12-2082-cv
L.I. Head Start Child Dev. Servs., Inc. v. Econ. Opportunity Comm'n of Nassau Cnty., Inc.




                            U NITED S TATES C OURT OF A PPEALS
                                 FOR THE S ECOND C IRCUIT


                                   August Term 2012

  (Argued: December 19, 2012                           Decided: March 13, 2013)

                               Docket No. 12-2082-cv

                             ________________________

     L.I. H EAD S TART C HILD D EVELOPMENT S ERVICES , I NC ., P AUL A DAMS ,
      derivatively on behalf of Community Action Agencies
   Insurance Group and as class representative of all other
                     persons similarly situated,

                                                           Plaintiffs-Appellees,

                                              v.

     E CONOMIC O PPORTUNITY C OMMISSION OF N ASSAU C OUNTY , I NC ., E CONOMIC
O PPORTUNITY C OUNCIL OF S UFFOLK , I NC ., Y ONKERS C OMMUNITY A CTION P ROGRAM ,
   I NC ., J OHN L. K EARSE , S TELLA B. K EARSE , Representative of the
                        Estate of John L. Kearse,

                                                           Defendants-Appellants. *

                             ________________________

Before:
                C ALABRESI , L YNCH , and C HIN , Circuit Judges.




       *
          The Clerk of Court is directed to amend the official
caption to conform to the above.
         Appeal from a judgment of the United States

District Court for the Eastern District of New York (Spatt,

J.), awarding damages against defendants-appellants

pursuant to the Employee Retirement Income Security Act, 29

U.S.C. § 1001 et seq., for breaching their duties as

fiduciaries of an employee welfare benefits plan.

         AFFIRMED.

                       ____________________________

                       ALEXANDER A. MIUCCIO (Gregory J.
                            Spaun, on the brief), Welby,
                            Brady & Greenbatt, LLP, White
                            Plains, New York, for
                            Plaintiffs-Appellees.

                       MARK GOIDELL, Law Office of Mark E.
                            Goidell, Amityville, New York,
                            for Defendants-Appellants.

                       ____________________________

CHIN, Circuit Judge:

         In 2000, in a prior lawsuit, the district court

entered judgment in the amount of $497,736, plus interest,

attorneys' fees, and costs, against Community Action

Agencies Insurance Group ("CAAIG" or the "Plan"), a welfare

benefits plan for employees of not-for-profit antipoverty

                           - 2 -
agencies, and its trustees.    The judgment was entered in

favor of one of the participating agencies, plaintiff -

appellee L.I. Head Start Child Development Services, Inc.

("LIHS"), on account of CAAIG's failure to refund reserves

that had been set aside for LIHS after LIHS withdrew from

the Plan.

            In the present case, LIHS and Paul Adams,

derivatively on behalf of CAAIG and as representative of a

class of LIHS employees who were Plan participants, sued

the administrators of CAAIG, contending that they breached

their fiduciary duties to CAAIG under the Employee

Retirement Income Security Act ("ERISA"), 29 U.S.C. § 1001

et seq., by failing to ensure that CAAIG had sufficient

assets with which to satisfy the judgment.     Following a

bench trial, the district court agreed and entered judgment

against the Plan administrators.      The administrators

appeal.     We affirm.




                              - 3 -
                      STATEMENT OF THE CASE

A.   The Facts

     1.     CAAIG

            CAAIG was established as an ERISA welfare benefits

plan for the purpose of providing "sickness, accident,

life, disability and other welfare benefits" for the

employees of not-for-profit antipoverty agencies.     At all

relevant times, the participating employers consisted of

Economic Opportunity Commission of Nassau County, Inc.

("EOC Nassau"), Economic Opportunity Council of Suffolk,

Inc. ("EOC Suffolk"), Yonkers Community Action Program,

Inc. ("Yonkers CAP"), and LIHS.

            Pursuant to a trust agreement dated October 4,

1983 (the "Trust Agreement"), the CAAIG Trust Fund (the

"Trust") was established to effectuate the purposes of the

Plan.     Section 2 of the Trust Agreement provided that the

participating agencies had authority to administer the

Plan.     The agencies delegated their authority to their

respective chief executive officers, who were to act as

trustees (the "Trustees") upon the direction of the

agencies.

                              - 4 -
         In exercising their powers and duties, section 3.4

of the Trust Agreement required the Trustees to act "solely

in the interest of the plan participants and other persons

entitled to benefits [thereunder]," for the exclusive

purpose of "providing benefits to participants" and

"defraying reasonable expenses of administering the Trust,"

and "[w]ith the care, skill, prudence, and diligence" of a

prudent person in like circumstances.

    2.   Employer Contributions and The Reserves

         The Trust Agreement required the participating

agencies to "make the necessary contributions to provide

the benefits expected to become payable under this Trust."

According to the CAAIG Health Coverage Plan, the failure of

any participating agency to "submit the appropriate premium

charge within the grace period of 30 days shall cause

coverage for all claims to cease from that month forward."

To ensure the financial integrity of the Plan, the Trustees

maintained approximately $1 million in reserves (the "Plan

Reserves"), which funds were "for [the] security of the

plan and could not be distributed to any member while the

plan was in existence."

                           - 5 -
            At some point, Yonkers CAP and EOC Suffolk began

experiencing difficulty paying their Plan contributions.

By 1990, Yonkers CAP owed approximately $100,000 in

arrears.    Although the Trustees initially terminated

Yonkers CAP's participation in the Plan, they reinstated

Yonkers CAP on assurances that it would pay d own its

overdue contributions.    After reinstatement, however,

Yonkers CAP failed to pay down the contributions in

arrears.    Similarly, in 1990, EOC Suffolk owed the Plan

approximately $38,000 in arrears, but the Trustees

permitted it to remain in the Plan and pay down its

delinquency on an "as possible" basis.

            On September 1, 1992, LIHS withdrew from the Plan

and requested the immediate return of the portion of Plan

Reserves attributable to its past contributions (the "LIHS

Reserves").    The Trustees refused to refund the LIHS

Reserves.

    3.      The Prior Action and Depletion of Reserves

            In 1993, LIHS, Anthony Macaluso (Finance Director

of LIHS) and Paul Adams (LIHS employee formerly

participating in the Plan) commenced a class action against

                              - 6 -
the Plan and its Trustees, seeking, inter alia, a refund of

the LIHS Reserves (the "Prior Action").

         At a meeting of the Board of Trustees on December

14, 1993, the Trustees discussed the fact that the Prior

Action exposed the Plan to a contingent liability of

approximately $500,000, the amount of damages sou ght by

LIHS and its employees.    At the very same board meeting,

the Trustees decided to write off the Yonkers CAP

delinquency as bad debt and pay the claims of Yonkers CAP

employees using the Plan Reserves.

         Over the next several years, the Trustees depleted

the Plan Reserves, notwithstanding the approximately

$500,000 contingent liability it faced in the Prior Action.

In 1995 alone, the Trustees expended $611,000 of the Plan

Reserves by recording a loss of approximately $296,000 for

the write-off of the Yonkers CAP delinquency plus interest

receivable, and by paying more in claims and expenses

relative to prior years.    The Plan Reserves fell below $1

million for the first time in at least seven years.

Despite the quickly declining reserves, however, the

Trustees did not increase the contributions due from the

                             - 7 -
agencies but collected approximately the same amounts as in

prior years.

           On June 30, 1998, Yonkers CAP and EOC Suffolk

withdrew from the Plan, owing $107,496 plus interest and

$9,000, respectively.    The Plan ceased operations that

year. 1   Between 1998 and March 2001, the Trustees depleted

the Plan Reserves, setting aside only $50,000 for the

$500,000 in contingent liability it faced in the Prior

Action.    They did not exercise their power, under section

3.2(j) of the Trust Agreement, to "retain any funds or

property subject to any dispute."

           In 2000, the district court entered judgment in

the Prior Action, awarding LIHS and its employees $497,736

for the LIHS Reserves that should have been refunded, plus

interest, attorneys' fees, and costs, for a total award of

$802,831.57.    The Plan satisfied only a portion of the

judgment, leaving over $700,000 plus interest unpaid.




     1
          Although the district court found that the Plan had
ceased operations in 1998, the record suggests that the Plan was
never legally terminated. The district court declined to make a
finding as to whether the Plan was legally terminated.
                             - 8 -
B.   Proceedings Below

         On December 13, 2000, LIHS and Adams commenced the

present action, principally asserting claims that EOC

Nassau, EOC Suffolk, Yonkers CAP, and John Kearse, Chief

Executive Officer of EOC Nassau (collectively, the

"Administrators"), breached their fiduciary duties in

violation of ERISA §§ 404(a) and 409(a).     In the claims

relevant to this appeal, LIHS and the Class alleged that

the Administrators breached their fiduciary duties by:       (1)

diverting the LIHS Reserves to pay the Plan's claims and

expenses (the "Diversion Claim"), (2) failing to adequately

fund the Plan through contributions from the agencies (the

"Underfunding Claim"), and (3) failing to collect overdue

contributions from EOC Suffolk (the "EOC Suffolk

Delinquency Claim"). 2

         The district court conducted a bench trial on a

number of days during the period 2004 to 2007 and issued a


     2
          Although the EOC Suffolk Delinquency Claim was
initially asserted as a claim under ERISA § 406, which
proscribes certain prohibited transactions, the basis for this
appeal is the district court's conclusion that the
Administrators breached their fiduciary duties in violation of
ERISA § 404(a).

                             - 9 -
series of decisions between 2008 and 2012. 3    The district

court held that, as a preliminary matter, LIHS and the

Class were not collaterally estopped from bringing their

claims because the defendant-agencies were not parties in

the Prior Action, but that certain findings of fact it had

made in the Prior Action would be binding as "law of the

case."   See L.I. Head Start Child Dev. Servs., Inc. v.

Econ. Opportunity Comm'n of Nassau Cnty., Inc., 558 F.

Supp. 2d 378, 406-08 (E.D.N.Y. 2008).     The district court

dismissed a number of claims as untimely under the

applicable statute of limitations, ERISA § 413, but found

the Diversion Claim, Underfunding Claim, and the EOC

Suffolk Delinquency Claim timely.     See id. at 391-406.   It

held that LIHS and the Class had standing to sue under

ERISA §§ 502(a)(2) and 515, and that the Administrators

    3
          The Administrators' notice of appeal indicates the
appeal is from the "final judgment entered in this action on the
25th day of April, 2012, and from each part thereof," which
implemented the district court's Memoranda of Decision and
Orders entered October 20, 2011 and April 24, 2012, awarding
damages and attorneys' fees to LIHS and the Class. In light of
Rule 3(c)(4) of the Federal Rules of Appellate Procedure and the
issues raised on appeal, we construe this appeal as also being
taken from the district court's Memoranda of Decision and Orders
entered June 3, 2008, July 8, 2009, May 28, 2010, October 20,
2011, and April 24, 2012.

                             - 10 -
were fiduciaries within the meaning of ERISA, and thus,

subject to liability.   See L.I. Head Start Child Dev.

Servs., Inc. v. Econ. Opportunity Comm'n of Nassau Cnty. ,

Inc., 634 F. Supp. 2d 290, 298-99 (E.D.N.Y. 2009).

          Proceeding to the merits of the three claims it

found timely, first, the district court dismissed the

Diversion Claim.   It reasoned that the Trustees, in

refusing to refund the LIHS Reserves, reasonably relied on

two trust amendments dated October 6, 1983 and August 7,

1986, which provided that the voluntary withdrawal or

termination of any member of the Plan shall result in

forfeiture of all monetary participation in the Trust and

that the Plan Reserves must remain in the Trust to be used

or distributed for Trust purposes.   See id. at 308-10.    The

district court held that while the trust amendments were

held void in the Prior Action, this ruling in 2000 could

not have informed the Trustees' reliance on the amendments

in the 1990s when they refused to refund the LIHS Reserves.

See id.

          Second, the district court found that the

Administrators breached their duties as to the Underfunding

                            - 11 -
Claim, i.e., that the agencies failed to make the necessary

contributions to adequately fund the Plan, and the

Administrators, as fiduciaries, failed to enforce the

agencies' contractual obligations to make the

contributions.    See id. at 311-12.

            Third, the district court found the Administrators

liable for the EOC Suffolk Delinquency Claim, concluding,

inter alia, that the Administrators breached their

fiduciary duties by failing to collect the delinquency and

permitting EOC Suffolk to remain in the Plan.       See id. at

313.

            On the parties' subsequent cross-motions for

reconsideration, the district court reaffirmed its previous

rulings, except to acknowledge that it had erred in relying

in part on ERISA § 515 to conclude that the plaintiffs had

standing.    See L.I. Head Start Child Dev. Servs., Inc. v.

Econ. Opportunity Comm'n of Nassau Cnty., Inc., No. 00 Civ.

7394, 2010 WL 8816299, at *8 (E.D.N.Y. May 28 , 2010).      The

district court nevertheless upheld its previous conclusion

that plaintiffs had standing pursuant to § 502(a)(2), an

independent basis for standing.       See id. at *11.

                             - 12 -
            After a full damages hearing, the district court

ordered the Administrators to pay $832,945, allocated among

the defendant-agencies, plus prejudgment interest. 4    See

L.I. Head Start Child Dev. Servs., Inc. v. Econ.

Opportunity Comm'n of Nassau Cnty., Inc., 820 F. Supp. 2d

410, 427-28 (E.D.N.Y. 2011).     In determining the damages

amount, the district court relied on the testimony of

plaintiffs' expert witness, Anthony Macaluso, and accepted

his assumptions and methodology as reliable.     See id. at

419, 427.    Lastly, the district court awarded $490,807.53

in attorneys' fees to the plaintiffs.     See L.I. Head Start

Child Dev. Servs., Inc. v. Econ. Opportunity Comm'n of

Nassau Cnty., Inc., 865 F. Supp. 2d 284, 297-98 (E.D.N.Y.

2012).

            This appeal followed.

                           DISCUSSION

            On appeal, the Administrators principally argue

that:    (1) LIHS and the Class lack standing under ERISA


    4
          Although the district court held that the Estate of
John Kearse was liable for damages attributable to Kearse, it
did not specify how much of the total damages amount should be
allocated to him.

                              - 13 -
§ 502(a)(2); (2) the claims are time-barred under ERISA

§ 413; (3) the agencies are not fiduciaries under ERISA

§ 3(21)(A); and (4) the Administrators did not breach their

fiduciary duties under ERISA § 409(a).      We review the

district court's findings of fact after a bench trial for

clear error and its conclusions of law de novo.      See United

States v. Coppola, 85 F.3d 1015, 1019 (2d Cir. 1996).

A.   Standing

     1.   Applicable Law

          ERISA § 502(a)(2) confers standing on "a

participant, beneficiary or fiduciary" to seek relief under

ERISA § 409.     29 U.S.C. § 1132(a)(2).   ERISA § 409(a) in

turn provides:

          Any person who is a fiduciary with respect to
          a plan who breaches any of the
          responsibilities, obligations, or duties
          imposed upon fiduciaries by this subchapter
          shall be personally liable to make good to
          such plan any losses to the plan resulting
          from each such breach.

29 U.S.C. § 1109.

          "[C]laims [pursuant to § 409(a)] may not be made

for individual relief, but instead are 'brought in a

representative capacity on behalf of the plan.'"      Coan v.

                              - 14 -
Kaufman, 457 F.3d 250, 257 (2d Cir. 2006) (quoting Mass.

Mut. Life Ins. Co. v. Russell, 473 U.S. 134, 142 n.9

(1985)).     Standing is conferred upon certain classes of

plaintiffs whose "common interest . . . is in the financial

integrity of the plan" to seek remedies against the "misuse

of plan assets."     Russell, 473 U.S. at 142 & n.9.   "[T]he

basic standing issue is whether the plaintiff is within the

zone of interests ERISA was intended to protect."      Mullins

v. Pfizer, Inc., 23 F.3d 663, 668 (2d Cir. 1994) (citation

and internal quotation marks omitted) (emphasis in

original).

           A "participant" within the meaning of § 502(a)(2)

is "any employee or former employee of an employer, . . .

who is or may become eligible to receive a benefit of any

type from an employee benefit plan."     29 U.S.C. § 1002(7).

"[T]he term participant is naturally read to mean either

employees in, or reasonably expected to be in, currently

covered employment, or former employees . . . who have a

colorable claim to vested benefits."     Firestone Tire &

Rubber Co. v. Bruch, 489 U.S. 101, 117 (1989) (citations

and internal quotation marks omitted).     For a claimant to

                              - 15 -
establish that he or she "may become eligible" for

benefits, the claimant "must have a colorable claim that

[ ] he or she will prevail in a suit for benefits."         Id.

         The existence of standing is a question of law we

review de novo.     Cent. States Se. & Sw. Areas Health &

Welfare Fund v. Merck-Medco Managed Care, L.L.C., 433 F.3d

181, 197 (2d Cir. 2005); Shain v. Ellison, 356 F.3d 211,

214 (2d Cir. 2004) (citation omitted).

    2.   Application

         First, the Administrators argue that the

plaintiffs' claims are not derivative in nature because the

relief they seek -- recoupment of losses to the Plan, which

may ultimately be used to satisfy the judgment in the Prior

Action -- does not inure to the Plan.        We disagree.

         The district court found that LIHS and the Class

were asserting claims in a derivative capacity for the

benefit of the Plan as a whole.        In their verified

consolidated amended complaint, the plaintiffs sought

recoupment of funds the Trustees should have collected to

keep the Plan financially solvent after paying its claims

and expenses.     LIHS and the Class asserted these claims on

                              - 16 -
the Plan's behalf, and prayed for relief inuring to the

Plan.   This relief, of course, surely would have benefitted

the Plan.    It is of no moment that recovery inuring to the

Plan may ultimately benefit particular participants.     See

LaRue v. DeWolff, Boberg & Assocs., Inc. 552 U.S. 248, 256

(2008) (ERISA § 502(a)(2) authorizes "recovery for

fiduciary breaches that impair the value of plan assets in

a participant's individual account"); accord Pfahler v.

Nat'l Latex Prods. Co., 517 F.3d 816, 826 (6th Cir. 2007)

("[T]he fact that damages awarded to the Plan may provide

plaintiffs with an indirect benefit, the payment of their

claims, does not convert their derivative suit into an

action for individual relief.").

            Second, the Administrators argue that the members

of the Class lack standing because they were seeking only a

refund of past contributions rather than asserting a "claim

for benefits."    The argument fails, however, because the

Class is not asserting a "claim for benefits" under ERISA

§ 502(a)(1)(B), but rather, a claim for recovery of "losses

to the plan" caused by the fiduciaries' breach of du ties

under ERISA §§ 502(a)(2) and 409(a).    See LaRue, 552 U.S.

                             - 17 -
at 259 (Roberts, C.J., concurring) (distinguishing a "claim

for benefits" under § 502(a)(1)(B) from a claim for breach

of fiduciary duty under § 502(a)(2)).     "Benefits" as used

to define "participants" is not limited to plan benefits

but encompasses "a benefit of any type."     29 U.S.C.

§ 1002(7).     Furthermore, ERISA §§ 502(a)(2) and 409(a)

require a fiduciary who breaches his duties "to make good

to [the] plan any losses to the plan resulting from [the]

breach, and to restore to such plan any profits [made by

the fiduciary through use of plan assets]."     Id. § 1109(a).

Thus, the Class members are "participants."

         Section 502(a)(2) confers standing on a

"participant" to seek relief under § 409(a).     Id.

§ 1132(a)(2).     Because the Class members are employees of

LIHS entitled to receive "a benefit of any type" from the

Plan, they are "participants" with standing under

§ 502(a)(2).

         As to LIHS, the Administrators argue that it lacks

standing because it is no longer a fiduciary of the Plan.

There is no dispute that LIHS was a fiduciary during its

participation in the Plan; rather, the Administrators argue

                              - 18 -
that LIHS lost its fiduciary status by withdrawing from the

Plan.

         The Administrators rely on Chemung Canal Trust Co.

v. Sovran Bank/Maryland, 939 F.2d 12, 14-15 (2d Cir. 1991),

for the proposition that a former fiduciary lacks standing

under ERISA § 502(a).    The circumstances in Chemung,

however, are distinguishable.     There, we held that a former

fiduciary -- whose interests were adverse to those of the

plan -- lacked standing where it "no longer [had] an

interest in protecting a plan to which it [was] now a

complete stranger."     Chemung, 939 F.2d at 15.   Here, far

from being a complete stranger to the Plan, the district

court found that LIHS had a continuing interest in

protecting the Plan assets, which consisted in part of the

funds LIHS had contributed to the Plan during its

participation.   Accordingly, we conclude that LIHS has

standing under ERISA § 502(a) as a fiduciary of the Plan.

Our conclusion is consistent with ERISA's remedial scheme

designed to "remove jurisdictional and procedural obstacles

which in the past appear to have hampered effective




                              - 19 -
enforcement of fiduciary responsibilities."     Mullins, 23

F.3d at 668 (quotation omitted). 5

B.   Statute of Limitations

     1.   Applicable Law

          ERISA § 413 provides the applicable statute of

limitations for claims asserting a breach of fiduciary

duty:

          the earlier of -- (1) six years after (A) the
          date of the last action which constituted a
          part of the breach or violation, or . . . (2)
          three years after the earliest date on which
          the plaintiff had actual knowledge of the
          breach or violation.

29 U.S.C. § 1113.

          Under the three-year limitations period in

subsection (2), actual knowledge is strictly construed and

constructive knowledge will not suffice.     See Caputo v.

Pfizer, Inc., 267 F.3d 181, 193-94 (2d Cir. 2001).      "While



     5
          We also reject the Administrators' argument that LIHS
and the Class lack constitutional standing because they have not
suffered an injury-in-fact. See Lujan v. Defenders of Wildlife,
504 U.S. 555, 560-61 (1992) (constitutional standing requires
injury-in-fact, causation, and redressability). As discussed,
LIHS and the Class have asserted their claims in a derivative
capacity, to recover for injuries to the Plan caused by the
Administrators' breach of their fiduciary duties. This is
injury-in-fact sufficient for constitutional standing.

                              - 20 -
a plaintiff need not have knowledge of the relevant law, he

must have knowledge of all facts necessary to constitute a

claim."   Id. at 193 (internal citation omitted).

          "We review the question of the application of the

relevant statute of limitations . . . de novo."     Novella v.

Westchester Cnty., 661 F.3d 128, 143 (2d Cir. 2011).

    2.    Application

          a.   Underfunding Claim

          The Administrators argue that the Underfunding

Claim is time-barred under the three-year limitations

period because counsel for LIHS and the Class, Alexander

Miuccio, acquired actual knowledge of the relevant facts

sometime between 1993 and 1996 during discovery in the

Prior Action, and such knowledge should be attributed to

his clients based on their agency relationship.

          The district court held that any actual knowledge

Miuccio possessed should not be imputed to LIHS and the

Class because this is a class action, relying on Stieberger

v. Sullivan, 738 F. Supp. 716 (S.D.N.Y. 1990), Schwab v.

Philip Morris USA, Inc., No 04 Civ. 1945, 2005 WL 2467766

(E.D.N.Y. Oct. 6, 2005), and Crimi v. PAS Industries, Inc.,

                            - 21 -
No. 93 Civ. 6394, 1995 WL 272580 (S.D.N.Y. May 9, 1995),

where knowledge was not imputed in class action contexts

because the large number of plaintiffs often rendered the

attorney-client relationship more tenuous.

         We conclude that the three-year limitations period

does not bar the Underfunding Claim.     Even assuming

Miuccio's knowledge can be attributed to LIHS and the

Class, he did not possess all of the material facts giving

rise to the Underfunding Claim.     Miuccio conceded before

the district court that during the Prior Action, he

acquired knowledge of the facts giving rise to the

Diversion Claim and the EOC Suffolk Delinquency Claim.        As

to the Underfunding Claim, however, he repeatedly

represented that it was not until sometime between 2000 and

2004 -- when he received the Plan's financial statements

during supplemental proceedings following entry of judgment

in the Prior Action -- that he learned that the Plan was

underfunded and the Administrators could have breached

their fiduciary duties in this regard.     The district court

accepted this representation, and we have no basis to




                           - 22 -
second-guess that decision. 6   This action was commenced on

December 13, 2000, within three years of the time Miuccio

learned all of the material facts giving rise to the

Underfunding Claim. 7

         Alternatively, the Administrators argue that the

Underfunding Claim is barred by the six-year limitations

period because it accrued on September 1, 1992, when LIHS

learned that the LIHS Reserves would not be refunded.      The

district court, however, found that the Administrators'

failure to adequately fund the Plan occur red between 1995

and March 2001, a finding that is not clearly erroneous.

The district court reasonably distinguished between the

earlier failure to refund money contributed by LIHS and the

    6
          The district court referred to "diversion" in
discussing both the Diversion Claim and the Underfunding Claim.
Based on our reading of the district court's decisions and the
record as a whole, we understand Miuccio's representations to
relate only to the Underfunding Claim.
    7
          The Administrators offer an alternate basis for the
application of the three-year bar. They argue that Macaluso and
Phyllis Simmons (former Chief Executive Officer of LIHS) knew
sometime between 1993 and 1995 that the Plan would not refund
the LIHS Reserves, and that is when the limitations period began
to run. This argument fails. The fact purportedly known by
Macaluso and Simmons relate to the Diversion Claim, not to the
Underfunding Claim. Moreover, any knowledge possessed by
Macaluso in the Prior Action cannot be attributed to the Class
in this case, of which he is not a member.

                             - 23 -
subsequent, distinct decision not to increase contributions

to the fund to maintain adequate reserves to cover the

contingent liability represented by LIHS's Prior Action to

recover that money.

           The six-year limitations period runs from the

"date of the last action which constituted a part of the

breach."   29 U.S.C. § 1113(1)(A) (emphasis added).   Because

the last action constituting the Administrators' failure to

adequately fund the Plan occurred in March 2001, and this

action was commenced on December 13, 2000, the Underfunding

Claim is timely.

           b.   EOC Suffolk Delinquency Claim

           The Administrators argue that the EOC Suffolk

Delinquency Claim accrued in 1990, and that, therefore, it

is barred by the six-year limitations period.   As discussed

above, the six-year limitations period runs from the date

of the last action constituting a part of the breach.      The

district court found that the Trustees' failure to collect

EOC Suffolk's delinquency continued until at least August

31, 1996, when $9,000 still remained on the Plan's books.




                             - 24 -
Thus, the EOC Suffolk Delinquency Claim is timely under the

six-year limitations period. 8

C.   Fiduciary Status of the Agencies

     1.     Applicable Law

            ERISA § 3(21)(A) imposes fiduciary status on (1)

"those who exercise discretionary authority [with regard to

the management or administration of the plan], regardless

of whether such authority was ever granted" and (2) those

"who have actually been granted discretionary authority,

regardless of whether such authority is ever exercised."

Bouboulis v. Transp. Workers Union of Am. , 442 F.3d 55, 63

(2d Cir. 2006) (citation and internal quotation marks

omitted).

            We review de novo the question of whether a party

is an ERISA fiduciary.       See LoPresti v. Terwilliger, 126

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

     8
          As the Administrators have not developed an argument
in their briefs that the EOC Suffolk Delinquency Claim is barred
by the three-year limitations period, they have waived any such
argument. See Tolbert v. Queens Coll., 242 F.3d 58, 75 (2d Cir.
2001). Furthermore, we do not reach the Administrators'
argument that the Diversion Claim is time-barred because we
affirm the district court's judgment on the basis of the
Underfunding and EOC Suffolk Delinquency Claims, as explained
below.

                                - 25 -
     2.   Application

          The agencies argue that they are not fiduciaries

of the Plan because the Trust Agreement assigned only

ministerial functions to them and assigned discretionary

authority to the Trustees.    We reject this argument.     The

district court correctly found that th e Trust Agreement

granted the agencies ultimate discretionary authority to

administer the Plan.    Section 2 of the Trust Agreement

expressly provided that the Plan would be administered by

the agencies, and that the Trustees would act upon the

agencies' direction.    Even if the agencies never exercised

this discretion, the Trust Agreement's grant of actual

discretionary authority to them is sufficient to find that

the agencies are fiduciaries under ERISA § 3(21)(A).       See

Bouboulis, 442 F.3d at 63.

D.   Breach of Fiduciary Duty

     1.   Applicable Law

          ERISA § 409(a) imposes liability on a fiduciary

who breaches his duties under ERISA § 404(a)(1), which

requires a fiduciary to "discharge his duties with respect

to a plan solely in the interest of the participants an d

                             - 26 -
beneficiaries and (a) for the exclusive purpose of: (i)

providing benefits to participants and their beneficiaries;

and (ii) defraying reasonable expenses of administering the

plan" with the care, skill, prudence, and diligence of a

prudent man under similar circumstances and in accordance

with the documents and instruments governing the plan.        29

U.S.C. § 1104(a).    Under ERISA § 405, a fiduciary "shall be

liable for a breach of fiduciary responsibility of another

fiduciary with respect to the same plan" in certain

circumstances.   Id. § 1105.     The Administrators concede

that the breach of a contractual obligation in the Plan

documents constitutes a breach of their fiduciary duties

under § 404(a)(1).

    2.   Application

         We conclude that the Administrators breached their

fiduciary duties with respect to the Underfunding Claim.

The district court found that the Plan was underfunded.

This finding of fact was not clearly erroneous.      The

district court found that beginning in 1995, the Plan

lacked sufficient funds to pay its claims and expenses.

The court accepted expert testimony from Macaluso that the

                               - 27 -
judgment in the Prior Action was an administrative expense

of the Plan.    This testimony accurately reflected the law.

A plan must pay its legitimate liabilities.    Payments to

satisfy judgments for expenses incurred or debts owed by

the Plan are appropriately considered administrative

expenses of the Plan.    The district court thus correctly

rejected the Administrators' contention that all of the

Plan's claims and expenses were paid throughout its

existence, and instead, concluded that the Administrators

were obliged to increase the contributions due from the

agencies.

            Section 3.1 of the Trust Agreement required the

agencies to "make the necessary contributions to provide

the benefits expected to become payable under this Trust."

The agencies failed to make the necessary contributions due

to the Plan, thus violating the Trust Agreement.

Similarly, the Administrators had a fiduciary duty to

ensure that the agencies satisfied their payment

obligations to the Plan.    See Diduck v. Kaszycki & Sons

Contractors, Inc., 874 F.2d 912, 916 (2d Cir. 1989) ("Under

ERISA, trustees have a fiduciary duty to 'act to ensure

                             - 28 -
that a plan receives all funds to which it is entitle d, so

that those funds can be used on behalf of participants and

beneficiaries.'" (quoting Cent. States, Se. & Sw. Areas

Pension Fund v. Cent. Transp., Inc., 472 U.S. 559, 571

(1985))); Frulla v. CRA Holdings, Inc., 596 F. Supp. 2d

275, 284 (D. Conn. 2009) (fiduciaries have an obligation to

ensure that plan sponsors satisfy their funding obligations

to the plan).

         Third, the Administrators violated section 3.4 of

the Trust Agreement, which required them to discharge their

fiduciary duties for the exclusive purpose of providing

benefits and "defraying reasonable expenses of

administering the Trust."   During the same board meeting at

which they discussed the $500,000 contingent liability in

the Prior Action, the Trustees decided to use the Plan

Reserves to write off a delinquency owed by Yonkers CAP and

to pay the claims of Yonkers CAP employees.   Although the

Trustees had the power to "retain any funds or property

subject to any dispute," as provided in section 3.2( j) of

the Trust Agreement, they failed to retain enough funds to




                            - 29 -
cover the $500,000 contingent liability, setting aside only

$50,000.

           Between 1993, when the Prior Action was commenced,

and March 2001, the Trustees dissipated the Plan Reserves,

allowing the reserves to fall below $1 million and

eventually depleting the funds altogether.     At the same

time, they failed to increase the contributions payable by

the agencies to replenish the Plan Reserves and ensure the

financial integrity of the Plan.     Even following the entry

of the $802,831.57 judgment in the Prior Action, the

agencies failed to fulfill their obligation to make

adequate contributions, and the Administrators as

fiduciaries failed to enforce the agencies' contractual

obligations to do so, consequently leaving the judgment

unsatisfied.   Accordingly, we agree with the district court

that the Administrators breached their fiduciary duties

with respect to the Underfunding Claim. 9


    9
          The Administrators argue that Kearse's liability
should be limited to breaches having occurred prior to October
5, 1996, when he resigned as trustee. We reject this argument,
as the parties jointly stipulated that Kearse continued acting
as a fiduciary until June 30, 1998, by which time the fiduciary
breaches had already occurred. The parties also stipulated that
the Trustees had delegated their authority to administer and
                            - 30 -
         As to the EOC Suffolk Delinquency Claim, the

district court found that the CAAIG Health Coverage Plan

required the Administrators to terminate EOC Suffolk from

the Plan upon its failure to pay its contributions within

the thirty-day grace period.     The district court concluded

that by failing to collect the delinquency and permitting

EOC Suffolk to remain in the Plan without meeting its

obligations, the Administrators breached their duties to

administer the Plan in accordance with plan documents and

act solely in the interest of plan participants and

beneficiaries.   We agree.    See Diduck, 874 F.2d at 916

(trustees have a fiduciary duty to ensure that a plan

receives all funds to which it is entitled).

         The Administrators argue that the Trustees could

have reasonably concluded that the cost of pursuing the

$9,000 debt was not justified.     They offer no evidence,

however, that the Trustees actually weighed the costs and

benefits of pursuing the debt and made a considered

decision in this regard.     Moreover, they cannot dispute

operate the Plan to Kearse. Therefore, Kearse's liability is
not limited, and we affirm the district court's judgment in that
regard.

                              - 31 -
that the Trustees could have terminated EOC Suff olk from

the Plan before it elected to withdraw in 1998, thereby

mitigating further losses to the Plan caused by EOC

Suffolk's participation.    Accordingly, we conclude that the

Administrators breached their fiduciary duties with respect

to the EOC Suffolk Delinquency Claim. 10

                           CONCLUSION

            Accordingly, the judgment of the district court is

AFFIRMED.




    10
          As to the Administrators' remaining arguments that
their fiduciary duty breaches did not cause a loss to the Plan,
the amount of damages was not established with reasonable
certainty, the agencies could not satisfy a judgment using funds
obtained through government grants, and the district court erred
in awarding attorneys' fees, we affirm for substantially the
reasons set forth by the district court in its Memoranda of
Decision and Orders entered October 20, 2011 and April 24, 2012.
See L.I. Head Start Child Dev. Servs., Inc. v. Econ. Opportunity
Comm'n of Nassau Cnty., Inc., 865 F. Supp. 2d 284 (E.D.N.Y.
2012); L.I. Head Start Child Dev. Servs., Inc. v. Econ.
Opportunity Comm'n of Nassau Cnty., Inc., 820 F. Supp. 2d 410
(E.D.N.Y. 2011).

                             - 32 -
