ERISA: LaScala v. Scrufari

U.S. District Court, Western District of New York

ERISA

Fiduciary Duties — Damages

LaScala v. Scrufari
93-CV-982
Judge Curtin

Background: On Jan. 15, 2004, the court issued findings of fact and conclusions of law after trial, finding defendant Santo Scrufari breached his fiduciary duties as plan manager of the Niagara-Genesee & Vicinity Carpenters Local 280 welfare and pension funds, in violation of the Employee Retirement Income Security Act of 1974, by paying himself four hours weekly overtime from March 1989 to October 1992, and by accepting additional weighted fringe benefits based on that inflated salary, without the approval of the funds’ board of trustees. It was determined, however, that Scrufari did not breach his fiduciary duties under ERISA when he set his salary and took regular pay increases at the same rate as the union’s general agent because the preponderance of the evidence at trial showed the trustees knew, or in the exercise of their fiduciary duties should have known, Scrufari was being compensated at that rate. The court awarded damages but, on appeal, the method used to calculate the award was reversed. Among its disagreements with the district court the appeals court found that the question of Scrufari’s breach of the fiduciary duties imposed by ERISA, “the highest [duties] known to the law,” did not turn on whether the trustees knew or should have known about his actions and acquiesced, but rather on whether Scrufari himself acted in accordance with those duties.

Ruling: The damages to the pension and welfare funds resulting from the defendant’s breach of fiduciary duty under ERISA amount to the following: $480,672 in damages to the pension fund and $415,238 to the welfare fund. Entry of final judgment is deferred pending the parties’ joint stipulated submission of updated annual investment return information for the period from Jan. 1, 2008 through the date of entry of the order.

Timothy A. McCarthy of Burd & McCarthy for the plaintiffs, and Michael T. Harren of ChamberlainD’Amanda and Robert A. Doren of Bond, Schoeneck & King PLLC for the respective defendants