Participants filed a putative class action against Trojan Horse and Glen Burnie Hauling for failing to make deposits into their defined contribution 401(k) plan, despite having continued to make such deductions and withholdings from plaintiffs’ wages.  The plaintiffs also joined Ascensus Trust, and sought summary judgment on fiduciary status and breach.

The Court found that “the unpaid Plan contributions are plan assets and fall within the scope of Ascensus’ duties as trustee. Plan assets include those ‘amounts a participant has withheld from his wages by an employer … as of the earliest date on which such contributions … can reasonably be segregated from the employer’s general assets.’ 29 C.F.R. §2510.3–102(a)(1). The Plan at issue here expressly provides that compensation to employees will include fringe benefits and that elective deferrals include any employer contributions made as a deferral at the election of an employee in lieu of cash compensation. This is confirmed by Trojan Horse’s payroll practices. Recognizing a perceived ‘unfairness in imposing strict fiduciary responsibilities—and personal liability—upon corporate officers who are not clearly aware of their status as fiduciaries,’ the Eleventh Circuit has held ‘that unpaid employer contributions are not “plan assets” unless specific and clear language in the plan documents or other evidence so indicates.’ This action is distinguishable from Pantoja for two reasons. First, the Trojan Horse 401(k) Plan documents clearly indicate that employer contributions are in fact fringe benefits and thus Plan assets. Second, Pantoja and the cases it relies on concern the imposition of liability on the employer itself and its corporate assets for failing to make plan contributions. A distinction arises because ‘a corporate officer facing limited cashflow who chooses to pay corporate obligations in lieu of employer contributions to an ERISA plan does not breach a fiduciary duty when he makes those decisions wearing his corporate officer hat rather than his fiduciary duty hat.’  This conflict is not present where, as here, the fiduciary is a trustee and third-party.”

Then granting certification to the class of participants under Rule 23(b)(1)(B), the Court reaffirmed that, given “the derivative nature of ERISA §502(a)(2) claims, breach of fiduciary duty claims brought under §502(a)(2) are paradigmatic examples of claims appropriate for certification as a Rule 23(b)(1) class.”


Longo v. Trojan Horse Ltd., No.13-cv-418, 2016 WL 5118281 (E.D.N.C. Sept. 20, 2016).