                             In the
 United States Court of Appeals
                 For the Seventh Circuit
                         ____________

Nos. 00-1085 and 00-3674
FREDERIC A. FENSTER and NOLAN S. FRANK,
                                          Plaintiffs-Appellants,
                                v.

TEPFER & SPITZ, LTD., RONALD O. SPITZ, DAWN C.
MAGLIOLA, and TEPFER & SPITZ, LTD. 401(K) PROFIT
SHARING PLAN and TRUST, et al.,
                                         Defendants-Appellees.
                         ____________
Nos. 00-3037, 00-3673 and 00-3991
RONALD O. SPITZ, AS A TRUSTEE OF THE TEPFER & SPITZ,
LTD. 401(K) PROFIT SHARING PLAN & TRUST,
                                              Plaintiff-Appellee,
                                v.

ARTHUR H. TEPFER, FREDERIC A. FENSTER,
and NOLAN S. FRANK,
                                Defendants-Appellants.
                    ____________
             Appeals from the United States District Court
        for the Northern District of Illinois, Eastern Division.
   Nos. 97 C 7093 & 96 C 5844—Harry D. Leinenweber, Judge.
                          ____________
  ARGUED DECEMBER 7, 2001—DECIDED AUGUST 30, 2002
                  ____________

  Before FLAUM, Chief Judge, MANION, and DIANE P. WOOD,
Circuit Judges.
2       Nos. 00-1085, 00-3674 & 00-3037, 00-3673, 00-3991

   DIANE P. WOOD, Circuit Judge. This is the second time
this court has had to consider the fractious battle between
two former business partners over their firm’s pension
plan. Once again, Ronald Spitz, the owner of a consulting
firm and trustee of a 401(k) plan, is before this court in
an Employee Retirement Income Security Act (ERISA)
action against his former co-owner, Arthur Tepfer, and
two of the firm’s employees, Frederic Fenster and Nolan
Frank. The district court has again granted summary
judgment in Spitz’s favor on all claims except for one, and
it has awarded Spitz attorneys’ fees, collectable jointly
from Tepfer, Frank and Fenster. This time, we affirm the
district court’s judgment.1


                              I
  We will assume familiarity with the account set forth
in our prior opinion in this matter and will repeat only
what is necessary for this appeal. See Spitz v. Tepfer, 171
F.3d 443 (7th Cir. 1999) (Spitz I). Spitz and Tepfer were
equal co-owners of a retirement-plan-consulting business,
Tepfer & Spitz, Ltd. (T&S). They were its sole directors
and officers: Spitz was president and Tepfer was secretary.
In January 1991, T&S established a 401(k) profit-sharing
plan (the Plan). Under the Plan, an employee could not
vest until she had completed six years of service with T&S.
  On June 9, 1995, Tepfer left T&S, leaving quite a wake
behind him. In addition to filing an unsuccessful suit in


1
  It appears that on September 13, 2000, more or less contempo-
raneously with the orders being appealed here, Tepfer filed for
bankruptcy. On December 6, 2000, he moved for relief from the
automatic stay imposed by the Bankruptcy Code, 11 U.S.C.
§ 362(d), for purposes of pursuing this appeal. The bankruptcy
court granted that motion on December 12, 2000. Tepfer’s appeal
is thus properly before us; Fenster’s and Frank’s appeals are
naturally unaffected by Tepfer’s bankruptcy.
Nos. 00-1085, 00-3674 & 00-3037, 00-3673, 00-3991         3

state court to force the dissolution of T&S, Tepfer formed
another corporation, Tepfer Consulting Group, Ltd., where
he served as president and sole shareholder. Fenster and
Frank also left T&S to become employees of Tepfer Con-
sulting Group. In addition, without telling Spitz, Tepfer
executed a document entitled the Fourth Plan Amendment.
This document was never adopted, ratified, or approved
by the T&S Board of Directors. It generously provided
that all participants in the T&S Plan would become 100%
vested by January 1, 1995, and that all employees were
guaranteed to receive their allocation of the T&S annual
contribution to the Plan, even if they were not actively
employed with T&S on the last day of the year. Finally,
and most importantly for this appeal, Tepfer withdrew
$48,000 on June 2, 1995, from the Plan without Spitz’s
knowledge, pursuant to another mysterious document
entitled “Participant Loan Program.” No one apart from
Tepfer himself approved the incorporation of the Partici-
pant Loan Program into the Plan, nor did anyone author-
ize the alleged loan he took out under that alleged program.
  These actions did not endear Tepfer to Spitz. To the
contrary, on September 12, 1996, Spitz filed an action in
the district court, requesting among other things that
the court declare that the Fourth Plan Amendment and
the Participant Loan Program were invalid. Spitz also
sought an order requiring Tepfer immediately to repay the
loan to the T&S Plan and a judgment declaring that
Tepfer, Fenster and Frank were not fully vested in the
T&S Plan and therefore not entitled to contributions to
their 401(k) accounts for 1995. Fenster and Frank initiated
a separate action against Spitz and T&S, claiming that
T&S violated ERISA’s information requirements. The
district court consolidated the two cases (dubbing them
the “Spitz” litigation and the “Fenster” litigation for con-
venience), granted summary judgment in favor of Spitz
in both, and denied both sides attorneys’ fees and costs.
4      Nos. 00-1085, 00-3674 & 00-3037, 00-3673, 00-3991

This court affirmed the district court in part and reversed
and remanded in part for further findings regarding the
existence and scope of the loan program. See Spitz I. We
also found that Spitz would be entitled to attorneys’ fees
under ERISA should he prevail again.
   On remand, Spitz sought two things: first, a finding that
the Plan administrator (basically, Spitz himself by that
time) did not abuse his discretion when he determined that
the Participant Loan Program was invalid and second,
an order requiring Tepfer immediately to repay the loan
with interest. The district court again granted summary
judgment in Spitz’s favor. With respect to the Fenster
case, the district court ruled in favor of Spitz on all mat-
ters with one exception. It decided sua sponte to grant
summary judgment for the Fenster plaintiffs on the claim
that T&S had violated ERISA by failing to respond with-
in 30 days to Fenster’s and Frank’s request for a bene-
fits statement. This was a largely symbolic victory, how-
ever, as the court also decided that the violation was
so trivial that penalties would not be assessed. Finally,
the district court awarded Spitz $67,406.90 in attorneys’
fees, costs, and litigation expenses. The attorneys’ fees
portion of this sum, the court concluded, could be offset
against Tepfer’s pension benefits pursuant to 29 U.S.C.
§ 1056(d)(4)(a)(ii). Tepfer, Fenster and Frank appeal the
district court’s orders.


                            II
  Before we proceed to the merits of this appeal, we
pause briefly to note that our appellate jurisdiction is now
secure. Initially, there was a finality problem because
Tepfer filed his notice of appeal prior to the entry of a
final order on his motion for reconsideration. Recogniz-
ing this error, however, he has since requested and re-
ceived a final order from the district court. As this was
Nos. 00-1085, 00-3674 & 00-3037, 00-3673, 00-3991        5

only a technical defect that has been cured, we have
jurisdiction to review the district court’s judgment. See
Spitz I, 171 F.3d at 448.


 A. Tepfer’s Loan
  In Spitz I, this court held that genuine issues of fact
remained regarding the scope of the loan program that
were critical to the question of whether Tepfer properly
applied for the loan. 171 F.3d at 449. On remand, Tepfer
tried to show that his loan and the Participant Loan
Program were validly executed pursuant to § 7.4 of the
Plan. Section 7.4 states that loans “shall be made pursuant
to a Participant loan program . . . . Such Participant loan
program shall be contained in a separate written document
which, when properly executed, is hereby incorporated
by reference and made a part of the Plan.”
  Tepfer’s point is fairly simple: the only document look-
ing like a § 7.4 loan program was his Participant Loan
Program; ergo, his loan must be valid. The district court
found otherwise. Tepfer wants us to review that decision
de novo, which is the standard that applies if an ERISA
plan does not give discretionary authority to the adminis-
trator to construe its terms. See O’Reilly v. Hartford Life
& Accident Ins. Co., 272 F.3d 955, 959 (7th Cir. 2001). It
is well established, however, that if the administrator
has such discretion (as this one did), we look only to see
whether the administrator’s determination is arbitrary
or capricious. Id. As this court noted in Spitz I, 171 F.3d
at 449, “Spitz is the only person left at T&S who mat-
ters” when interpreting the Plan as the only remaining
administrator at T&S. He found the Participant Loan
Program was invalid because it was unsigned and never
approved by the Board of Directors. We agree with the
district court that this determination was neither arbi-
trary nor capricious.
6      Nos. 00-1085, 00-3674 & 00-3037, 00-3673, 00-3991

   Tepfer disagrees, and first suggests that remaining
disputed issues of material fact should have prevented
the district court from ruling against him on summary
judgment. Specifically, he points to two unresolved issues:
when the program was executed, and by whom. But the
district court found that these facts were not material, in
light of the reason why the administrator made his deter-
mination. The document was unsigned, which Tepfer
does not contest. On that basis alone the administrator
was not arbitrary in determining that the Participant
Loan Program was invalid. Tepfer points to nothing in
the record that suggests that the district court was re-
quired to find that this Plan tolerated such unsigned
programs.
   Tepfer next claims that the Participant Loan Program
must be valid, or else there would be a fatal inconsistency
between the Summary Plan Description (SPD) and the
Plan itself. The SPD is a plain-language summary of the
Plan for the use of the participating employees. The Plan’s
SPD describes a program for securing loans, and Tepfer
contends that the Participant Loan Program must be va-
lid because it is the only loan program available to par-
ticipants. Although it is true that when an SPD contradicts
a profit-sharing plan, the SPD controls, Spitz I, 171 F.3d
at 448. This well-established proposition is beside the
point. The question is whether the particular loan pro-
gram Tepfer tried to use was validly created under the
Plan. As the district court noted, participants are en-
titled to apply for loans under the Plan whether or not
any given loan program passes muster. Just because
Tepfer was eligible for a loan as a participant does not
mean that his Participant Loan Program is the tool by
which participants may secure loans.
  In fact, the SPD provided an alternate route for loans
that did not involve use of a specific participant loan
program: applicants could obtain approval for a loan if an
Nos. 00-1085, 00-3674 & 00-3037, 00-3673, 00-3991        7

administrator reviewed the application and a majority of
the Plan’s trustees approved it. Unfortunately, this does
not help Tepfer, because the undisputed facts showed
that he did not seek approval from the majority of the
trustees prior to taking out the $48,000 loan. As an admin-
istrator at the time (in his capacity as an officer and
employee of T&S), Tepfer arguably could have approved
the loan, but he still ignored the SPD’s instructions re-
quiring trustee approval. In his brief, Tepfer suggested
that trustee approval was not really a requirement un-
der the SPD, but we agree with the district court that the
plain language of the document does not support this
position. Even though the SPD does not define the term
“trustee,” the Plan describes a Trustee as “the majority
of all trustees.” §§ 9.4; 7.1. The SPD then goes on to say
the following:
   You may apply to the Administrator for a loan from the
   Plan. . . . The Administrator will inform the Trustee
   that you qualify. The Trustee may then review the
   Administrator’s determination and make a loan to you
   if it is a prudent investment for the Plan. (Emphasis
   added)
Nothing in this language remotely suggests that the step
of informing the trustees and obtaining their approval
can be omitted. Indeed, it is the Trustee who ultimately
makes the loan, if it is prudent to do so.
  At oral argument, counsel for Tepfer acknowledged that
Tepfer should have informed a Trustee of the loan; but, he
went on, the omission was immaterial because the loan
inevitably would have been approved. We do not know
what would have happened, of course. It is possible that
Tepfer’s loan would have been approved, but the fact is
that it never was. ERISA requires formal process, see
McNab v. General Motors Corp., 162 F.3d 959, 961 (7th Cir.
1998), and no amount of speculation can erase Tepfer’s
disregard of the rules outlined by the SPD.
8       Nos. 00-1085, 00-3674 & 00-3037, 00-3673, 00-3991

  Finally, we reject Tepfer’s contention that a quest for
loan approval would have been futile because he would
have needed Spitz’s approval (since Spitz was a trustee,
and Spitz was not about to give it). We have heard
Tepfer’s concern before about Spitz’s “conflict of interest.”
Spitz, 171 F.3d at 449. Although Tepfer still insists Spitz
is inherently biased and had no reason to be fair in deal-
ing with Tepfer, this court found that “[t]he mere fact
that Spitz has a potential conflict of interest between his
role as owner of T&S and his role as plan administrator
is not enough by itself to dismiss his interpretation of
the Plan.” Id.; see also Mers v. Marriott Int’l Group Acci-
dental Death & Dismemberment Plan, 144 F.3d 1014, 1020
(7th Cir. 1998). Despite our discussion in Spitz I, Tepfer
still offers no specific evidence of Spitz’s bias or abuse in
this or any other determination he made as Plan admin-
istrator or as a trustee.
  The Participant Loan Program and Tepfer’s loan
were improper under both the SPD and the Plan. Tepfer
must pay the final $100 of the $48,000 deposited in the
registry of the district court to Spitz along with any interest
accrued during this appeal.


    B. Statutory Penalties
  Fenster and Frank challenge the district court’s find-
ing that T&S’s violation of 29 U.S.C. § 1024(b)(4)—through
a seven-day delay in furnishing information—did not
warrant any penalty. Before addressing the merits of
Fenster’s and Frank’s argument, we note that they are
incorrect to suggest that our review of this matter is de
novo. It is within the district court’s discretion to deter-
mine whether to award statutory penalties, and the exis-
tence of that discretion means that our review is deferen-
tial. Anweiler v. American Elec. Power Serv. Corp., 3 F.3d
986, 990 (7th Cir. 1993); Harsch v. Eisenberg, 956 F.2d 651,
Nos. 00-1085, 00-3674 & 00-3037, 00-3673, 00-3991        9

662 (7th Cir. 1992). A fine is not mandatory even upon
a finding of a violation of § 1024(b)(4). Ames v. American
Nat’l Can Co., 170 F.3d 751, 759-60 (7th Cir. 1999).
  No one doubts that the district court had the power
to hold the administrator “personally liable to such par-
ticipant or beneficiary in the amount of up to $100 a day”
under 29 U.S.C. § 1132(c) for the seven-day delay. The
question, however, is whether it was an abuse of discre-
tion to refrain from exercising that power here. The dis-
trict court reasonably determined that no penalty was
required because T&S’s failure to comply with the statute
did not materially prejudice the defendants. See Harsch,
956 F.2d at 662. Although Fenster and Frank protest
that no hearing was held on the issue, they have raised
no factual dispute requiring a hearing. There was no
reversible error either in the procedures the court used
or in its conclusion.


 C. Termination
  Fenster and Frank also argue the district court erred
when it refused to consider whether the Plan was ac-
tually terminated. They take the position that it was
terminated, because under the terms of § 6.4(c) of the
Plan, that would make all of the participants, including
themselves, fully vested. To begin with, this issue is
remarkably close to one we resolved in Spitz I. Indeed
Spitz argues that Spitz I precludes Fenster and Frank
from even raising the issue. We will not go as far as to
say that Fenster and Frank are barred by the law of the
case from making the argument. The focus in Spitz I was
on whether the district court used the proper vesting
percentages and correctly allocated the 1995 T&S con-
tribution; to the extent the subject came up, Plan termina-
tion was a peripheral matter. We therefore may consider
Fenster’s and Frank’s argument that the Plan ended by its
own terms.
10     Nos. 00-1085, 00-3674 & 00-3037, 00-3673, 00-3991

  Although ERISA imposes fiduciary duties on employ-
ers with respect to the management of plan assets, it
does not require an employer to act in a fiduciary capacity
when the employer abolishes or amends a benefits plan
(or in this case declines to abolish a plan). Senn v. United
Dominion Indus., Inc., 951 F.2d 806, 817 (7th Cir. 1992).
After considering Fenster’s and Frank’s argument that
the Plan had self-terminated, the district court found
that it had no authority to grant relief because T&S’s
failure formally to terminate the plan did not involve a
fiduciary decision. Buckley Dement, Inc. v. Travelers Plan
Adm’rs of Ill., Inc., 39 F.3d 784, 790 (7th Cir. 1994); Adams
v. Avondale Indus., Inc., 905 F.2d 943 (6th Cir. 1990).
  The district court may have slightly misunderstood the
point Fenster and Frank were making, but in the end it
makes no difference. They recognize that the act of termi-
nation is not a fiduciary one, but they argue that the Plan
ended according to its own terms and that their rights
automatically vested. The question of whether a plan has
terminated under its own provisions is a question of con-
tract interpretation. Phillips v. Lincoln Nat’l Life Ins. Co.,
978 F.2d 302, 311 (7th Cir. 1992). As we noted in our
discussion of Tepfer’s loan, the T&S Plan gives its adminis-
trator discretion to interpret its terms, and our review
is therefore only to assess whether the determination
here that the Plan was still in force is arbitrary and
capricious. Herzburger v. Standard Ins. Co., 205 F.3d 327,
329 (7th Cir. 2000).
  The SPD provides in Part XI(2) that the Plan will termi-
nate upon “a complete discontinuance of contributions by
your Employer.” Frank and Fenster point out that T&S is
no longer contributing to the Plan, and that after December
31, 1995, T&S had no payroll, no new business, and a
liquidation resolution. They also note that both Spitz and
Tepfer have formed separate companies, and thus that
there will not be any additional pension contributions. They
reason that under the SPD, this must mean that the Plan
Nos. 00-1085, 00-3674 & 00-3037, 00-3673, 00-3991          11

has terminated. Spitz, in his capacity as administrator,
paints a different picture. He characterizes the status of the
plan as a “suspension,” rather than a cessation. Spitz
maintains that the status of the company is “on hold” for
now, while its primary focus is resolving this long-running
litigation. Furthermore, Spitz adds, the company has
changed not because it terminated all of its employees, but
because the employees, including Fenster and Frank,
voluntarily left T&S. Cf. Anderson v. Emergency Medicine
Assocs., 860 F.2d 987 (10th Cir. 1988) (partial termination
did not occur when employees voluntarily quit). At this late
stage of summary judgment, Frank and Fenster must do
more than offer allegations and conclusory statements to
support their argument that the Plan is terminated.
  The record supports only the opposite conclusion, as the
district court recognized as early as its 1997 opinion. Spitz,
the Plan administrator, stated repeatedly that T&S was
only suspended and that no decisions on the business’s
future could be made until the litigation ended. Future
prospects for T&S include a merger, a new business
under a new name, or even a continuation of the same
business. Furthermore, despite Fenster’s and Frank’s ar-
guments and Tepfer’s attempts to dissolve T&S, it has
survived. See Tepfer v. Spitz, Nos. 95 CH 2082 & 95 CH
11171, Circuit Court of Cook County, Chancery Division.
Fenster and Frank have not shown that the Plan has
terminated under its own terms, and, as the district
court also found, this court does not have the authority
to terminate the Plan. See Buckley Dement, Inc., 39 F.3d
at 790.


  D. Attorneys’ Fees
  We also find that the district court did not err in award-
ing attorneys’ fees to Spitz. Before we address the joint
award, we respond briefly to Tepfer’s argument that the
award should not be offset from his Plan assets. Tepfer
12     Nos. 00-1085, 00-3674 & 00-3037, 00-3673, 00-3991

did not argue that the district court’s offset order violated
ERISA’s anti-alienation provision, 29 U.S.C. § 1056(d),
until he filed his reply brief and his motion for reconsid-
eration in the district court. This is too late. An argument
introduced for the first time in a reply brief is waived.
We therefore do not address this point further.
  The district court did not abuse its discretion by hold-
ing Tepfer, Fenster, and Frank jointly and severally liable
for the payment of attorneys’ fees. When making its
determination, the district court noted that Tepfer, Fenster
and Frank had maintained the same legal positions
throughout this litigation, had agreed to pay their attor-
ney in proportion to their account balances, and were
charged roughly the same amount by their attorneys.
Whether Fenster and Frank had shown the same bad
faith as Tepfer, the district court determined that “reduc-
ing the fee award so as to protect Fenster and Frank
would only ease Tepfer’s burden.” We generally review the
district court’s award of attorneys’ fees for an abuse of
discretion because of the district court’s “superior under-
standing of the litigation.” Jaffee v. Redmond, 142 F.3d 409,
412-13 (7th Cir. 1998). In conducting this review, we ask
the following question: “Was the losing party’s position
substantially justified and taken in good faith, or was
that party simply out to harass its opponent?” Bowerman v.
Wal-Mart Stores, Inc., 226 F.3d 574, 593 (7th Cir. 2000).
  While we recognize that Tepfer argued some issues
alone, and that Fenster and Frank filed a separate action
that was consolidated with Spitz’s suit, this is not a case
where Fenster, Frank and Tepfer are truly strangers.
Indeed, as the district court noted, they have maintained
the same positions despite their separate status as trustee
and beneficiaries and the separate, but consolidated, law-
suits. All three used the same attorney and cooperated
with each other. In fact, in his deposition, Tepfer acknowl-
edged that he agreed with Fenster and Frank to share the
financial burdens of the litigation.
Nos. 00-1085, 00-3674 & 00-3037, 00-3673, 00-3991         13

  Moreover, all three appellants continuously argued posi-
tions that were not substantially justified; some posi-
tions bordered on frivolous. Quinn v. Blue Cross & Blue
Shield Ass’n, 161 F.3d 472, 478 (7th Cir. 1998). We are
not persuaded by Tepfer’s attempts to argue that he did
not act in bad faith. Although Tepfer maintains that
his loan was not a “blatantly illegal withdrawal from the
plan,” that is not the standard for awarding attorneys’ fees.
The parties were not substantially justified in maintain-
ing this losing litigation position, and the district court’s
fee order was well within its discretion.


                            III
  The judgment of the district court is AFFIRMED.

A true Copy:
      Teste:

                        ________________________________
                        Clerk of the United States Court of
                          Appeals for the Seventh Circuit




                    USCA-97-C-006—8-30-02
