Secretary United States Department of Labor v. Koresko

NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
______
Nos. 15-2470, 15-3141
______
SECRETARY UNITED STATES DEPARTMENT OF LABOR
v.
JOHN J. KORESKO, V.; JEANNE D. BONNEY;
PENN-MONT BENEFIT SERVICES, INC.;
KORESKO & ASSOCIATES, P.C.; KORESKO LAW FIRM, P.C.;
PENN PUBLIC TRUST; REGIONAL EMPLOYERS ASSURANCE LEAGUES
VOLUNTARY EMPLOYEES BENEFICIARY ASSOCIATION TRUST;
SINGLE EMPLOYER WELFARE BENEFIT PLAN TRUST
JOHN J. KORESKO, V,
Appellant
______
On Appeal from the United States District Court
for the Eastern District of Pennsylvania
(D.C. Civil No. 2-09-cv-00988)
District Judge: Honorable Mary A. McLaughlin
______
Submitted Pursuant to Third Circuit L.A.R. 34.1(a)
March 18, 2016
Before: CHAGARES, RESTREPO, and VAN ANTWERPEN, Circuit Judges
(Filed: April 5, 2016)
________
OPINION
________

This disposition is not an opinion of the full Court and pursuant to I.O.P. 5.7 does not
constitute binding precedent.
VAN ANTWERPEN, Circuit Judge
John J. Koresko, V (“Koresko”) appeals several rulings from the U.S. District
Court for the Eastern District of Pennsylvania regarding Appellee Secretary of Labor’s
(“Secretary”) enforcement action against Koresko and related entities for breach of
fiduciary duties under the Employee Retirement Income Security Act of 1974
(“ERISA”). The District Court found that Koresko breached fiduciary duties he owed to
employee welfare benefit plans under ERISA. We will affirm the following District
Court rulings: (1) the August 3, 2012 order granting partial summary judgment in favor
of the Secretary; (2) the September 16, 2013 order appointing a temporary independent
fiduciary; (3) the February 6, 2015 opinion imposing liability on Koresko for breach of
fiduciary duty; (4) the March 13, 2015 order imposing final judgment on Koresko; and
(5) the May 13, 2015 order denying Koresko’s motion for a new trial.1 We will also
dismiss Koresko’s appeal of the Court’s August 4, 2015 order appointing a permanent
independent fiduciary because we lack jurisdiction to review it.
I. INTRODUCTION
Since we write only for the benefit of the parties, we set forth only those facts
necessary to inform our analysis.2 This appeal arises out of a suit brought in March 2009
1
Koresko’s arguments on appeal do not discuss each of these rulings. To the extent
Koresko has not discussed why a particular ruling was improper, we deem him to have
abandoned and waived the issue on appeal. See Kost v. Kozakiewicz, 1 F.3d 176, 182 (3d
Cir. 1993).
2
by the Secretary against Koresko and several entities he controls in connection with a
multi-employer employee death benefit program. (App. 1184–88). Koresko and his
brother Lawrence Koresko ran an “unincorporated association of unrelated employers
called the Regional Employers Assurance Leagues” (“REAL,” “League”), which offered
employee welfare benefit plans, including death benefit plans, to employers through the
REAL Voluntary Employees’ Beneficiary Association (“REAL VEBA”) Trust. (Id. at
8).3 Participating employers executed an adoption agreement in order to join the League
and subscribe to the trusts. (Id. at 9); see, e.g., (id. at 465).4 In joining the League,
employers agreed to be bound by the governing documents including the Master Trust
Agreement, Plan Document, and their individual adoption agreement. (Id. at 9–10).
PennMont Benefit Services, Inc. (“PennMont”) was the administrator of the plans;
Koresko is the president and CEO of PennMont. (Id. at 11, 138). Employers who joined
the League could select the type and amount of benefits to offer and set eligibility
requirements for employees. (Id. at 9). Eligible employees of adopting employers could
2
The District Court conducted an extensive review of this case in granting the Secretary
partial summary judgment and in its opinion following a bench trial against Koresko.
(App. 8–22, 97–251).
3
This case also involves the Single Employer Welfare Benefit Plan Trust (“SEWBPT”),
which Appellant acknowledges is essentially identical to the REAL VEBA Trust. (App.
139); (Appellant’s Br. 7 n.1) (“The operative documents of the Trusts are essentially
identical, as are their structural arrangements.”). Our explanation of the REAL VEBA
Trust applies to the SEWBPT as well. The REAL VEBA Trust and SEWBPT are referred
to collectively as “trusts.”
4
The participating employers’ individual employee welfare benefit plans are referred to
herein as “plans.” The employers who joined the League and executed adoption
agreements are referred to as “adopting employers.”
3
then participate in the benefit program. (Id.). The trusts consisted of employer
contributions, which the adoption agreements require, and life insurance policies taken
out on the lives of participating employees to fund the benefits. (Id.). Benefits were then
paid according the adopting employers’ individual adoption agreement and the governing
documents for the trust. (Id. at 9–10).
The suit brought by the Secretary was against Koresko, several companies he
owned, the trusts, an employee of Koresko, and the trustees. (Id. at 1185–88). The
Secretary alleged a breach of fiduciary duties with respect to many individual employee
welfare benefit plans. (Id. at 1195–202). In August 2012, the U.S. District Court for the
Eastern District of Pennsylvania (McLaughlin, J.), granted the Secretary partial summary
judgment with respect to three specific plans. (Id. at 81–82). The Court proceeded to
remove Koresko from his positions of authority with respect to the trusts, and appointed a
temporary independent fiduciary to administer the plans and trusts in September 2013.
(Id. at 1448–455). The District Court then conducted a three-day bench trial that
concerned additional employee welfare benefit plans. This resulted in a memorandum
opinion in February 2015 that detailed Koresko’s violations of ERISA. (Id. at 97–322).5
The Court found that at least 419 employee welfare benefit plans were ERISA-covered
plans. (Id. at 156, 257).6 The Court entered judgment in accordance with this opinion in
5
The nature of Koresko’s breach of fiduciary duties is not at issue on appeal, therefore
we will not discuss the extent of his ERISA violations.
6
As discussed infra, under federal regulations, employee welfare benefit plans in which
there are no non-owner employees are exempt from ERISA coverage. 29 C.F.R. §
2510.3-3(b). Therefore, this calculation is based on the number of plans the District Court
4
March 2015, ordering the permanent removal of the fiduciaries. (Id. at 323–28). The
Court also ordered Koresko to pay restitution and disgorgement of the remaining diverted
assets. (Id. at 323). Koresko’s motion for a new trial was denied by the Court in May
2015. (Id. at 329). Koresko timely appealed. (Id. at 1).7
After Koresko appealed the Court’s March 2015 order, the Court issued an order
on August 4, 2015 appointing a permanent independent fiduciary. (Id. at 1621–22). In
addition to appointing a permanent independent fiduciary, the Court required that
Koresko bear the costs of the fiduciary’s appointment. (Id. at 1631). The Court stated:
“[h]ad the Koresko Defendants complied with their fiduciary duties, there would be no
need to appoint an Independent Trustee in this case.” (Id.). The costs of the appointment
would initially be paid from trust assets. (Id.). The Court retained jurisdiction in order to
enforce the order and explained that it would “issue a separate order specifying the total
amount the Koresko Defendants are liable to the Plans to restore on account of this
appointment.” (Id.). Appellant also appeals this order. (Id. at 1616).
II. AFFIRMANCE DISCUSSION8
found that included at least one non-owner employee. (App. 156). The Court concluded
that the plans at issue in this case are employee welfare benefit plans governed by ERISA
and that Koresko was a fiduciary with respect to these plans. (Id. at 99–100).
7
Koresko is the only party appealing.
8
The District Court had jurisdiction under 29 U.S.C. § 1132(e)(1). We have jurisdiction
pursuant to 28 U.S.C. § 1291. “Our review of the district court’s interpretation of ERISA
is plenary, while the district court’s findings of fact are reviewed for clear error.” Mack
Boring & Parts v. Meeker Sharkey Moffitt, Actuarial Consultants of N.J., 930 F.2d 267,
270 (3d Cir. 1991) (citations omitted).
5
Appellant argues on appeal that the District Court erred by finding that: (A) trust
assets are plan assets for purposes of ERISA application; (B) a 2009 amendment to the
Plan Document eliminating non-owner employees was invalid; (C) Koresko was not
entitled to an advancement of defense costs; and (D) Koresko must restore the alleged
depletion of assets of the trusts. We reject all of these arguments for the following
reasons.
A. Trust assets are ERISA plan assets
“ERISA is a comprehensive statute designed to promote the interests of employees
and their beneficiaries in employee benefit plans.” Edwards v. A.H. Cornell & Son, Inc.,
610 F.3d 217, 220 (3d Cir. 2010) (quoting Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 90
(1983)) (internal quotation marks omitted). ERISA applies to “employee benefit plans,”
which may be either employee pension benefit plans or employee welfare benefit plans.
29 U.S.C. § 1002(3). This case involves employee welfare benefit plans, which the
statute defines as:
[A]ny plan, fund, or program which was heretofore or is hereafter
established or maintained by an employer or by an employee organization,
or by both, to the extent that such plan, fund, or program was established or
is maintained for the purpose of providing for its participants or their
beneficiaries, through the purchase of insurance or otherwise . . . benefits in
the event of . . . death . . . .
Id. § 1002(1). The District Court concluded that the master REAL VEBA plan, a multi-
employer program, is not a “plan” under ERISA. (App. 26). However, the Court found
6
that individual employer-level plans joining the master REAL VEBA plan are ERISA
plans. (Id. at 27). 9
We must decide whether the employer-level plans are ERISA plans in order to
determine whether or not Koresko owed fiduciary duties to these plans. ERISA “defines
‘fiduciary’ not in terms of formal trusteeship, but in functional terms of control and
authority over the plan.” Mertens v. Hewitt Assocs., 508 U.S. 248, 262 (1993). The statute
provides that “a person is a fiduciary with respect to a plan to the extent (i) he exercises
any discretionary authority or discretionary control respecting management of such plan
or exercises any authority or control respecting management or disposition of its assets.”
29 U.S.C. § 1002(21)(A)(i). In other words, a person may be a fiduciary with respect to a
plan even if the person is not named as a fiduciary in plan documents, “to the extent . . .
he . . . exercises any authority or control respecting management or disposition of its
assets.” Sec’y of Labor v. Doyle, 675 F.3d 187, 200 (3d Cir. 2012) (alterations in original)
(quoting 29 U.S.C. § 1002(21)(A)(i)) (internal quotation marks omitted). We recognize
the difference between the two clauses set forth above in 29 U.S.C. § 1002(21)(A)(i),
“that discretion is specified as a prerequisite to fiduciary status for a person managing an
ERISA plan, but the word ‘discretionary’ is conspicuously absent when the text refers to
assets.” Srein v. Frankford Trust Co., 323 F.3d 214, 221 (3d Cir. 2003) (quoting Bd. of
Trs. of Bricklayers & Allied Craftsmen Local 6 of N.J. Welfare Fund v. Wettlin Assocs.,
Inc., 237 F.3d 270, 273 (3d Cir. 2001)) (hereinafter Bricklayers). We have emphasized
9
The Court also found that the plans of adopting employers who joined the SEWBPT
were ERISA plans. (App. 252).
7
this distinction, “[n]oting that the ‘statute treats control over the cash differently from
control over administration’ . . . [and] that ‘any control over disposition of plan money
makes the person who has the control a fiduciary.’” Bricklayers, 237 F.3d at 273 (quoting
IT Corp. v. Gen. Am. Life Ins. Co., 107 F.3d 1415, 1421 (9th Cir. 1997)).
The Secretary has primarily relied on the second clause of § 1002(21)(A)(i) to
argue that Koresko is a fiduciary, even though he lacked discretionary authority or
control over management of the plans and he was not named a fiduciary in the plan
documents. The District Court found, and the parties do not dispute, that Koresko
exercised control over the disposition of the assets of the individual employer-level plans.
(App. 61–67, 269–70). As explained above, this basis for attaching fiduciary status is
authority or control over “plan assets,” therefore, fiduciary status attaches to Koresko to
the extent of the employer-level ERISA plans’ assets. See Doyle, 675 F.3d at 200. In
order to find that Koresko violated his fiduciary duties in this case, we must determine
that the plans’ assets include the assets in the master trusts.
1. Determination of plan assets
“The term ‘plan assets’ is not comprehensively defined in ERISA or in the
Secretary’s regulations.” Id. at 203. ERISA provides that “‘plan assets’ means plan assets
as defined by such regulations as the Secretary may prescribe.” 29 U.S.C. § 1002(42).
These regulations “define the scope of ‘plan assets’ in two specific contexts: (1) where an
employee benefit plan invests assets by purchasing shares in a company, 29 C.F.R.
§ 2510.3–101, and (2) where contributions to a plan are withheld by an employer from
employees’ wages, 29 C.F.R. § 2510.3–102.” Doyle, 675 F.3d at 203. The second
8
regulation does not apply in this case, and while the District Court relied primarily on
property rights in its analysis, the Court’s conclusion “found support” in the first
regulation, discussed infra. (App. 59–60, 264–65).
The District Court relied on “ordinary notions of property rights under non-ERISA
law” to determine plan assets, an approach we set forth in Secretary of Labor v. Doyle.
675 F.3d at 203; (App. 50, 263); see In Re Luna, 406 F.3d 1192, 1199 (10th Cir. 2005)
(approving this approach by explaining that “the definition of ‘asset,’ . . . is that the
person or entity holding the asset has an ownership interest in a given thing, whether
tangible or intangible”). We explained that this approach is consistent with guidance
provided by the Secretary that “the assets of a plan generally are to be identified on the
basis of ordinary notions of property rights under non-ERISA law. In general, the assets
of a welfare plan would include any property, tangible or intangible, in which the plan
has a beneficial ownership interest.” Doyle, 675 F.3d at 203 (quoting Department of
Labor, Advisory Op. No. 93–14A, 1993 WL 188473, at *4 (May 5, 1993)) (internal
quotation marks omitted). The Eighth Circuit has expanded on the term “beneficial
interest” by approving the Secretary’s explanation set forth in a Department of Labor
opinion letter:
Whether a plan has acquired a beneficial interest in particular funds
depends on “whether the plan sponsor expresses an intent to grant such a
beneficial interest or has acted or made representations sufficient to lead
participants and beneficiaries of the plan to reasonably believe that such
funds separately secure the promised benefits or are otherwise plan assets.”
Kalda v. Sioux Valley Physician Partners, Inc., 481 F.3d 639, 647 (8th Cir. 2007)
(quoting Department of Labor, Advisory Op. No. 94–31A, 1994 WL 501646, at *3 (Sept.
9
9, 1994)). We agree with the Eighth Circuit that this agency interpretation is entitled to
some deference. See Skidmore v. Swift & Co., 323 U.S. 134, 140 (1944).
In relying on ordinary notions of property rights to determine whether the plan has
acquired a beneficial interest in particular funds, we begin by “consult[ing] the
documents establishing and governing the plan.” Doyle, 675 F.3d at 204. “[T]hen, in light
of these documents, [we] consult contracts to which the plan is a party or other
documents establishing the rights of the plan.” Id. The District Court properly considered
the Plan Document, the Master Trust Agreement, and applicable adoption agreements,
which established and governed the individual employer-level plans when they joined the
trusts. (App. 51–52, 264). These documents make clear that legal title to the trust is
vested in the trustee only. For example, the Master Trust Agreement to the REAL VEBA
trust provides:
Title to the Trust Fund shall be vested in and remain exclusively in the
Trustee and neither the Adopting Employer, Advisory Committee Plan
Administrator, nor any employee, or his or her decedents or beneficiaries
shall have any right, title or interest therein or thereto. Participation in the
Plan and this Trust shall not give any employee, beneficiary or any other
Person, any right or interest in the Plan or this Trust other than as herein
provided.
(Id. at 1117). Neither the plans, the employers, nor the beneficiaries may claim legal title
over the trust property, which consists of the employer contributions and life insurance
contract proceeds.
This is where Appellant disagrees with the District Court’s approach, as Appellant
contends “the question was—or should have been—answered: the Trustee owns the
assets in the Trust and the employer-level plans have no interest therein.” (Appellant’s
10
Br. 16). The Court, however, found that “the inquiry does not end there,” and continued
to find that “[a]lthough the documents do not confer legal title to the REAL VEBA trust
assets on the Plans, they manifest an intent to confer a beneficial interest on participating
plans.” (App. 52). As explained above, welfare plan assets include property in which the
plan has a beneficial ownership interest. Doyle, 675 F.3d at 203. The District Court found
that “the assets in the REAL VEBA Trust are held in trust for the exclusive benefit of the
participating employees and beneficiaries of employers that adopt the REAL VEBA
benefit arrangement.” (App. 53–54); see also (id. at 265) (“Because the 419 covered
plans have an undivided beneficial interest, that means they have an interest in all of the
assets in the REAL VEBA or SEWBP Trust . . . .”).
We agree with the District Court and rely on ordinary notions of property and trust
law. While trustees have legal title and a non-beneficial interest in trust assets,
beneficiaries of a trust have an equitable or beneficial interest. “A trust may be defined as
a fiduciary relationship in which one person holds a property interest, subject to an
equitable obligation to keep or use that interest for the benefit of another.” Amy Morris
Hess, George Gleason Bogert & George Taylor Bogert, Bogert’s Trusts and Trustees,
The Law Of Trusts and Trustees § 1 (2015); see In re Columbia Gas Sys. Inc., 997 F.2d
1039, 1059 (3d Cir. 1993) (“[T]he classic definition of a trust [is that] the beneficiary has
an equitable interest in the trust property while legal title is vested in the trustee.”);
Restatement (Third) of Trusts § 42 (explaining that the trustee has a “non-beneficial
interest” in the trust assets). The governing documents make clear that employees as plan
participants are to be considered beneficiaries under the master plan. The Master Trust
11
Agreement for the REAL VEBA trust provides that “[t]he Trustee will hold the funds
contributed to it by the League in a fiduciary capacity for the benefit of all Employees
covered under the Plan.” (App. 1113); see (id. at 1127) (similar language in the Master
Trust Agreement for the SEWBPT). The Master Trust Agreement continues:
This trust is established . . . for the purpose of receiving contributions of the
Adopting Employers and their employees to provide . . . benefits to the
employees and beneficiaries hereunder or payment of insurance premiums
or making such other similar payments pursuant to the terms of the Plan.
All contributions, and all assets and earnings of the Trust are solely the net
earnings of the Trust and shall not in any manner whatsoever inure to the
benefit of any person other than a Person designated as an employee or
beneficiary of an Adopting Employer under the terms of the Plan.
(Id. at 1115); see (id. at 1128) (similar language in the Master Trust Agreement of the
SEWBPT); see also (id. at 54) (providing other examples in the plan documents “that the
trust corpus and income shall be used for the exclusive benefit of participating employees
and their beneficiaries”). Furthermore, the qualification in the Master Trust Agreement
for the REAL VEBA Trust, that “[p]articipation in the Plan . . . shall not give any
employee, beneficiary or any other Person, any right or interest in the Plan . . . other than
as herein provided” allows these interests to exist. (Id. at 1117) (emphasis added).
Therefore, we agree that the employees and plan participants have a beneficial interest in
the trusts.
Appellant argues that while employer-plan participants may be beneficiaries under
the trust, the employer-level plans themselves are distinct from plan participants and have
no interest, beneficial or otherwise, in the trust. (Appellant’s Br. 17–18); (quoting
Merrimon v. Unum Life Ins. Co. of Am., 758 F.3d 46, 56 (1st Cir. 2014)) (“It is the
12
beneficiary, not the plan itself, who has acquired an ownership interest in the assets . . .
.”). Appellant’s argument that employer-level plans do not have a beneficial interest in
the trusts’ assets directly contradicts guidance from the Department of Labor. The
Secretary has issued opinion letters discussing the extent to which trust assets may be
considered ERISA plan assets:
In the Department's view, a plan obtains a beneficial interest in particular
property if, under common law principles, the property is held in trust for
the benefit of the plan or its participants and beneficiaries, or if the plan
otherwise has an interest in such property on the basis of ordinary notions
of property rights. Further, whether a plan has acquired a beneficial interest
in definable assets depends, largely, on whether the plan sponsor has
expressed the intent to grant such a beneficial interest or has acted or made
representations sufficient to lead participants and beneficiaries of the plan
reasonably to believe that such funds separately secure the promised
benefits or are otherwise plan assets. The identification of plan assets
therefore requires consideration of any contract or other legal instrument
involving the plan, as well as the actions and representations of the parties
involved.
Department of Labor, Advisory Op. No. 99-08A, 1999 WL 343509, at *3 (May 20, 1999)
(footnote omitted). The first sentence in the paragraph above from this opinion letter is
particularly applicable: “a plan obtains a beneficial interest in particular property”—that
is, the employer-level employee welfare plans obtain a beneficial interest in the trust
property—“if, under common law principles, the property is held in trust for the benefit
of the plan or its participants and beneficiaries.” Id. (emphasis added). It is clear based
on the governing documents that the property in the trusts is for the benefit of the plans’
participants and beneficiaries. Therefore, the plans have a beneficial interest in trust
property. The Secretary did not distinguish property held in trust for the benefit of the
plan itself from property held in trust for the plans’ participants and beneficiaries.
13
Appellant’s proffered distinction reads as a rather transparent attempt to evade ERISA
liability. Such liability would also seem applicable here considering Appellant has
previously represented that ERISA governs the trust.10 Because the employees have a
beneficial interest in the trust, we believe the employer-level plans, in which employees
are plan participants, also have a beneficial interest in the trust property.
2. 29 C.F.R. § 2510.3–101(h)(2)
We agree with the District Court’s analysis that this regulation supports the
conclusion that the employer-level plans include trust assets. The regulation provides:
When a plan acquires or holds an interest in any entity (other than an
insurance company licensed to do business in a State) which is established
or maintained for the purpose of offering or providing any benefit described
in section 3(1) or section 3(2) of the Act to participants or beneficiaries of
the investing plan, its assets will include its investment and an undivided
interest in the underlying assets of that entity.
29 C.F.R. § 2510.3–101(h)(2). Comments to this regulation state that “assets of
entities . . . that are established for the purpose of providing benefits to participants of
investing plans would include plan assets. This provision was intended to apply primarily
10
The District Court noted that while it did not base its decision on judicial estoppel,
Koresko has successfully argued before the U.S. District Court for the Eastern District of
Pennsylvania that a “similar or identical employee benefit arrangement” was a welfare
benefit plan governed by ERISA. (App. 35 n.15); see REAL VEBA Trust v. Sidney
Charles Mkts., Inc., No. 01-4693, 2006 WL 2086761, at *1–3, *6 (E.D. Pa. July 21,
2006). Although Koresko argued in this case to the District Court that the REAL VEBA
trust is distinguishable, the Court did “not see how the issue of ERISA coverage differs
between the two cases.” (App. 35 n.15). In addition, the record includes a summary plan
description which a participating employer gave to employee participants that states:
“This Plan is covered by the Employee Retirement Income Security Act of 1974
(“ERISA”) which was designed to protect employees’ rights under benefit plans.” (App.
1157). These representations suggest that Koresko originally understood that these plans
were properly governed by ERISA.
14
to so-called ‘multiple employer trusts.’” Final Regulation Relating to the Definition of
Plan Assets, 51 Fed. Reg. 41262-01, 41263 (Nov. 13, 1986). This regulation is not
directly on point, as there is no indication that employers joined the trust or established
employer-level plans for the purpose of investing assets. See Doyle, 675 F.3d at 203(describing this regulation as “where an employee benefit plan invests assets by
purchasing shares in a company”) (citing 29 C.F.R. § 2510.3–101).
The purpose behind the regulation and the provided example of its application,
discussed below, are relevant and insightful to our analysis. The regulation appears
concerned with complex arrangements, usually investments, in which the manager of a
welfare plan would no longer owe fiduciary duties to the plan because the investment
structure positions him to be in an indirect relationship to the plan. Final Regulation
Relating to the Definition of Plan Assets, 51 Fed. Reg. at 41263. It would frustrate the
“broad functional definition of ‘fiduciary’ in ERISA if persons who provide services that
would cause them to be fiduciaries if the services were provided directly to plans are able
to circumvent the fiduciary responsibility rules of the Act by the interposition of a
separate legal entity between themselves and the plans.” Id. The regulation itself provides
the following example:
A medical benefit plan, P, acquires a beneficial interest in a trust, Z, that is
not an insurance company licensed to do business in a State. Under this
arrangement, Z will provide the benefits to the participants and
beneficiaries of P that are promised under the terms of the plan. Under
paragraph (h)(2), P's assets include its beneficial interest in Z and an
undivided interest in each of its underlying assets. Thus, persons with
discretionary authority or control over the assets of Z would be fiduciaries
of P.
15
29 C.F.R. § 2510.3–101(j)(12). Despite the fact that this example presupposes that the
plan acquires a beneficial interest in a trust, the explanation is unmistakably clear that
where a trust provides benefits to participants and beneficiaries of a plan, “persons with
discretionary authority or control over the assets of [the trust] would be fiduciaries of [the
plan].” Id. Koresko had control over the disposition of plan assets, and undoubtedly the
trust provides benefits to participants and beneficiaries of the employer-level plans. The
interposition of a multi-employer trust, in which legal title is held by the trustee, does not
serve to divest Koresko of his fiduciary responsibilities to beneficiaries of the trust.
This Court has established that if an ERISA plan has a beneficial interest in
property, this interest is sufficient to render the property “plan assets” under ERISA.
Doyle, 675 F.3d at 200. The distinction Koresko advances between the plan itself and its
beneficiaries contradicts persuasive authority from the Secretary and frustrates the broad
functional definition of “fiduciary.” See Edmonson v. Lincoln Nat’l Life Ins. Co., 725
F.3d 406, 413 (3d Cir. 2013) (“The definition of a fiduciary under ERISA is to be broadly
construed.”). For the foregoing reasons we agree with the District Court that the
individual employer-level employee welfare benefit plans have a beneficial interest in the
trusts, and therefore the assets of the trusts are “plan assets” within the meaning of
ERISA.
B. The 2009 Amendment
16
The governing documents of the plans allow the League, “in its sole discretion,” to
amend the Plan Document. (App. 454).11 The League in turn is REAL, the fictitious
entity consisting of Koresko and Lawrence Koresko, which adopting employers join in
adopting the plan. (Id. at 139, 1114). Appellant argues that the 2009 REAL VEBA and
SEWBPT Amendment of Trust and Incorporated Plan Documents (“2009 Amendment”)
eliminated benefits to non-owner employees, and therefore the employer-level plans were
no longer covered by ERISA. (Appellant’s Br. 21–22); see (App. 1216–17). We agree
with the District Court and hold that the 2009 Amendment was invalid.
As previously noted, federal regulations provide that an “employee benefit plan”
under ERISA does not include “any plan, fund or program . . . under which no employees
are participants covered under the plan.” 29 C.F.R. § 2510.3-3(b); see also Yates v.
Hendon, 541 U.S. 1, 21 (2004) (“Plans that cover only sole owners or partners and their
spouses, the regulation instructs, fall outside [ERISA’s] domain.”).12 The 2009
Amendment provides: “No benefits shall be paid to or on account of any claimant,
person, participant, or former participant . . . classified as a non-owner-employee, or to
any beneficiary of any such [non-owner employee].” (App. 1216). Appellant argues that
because the plans no longer have any non-owner employees, they cannot be governed by
11
The Plan Document “governs the benefit arrangement” and is incorporated by each
adopting employer. (App. 9, 141).
12
This regulation also provides “[a]n individual and his or her spouse shall not be
deemed to be employees with respect to a trade or business . . . which is wholly owned by
the individual or by the individual and his or her spouse.” 29 C.F.R. § 2510.3-3(c)(1).
Some of the plans at issue in this case were determined by the District Court to not be
governed by ERISA because of this regulation. (App. 153–56).
17
ERISA. Nevertheless, the District Court found “undisputed record evidence” that each of
the plans at issue originally included at least one non-owner employee. (Id. at 36).
The District Court provided two reasons why the 2009 Amendment was invalid.
First, the Court found that Koresko, Lawrence Koresko, and PennMont lacked authority
to amend the plan under its governing documents. (Id. at 37–39). Second, the Plan
Document prohibited the 2009 Amendment by disallowing amendments that create
discrimination in favor of highly compensated employees, officers, or stockholders. (Id.
at 39). The Court supported its conclusion with a policy argument, that it would be
inconsistent with the purposes of the statute to allow an ERISA-covered employee
welfare benefit plan to avoid enforcement of ERISA provisions by issuing a subsequent
amendment. (Id. at 40).
Appellant rebuts the District Court’s findings and argues that the 2009
Amendment was properly executed. We agree with both of the District Court’s findings
and therefore determine that the 2009 Amendment was invalid.
ERISA requires that employee welfare benefit plans “be established and
maintained pursuant to a written instrument.” 29 U.S.C. § 1102(a)(1). The written
employee benefit plan must “provide a procedure for amending such plan, and for
identifying the persons who have authority to amend the plan.” Id. § 1102(b)(3).
“Employers or other plan sponsors are generally free under ERISA, for any reason at any
time, to adopt, modify, or terminate welfare plans.” Curtiss-Wright Corp. v.
Schoonejongen, 514 U.S. 73, 78 (1995). However, “whatever level of specificity a
company ultimately chooses, in an amendment procedure or elsewhere, it is bound to that
18
level.” Id. at 85. “[A]n amendment is ineffective if it is inconsistent with the governing
documents.” Depenbrock v. Cigna Corp., 389 F.3d 78, 82 (3d Cir. 2004) (citing
Delgrosso v. Spang & Co., 769 F.2d 928, 935–36 (3d Cir. 1985)); see also Confer v.
Custom Eng’g Co., 952 F.2d 41, 43 (3d Cir. 1991) (“Only a formal written amendment,
executed in accordance with the Plan’s own procedure for amendment, could change the
Plan.”).
1. Lack of Authority
Regarding the District Court’s first finding, we agree that Koresko, his brother
Lawrence, and PennMont lacked authority to amend the plans. Appellant acknowledges
that the governing documents allow the League to amend the plans. (Appellant’s Br. 22)
(citing App. 454). Appellant continues that the Master Trust Agreement defines “League”
as “REAL” and he signed the amendment “as Attorney in Fact for all Participating
Employers.” (Id.); (App. 1114, 1221). The argument follows that because Koresko signed
on behalf of the participant employers, the participant employers are collectively REAL,
and the Master Trust Agreement defines “League” as “REAL”—Koresko was authorized
to sign the 2009 Amendment. Our rejection of this convoluted argument does not
“elevate[] form over substance.” (Appellant’s Br. 23). Rather, Koresko’s argument
ignores the unambiguous language of the governing documents. The League “in its sole
discretion” may amend the Plan Document. (App. 37, 454). The 2009 Amendment was
an amendment to the benefit structure in the Plan Document. (Id. at 1216–17). With the
number of related entities and organizations in this case and under the governing
documents, it is essential that amendments to the plan be executed specifically as
19
authorized under the governing documents. The governing documents simply do not
authorize Koresko as attorney in fact for all participating employers to amend the plan.13
Similarly, the governing documents do not allow PennMont or Lawrence Koresko
to amend the Plan Document.14 Appellant argues that provisions in the governing
documents delegate League authority to PennMont as Plan Administrator, “for
administering the Plan” and “for plan administrative services.” (Appellant’s Br. 23–24)
(citing App. 460, 1122); (App. 1131). This argument fails as none of the provisions
delegating authority to PennMont include authorization to amend the plan. The role of
plan administrator or the delegation of plan administrative services does not
automatically entail the authority to amend the plan. See Varity Corp. v. Howe, 516 U.S.
489, 505 (1996) (stating “it may be true that amending or terminating a plan (or a
common-law trust) is beyond the power of a plan administrator (or trustee)—and,
therefore, cannot be an act of plan ‘management’ or ‘administration’”); accord Bins v.
13
The Plan Document also allows employers “the right to amend the [b]enefit structures
in [the plans] from time to time, and to amend or cancel any such amendments.” (App.
454). Koresko does not argue that his authority to amend the plan stems from this
provision despite the fact that he signed “as attorney in fact for all participating
employers.” (Id. at 1221). Therefore, we deem him to have waived reliance on this
provision. See Kost, 1 F.3d at 182. Even if he had properly raised this argument,
however, the Plan Document allows employers, and not the attorney in fact for all
participating employers, the right to amend the benefit structures in the plans. (Id. at 454,
1221); see Curtiss-Wright Corp., 514 U.S. at 85 (“[W]hatever level of specificity a
company ultimately chooses, in an amendment procedure or elsewhere, it is bound to that
level.”).
14
Although PennMont is authorized to amend the Master Trust Agreement for the
SEWBPT, the 2009 Amendment eliminating non-owner employees is specifically an
amendment to the Plan Document. (App. 1137, 1216). The Plan Document does not
allow PennMont to amend its terms.
20
Exxon Co. U.S.A., 220 F.3d 1042, 1053 (9th Cir. 2000) (“The act of amending, or
considering the amendment of, a plan is beyond the power of a plan administrator and
thus is not an act of plan management or administration.”). The governing documents,
both in describing the Plan Administrator’s duties and in specifying amendment
procedures, do not provide PennMont with the authority to amend the plans. Further,
Appellant’s argument that his brother Lawrence was authorized to amend the plan
because he was “the League” is insufficient. (Appellant’s Reply Br. 4). Lawrence
Koresko did not sign on behalf of the League and did not mention the League in
executing the amendment, therefore he also lacked authority to amend the Plan
Document.
2. Discriminatory Amendment
We also agree with the District Court’s second finding that the Plan Document
prohibits this type of amendment. The Plan Document provides: “no amendment shall . . .
[c]reate or effect any discrimination in favor of Participants who are highly compensated,
who are officers or [sic] the Employer, or who are stockholders of the Employer.” (App.
454–56). The District Court found that eliminating non-owner employees from benefits
violates this prohibition. (Id. at 39–40). Appellant does not dispute that the 2009
Amendment violates this provision. Rather, Appellant argues that this provision was
intended to exempt the arrangement from federal income tax, and that the plan sponsor
may choose at any time to terminate tax-exempt status and become a taxable
organization. (Appellant’s Br. 24–25).
21
Appellant’s argument ignores the importance of adhering to procedures for
amending a plan. The Secretary is correct that in order for Koresko’s argument to
succeed, he would have had to show that he amended the plan to remove this provision
before executing the 2009 Amendment, “otherwise, the discrimination provision remains
in conflict with [the 2009 Amendment].” (Appellee’s Br. 35). The 2009 Amendment did
not specifically eliminate the original provision or mention the original plan provision,
but it directly conflicts with the original provision. In adhering to the governing
documents and the amendment procedure set forth, the 2009 Amendment is invalid
because it is inconsistent with the anti-discrimination clauses for future amendments.
We need not delve into the District Court’s public policy arguments having found
two reasons why the 2009 Amendment was invalid. We do note that the Supreme Court
has articulated a purpose behind having written procedures govern making amendments
to an ERISA plan: “such a requirement increases the likelihood that proposed plan
amendments, which are fairly serious events, are recognized as such and given the special
consideration they deserve.” Curtiss-Wright Corp., 514 U.S. at 82. Given the seriousness
of plan amendments and the explicit directions in the applicable governing documents,
we have little difficulty in holding that the 2009 Amendment is invalid because it was
executed without proper authority and is in conflict with existing plan provisions.15
15
We agree with the District Court that it is troubling that Koresko sought to avoid
application of ERISA through this amendment. (App. 40 n.18) (“John Koresko admitted
at oral argument that one purpose of the [2009] [A]mendment, which he authored, was to
avoid application of ERISA.”). While we acknowledge that a plan sponsor may amend or
terminate an ERISA-covered plan, the termination of a plan through an amendment must
follow the plan’s amendment procedures. See Hozier v. Midwest Fasteners, Inc., 908
22
C. Denial of defense costs
Appellant next contends that the District Court fundamentally erred and violated
indemnification provisions set forth in the governing documents by denying him the
advancement of defense costs. (Appellant’s Br. 27–28). On September 16, 2013, the
Court ordered that the trusts were barred from advancing defense costs to Koresko. (App.
1455). Koresko maintains this violates indemnification provisions in the governing
documents. The Master Trust Agreements for the REAL VEBA Trust and SEWBPT
provide indemnification for legal fees and expenses, “in advance, unless it is alleged and
until it is conclusively determined that such Claims arise from the Trustee’s own
negligence or willful breach of its obligations specifically undertaken pursuant to this
Agreement.” (Id. at 1120, 1136). Although the Secretary argues that the partial grant of
summary judgment and subsequent bench trial “conclusively determined” that the claims
arose from Koresko’s breach of fiduciary duties, we do not rely on this basis to affirm
this part of the District Court’s order. (Appellee’s Br. 37); (App. 1120, 1136).
We agree with the District Court that this indemnification provision, or Koresko’s
reliance on this provision to seek plan assets for advancement costs, is in violation of
ERISA. The statute provides that “any provision in an agreement or instrument which
F.2d 1155, 1162 (3d Cir. 1990) (explaining that employers do not have “unfettered
discretion to amend or terminate plans at will”). In distinguishing Delgrosso v. Spang &
Co., 769 F.2d at 935–36, a case in which we held that a company breached its fiduciary
duty by failing to administer a plan pursuant to the governing documents, we noted in
Hozier that “the particular amendment at issue in Delgrosso was invalid under the terms
of the unamended plan’s governing documents.” Hozier, 908 F.2d at 1161 n.6.
Appellant’s reliance on Hozier for the proposition that he could decide at any time to
terminate an ERISA plan is therefore unwarranted.
23
purports to relieve a fiduciary from responsibility or liability for any responsibility,
obligation, or duty under this part shall be void as against public policy.” 29 U.S.C.
§ 1110(a). The Department of Labor has interpreted this statute to
render[] void any arrangement for indemnification of a fiduciary of an
employee benefit plan by the plan. Such an arrangement would have the
same result as an exculpatory clause, in that it would, in effect, relieve the
fiduciary of responsibility and liability to the plan by abrogating the plan's
right to recovery from the fiduciary for breaches of fiduciary obligations.
29 C.F.R. § 2509.75-4 (interpretive bulletin). Indemnification provisions are allowed if
they “merely permit another party to satisfy any liability incurred by the fiduciary,” such
as liability insurance. Id. Plan indemnification provisions that allow the plan to
indemnify a fiduciary are considered void. See Johnson v. Couturier, 572 F.3d 1067,
1079–80 (9th Cir. 2009) (“Thus, ‘[i]f an ERISA fiduciary writes words in an instrument
exonerating itself of fiduciary responsibility, the words, even if agreed upon, are
generally without effect.’”) (alteration in original) (quoting IT Corp., 107 F.3d at 1418);
Perelman v. Perelman, 919 F. Supp. 2d 512, 523 (E.D. Pa. 2013) (explaining that the
indemnification provision does not violate ERISA because “it permits the Trustee to seek
indemnification only from the employer and does not permit indemnification by the
Plan”).
Appellant urges this Court to follow Harris v. GreatBanc Trust Co., No.
EDCV12-1648-R (DTBx), 2013 WL 1136558 (C.D. Cal. Mar. 15, 2013). In Harris, the
court found an indemnification agreement valid under ERISA because it expressly
prohibited indemnification if a court entered a final judgment from which no appeal
could be taken finding breach of fiduciary duties. Id. at *3. Appellant argues the same
24
result as in Harris should apply here, because the Master Trust Agreement provides for
indemnification “unless it is alleged and until it is conclusively determined that such
Claims arise from the Trustee’s own negligence or willful breach of its obligations
specifically undertaken pursuant to this Agreement.” (Appellant’s Br. 29–30) (citing
App. 1120, 1136). Thus, Appellant argues that the indemnification provision complies
with ERISA because it similarly does not allow for indemnification if Appellant is found
to have violated fiduciary duties.
In addition to not being binding authority, the indemnification provision in Harris
is distinguishable. In Harris, the provision required Sierra Aluminum, the sponsor of an
employee stock ownership plan, to indemnify GreatBanc, the trustee of the plan. 2013
WL 1136558, at *1. This did not violate ERISA because, as discussed above, per
guidance from the Department of Labor, indemnification provisions that “merely permit
another party to satisfy any liability incurred by the fiduciary” are permissible. 29 C.F.R.
§ 2509.75-4. The Department of Labor allows a trustee to seek indemnification from
another party, as long as the indemnification does not come from the plan itself. Unlike in
Harris, in this case, Koresko was seeking advancement costs from the plans themselves,
not another party. This would effectively “abrogate[e] the plan's right to recovery from
the fiduciary for breaches of fiduciary obligations.” Id. Although Koresko could have
relied on liability insurance or indemnification through another party, he could not rely
on plan assets to front his legal costs. We agree with the District Court order denying
Koresko from relying on plan assets to cover his litigation costs as a proper interpretation
of 29 U.S.C. § 1110 and 29 C.F.R. § 2509.75-4.
25
D. Damages analysis
Koresko contends that the District Court’s damages analysis was “legally
unsupportable.” (Appellant’s Br. 32). He argues that he should only be required “to
restor[e] plan participants to the position in which they would have occupied but for the
breach of trust.” (Id. at 33) (alteration in original) (quoting Perelman, 919 F. Supp. 2d at
519) (internal quotation marks omitted). Koresko argues that the plans at issue entitled
beneficiaries to receive certain benefits, and that the District Court’s order that he restore
the depletion of assets of the trusts would be unnecessary for the plans to pay
beneficiaries their entitled benefits. (Appellant’s Reply Br. 5–6). ERISA provides that a
fiduciary who breaches duties owed to a plan
shall be personally liable to make good to such plan any losses to the plan
resulting from each such breach, and to restore to such plan any profits of
such fiduciary which have been made through use of assets of the plan by
the fiduciary, and shall be subject to such other equitable or remedial relief
as the court may deem appropriate, including removal of such fiduciary.
29 U.S.C. § 1109(a).
Appellant’s arguments fail for two reasons. First, as established above, the plans
have a beneficial interest in trust assets. Koresko’s argument that the Court “confuse[d]
purported losses incurred by the Trusts with that of the employer-level plans” ignores the
Court’s finding, which we affirm, that the plans have a beneficial ownership interest in
the trust assets. (Appellant’s Br. 33). Koresko is not entitled to retain his ill-gotten gains
because he depleted assets from the trusts and not from the individual plans. As the
statute requires the fiduciary to return profits to the plan, the District Court properly
26
required Koresko to return profits to the trust, property that the plans have an ownership
interest in. See 29 U.S.C. § 1109(a).
Second, disgorgement of profits is an equitable remedy and therefore allowable
under the statute. Id.; see S.E.C. v. Huffman, 996 F.2d 800, 802 (5th Cir. 1993) (stating
that disgorgement of profits “is an equitable remedy meant to prevent the wrongdoer
from enriching himself by his wrongs”); Leigh v. Engle, 727 F.2d 113, 122 n.17 (7th Cir.
1984) (explaining that legislative history indicates Congress intended disgorgement of
profits to be an available remedy for breach of fiduciary duties under ERISA). We have
explained that “ERISA’s duty of loyalty bars a fiduciary from profiting even if no loss to
the plan occurs.” Edmonson, 725 F.3d at 415–16; see also Leigh, 727 F.2d at 122(“ERISA clearly contemplates actions against fiduciaries who profit by using trust assets,
even where the plan beneficiaries do not suffer direct financial loss.”). The purpose of
disgorgement of profits is deterrence, which is undermined if the fiduciary is able to
retain proceeds from his own wrongdoing. Koresko’s argument that the plans have
suffered no damages is without merit. The District Court properly ordered Koresko to
disgorge his profits, and the Court’s damages analysis is supported by the statute. See 29
U.S.C. § 1109(a).
III. DISMISSAL DISCUSSION
Koresko additionally appeals the District Court’s August 4, 2015 order appointing
an independent fiduciary and requiring Koresko to pay future costs. We lack jurisdiction
to review this appeal because the August 4, 2015 order was not a final decision of the
27
District Court. See 28 U.S.C. § 1291 (“The courts of appeals . . . shall have jurisdiction of
appeals from all final decisions of the district courts . . . .”).
A “final decision” is defined as a decision of a district court that “ends the
litigation on the merits and leaves nothing for the court to do but execute the judgment.”
Catlin v. United States, 324 U.S. 229, 233 (1945). An order that “finds liability and
imposes a monetary remedy, but does not reduce that award to a specific figure” will
usually be considered interlocutory and not a final decision. Century Glove, Inc. v. First
Am. Bank of N.Y., 860 F.2d 94, 98 (3d Cir. 1988); see also Pennsylvania v. Flaherty, 983
F.2d 1267, 1276 (3d Cir. 1993) (stating that “the norm is that an award . . . which does
not fix the amount of the award or specify a formula allowing the amount to be computed
mechanically is not a final decision”) (quoting John v. Barron, 897 F.2d 1387, 1390 (7th
Cir. 1990)) (internal quotation marks omitted). We have elaborated on an exception to the
rule that if a judgment does not fix the amount of damages, it is not a final decision:
However, “even when a judgment fails to fix the amount of damages, if the
determination of damages will be mechanical and uncontroversial, so that
the issues the defendant wants to appeal before that determination is made
are very unlikely to be mooted or altered by it—in legal jargon, if only a
‘ministerial’ task remains for the district court to perform—then immediate
appeal is allowed.”
Skretvedt v. E.I. DuPont de Nemours, 372 F.3d 193, 200 n.8 (3d Cir. 2004) (quoting
Prod. & Maint. Emps. Local 504 v. Roadmaster Corp., 954 F.2d 1397, 1401 (7th Cir.
1992)). Appellant contends that only ministerial tasks remain, rendering the District
Court order a final decision. We do not agree.
28
We believe the District Court order requiring Koresko to pay future costs incurred
by the independent fiduciary is not a final decision at this point because the order
imposed an unquantified and uncertain monetary award without a mechanical
computation to ascertain these damages. The Court ordered that “[t]he costs of the
Trustee’s appointment ordered herein will be borne by the Koresko Defendants.” (App.
1631). The Court did not define “[t]he costs of the Trustee’s appointment” or provide a
method to calculate these costs. Instead the Court specified that the trustee’s services
would initially be paid out of trust assets to be later reimbursed by Appellant. (Id.). The
District Court retained jurisdiction over this case in order to enforce compliance with the
order and to calculate the costs Appellant will owe to reimburse the plans for paying the
trustee. (Id.) (“At the close of its appointment, the Court shall issue a separate order
specifying the total amount the Koresko Defendants are liable to the Plans to restore on
account of this appointment.”). The Court recognized the complexity of these damages
and the importance of determining exactly what costs were incurred by the appointment
of the independent fiduciary. The Court’s contemplation that a subsequent order would
be necessary to calculate these costs does not evince that “the determination of damages
will be mechanical and uncontroversial.” Skretvedt, 372 F.3d at 200 n.8 (quoting Prod. &
Maint. Emps. Local 504, 954 F.2d at 1401) (internal quotation marks omitted).
Appellant relies on Vitale v. Latrobe Area Hospital as an example of a case in
which we determined that a district court order was a final decision even though it did not
specifically fix damages. 420 F.3d 278, 281 (3d Cir. 2005). Vitale is distinguishable
because in that case we determined “that the benefits calculation required by the District
29
Court would be entirely mechanical” as set forth by a “precise mathematical formula for
calculating the monthly retirement benefit.” Id. In this case, the calculation of costs is far
from mechanical or ascertainable, which is why the District Court explained that it would
issue a separate order specifying the amount Koresko owes. The August 4, 2015 order is
not a final decision because it did not specify fixed damages or a mechanical method to
calculate damages. See Dir., Office of Workers’ Comp. Programs v. Brodka, 643 F.2d
159, 161 (3d Cir. 1981) (“It is a well-established rule of appellate jurisdiction ‘that where
liability has been decided but the extent of damage remains undetermined, there is no
final order.’”) (quoting Sun Shipbuilding & Dry Dock Co. v. Benefit Review Bd., U.S.
Dept. of Labor, 535 F.2d 758, 760 (3d Cir. 1976)).
We also agree with Appellee that we lack jurisdiction under 28 U.S.C.
§ 1292(a)(1) and 28 U.S.C. § 1292(a)(2) for appeals from interlocutory orders pertaining
to injunctions and receiverships. Further, the District Court order does not fall within the
collateral order doctrine, which would allow it to be appealed.
Although 28 U.S.C. § 1292(a)(1) allows appeals from certain interlocutory orders
pertaining to injunctions, the District Court order is not an injunction because it was not
“directed to a party” or “enforceable by contempt.” In re Pressman-Gutman Co., Inc.,
459 F.3d 383, 392 (3d Cir. 2006) (quoting Cohen v. Bd. of Trs. of the Univ. of Med. &
Dentistry of N.J., 867 F.2d 1455, 1465 n.9 (3d Cir. 1989)) (internal quotation marks
omitted). The order is directed at the newly appointed independent fiduciary, which is not
a party in this case. Further, because the order does not direct Koresko to pay a specified
amount, it is not enforceable by contempt. See Santana Prods., Inc. v. Compression
30
Polymers, Inc., 8 F.3d 152, 155 (3d Cir. 1993) (explaining that an order is not injunctive
because “the order does not compel [a party] to take any action nor does the order restrain
[the party] from doing anything”). Koresko is not compelled to take any action at this
point where the court has not yet calculated damages Koresko owes to the plans.
Under 28 U.S.C. § 1292(a)(2), we have jurisdiction to review “[i]nterlocutory
orders appointing receivers, or refusing orders to wind up receiverships or to take steps to
accomplish the purposes thereof, such as directing sales or other disposals of property.”
The purpose of § 1292(a)(2) is “to relieve the parties from interlocutory orders affecting
control over property.” Martin v. Partridge, 64 F.2d 591, 592 (8th Cir. 1933); see also 16
Charles Alan Wright et al., Fed. Prac. & Proc. Juris. § 3925 (3d ed. 2015) (explaining
the purpose behind the statute that “[a] receivership can drastically curtail existing
property rights, foreclosing independent action and decision in irreparable ways”). The
concern over property rights, which justifies taking appeals from interlocutory orders
involving receiverships, does not apply in this case. The August 4, 2015 order did not
affect the parties’ control over trust property. Koresko lost control over the trusts through
the Court’s September 16, 2013 and March 13, 2015 orders. (App. 325–27, 1448–52).
Koresko timely appealed the final judgment in this case, which removed him from his
position as a fiduciary. (Id. at 1, 325–326). Therefore, the August 4, 2015 order is not a
receivership order under 28 U.S.C. § 1292(a)(2) because the order did not affect
Koresko’s control over trust property assets.
The collateral order doctrine allows appeals from district court orders that meet a
“stringent” standard. In re Pressman-Gutman Co., Inc., 459 F.3d at 396; (quoting Will v.
31
Hallock, 546 U.S. 345, 349 (2006)) (internal quotation marks omitted). The order must:
“(1) conclusively determine the disputed question, (2) resolve an important issue
completely separate from the merits of the action, and (3) be effectively unreviewable on
appeal from a final judgment.” Id. at 395–96 (quoting Will, 546 U.S. at 349) (internal
quotation marks omitted). Failure to meet any one of the three requirements renders the
doctrine inapplicable. Id. By its own terms, the August 4, 2015 order does not
conclusively determine the disputed question because the order states that “the Court
shall issue a separate order specifying the total amount the Koresko Defendants are liable
to the Plans.” (App. 1631). The order did not conclusively determine the issue of
damages in this case and accordingly the collateral order doctrine does not apply.
Because we lack jurisdiction to review the District Court’s August 4, 2015 order,
we will dismiss the appeal of that order.
IV. CONCLUSION
For the foregoing reasons, we will affirm the August 3, 2012; September 16, 2013;
February 6, 2015; March 13, 2015; and May 13, 2015 rulings of the District Court on
appeal before us and dismiss Koresko’s appeal of the Court’s August 4, 2015 order for
lack of jurisdiction.
32