Opinion ID: 677824
Heading Depth: 3
Heading Rank: 2

Heading: Plaintiffs' Claim Under Sec. 515 of ERISA

Text: 29 We turn next to the liability of the individual Lollos under ERISA. Analysis of this issue is necessary because, in addition to recovery of unpaid union dues and pension contributions under Sec. 301 of the LMRA, plaintiffs claim the right to ERISA penalties on their judgment for the 1987 CBA claim. These statutory damages are only available in an action by a fiduciary for or on behalf of a plan to enforce section 1145 of this title in which a judgment in favor of the plan is awarded. 29 U.S.C. Sec. 1132(g)(2). Accordingly, the penalties, which include interest, liquidated damages, reasonable attorney's fees, and costs, are only available if Soracco, as a fiduciary of the Funds, obtains a favorable judgment under Sec. 1145. 30 We decide for the first time whether a corporate officer who assumes responsibility for his company's ERISA obligations as part of a collective bargaining agreement qualifies as an employer who is obligated to make contributions to a multiemployer plan as specified under Sec. 1145. Our prior cases have imposed individual liability for ERISA obligations only in those extraordinary cases where the defendant has committed fraud, as in Leddy, or acted in concert with a fiduciary to breach a fiduciary obligation, as in Diduck and Lowen v. Tower Asset Management, Inc., 829 F.2d 1209, 1220 (2d Cir.1987). See Sasso, 985 F.2d at 50-51. Although Soracco asserted a colorable claim of fraud in relation to the 1984 CBA, no such allegations have been made in connection with the 1987 CBA. Our analysis thus focuses solely on whether defendants are liable under the express terms of Sec. 1145. 31 In Massachusetts Laborers' Health & Welfare Fund v. Starrett Paving Corp., 845 F.2d 23, 25 (1st Cir.1988) (Breyer, J.), the First Circuit held that Sec. 1145 permits recovery only against those employers who are already obligated, in the absence of ERISA, to make ERISA contributions. We agreed with this interpretation in Sasso, see 985 F.2d at 50, and now reaffirm our endorsement of the First Circuit's reasoning. Looking at the plain language of Sec. 1145, then-Judge, now-Justice Breyer observed that the statute applied only to employers obligated to make contributions. Thus, he reasoned, the employer's obligation had to arise from a source other than ERISA since the existence of the obligation was a precondition to the duty arising under Sec. 1145. This interpretation is reinforced by the section's legislative history, which stated in a report produced by the Senate Committee on Labor that  '[t]he bill imposes a Federal statutory duty to contribute on employers that are already contractually obligated to make contributions to multiemployer plans.'  845 F.2d at 25 (quoting Staff of Senate Committee on Labor and Human Resources, 96th Cong., 2d Sess., The Multiemployer Pension Plan Amendments Act of 1980: Summary and Analysis of Consideration 44 (Comm.Print.1980)) (emphasis added by First Circuit); see also id. (quoting similar statement made in floor debate by chief sponsor in the House of Representatives). The First Circuit thus concluded, and we agree, that Sec. 1145 does not impose a duty to make pension contributions, even on one who qualifies as an employer under the general definition provided in 29 U.S.C. Sec. 1002(5), if the duty to contribute did not previously exist. 32 This principle accords with other cases finding corporate officers not liable for their companies' ERISA obligations in part because they did not assume personal responsibility for the contributions. See, e.g., Rockney v. Blohorn, 877 F.2d 637, 643 (8th Cir.1989) (Corporate officers could be personally liable under ERISA if the terms of the plan imposed such liability on them.); Scarbrough v. Perez, 870 F.2d 1079, 1083 (6th Cir.1989) ([T]here has been no showing that [defendant] ever personally assumed any obligation to make contributions to the plans on behalf of [his company].); International Bhd. of Painters v. George A. Kracher, Inc., 856 F.2d 1546, 1550 (D.C.Cir.1988) (There is nothing in the legislative history that suggests that Congress meant to expand that liability beyond parties who in a plan or collective bargaining agreement obligated themselves to make those contributions.). 33 Starrett Paving held that where the owner of a corporation had not himself promised to make the relevant pension contributions, and there was no allegation that he was the corporation's alter ego, there was no basis to hold him liable under Sec. 1145. 845 F.2d at 24-25. By contrast, in this case Jeffrey personally assumed the obligations of Lollo, Inc. As discussed earlier, by signing the 1987 CBA, Jeffrey became contractually obligated, wholly independently of ERISA, to make pension contributions. As such, he qualifies as an employer who is obligated to make contributions to a multiemployer plan under the terms of the plan or under the terms of a collectively bargained agreement pursuant to Sec. 1145, and is liable for Soracco's claim to enforce this obligation under 29 U.S.C. Sec. 1132, as well as for the statutory penalties available under that section. As we have ruled that there is no basis in the 1987 CBA for imposing personal liability on the other Lollo defendants, they do not qualify as employers already contractually obligated to make pension contributions and cannot be held liable under Sec. 1145. 34 While affirming the district court's holding on this claim, we remand so that the district judge may ensure that the ERISA penalties available under 29 U.S.C. Sec. 1132(g) were calculated only with reference to that portion of the judgment representing unpaid contributions. Defendants assert that ERISA penalties were calculated based on the entire amount awarded under the 1987 CBA, and there is no way for us to evaluate this statement since the judgment does not distinguish between monies owed to the Union under Sec. 301 of the LMRA and monies owed to the Funds under Sec. 515 of ERISA. We have considered the parties' remaining arguments and find them to be without merit.