In Finkel v. Whiffen Electric Co., Inc., 07-2558-cv (2nd Cir. 2009), Whiffen Electric Co., Inc. (“Whiffen” ) was an employer that participated in several multiemployer plans (the “Plans”). Ramonowicz was an officer of Whiffen who was authorized to sign checks. As a participant in the Plans, Whiffen was obligated to withhold specified amounts of its employees’ wages and, on a monthly basis, remit them to the Plans. However, from September 2004 through October 2005, Whiffen failed to remit these contributions. Rather, during that period, Whiffen either sent checks to the Plans that were signed by Ramonowicz and subsequently dishonored due to insufficient funds, or sent nothing at all. In March 2006, the administrator of the Plans sued Whiffen, as employer, and Ramonowicz, as alleged fiduciary of the Plans, under ERISA for the unpaid contributions. The administrator also sued Ramonowicz under New York law for the unpaid contributions resulting from the dishonored checks. The issue before the Second Circuit was Ramonowicz’s liability for the unpaid contributions.
In resolving this issue, the Court said that under the applicable part of Section 3(21)(A)(i) of ERISA, to be a fiduciary, a person must exercise authority or control over the management of a plan’s assets. The Court noted that the amounts withheld from wages by Whiffen, and not remitted to the Plans due to the checks being dishonored or otherwise, were nevertheless assets of the Plans. However, the Court concluded that Romanowicz is not a fiduciary of the Plans, within the meaning of Section 3(21)(A)(i), even though Romanowicz was an officer of Whiffen, was authorized to sign checks on Whiffen’s behalf, had some general knowledge that amounts had been withheld from employees’ wages for remittance to the Plans, and had maintained the unremitted assets for his own and Whiffen’s benefit. As to the unremitted assets, Romanowicz did not determine which of Whiffen’s creditors to pay or in what order. As to the Plans themselves, Romanowicz did not select or exchange the Plans’ investments, undertake any other transaction typical to a pool of retirement plan assets, or otherwise enjoy any authority or control over the management of the Plans’ assets. Since Romanowicz was not a fiduciary of the Plans, he cannot be sued for the unpaid contributions on that basis.
However, the Court found that, under New York’s Uniform Commercial Code, Ramonowicz was personally liable for the unpaid contributions represented by the dishonored checks, since the checks did not indicate, and Ramonowicz did not establish as an affirmative defense, that Ramonowicz had signed the checks in a representative capacity.