 32. 

HealthPartners denied the request and demanded full payment of the January and 

February premiums by March 31. Id. When Faribault did not remit the overdue 

payments, HealthPartners canceled the Plan’s insurance policy on April 1, 2009. 

Id. ¶¶ 33–34. Faribault thus never remitted $55,040.61 withheld from its 

employees’ paychecks for insurance premiums from January 9, 2009, to March 20, 

2009. Id. at 612, ¶ 61. 

During that same time period, Faribault used the funds in its general 

operations account to pay other corporate expenses. In January 2009, Faribault 

paid $303,632.01 from its general operations account for other corporate debts. 

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J.A. at 610, ¶¶ 54–55. In February 2009, Faribault paid $324,686.83 from its 

general operations account for other corporate expenditures. Id. 

In March 2009, Faribault paid $246,240.52 from its general operations 

account to pay other corporate creditors. J.A. at 610, ¶¶ 54–55. From March 26 to 

March 31, 2009, alone, Faribault used over $70,000 from its general operations 

account to either make transfers to other Faribault accounts or to pay other 

creditors and expenses. Id. at 611, ¶ 56. Harris and his wife received $27,031.48 

in payments from Faribault’s general operations account during this end-of-March 

period. Id. Those payments included a $21,531.48 payment on Harris’s home 

equity line of credit, which Harris directed Dorr to make on March 31, 2009. Id. 

¶ 56.c. 

Faribault never repaid its employees for the amounts it withheld from their 

paychecks during this period. Id. at 612, ¶ 61. 

B. The U.S. District Court Determined Harris Violated ERISA and Is Liable 

to the Plan for the Losses He Caused It to Suffer 

On December 19, 2012, the Secretary filed a complaint against Harris in the 

U.S. District Court for the District of Minnesota (“district court”), alleging he 

violated ERISA by failing to remit the $55,040.61 in withheld employee earnings 

to pay the Plan’s healthcare premiums to HealthPartners. Complaint, Perez v. 

Harris, No. 12-cv-3136 (D. Minn. Dec. 19, 2012) (Doc. 1). Among other claims, 

the Secretary alleged that, by failing to remit the withheld premiums, Harris 

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breached his fiduciary duty of loyalty to Faribault’s employees and their Plan in 

violation of ERISA section 404(a)(1)(A), 29 U.S.C. § 1104(a)(1)(A). Id. 

On November 9, 2015, after a three-day bench trial, see J.A. at 30–601, the 

district court issued a judgment in the Secretary’s favor, concluding that Harris 

violated his fiduciary duty of loyalty under ERISA by diverting $55,040.61 in 

employee contributions to pay for corporate expenses and his own home-equity 

loan, id. at 613, 643. 

The district court first determined Harris acted as an ERISA fiduciary in 

relation to his employees’ withheld but unremitted contributions to the Plan to pay 

their health insurance premiums. J.A. at 637. The court noted that the amounts 

withheld from Faribault employees’ paychecks for premium payments became 

plan assets “as of the date on which the employees’ wages were paid (i.e., the date 

on which the employees’ contributions were withheld).” Id. at 636. The court then 

found that Harris exercised authority or control respecting the management or 

disposition of those plan assets, id. at 635–37, a basis for ERISA fiduciary status, 

see 29 U.S.C. § 1002(21)(A)(i). For example, Dorr testified that she did not have 

the authority to pay any bills or expenses without Harris’s approval, including the 

remittance of employee contributions to HealthPartners. J.A. at 635. Harris also 

signed the checks to HealthPartners. Id. Moreover, when Glienke brought 

HealthPartners’s past-due notices to Harris’s attention, Harris asked Glienke to try 

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to get an extension or, as in March 2009, called HealthPartners himself to request 

an extension. Id. 

Harris’s testimony to the contrary did not compel a different result, as his 

claim that Dorr (and not Harris) actually determined when and how to pay 

HealthPartners and other corporate expenses “lack[ed] credibility given the great 

weight of evidence to the contrary.” J.A. at 636–37. The court thus determined 

Harris was a Plan fiduciary “from at least January 1, 2009 to March 31, 2009,” as 

he exercised authority and control over plan assets during that time. Id. at 637. 

Second, the district court found “that Harris breached his [fiduciary] duty of 

loyalty to the Health Plan by failing to remit plan assets to the Health Plan and 

instead using those assets to pay corporate creditors and personal expenses.” Id. at 

639. Specifically, 

[h]e breached that duty when, in late March 2009—after he claims he 

first learned that the January and February premiums had not been 

remitted to HealthPartners—he directed or allowed funds from [the 

general operations account] to be used to pay Faribault Mills’s 

expenses and debts instead of the HealthPartners premiums. 

Id. 

The district court also concluded Harris’s fiduciary breach caused the 

$55,040.61 in losses suffered by the Plan. Id. at 640. 

Harris’s decision not to remit the employee withholdings to 

HealthPartners caused the $55,040.61 loss to the Health Plan. . . . 

[T]he evidence shows that an amount of money significantly higher 

than the amount of premiums that was due to HealthPartners was 

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removed from the account from which premiums were paid and was 

neither paid to HealthPartners nor returned to the employees, but 

instead was used to pay other corporate expenses or debts. 

Id. 

The district court thus issued a judgment on November 9, 2015, in the 

Secretary’s favor, finding Harris liable to the Plan for $55,040.61 in restitution 

and, with prejudgment interest, a total of $67,839.60 (hereinafter, “ERISA 

Judgment Debt”). J.A. at 641–43. Harris did not appeal that judgment. 

C. The Bankruptcy Court Determined Harris’s ERISA Judgment Debt Is 

Nondischargeable under 11 U.S.C. § 523(a)(4) 

On November 23, 2015, Harris filed a Chapter 7 bankruptcy petition in the 

U.S. Bankruptcy Court for the District of Minnesota (“bankruptcy court”). 

Petition, In re Harris, No. 15-bk-44062 (Bankr. D. Minn. Nov. 23, 2015) (Doc. 1). 

Harris’s petition listed the U.S. Department of Labor as an unsecured, nonpriority 

creditor for the $67,839.60 he owed under the district court’s November 9, 2015 

judgment. Id. On February 29, 2016, the Secretary filed an adversary proceeding 

against Harris seeking a determination that his $67,839.60 judgment debt was 

nondischargeable pursuant to 11 U.S.C. §§ 523(a)(4) and 727. J.A. at 1. 

The Secretary moved for summary judgment on June 30, 2016, arguing that 

(1) the collateral-estoppel doctrine gave preclusive effect in the bankruptcy case to 

the district court’s factual and legal determinations; and (2) Harris’s debt was 

nondischargeable because it arose from “defalcation while acting in a fiduciary 

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capacity,” based on those factual and legal determinations. See 11 U.S.C. 

§ 523(a)(4); J.A. at 648. For summary judgment purposes, the parties stipulated to 

sixty-two uncontested facts identified in the district court’s opinion as its “Findings 

of Fact.” J.A. at 658. 

The bankruptcy court granted the Secretary’s motion for summary judgment. 

J.A. at 718. First, the court agreed that collateral estoppel applied to this case and 

accepted the district court’s legal conclusions and factual findings. Id. at 709. The 

bankruptcy court then turned to the question of whether Harris’s actions 

constituted defalcation within a fiduciary relationship under section 523(a)(4) of 

the Bankruptcy Code. 

The bankruptcy court held that Harris acted as a section 523(a)(4) fiduciary 

with respect to the health insurance premiums withheld from employee paychecks. 

J.A. at 714. The court recognized that, under ERISA, employee contributions 

become plan assets when they are withheld from employee paychecks. Id. 

Because Harris exercised control over employee contributions to the Plan held in 

Faribault’s general account, Harris exercised control over plan assets and thereby 

became a fiduciary with obligations under ERISA to protect the Plan’s assets in 

that account and to prevent their misuse. Id. at 710–14. 

The bankruptcy court also found that Harris’s control over withheld 

employee contributions began well before his decision to divert those employee 

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contributions to pay corporate expenses in late March 2009. J.A. at 714. Thus, 

Harris had a statutory fiduciary obligation to protect the Plan assets before he 

decided to violate his fiduciary duties and divert those assets to pay for his own 

and corporate expenses, the act from which his ERISA Judgment Debt arose. Id. at 

712–14. 

Finally, applying the Supreme Court’s decision in Bullock v. 

BankChampaign NA, 133 S. Ct. 1754 (2013), the bankruptcy court determined 

Harris had committed defalcation under section 523(a)(4). J.A. at 718. 

Specifically, the court held that “several undisputed facts suggest that the Debtor 

was willfully blind to a substantial and unjustifiable risk that his conduct will turn 

out to violate a fiduciary duty, thereby qualify[ing] his conduct as defalcation 

under section 523(a)(4).” Id. at 714. Those facts included: (1) Harris’s authority 

and control over Faribault’s bank accounts; (2) his signing of checks, including 

those that HealthPartners returned for insufficient funds; and (3) his decision to 

pay himself, Faribault, and other creditors instead of remitting to HealthPartners 

his employees’ healthcare premiums withheld from the employees’ own 

paychecks. Id. at 714–18. Therefore, “Harris exhibited a reckless and conscious 

disregard . . . [in] violat[ing] a duty of undivided loyalty to the plan[.]” Id. at 718. 

The bankruptcy court thus concluded Harris’s ERISA Judgment Debt was 

nondischargeable under section 523(a)(4). J.A. at 718. 

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D. The Bankruptcy Appellate Panel Affirmed the Bankruptcy Court’s Decision 

Harris appealed the bankruptcy court’s decision to the U.S. Bankruptcy 

Appellate Panel for the Eighth Circuit (“BAP Court”). J.A. at 719. After briefing 

and oral argument, the BAP Court agreed with and affirmed the bankruptcy court’s 

decision on January 6, 2017. Id. at 723–24. 

The BAP Court first determined that money withheld from employee 

paychecks constituted a trust res, as “Faribault was holding funds that actually 

belonged to someone else . . . and it had a duty to use the employees’ money to 

make the premium payments.” J.A. at 732–33. In so doing, the BAP Court, like 

the bankruptcy court, noted a distinction between cases involving unpaid employer 

contributions to ERISA plans, which do not typically constitute a trust res, and 

cases involving withheld but unremitted employee contributions to ERISA plans, 

which do constitute a trust res because they are plan assets as a matter of law. Id. 

at 731–33. Consistent with this distinction, the court held that “this case fits 

squarely with those cases holding that a trust is created when the employer 

withholds wages for payments to a plan providing benefits to employees.” Id. at 

733 & n.23 (citing supporting caselaw). 

Second, the BAP Court determined Harris had a fiduciary relationship to the 

trust res that preexisted his defalcatory act. J.A. at 736. The court noted that 

Harris had fiduciary duties to the Plan and its assets “throughout the period in 

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which the funds withheld from wages were not remitted to HealthPartners,” as his 

authority over management or disposition of those plan assets “existed throughout” 

that time. Id. at 735. The court explained, “[Harris] was the person who had 

ultimate responsibility to determine which bills would be paid out of the 

company’s scarce resources, and he exercised that authority to his own benefit.” 

Id. at 736. Harris thus had a preexisting fiduciary duty to the funds withheld from 

his employees’ paychecks, which constituted a statutorily defined trust res. Id. As 

a result, he “act[ed] in a fiduciary capacity” as that phrase is used in section 

523(a)(4). See id. 

Third, the BAP Court determined Harris acted with sufficient scienter to 

come under the meaning of defalcation, which requires that the debtor act either 

intentionally or with gross recklessness. J.A. at 741 & n.36. The court explained 

that “[b]etween March 26 and 31, [Harris] knew that more than $55,000 of the 

funds in Faribault’s operating accounts were withheld from employee wages and 

did not belong to the company—yet, [Harris] chose to use those funds to pay 

personal and corporate expenses.” Id. at 739. The court further explained that, 

“[b]ased on [those] undisputed facts, and based on [Harris’s] failure to offer a 

justifiable reason for his decision not to use the remaining funds for the benefit of 

the employees for whom they were held in trust, the Bankruptcy Court properly 

concluded” that Harris acted with conscious disregard to a substantial and 

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unjustifiable risk that his conduct would violate a fiduciary duty. Id. at 741. The 

BAP Court therefore affirmed the bankruptcy court’s holdings that Harris 

committed defalcation while acting in a fiduciary capacity and that his ERISA 

Judgment Debt was consequently nondischargeable under section 523(a)(4). Id. at 

742. 

Harris now appeals to this Court. J.A. at 743. 

SUMMARY OF THE ARGUMENT 

Harris’s ERISA Judgment Debt is nondischargeable in his Chapter 7 

bankruptcy because that debt arose from his “defalcation” of ERISA plan assets 

while acting as a “fiduciary” to the ERISA plan within the meaning of 11 U.S.C. 

§ 523(a)(4). 

1. The bankruptcy court and the BAP Court correctly determined that 

Harris was “acting in a fiduciary capacity” as that phrase is used in section 

523(a)(4). First, “acting in a fiduciary capacity” requires the debtor to have a 

fiduciary relationship to an express or technical trust. A statute can establish the 

“fiduciary relationship to a trust” requirement when the statute creates a definable 

trust res and imposes trustee-like responsibilities for the res on the debtor. Here, 

the withholdings from employee paychecks became plan assets under ERISA on 

the date the paychecks were issued, and those plan assets constituted a trust res 

because ERISA subjects all plan assets to a trust requirement. Furthermore, 

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because ERISA imposed trustee-like fiduciary duties on Harris based on his 

control over how that trust res was used, he had a statutorily-created fiduciary 

relationship and accompanying fiduciary duties to that trust res and its 

beneficiaries. 

Harris does not contest these conclusions on appeal. Instead, Harris makes 

three narrow arguments in favor of reversal. First, he argues that he was not a 

“fiduciary” until the “wrongful” act of misusing employee contributions occurred 

in late March 2009, so that his fiduciary status did not predate the defalcation as is 

required under section 523(a)(4). Harris’s argument directly contradicts the district 

court’s factual findings, binding here based on collateral estoppel, that Harris had 

fiduciary and trustee-like duties to the premiums withheld from employee 

paychecks at least as early as January 2009 and through the time he committed the 

defalcatory acts in late March 2009. 

Second, Harris argues he is not “personally” liable as a fiduciary under 

section 523(a)(4) because he acted as a corporate officer when he exercised 

authority over plan assets. This argument fails, as ERISA imposes fiduciary duties 

on any individual to the extent he exercises authority or control over plan assets. 

Further, courts have similarly construed section 523(a)(4) in other contexts to 

apply to corporate officers who are personally entrusted with fiduciary obligations 

over a trust res by a statute. 

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Harris’s third argument—that this Court should reverse the bankruptcy 

court’s and BAP Court’s decisions based on Hunter v. Phillpott, 373 F.3d 873 (8th 

Cir. 2004)—is equally unavailing. Hunter involved unremitted employer 

contributions to an ERISA plan, which are not plan assets subject to ERISA’s trust 

requirements, unlike the unremitted employee contributions here, which are plan 

assets subject to ERISA’s trust requirements as a matter of law. His three 

arguments do not undermine the lower courts’ sound conclusion that Harris was a 

fiduciary to a trust under ERISA and section 523(a)(4). 

2. The bankruptcy court and the BAP Court also correctly determined 

that Harris’s breach of his fiduciary duties in late March 2009 constituted 

defalcation. As the Supreme Court explained in Bullock v. BankChampaign, N.A., 

defalcation under section 523(a)(4) applies only to intentional or grossly reckless 

acts. 133 S. Ct 1754 (2013). Gross recklessness is a conscious disregard of a 

substantial and unjustifiable risk of violating fiduciary duties. Harris acted 

intentionally, or at least with gross recklessness, when he decided in late March 

2009 to use plan assets—i.e., the monies withheld from the employees’ 

paychecks—to pay other corporate expenses and debts Faribault owed him, rather 

than remit those plan assets to HealthPartners as he had done in the past and as 

required by his fiduciary obligations. His actions in late March 2009 therefore 

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constituted defalcation while acting in a fiduciary capacity, and his ERISA 

Judgment Debt is nondischargeable under section 523(a)(4). 

ARGUMENT 

In a Chapter 7 bankruptcy, a court may not discharge “an individual debtor 

from any debt . . . for fraud or defalcation while acting in a fiduciary capacity.” 11 

U.S.C. § 523(a)(4) (emphasis added). In the bankruptcy court below, the Secretary 

established the two elements necessary to show Harris’s debt was 

nondischargeable under section 523(a)(4): (1) a fiduciary relationship existed 

between the Plan and Harris; and (2) Harris committed defalcation in the course of 

that fiduciary relationship. Jafarpour v. Shahrokhi (In re Shahrokhi), 266 B.R. 

702, 707 (B.A.P. 8th Cir. 2001). Thus the bankruptcy court granted the Secretary’s 

summary judgment motion and correctly declared Harris’s ERISA Judgment Debt 

nondischargeable. This Court reviews de novo the bankruptcy court’s grant of 

summary judgment and the BAP Court’s affirmance of that decision, viewing the 

facts in the light most favorable to the nonmoving party. See Blocker v. Patch (In 

re Patch), 526 F.3d 1176, 1179 (8th Cir. 2008). 

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The relevant facts here are undisputed, and the district court’s factual 

determinations and legal conclusions apply to this case by virtue of collateral 

estoppel.1 

I.	 At the Time of His Defalcation of ERISA Plan Assets, Harris Was Acting 

in a Fiduciary Capacity to the Plan and Its Assets (the Trust Res) that 

Predated His Defalcation 

This Court has held that a fiduciary relationship under section 523(a)(4) can 

arise only if the debtor (1) was a fiduciary to an “express or technical trust” (2) 

“imposed before and without reference to the wrongdoing that caused the debt.” 

Tudor Oaks Ltd. P’ship v. Cochrane (In re Cochrane), 124 F.3d 978, 984 (8th Cir. 

1997) (citation omitted). This section will address each element in turn. 

A.	 ERISA Created an Express or Technical Trust to which Harris Had 

Fiduciary Duties 

Generally, a fiduciary relationship and an “express or technical” trust under 

section 523(a)(4) can be created by statute or common law. See In re Thompson, 

458 B.R. 504, 508 (B.A.P. 8th Cir. 2011); see also Arvest Mortg. Co. v. Nail (In re 

Nail), 680 F.3d 1036, 1040 (8th Cir. 2012); Barclays Am./Bus. Credit, Inc. v. Long 

1 Harris does not challenge the lower courts’ application of collateral estoppel in 

this appeal. See Ahlberg v. Chrysler Corp., 481 F.3d 630, 634 (8th Cir. 2007) 

(points not argued in opening brief are deemed waived). This Court has applied 

collateral estoppel in determining defalcation by a fiduciary under section 

523(a)(4). E.g., In re Speight, 16 F.3d 287, 287 (8th Cir. 1994); Cochrane, 124 

F.3d at 983 (“issues concerning Cochrane’s breach of his fiduciary duties were 

fully, fairly, and actually litigated and were essential to the final judgment entered 

in the underlying state court action. We therefore hold that the bankruptcy court 

did not err in concluding that Cochrane is bound by the jury’s findings.”). 

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(In re Long), 774 F.2d 875, 878 (8th Cir. 1985). To create such a fiduciary 

relationship, a “statutory trust must (1) include a definable res and (2) impose 

‘trust-like’ duties.” In re Nail, 680 F.3d at 1040 (citation omitted). 

ERISA provides the statutory basis for Harris’s fiduciary status. ERISA 

abounds with the language and terminology of trust law. Firestone Tire & Rubber 

Co. v. Bruch, 489 U.S. 101, 110 (1989); see also CIGNA Corp. v. Amara, 563 U.S. 

421, 439 (2011) (ERISA “typically treats” plan fiduciary “as a trustee”); Mertens 

v. Hewitt Assocs., 508 U.S. 248, 262 (1993) (ERISA also “expand[ed] the universe 

of persons subject to fiduciary duties” beyond those considered fiduciaries 

“[u]nder traditional trust law.”). ERISA governs and protects employee benefit 

plans, including the Plan here, by requiring that plan assets be held in trust and by 

imposing fiduciary obligations on those who manage them. See 29 U.S.C. § 1103 

(“all assets of an employee benefit plan shall be held in trust”); see also Cent. 

States, Se. & Sw. Areas Pension Fund v. Cent. Transp., Inc., 472 U.S. 559, 570 & 

n.10 (1985) (“[R]ather than explicitly enumerating all of the powers and duties of 

trustees and other fiduciaries, Congress invoked the common law of trusts to define 

the general scope of their authority and responsibility.” (citing ERISA’s legislative 

history)); Prudential Ins. Co. of Am. v. Doe, 76 F.3d 206, 209 (8th Cir. 1996). 

ERISA also defines who acts as fiduciaries with regard to plan assets, as well as 

their attendant fiduciary obligations. See 29 U.S.C. §§ 1002(21)(A), 1104(a). As 

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most relevant here, ERISA requires fiduciaries to “discharge [their] duties with 

respect to a plan solely in the interest of the participants and beneficiaries and for 

the exclusive purpose of providing benefits to participants and their beneficiaries.” 

29 U.S.C. § 1104(a)(1)(A) (emphasis added); see NLRB v. Amax Coal Co., 453 

U.S. 322, 329 (1981) (“[An ERISA] trustee bears an unwavering duty of complete 

loyalty to the beneficiary of the trust, to the exclusion of the interests of all other 

parties.”). ERISA imposes these duties to prevent and redress fiduciary 

mismanagement, like Harris’s diversion of Plan assets. Doe, 76 F.3d at 209. 

It is undisputed that, under the governing ERISA regulation, when or shortly 

after Faribault withheld premiums from employee paychecks, those monies 

became the Plan’s assets to be held for the benefit of the Plan’s participants. 

Withheld employee contributions become plan assets on the earliest date on which 

they can reasonably be segregated from the employer’s general assets. See 29 

C.F.R. § 2510.3-102(a), (c) (2010); Graphic Commc’ns Int’l Union Upper 

Midwest Local 1M Health & Welfare Plan v. Bjorkedal, 516 F.3d 719, 733 (8th 

Cir. 2008). The district court found that the withheld employee contributions 

became Plan assets “on the date on which the employees’ wages were paid,” and it 

is undisputed on appeal that collateral estoppel applies in this case to the district 

court’s factual findings and legal conclusions. J.A. at 635. The statute and 

regulations state that the failure to forward employee contributions to a plan as 

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soon as they can be reasonably segregated from the employer’s general assets 

constitutes a breach of fiduciary duty and violates ERISA’s trust requirement. 29 

U.S.C. § 1103; 29 C.F.R. § 2510.3-102 (2010). See generally 44 Fed. Reg. 50,363, 

50,365 (Aug. 28, 1979); 53 Fed. Reg. 17,628, 17,629 (May 17, 1988); 61 Fed. Reg. 

41,220, 41,227–28 (Aug. 7, 1996). ERISA thus requires fiduciaries like Harris, 

who control the distribution of their employees’ hard-earned wages, to manage and 

remit the employees’ health plan contributions (plan assets) for the exclusive 

benefit of the Plan and its employee-participants—not for other uses. See, e.g., 

LoPresti v. Terwilliger, 126 F.3d 34, 39 (2d Cir. 1997) (ERISA fiduciary violated 

duty of loyalty by using withheld employee contributions to pay corporate 

creditors). ERISA clearly imposes fiduciary obligations on individuals, like 

Harris, who control withheld employee contributions. FirsTier Bank, N.A. v. 

Zeller, 16 F.3d 907, 911 (8th Cir. 1994). 

Accordingly, bankruptcy courts in numerous jurisdictions have determined 

ERISA fiduciaries with control over withheld employee contributions are 

fiduciaries of “trusts” under section 523(a)(4), even if those contributions are held 

in a corporate account. This is because those withheld employee contributions are 

plan assets (a “definable res”) subject to a statutory trust requirement and protected 

by ERISA’s fiduciary obligations (“trust-like duties”). See Chao v. Gott (In re 

Gott), 387 B.R. 17, 22 (Bankr. S.D. Iowa 2008); Trs. of Colo. Ironworkers Pension 

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Fund v. Gunter (In re Gunter), 304 B.R. 458, 461 (Bankr. D. Colo. 2003); 

Eavenson v. Ramey, 243 B.R. 160, 164, 166 (N.D. Ga. 1999); Morgan v. 

Musgrove (In re Musgrove), 187 B.R. 808, 814 (Bankr. N.D. Ga. 1995). Harris 

cites no contrary authority. This is consistent with the Bankruptcy Code’s 

treatment of non-ERISA fiduciaries as trustees when they similarly fail to remit 

funds under their care. See, e.g., Quaif v. Johnson, 4 F.3d 950, 954 (11th Cir. 

1993) (“technical trust” exists under section 523(a)(4) when fiduciary has duty to 

remit funds to insurer but does not segregate those funds from other corporate 

assets prior to remittance). 

On appeal, Harris does not contest the lower courts’ conclusions that ERISA 

imposes trust and fiduciary requirements on employee contributions, and, thereby, 

satisfies the “trust” and “fiduciary” elements necessary for defalcation of employee 

contributions to be non-dischargeable under Bankruptcy Code section 

523(a)(4). His brief narrowly challenges the lower courts’ conclusions only on 

three points, arguing that: (1) he was not a “fiduciary” under ERISA or under 

section 523(a)(4) until the “wrongful” act of misusing employee contributions, so 

his fiduciary status did not predate the defalcation; (2) he was not individually 

liable as a fiduciary for the defalcation under section 523(a)(4); and (3) this case 

should be analogized to this Court’s decision in Hunter v. Philpott, 373 F.3d 873 

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(8th Cir. 2004). For the reasons stated in the following three sections, his narrow 

arguments are without merit. 

B. Harris’s Fiduciary Status Predated his Defalcation 

For section 523(a)(4) to apply, the fiduciary relationship “must exist before 

the incident creating the contested debt and apart from it. It is not enough that the 

trust relationship spring from the act from which the debt arose.” Devaney v. 

Dloogoff (In re Dloogoff), 600 F.2d 166, 168 (8th Cir. 1979) (citing Davis v. 

Aetna Acceptance Co., 293 U.S. 328, 333 (1934)). This requirement excludes 

from section 523(a)(4)’s ambit those trusts created by virtue of a court-ordered 

remedy, commonly known as “constructive trusts.” In re Talcott, 29 B.R. 874, 878 

(Bankr. D. Kan. 1983) (fiduciary relationship under § 523(a)(4) must “aris[e] out 

of a pre-existing express or technical trust, not implied or constructive trusts”); see 

also In re N.S. Garrott & Sons, 772 F.2d 462, 467 (8th Cir. 1985) (“A constructive 

trust is an equitable remedy imposed under circumstances where it would be unfair 

for the owner of the property to enjoy the beneficial interest and would result in his 

unjust enrichment.”). Yet this limitation to section 523(a)(4)’s application is itself 

narrow—section 523(a)(4) is satisfied whenever a trust-like relationship exists 

prior to and separate from the defalcatory act, even if that relationship arises nearin-time to that act. See Devaney, 600 F.2d at 168 (excluding from section 

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523(a)(4)’s application only defalcation that itself creates the fiduciary relationship 

simultaneously). 

Harris now erroneously cites this narrow limitation and argues that he was 

not a section 523(a)(4) fiduciary to the Plan until he exercised “authority in March 

of 2009 by permitting payment of other expenses rather than meeting Faribault’s 

obligation to pay the health insurance premiums” and, therefore, his fiduciary 

status under section 523(a)(4) arose only “out of the wrongdoing in question.” 

Appellant’s Br. 11–16. This argument ignores the district court’s findings, which 

are directly to the contrary and binding on him by the doctrine of collateral 

estoppel. The district court found that Harris exercised control over plan assets 

from at least January 1, 2009, before he diverted any employee contributions. J.A. 

at 636–37. During the first quarter of 2009 at least, Harris had signatory authority 

over the general operating account in which Plan assets were held and had control 

over disbursements from that account, including the power to determine whether 

corporate expenses or healthcare premiums would be paid. Id. at 635–37. The 

district court found that between January 1 and March 31, 2009, Harris decided if 

and when to remit withheld premium payments for January and February 2009, 

and he approved and signed the checks to HealthPartners for those months’ 

premiums. Id. As found by the bankruptcy court and uncontested here, Harris is 

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bound by the district court’s factual findings and legal conclusions, which he did 

not appeal.2 

As a result, from at least January 2009, Harris exercised control over 

Faribault’s general operations account, including the withheld employee 

contributions in that account, which were plan assets as a matter of law. Harris 

concedes this fact in his appellate brief, noting that the district court found he “had 

authority regarding . . . [plan] assets” in January 2009, Appellant’s Br. 12. He also 

admits that he, “as CEO of Faribault, had authority over health plan payments[.]” 

Appellant’s Br. 8. Accordingly, based on undisputed facts, Harris was a 

“fiduciary” to those Plan assets under both ERISA and section 523(a)(4) starting 

from at least January 2009, well before any act of defalcation. 

2 In his brief, Harris relies heavily on testimony offered at trial that was rejected as 

either not credible or in conflict with other evidence. See, e.g., Appellant’s Br. 4–5 

(citing J.A. at 604, ¶ 21(a)–(e), which the district court had described as 

“somewhat conflicting” and had listed contrary testimony, see also id. at 603–06, 

¶¶ 19–21). Moreover, the district court clearly resolved the relevant factual 

disputes in reaching its holding. For example, Harris claims in his appellate brief 

that “[a]lthough he had ultimate authority to approve expenditures, the Finance 

Department (CFO Dorr) determined when and how to pay corporate expenditures, 

including Health Partner bills.” Appellant’s Br. 5. The district court specifically 

found that this claim “lacks credibility given the great weight of evidence to the 

contrary[.]” J.A. at 636 (citing contrary evidence). As noted earlier, Harris does 

not challenge the lower courts’ application of collateral estoppel to the district 

court’s findings. 

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C. Harris was “Personally” Acting as a Fiduciary under Section 523(a)(4) 

Harris also contends that “[t]he fact that a corporate officer has authority 

regarding the trust asset does not establish that he is personally acting as a [section 

523(a)(4)] fiduciary,” id. at 14 (citing Long, 774 F.2d at 878–79). Harris ignores 

this Court’s statement in Long that “there are cases charging individuals, by virtue 

of their corporate officer status, with the corporation’s fiduciary obligations. To 

the extent these cases hold that a statute or other state law rule may create 

fiduciary status in an officer which is cognizable in bankruptcy proceedings, we 

agree.” Long, 774 F.2d at 878 (citations omitted) (emphasis added). Based on 

Long, courts have readily found fiduciary status for individuals when the statute 

imposes fiduciary obligations on individuals. E.g., Meyer v. Rigdon, 36 F.3d 

1375, 1382 (7th Cir. 1994) (citing Long, 774 F.2d at 878); In re Roussel, 504 B.R. 

510, 520 (E.D. Ark. 2013) (same); In re Collins, 137 B.R. 754, 756 (Bankr. E.D. 

Ark. 1992) (same). 

Here, there is no doubt that ERISA imposes fiduciary obligations on 

individuals, like Harris, who satisfy ERISA’s definition of a fiduciary, not just on 

corporate entities. E.g, Olson v. E.F. Hutton & Co., 957 F.2d 622, 625 (8th Cir. 

1992) (“‘[W]hether or not an individual or entity is an ERISA fiduciary must be 

determined by focusing on the function performed, rather than the title held.’”) 

(quoting Blatt v. Marshall & Lassman, 812 F.2d 810, 812-13 (2d Cir. 1987)); see 

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also 29 U.S.C. § 1002(9), (21) (imposing fiduciary obligations on any “individual” 

who satisfies the “fiduciary” definition). Indeed, Harris does not dispute he is 

“personally liable” as an ERISA fiduciary. Appellant’s Br. 12, 15, 16 (discussing 

Harris’s “personal liability”). As the district court found and is undisputed on 

appeal, Harris had personally exercised authority and control over employee 

contributions kept in Faribault’s general operations account since at least January 

2009, and he was a fiduciary in his individual capacity.3 J.A. at 636–37; see also 

FirsTier Bank, N.A., 16 F.3d at 911 (ERISA’s fiduciary provision “imposes those 

duties whenever one deals with plan assets. This distinction is not accidental—it 

reflects the high standard of care trust law imposes upon those who handle money 

or other assets on behalf of another.”). Accordingly, Harris was personally a 

fiduciary under ERISA and section 523(a)(4) since, at least, January 2009. 

This result is consistent with numerous other cases in analogous 

circumstances where similar arguments were rejected. E.g., Woodworking Enters., 

Inc. v. Baird (In re Baird), 114 B.R. 198, 204–05 (B.A.P. 9th Cir. 1990) (president 

and sole shareholder of corporation was personally liable for breaches of Arizona 

3 In support of this determination, the district court credited certain testimony over 

Harris’s testimony to the contrary: “[f]or example, Dorr testified that she did not 

have the authority, without Harris’s approval, to remit employee contributions to 

HealthPartners. Indeed, the checks to HealthPartners were signed by Harris.” J.A. 

at 635, ¶ 13. The district court also credited the fact that “Dorr, Michael, and 

Harris all testified that Harris had ultimate authority during at least the first quarter 

of 2009 to determine which of Faribault Mill’s expenses would be paid.” Id. at 

636, ¶ 14.b. 

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builder’s trust fund statute because he was “the only person responsible for 

disbursing funds held by [his corporation]” and therefore “directly and actively 

participated in the defalcation” of those funds); Baker v. Wentland (In re 

Wentland), 410 B.R. 585, 599 (Bankr. N.D. Ohio 2009) (defendant, who was 

president of corporation and controlled corporation’s finances, was personally 

liable for failure to apply funds withheld from employee’s wages to payments of 

health insurance premiums); Nuchief Sales, Inc. v. Harper (In re Harper), 150 B.R. 

416, 419 (Bankr. E.D. Tenn. 1993) (corporate stockholder, officer, director, 

bookkeeper, and day-to-day operational supervisor was personally liable for 

corporation’s breaches of fiduciary duties under the Perishable Agricultural 

Commodities Act; “focus of fiduciary liability is upon the actor responsible for the 

act rather than the corporate form”; “it is the employee or officer responsible for 

implementing the fiduciary responsibilities who is liable for any acts of 

defalcation”). 

In short, Harris was a fiduciary in his individual capacity under both ERISA 

and section 523(a)(4) before he decided to divert the employee contributions (plan 

assets) for personal and corporate uses in late March 2009. 

D. Hunter v. Philpott Is Inapposite 

Harris also relies on the factual situation in Hunter, which ultimately 

concluded the debtor, an ERISA fiduciary, was not a fiduciary under section 

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523(a)(4). Appellant’s Br. 14–16 (quoting Hunter v. Philpott, 373 F.3d 873, 877 

(8th Cir. 2004)). His reliance on Hunter is misplaced. As the bankruptcy court 

recognized, this Court stated in Hunter v. Philpott that an ERISA fiduciary is not 

“ipso facto a fiduciary for the purposes of § 523(a)(4).” 373 F.3d 873, 875 (8th 

Cir. 2004). However, Hunter involved different circumstances than here, as this 

case concerns the employees’ own contributions to their plan, which were plan 

assets once withheld from their paychecks, and upon which ERISA imposes trust 

and fiduciary requirements to protect against any misuse. In contrast, Hunter 

concerned the employer’s contractual obligation to contribute the employer’s funds 

to its employees’ benefit plan. ERISA does not impose similar requirements on 

unpaid employer contributions in the employer’s possession, which are usually not 

considered plan assets. See Rahm v. Halpin (In re Halpin), 566 F.3d 286, 289–90 

(2d Cir. 2009) (agreeing with Secretary of Labor’s “interpretation that employer 

contributions become assets only after being paid”) (citing Brief for the Secretary 

of Labor as Amicus Curiae Supporting Debtor-Defendant-Appellee at 8–18, Rahm 

v. Halpin (In re Halpin), 566 F.3d 286 (2d Cir. 2009) (Nos. 07-3234-BK, 07-3206­

BK), http://bit.ly/2cGlqja). Harris concedes this factual difference is “significant.” 

Appellant’s Br. 14. 

In Hunter, the debtor owned a construction business that had signed a 

collective bargaining agreement (“CBA”) with a union. 373 F.3d at 874. Under 

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the CBA, the business agreed to make employer contributions to certain union 

benefit plans from the company’s own accounts. Id. at 874–75. The business 

failed to make those CBA-required payments to the plans. Id. at 875. After the 

plans sued the business and the debtor for those unpaid contributions, the debtor, 

an officer of the business, filed for bankruptcy. Id. The plans filed an adversary 

proceeding against the debtor seeking section 523(a)(4) nondischargeability of the 

unpaid employer contributions. Id. In deciding whether the employer 

contributions were nondischargeable, this Court “look[ed] specifically at the 

property that [wa]s alleged to have been defalcated to determine whether [the 

debtor] was legally obligated to hold that specific property for the benefit of the 

[plans].” Id. 

Unlike employee contributions, ERISA generally does not make unpaid 

employer contributions “plan assets” until their remittance into the ERISA plan; 

thus such contributions are not subject to ERISA’s fiduciary and trust 

requirements. See, e.g., Bjorkedal, 516 F.3d at 732–33 (“[c]orporate assets do not 

become plan assets merely because an employer has a corporate obligation to make 

payments to the plan”). Generally, “employer contributions become an asset of the 

plan only when the contribution has been made.” Emp. Benefits Sec. Admin., U.S. 

Dep’t of Labor, Field Assistance Bulletin 2008–1, at 1–2 (Feb. 1, 2008); see also 

U.S. Dep’t of Labor, Advisory Op. No. 2005–08A (May 11, 2005); U.S. Dep’t of 

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Labor, Advisory Op. No. 93–14A (May 5, 1993). See generally Halpin, 566 F.3d 

at 289 (adopting the Secretary’s position that the statute itself does not impose 

ERISA duties with respect to unpaid employer contributions). 

Although ERISA itself does not subject unpaid employer contributions to its 

fiduciary or trust requirements, parties may supersede the general rule through a 

contract in which the parties agree, for example, that title to the unpaid 

contribution passes to the plan when the contribution is due and payable. See, e.g., 

ITPE Pension Fund v. Hall, 334 F.3d 1011, 1013–14 & n.2 (11th Cir. 2003). In 

Hunter, this Court confronted a situation where the parties attempted to do so, and 

the plans argued the debtor had assumed ERISA fiduciary status under the 

contract. 373 F.3d at 875–76. This Court, however, determined the CBA did not 

expressly make any owed employer contributions plan assets before they were 

paid. See id. Thus the general rule applied, and the unpaid employer contributions 

were not subject to any statutory trust or fiduciary requirements; the debtor 

therefore did not assume any fiduciary duties with respect to the unpaid employer 

contributions. Id.; cf. Raso v. Fahey (In re Fahey), 482 B.R. 678, 691 (B.A.P. 1st 

Cir. 2012) (contract imposed section 523(a)(4) fiduciary status over unpaid 

employer contributions). 

As a result, the debtor’s obligations in Hunter were “more contractual than 

fiduciary,” and his “debt to the [plans] did not preexist the allegedly wrongful act 

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complained of: that is, his failure to hold money to satisfy the business’s owed 

contributions.” 373 F.3d at 875–76. In other words, the debtor was not a section 

523(a)(4) fiduciary because the only obligation (and breach) was his business’s 

contractual obligation to pay the plan; the debtor individually had no preexisting 

fiduciary duty, statutory or contractual, to set aside or protect certain funds to 

fulfill that contractual obligation. 

In contrast, the withheld employee contributions in this case were 

indisputably plan assets under the statute and applicable regulation (as the district, 

bankruptcy, and BAP courts recognized), and thus were subject to the statutory 

trust and fiduciary requirements. See, e.g., Regulation Relating to Definition of 

“Plan Assets”—Participant Contributions, 61 Fed. Reg. 41,220-01, 41,222 (Aug. 7, 

1996) (codified at 29 C.F.R. pt. 2510) (“employees who agree to deductions from 

their wages for contributions to a [welfare] plan are entitled to have the assurance 

that when the employer decides to purchase an insurance policy or medical 

services for the plan, it is acting as a fiduciary of the plan and is governed by the 

fiduciary standards of ERISA in so doing”); Secretary U.S. Dep’t of Labor v. 

Kwasny, __ F.3d ___, No. 16-1872, slip op. at 5 (3d Cir. Apr. 5, 2017) (“Plan 

funds protected under [ERISA] include money withheld from employees’ 

paychecks for purposes of the benefit plan but not yet delivered to the benefit 

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plan.”); In re Halpin, 566 F.3d at 289 (employee contributions are plan assets 

pursuant to Department of Labor regulations) (citing 29 C.F.R. § 2510.3-102). 

Further, under the statute, Harris individually had fiduciary duties because 

he controlled these Plan assets. His obligation to remit funds to pay the 

HealthPartners premium was not a mere “contractual obligation.” As the 

individual with authority and control over these withholdings, he was a fiduciary 

and had a corresponding statutory duty to protect all plan assets, including 

withheld employee contributions, and to ensure they were used in the employees’ 

exclusive interests. See 29 U.S.C. § 1002(21)(A) (defining “fiduciary” under 

ERISA); 29 U.S.C. § 1104(a)(1) (listing ERISA fiduciary duties); 29 U.S.C. 

§ 1104(a)(1)(A)(i) (ERISA fiduciary must discharge duties to plan for exclusive 

purpose of providing benefits to participants and beneficiaries). This duty existed 

when he made decisions with respect to the disposition of the contributions; he 

abided by that duty when he paid HealthPartners, but then breached it in late 

March 2009 when he diverted employee contributions for other purposes. This 

duty to protect the withheld employee contributions preexisted his diversion of 

those contributions; as the district court held, Harris had this statutory duty starting 

at least as early as January 2009. 

In Navarre v. Luna (In re Luna), the U.S. Court of Appeals for the Tenth 

Circuit likewise distinguished the contractual obligations surrounding employer 

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contributions from the pre-existing trust and fiduciary requirements imposed by 

statute on persons (like Harris) controlling employee contributions. 406 F.3d 

1192, 1205 & n.6 (10th Cir. 2005); see also Bd. Trs. Ohio Carpenters’ Pension 

Fund v. Bucci (In re Bucci), 493 F.3d 635 (6th Cir. 2007) (interpreting Hunter as 

rejecting § 523(a)(4) fiduciary status for employer contributions, not employee 

contributions); Cent. Laborers’ Pension, Welfare & Annuity Funds v. AddisonAwalt Constr., Inc., CIV. No. 06-930-GPM, 2007 WL 4269260, at *1 (S.D. Ill. 

Nov. 19, 2007) (same). Following this reasoning, courts in this Circuit have 

distinguished Hunter, concluding that a debtor whose defalcation involved 

employee and not employer contributions to ERISA plans was a section 523(a)(4) 

fiduciary. See, e.g., In re Gott, 387 B.R. at 23. 

Based on the undisputed facts, the district court’s findings of fact and 

conclusions of law, and the weight of authority on this issue, Harris had fiduciary 

responsibilities to Plan assets held in Faribault’s general operations account 

starting at least on January 1, 2009. And because that fiduciary relationship 

preexisted Harris’s defalcatory act, his fiduciary relationship clearly meets the 

requirements for application of section 523(a)(4). 

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II.	 Harris Committed Defalcation When He Intentionally or Recklessly Used 

Funds Withheld from Employee Paychecks for Health Insurance 

Premiums to Pay Himself and Other Corporate Expenses 

“Defalcation is defined as the misappropriation of trust funds or money held 

in any fiduciary capacity; [the] failure to properly account for such funds.” 

Cochrane, 124 F.3d at 984. In Bullock, the Supreme Court clarified the “scienter” 

applicable to the term “defalcation” in section 523(a)(4). 133 S. Ct. 1754 (2013). 

The Court explained, 

where the conduct at issue does not involve bad faith, moral turpitude, 

or other immoral conduct, the term requires an intentional wrong. We 

include as intentional not only conduct that the fiduciary knows is 

improper but also reckless conduct of the kind that the criminal law 

often treats as the equivalent. . . . Where actual knowledge of 

wrongdoing is lacking, we consider conduct as equivalent if the 

fiduciary “consciously disregards” (or is willfully blind to) “a 

substantial and unjustifiable risk” that his conduct will turn out to 

violate a fiduciary duty. That risk “must be of such a nature and 

degree that, considering the nature and purpose of the actor’s conduct 

and the circumstances known to him, its disregard involves a gross 

deviation from the standard of conduct that a law-abiding person 

would observe in the actor’s situation.” 

Id. at 1759–60 (emphasis added) (citations omitted). On appeal, Harris challenges 

the lower courts’ conclusion that Harris had the requisite scienter. 

The district court held that Harris breached his fiduciary duty of loyalty 

when he “deci[ded] not to remit the employee withholdings to HealthPartners,” 

and “instead us[ed] those assets to pay corporate creditors and personal expenses.” 

See J.A. at 639–40 (emphasis added). The district court found Harris knew of his 

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obligation to remit the withheld contributions for January and February of 2009 to 

HealthPartners by March 26, 2009, at the latest, when he called HealthPartners 

seeking an extension to pay the withheld premiums. Despite this knowledge, he 

nonetheless chose to pay other corporate creditors and personal expenses instead of 

HealthPartners from March 26 to March 31, 2009. Id. at 640. For example, when 

faced with a choice, Harris intentionally and wrongfully ordered Dorr to pay 

Harris’s personal home equity line of credit. J.A. at 636, ¶ 14.c; id. at 629, ¶ 58.c. 

Harris took the employees’ withheld money (which belonged to the Plan) and used 

it to pay his personal home equity obligation, among other things, rather than the 

Plan’s overdue health insurance premiums, causing losses to the Plan and exposing 

participants to personal liability for any health expenses they incurred. 

Such acts constitute an intentional misappropriation of trust funds, or at the 

very least, a misappropriation of trust funds undertaken with conscious disregard to 

the substantial and unjustifiable risk that doing so would result in a breach of 

Harris’s fiduciary duty of loyalty, when simply paying HealthPartners instead of 

corporate or personal expenses would have fulfilled that duty. See Stoughton 

Lumber Co. v. Sveum, 787 F.3d 1174, 1177 (7th Cir. 2015) (defining “gross 

recklessness” under Bullock as “knowing that there is a risk of serious harm and 

that it can be averted at reasonable cost, yet failing to act on that knowledge”); see 

also In re Roussel, 504 B.R. 510, 523 (E.D. Ark. 2013) (“Defalcation may be 

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presumed from breach of the duty of loyalty, the duty not to act in the fiduciary’s 

own interest when that interest comes or may come into conflict with the 

beneficiaries’ interest” (quoting In re Baylis, 313 F.3d 9, 20 (1st Cir. 2002))). In 

other words, Harris committed defalcation as that term is used in section 523(a)(4) 

when he knowingly failed to remit employee contributions to HealthPartners and 

instead knowingly used those funds to pay for corporate or personal expenses in 

complete disregard for the employees’ rights to their own wages. See Kansas v. 

Nebraska, 135 S. Ct. 1042, 1056 (2015) (“In some areas of the law and for certain 

purposes, the distinction between purposefully invading and recklessly 

disregarding another’s rights makes no difference.” (citing Bullock, 133 S. Ct. at 

1759)). The bankruptcy court correctly reached this conclusion by cataloguing 

Harris’s intentional and reckless actions when dealing with employee 

contributions. J.A. at 714–18. 

In a post-Bullock case, the U.S. Bankruptcy Court for the District of 

Massachusetts came to the same conclusion under parallel circumstances. In Raso 

v. Fahey (In re Fahey), the court concluded a debtor had committed defalcation 

when he violated his duty of loyalty to an ERISA plan. 494 B.R. 16 (Bankr. D. 

Mass. 2013). The court explained, 

The Debtor does not dispute that he was aware of his obligations to 

the Funds, but nonetheless failed to remit the assets. Instead, the 

undisputed facts indicate that the Debtor prioritized the payment of 

corporate expenses that were beneficial to him . . . over his obligations 

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to the Funds. In so doing, he violated the duty of loyalty to the 

beneficiaries of the Funds[, and also] . . . committed a defalcation 

within the meaning of 11 U.S.C. § 523(a)(4). 

Id. at 21–23 (footnote omitted). 

Like the debtor in Fahey, Harris knew he had an obligation to remit the 

withheld employee contributions to HealthPartners, but he instead chose to 

prioritize payments of corporate expenses and creditors, including payments to 

himself. Harris thus committed defalcation when he paid other corporate and 

personal expenses instead of remitting the withheld employee contributions to 

HealthPartners. 

The case cited by Harris, IBEW Local 231 v. Pottebaum (In re Pottebaum), 

does not counsel a different result. No. 11-9050, 2013 WL 5592368 (Bankr. N.D. 

Iowa Oct. 9, 2016). In Pottebaum, the debtor filed a Chapter 7 bankruptcy petition 

after his electrical contractor company, of which he was the sole shareholder, went 

out of business. Id. at *1. As the company was struggling, the debtor 

communicated and worked with his employees’ representative, the International 

Brotherhood of Electrical Workers, Local Union 231 (Union), “to try to fund all 

his obligations,” including the remittance to the Union and two Union funds of 

wages withheld from employee paychecks. Id. at *1–2, *6. The bankruptcy court 

found credible the debtor’s testimony that “[h]e took money he needed for other 

things and used it to pay the Funds until the money ran out,” and that “he had no 

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intent to wrong or harm the workers or Union Funds.” Id. at *2. A Union 

representative also testified as to how he and the debtor worked together to save 

his Union members’ jobs. Id. Based on this, the court concluded the debtor did 

not commit defalcation, as he did not act with a scienter sufficient to meet the 

standard announced by the U.S. Supreme Court in Bullock. Id. at *5–6. 

First, Pottebaum relies on a false premise, namely that the debtor-fiduciary 

had any legal basis to use his employees’ monies, the plan’s assets, for corporate or 

personal use. See, e.g., Amax, 453 U.S. at 329–30 (“A fiduciary cannot contend 

‘that, although he had conflicting interests, he served his masters equally well or 

that his primary loyalty was not weakened by the pull of his secondary one.’” 

(quoting Woods v. City National Bank & Trust Co., 312 U.S. 262, 269 (1941))); 

LoPresti, 126 F.3d at 40 (holding that insurance premiums deducted from 

employees’ paychecks and commingled with corporate assets were plan assets in 

accordance with Department of Labor regulations, see 29 C.F.R. § 2510.3-102(a), 

and therefore that president of employer corporation acted as a fiduciary when he 

failed to separate those assets for payment to the funds and instead used them to 

pay company creditors); see also J.A. at 638 (citing similar cases). 

In fact, this Court rejected a similar argument in the criminal context. In 

United States v. Van Elsen, a criminal defendant argued that he lacked the “mens 

rea” for the “stealing” or “conversion,” also described as a “defalcation,” of funds 

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from his employees’ Individualized Retirement Accounts (IRAs), because he 

“genuinely intended to repay” the employees after misusing their retirement 

savings. 652 F.3d 955, 958 (8th Cir. 2011).4 This Court concluded that the 

defendant’s purported intent to repay the employees does not obviate the 

defendant’s intentional wrong in misusing the employees’ own money to pay for 

corporate and personal expenses in the first place. See id. at 960. Similarly, here, 

Harris’s arguments that he attempted but never in fact repaid the employees is 

“irrelevant” to his scienter, i.e., that he intentionally, or at least with gross 

recklessness, violated his duty of loyalty under ERISA. 

Moreover, the facts of this case are quite different from Pottebaum. Harris 

did not consult with his employees about which bills he should pay and when he 

should pay them. Instead, he alone prioritized which bills Faribault would pay in 

4 For example, the criminal intent for conversion 

may include misuse or abuse of property. It may reach use in an 

unauthorized manner or to an unauthorized extent of property placed 

in one’s custody for limited use. Money rightfully taken into one’s 

custody may be converted without any intent to keep or embezzle 

it . . . . 

Van Elsen, 652 F.3d at 958 (quoting Morissette v. United States, 342 U.S. 

246, 262 (1952)). This Court held that there is no requirement for a specific 

intent to permanently deprive the employees of their retirement money. Id. 

Similarly, here, a reckless disregard for fiduciary duties requires only that 

Harris have a specific intent at the time to misuse the employee 

contributions by using the employees’ money in an unauthorized manner, 

such as paying down his own loans. 

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late March 2009. And unlike the debtor in Pottebaum, Harris decided to pay 

himself with Plan assets for debts owed to him by Faribault. For example, Harris 

does not dispute that, “after speaking with Dorr and determining that Faribault 

Mills would be unable to pay the full premium due to HealthPartners, he directed 

Dorr to . . . use the funds available in the checking account from which premiums 

were paid to make a March 31, 2009 payment on his home equity line of credit.” 

J.A. at 629, 636; see also Appellant’s Br. 5.5 The district court also found that 

Harris “had ultimate authority during at least the first quarter of 2009 to determine 

which of Faribault Mills’s expenses should be paid.” J.A. at 636. He could have 

preserved the withholdings; instead, Harris knowingly misused the Plan’s assets 

for his own and his corporation’s purposes. Id. at 639–40. Indeed, the district 

court found, and it is undisputed on appeal, that Harris made a “decision not to 

remit the employee withholdings.” Id. at 640 (emphasis added). Finally, the 

district court made credibility determinations, applicable here pursuant to collateral 

estoppel, against Mr. Harris’s testimony to reach its conclusions that (1) Harris 

was the sole decision-maker of how and when bills were paid, and (2) Harris had 

control and exercised control over health plan assets. Id. at 636–37. 

5 This undisputed fact, among other undisputed facts, contradicts Appellant’s 

baseless assertion that after March 27, 2009, Harris “no longer had financial 

control of Faribault Mills’ affairs.” Appellant’s Br. 7. As Harris recognized, he 

only resigned as the CEO in May. Id. 

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The bankruptcy court and the BAP Court correctly concluded Harris acted 

with conscious disregard to a substantial and unjustifiable risk that his conduct 

would violate a fiduciary duty. Based on the foregoing, Harris committed 

defalcation in late March 2009 when he chose to use plan assets to pay himself and 

other corporate expenses instead of remitting those assets to HealthPartners. 

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CONCLUSION 

The Secretary respectfully requests that this Court affirm the bankruptcy 

court’s judgment and the BAP Court’s affirmance of that judgment, as Harris’s 

ERISA Judgment Debt is nondischargeable pursuant to 11 U.S.C. § 523(a)(4). 

Respectfully Submitted, 

NICHOLAS C. GEALE 

Acting Solicitor of Labor 

G. WILLIAM SCOTT 

Associate Solicitor 

for Plan Benefits Security 

THOMAS TSO 

Counsel for Appellate and Special 

Litigation 

/s/ Eirik Cheverud 

EIRIK CHEVERUD 

Trial Attorney 

Plan Benefits Security Division 

Office of the Solicitor 

U.S. Department of Labor 

200 Constitution Ave., NW, N-4611 

Washington, DC 20210 

202.693.5516 (t) | 202.693.5610 (f) 

cheverud.eirik.j@dol.gov 

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CERTIFICATE OF SERVICE
 

I hereby certify that a copy of the foregoing was filed electronically using 

the CM/ECF system, which will send notification of such filing to the following: 

JOHN D. LAMEY 

ELAINE D.W. WISE 

Lamey Law Firm, PA 

980 Inwood Avenue North 

Oakdale, MN 55128 

(651) 209-3550 

Attorneys for Appellant 

/s/ Eirik Cheverud 

EIRIK CHEVERUD 

Trial Attorney 

Plan Benefits Security Division 

Office of the Solicitor 

U.S. Department of Labor 

200 Constitution Ave., NW, N-4611 

Washington, DC 20210 

202.693.5516 (t) | 202.693.5610 (f) 

cheverud.eirik.j@dol.gov 

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CERTIFICATE OF COMPLIANCE
 

WITH FEDERAL RULE OF APPELLANTE PROCEDURE 32(a) AND
 

EIGHTH CIRCUIT LOCAL RULE 28A(h) 

1. This brief complies with the type-volume limitation of Federal Rule of 

Appellate Procedure 32(a)(7)(B) because: this brief contains 9,941 words, 

excluding the parts of the brief exempted by Federal Rule of Appellate Procedure 

32(a)(7)(B)(iii) 

2. This brief complies with the typeface requirements of Federal Rule of 

Appellate Procedure 32(a)(5) and the type style requirements of Federal Rule of 

Appellate Procedure 32(a)(6) because: this brief has been prepared in a 

proportionally spaced typeface using Microsoft Word 2010 in 14-point, Times 

New Roman font. 

3. This brief has been scanned for viruses and is virus-free. 

/s/ Eirik Cheverud 

Counsel for the Secretary 

April 19, 2017 

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