Petition for Writ of Certiorari — John J. Koresko, Petitioner v. R. Alexander Acosta, Secretary of Labor

Supreme Court briefOct 29, 2018

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IN THE SUPREME COURT OF THE UNITED STATES

JOHN J. KORESKO, V.

PETITIONER

R. ALEXANDER ACOSTA,

SECRETARY, UNITED STATES DEPARTMENT OF LABOR

On Petition For A Writ Of Certiorari To The

United States Court Of Appeals For The Third Circuit

CA3 Na, 16-3806

PETITION FOR A WRIT OF CERTIORARI

John J. Koresko, V

1159 Seaton Ross Rd.

Radnor, PA 19087-2838

(484) 202-007

jjkoresko@gmail.com

Pro se

-1-

QUESTIONS PRESENTED

ERISA, 29 U.S.C. § 1132(a)(2) allows a participant, beneficiary or the Secretary

of Labor to sue for appropriate relief under § 1109; or each can seek injunction or

"appropriate equitable relief" under § 1132(a)(3) or §1132(a)(5). Under § 1109, a

fiduciary who breaches his duty is "personally liable to make good to such plan any

losses to the plan resulting from each such breach, and to restore to such plan any

profits * * *•" Nevertheless, participants and beneficiaries have no standing to sue for

any monetary relief attributable to "plan injury" when reduction of surplus assets

does not reduce their defined benefits. Because plans, like trusts, cannot sue under

§ 1132(a), and congress did not give plans any property rights, the questions address

the appropriate analytical framework for determining the Secretary's standing to

maintain an action seeking monetary recovery under ERISA:

Does the Secretary of Labor have standing to sue for "losses" to the

surplus of an ERISA defined benefit welfare plan i.e., a theoretical injury to a

legal abstraction under 29 U.S.C. § 1132(a)(2) or (a)(5), without also showing

concrete harm to the present property interests of participants or beneficiaries?

Whether the Third circuit correctly held—in conflict with this Court

that 29 U.S.C. § 1132(a)(2) and (a)(5) authorized the courts to ignore contractual

language, supersede the interpretation by the person with

settlor/sponsor/administrator and trustee powers, and refuse to recognize his

right to amend welfare benefit plans and deprive the Secretary of standing?

Did the District Court's order to permanently bar Petitioner from

providing services to any employee benefit plan exceed the limited "appropriate

relief' permitted by 29 U.S.C. §1132(a)(2) and (5), especially when Congress only

barred felons from positions in ERISA plans in 29 U.S.C. § 1111, and the court

otherwise granted a complete and adequate remedy at law?

11 -

PARTIES TO THE PROCEEDING BELOW

Petitioner is John J. Koresko, V, one of the defendants and appellant below,

and the principal, director, officer or controlling shareholder of the other corporate

party defendants listed below (which are not public companies):

PennMont Benefit Services, Inc., a Pennsylvania corporation;

Koresko & Associates, P.C. a Pennsylvania corporation;

Koresko Law Firm, P.C., is a Pennsylvania corporation;

Penn Public Trust, a Pennsylvania non-profit corporation.

Co-defendants Regional Employers Assurance Leagues Voluntary

Employees Beneficiary Association Trust and Single Employer

Welfare Benefit Plan Trust were Pennsylvania trusts named as defendant

parties by the Secretary. Petitioner was the controlling fiduciary of each

before their property was seized and Petitioner was removed by order of the

district court. They did not participate in the trial of this case or the appeal.

Co-defendant Jeanne Bonney is a party but did not appeal.

Respondent, A. Alexander Acosta, is the Secretary, United States Department

of Labor, the plaintiff- appellee below.

111

TABLE OF CONTENTS

QUESTIONS PRESENTED

PARTIES TO THE PROCEEDING BELOW............................................................ii

TABLE OF AUTHORITIES.............................................................................................

OPINIONSBELOW ....................................................................................................... 1JURISDICTION.............................................................................................................-2CONSTITUTIONAL AND STATUTORY PROVISIONS INVOLVED ......... 2INTRODUCTION............................................................................................................ 3STATEMENT OF THE CASE ..................................................................................... 6REASONS FOR GRANTING THE PETITION .................................................. 16-

The First Question The Secretary's Standing in Cases of Reduced Plan

Surplus, Without Concrete Harm to Real People or Their Benefits Warrants

Further

16 -

Review

........................................................................................................

The Third Circuit's Decision Contradicts The Uniform View of This Court And

The Other Circuits In Cases Involving Defined-Benefit Arrangements........- 16 The Decision Below Conflicts With This Court's Well-Established

Doctrines Involving Standing and The Law of Trusts . ................... 21 The Third Circuit's Decision, Expressly Rejecting Spokeo V.

Robins in ERISA Cases, Creates An Exception For The Secretary

In Conflict With The Other Circuits .......................................................... 26

The Second Question Should Be Reviewed Because ERISA Does Not Prohibit

Any Amendment By A Person Who Has Settlor/Sponsor/Administrator and

Trustee Powers, Even If It Operates to Deprive The Secretary Of Standing- 31

The Third Question Should Be Reviewed Because Congress Did Not Give

Federal Courts Authority To Permanently Bar Any Non-Felon From Providing

Services To Any Employee Benefit Plans, Whether Or Not Covered By ERISA,

Or To Issue Punitive Sanctions In Favor Of The Secretary Of Labor............- 36 -

CONCLUSION ..............................................................................................................-38CERIFICATE OF SERVICE ...............................................................-39CERIFICATE OF COMPLIANCE ............................................................-39-

TABLE OF CONTENTS OF PETITIONER'S APPENDIX

VOLUME I

Order, Third Circuit Court of Appeals denying Motion for Motion for Rehearing

(3d Cir. June 12, 2018)

Opinion, Third Circuit Court of Appeals (unreported), No. 16-3806, 17-1140

(March 23, 2018)

Order and Opinion, August 31, 2016, United States District Court for the Eastern

District of Pennsylvania (E.D. Pa.) No. 09-cv-00988 [Docket 1390,1391] [2016

U.S. Dist. LEXIS 117384]

20a

Sec 'y ofLabor v. Koresko, Nos. 15-2470,15-3141, 2016 WL 1358101 (3dCir. Apr.

5, 2016).

36a

Order/Judgment, Doc. 1149 (E.D. Pa., Mar. 13, 2015)

55a

Order (preliminary injunction), Doc. 496 (E.D. Pa. Sept. 13, 2013)

61a

Appendix to Opinion, Doc. 1 134-1(E.D. Pa., Feb. 26, 2015)

68a

REAL VEBA Master Trust Document, Doe. 268-14,GX 11

78a

REAL VEBA Master Plan Document, Doc. 268-17, GX 14

91a

REAL VEBA Custodial Agreement, Doc 268 -17, GX 65

114a

Amendment to REAL VEBA, Doc. 295-2, DX 1

1 16a

REAL VEBA Adoption Agreement, Doc. 268-48, GX 44

124a

REAL VEBA Employee Participation Agreement, Doe. 268-50, GX 46

13 la

Constitutional and Statutory Provisions Involved

132a

VOLUME II

Perez v. Koresko, 86 F.Supp.3d 293 (E.D. Pa. 2015); Doe 1134

151a

Solis v. Koresko, 884 F.Supp.2d 261 (E.D. Pa. 2012); Doe. 314

236a

TABLE OF AUTHORITIES

Cases

Anderson v. Wilson,

289 U.S. 20,27(1933) ........................................................................................ -29Cent. States Se. & Sw. Areas Health & Welfare Fund v. Merck-Medco Managed

Care, L.L.C., 433 F.3d 181, 199 (2d Cir. 2005); .................................................. 22 Curtis-Wright Corp. v. Schoonejongen,

514 U.S. 73, 78 (1995).......................................................................................passim

David v. Aiphin,

704 F.3d 327, 338 (4th Cir. 2013).............................................................. - 22 - 34 Duncan v. Muzyn,

885 F.3d 422 (6th Cir. 2018) ............................................................................... 21

Edmonson v. Lincoln National Life Insurance Co.,

725 F.3d 406, 417 (3d Cir. 2013) .......................................................................... 17 Firestone Tire & Rubber Co. v. Bruch,

489 U. S. 101, 113 (1989) ..................................................................................... 42. Great West Life & Annuity Ins. Co. v. Knudson,

534 U.S. 204, 209 (2002) ..................................................................................... 45 Greenough v. Tax Assessors Of City Of Newport,

331

29 Harley v. Minn. Mining & Mfg. Co.,

284 F.3d 901, 906 (8th Cir. 2002) .............................................................. 22 - 35 Hughes Aircraft v. Jacobson,

525 U.S. 432 (1995)..........................................................................................passim

Huntington v. Attrill,

146 U.S. 657, 667 (1892)) ..................................................................................... 46 In re Trust Estate of Pew,

(1963) ........................................................... 39 411 Pa. 96, 106, 191 A.2d 399,

Insurance Corp. of Ireland v. Compagnie des Bauxites de Guinee,

456 U.S. 694, 704(1982) ....................................................................................... 38 Kendall v. Emps. Ret. Plan of Avon Prods.,

561 F.3d 112, 121 (2d Cir. 2009) .............................................................. 22

Kokesh v. SEC,

137 S. Ct. 1635, 1642 (2017) ................................................................................ 46

Kon trick v. Ryan,

540 U.S. 443, 455 (2004) ..................................................................................... 37 LaRue v. DeWoiff, Boberg & Assocs., Inc.,

552 U.S. 248, 255 (2008) ...................................................... 19

Lee v. Verizon Comrnc'ns, Inc.,

623 F. App'x 132, 150 (5th Cir. 2015) ................................................................ 32 Lee v. Verizon Commc'ns, Inc.,

837 F.3d 523, 546-47 (5th Cir. 2016)..............................................- 21

, -

U.S.

486,

494

(1944)

................................................................................... -

, -

-\1Lexmark Intl, Inc. v. Static Control Components, Inc.,

134 S. Ct. 1377(2014) ......................................................................................... 24

M&G Polymers USA, LLC v. Tackett,

524 U.S.

135 S. Ct. 926, 944 (2015) ............................................................ 23

Malia v. General Elec. Co.,

23 F.3d 828 (3d Cir. 1994) .................................................................................. 18 Massachusetts Mut. Life Ins. Co. v. Russell,

473 U. S. 134 (1985)..........................................................................- 6

McCullough v. AEGON USA Inc.,

585 F.3d 1082, 1084 (8th Cir. 2009) .................................................................... 22 Mertens v. Hewitt Associates, 508 U. S. 248, 256 (1993) ............................ 39 - 45 Meyer v. Nebraska,

262 U.S. 390, 399 (1923) ...................................................................................... -46Perelman v. Perelman,

793 F.3d 368 (3d Cir. 2015); ............................................................ 22

Perez v. Koresko,

86 F.Supp.3d 293 (E.D. Pa. 2015) ......................................................................... 1

Pundt v. Verizon Commc'ns, Inc.,

137 S. Ct. 1374, 197 L. Ed. 2d 568 (2017) ........................................................... 21

Schreibner v. Kellogg,

50 F.3d 264, 266 (3d Cir. 1995) ........................................................................... 42 Sec of Labor v. Koresko,

646 Fed. Appx. 230 (3d Cir. 2016) .......................................... 1 14

Sec'y U.S. Dept. of Labor v. Koresko,

726 Fed. Appx. 127 (3d Cir. 2018) ........................................................................ 1

Soehnlen v. Fleet Owners Ins. Fund,

844 F.3d 576 (6th Cir. 2016)............................................................- 21

Solis v. Koresko,

884 F.Supp.2d 261 (E.D. Pa. 2012) ....................................................................... 1

Spokeo, Inc. v. Robins,

136 S. Ct. 1540 (2016).......................................................................................passim

Sprint Communications Co. v. APCC Services, Inc.,

554 U.S. 269, 274 (2008) ..................................................................................... 27 Summers v. Earth Island Institute,

555 U.S. 488, 496 (2009) .................................................................................... 26 Thole v. U.S. Bank, Nat'l Ass'n,

873 F.3d 617 (8th Cir. 2017); pet. for cert pending No. 17-1712 .............. 21 - 35 Tull v. United States,

481 U.S. 412, 422 (1987) ...................................................................................... 45U.S. Airways v. McCutchen,

133

38 Vermont Agency of Natural Resources v. United States ex rel. Stevens,

529 U.S. 765, 775-777 (2000) .............................................................................. 27

, -

S.Ct.

1537 (2013)

.......................................................................................... -

Whitman v. Am. Trucking Assn,

531 U.S. 457, 468 (2001) ..................................................................................... 45 Yates v. Hendon,

541

Ziglar v. Abbasi,

16 137

U.S.

S.Ct.

(2004)

........................................................................................... -

1843

(2017)

........................................................................................... -

Statutes

23 29

229

2029

14 - 18 29

29 U.S.C. § 1109 .........................................................................................i, -18-,- 2117 29

29 U.S.C. § 1111 ........................................................................................................-518 29

29 U.S.C. § 1132(a)(2).........................................................................................passim

34 29

29 U.S.C. §1104(a)(1)(D). ........................................................................................ 34 33

29 U.S.C. §1132(a)(5)..................................................................................i, 12

29 U.S.C. 1132(a)(3) ........................................................................... 28

29USC1111.........................................................................................................-37U.S.C.

U.S.C.

1132(a)(6)

1001

........................................................................................................ -

1001(b)

1106

............................................................................................ -

.................................................................................................. -

............................................................................................-

1109(a)

1132(a)

, -

................................................................................................ -

.................................................................................................. -

§1102(a)(1)

............................................................................................... -

Constitution of the United States

ArticleIII ............................................................................................passim

Treatises

718, 731 ............ 25 George Gleason Bogert, The Law of Trusts and Trustees

Restatement (Third) of Trusts § 94 cmt. b ............................................................ 25 Restatement (Third) of Trusts § 94 cmt. b. (2007) (emphasis added) .............. 25

--1--

PETITION FOR A WRIT OF CERTIORARI

John J. Koresko, V respectfully petitions for a writ of certiorari to review the

judgment of the United States Court of Appeals for the Third Circuit in this case.

OPINIONS BELOW

The order denying panel rehearing and rehearing en banc (App., infra, la) is

unreported. The opinion of the court of appeals dated March 23, 2018 (3a) is

unreported but available at Sec'y U.S. Dept. of Labor v. Koresko, 726 Fed. Appx. 127

(3d Cir. 2018). The opinion of the court of appeals dated April 2016 (36a) is

unreported, but available at Sec'y U.S. Dept. of Labor v. Koresko, 646 F. Appx. 230

(3d Cir. 2016).

The district court's order of August 31, 2016 (20a) is unreported but available

at 2016 U.S. Dist. LEXIS 117384. The prior orders of the district court are reported

at Perez v. Koresko, 86 F.Supp.3d 293 (E.D. Pa. 2015) (151a) ("Perez") and Solis v.

Koresko, 884 F.Supp.2d 261 (E.D. Pa. 2012) (236a) ("Solis")

--2-JURISDICTION

The judgment of the court of appeals was entered March 26, 2018. The court of

appeals denied a petition for panel rehearing and rehearing en banc on June 12,

2018. (la.) On August 30, 2018, Justice Auto extended the time to file a petition for

certiorari to and including November 9, 2018. No. 18A225. The jurisdiction of this

Court is invoked under 28 U.S.C. 1254(1).

CONSTITUTIONAL AND STATUTORY PROVISIONS INVOLVED

The relevant provisions of the Employee Retirement Income Security Act of

1974 (ERISA), 29 U.S.C. 1001 et seq., and the United States Constitution are

reproduced in the appendix to this petition (132a).

--3-INTRODUCTION

In February 2004, the United States Department of Labor (DOL) initiated an

investigation into unspecified fiduciary duty violations of the Employee Retirement

Income Security Act of 1974, 29 U.S.C. § 1001 et seq. ("ERISA") involving the

Regional Employers' Assurance Leagues' Voluntary Employees' Beneficiary

Association ("REAL VEBA") (156a). REAL VEBA was a multiple-employer welfare

benefit trust, a vehicle of private enterprise. Petitioner created REAL VEBA.

(171a).

The Secretary has never alleged that REAL VEBA was ever an ERISA plan.

(159a, 299a).

Instead, this case concerns REAL VEBA trust property, owned by a trustee,

that was mysteriously transmuted by the Secretary into the "property" of

theoretical ERISA plans. The Secretary was able to convince the courts below that

those theoretical plans (not people) had rights and property interests "under typical

notions of property law," (309a) despite nothing in the common law, the documents,

or ERISA that ever gave trusts, quasi-trusts, or "plans" any rights or property

interests.' Eventually, Petitioner and his affiliates were sued and put out of

business when the district court seized the REAL VEBA non-ERISA trust, and

found strict liability for millions of dollars of "transfers" (assumed to be damages)

among the Petitioner's affiliates, even though there was never any allegation or

The Circuit and District Courts agreed: "[T]he documents do not confer legal

title on the plans, they manifest an intent to confer a beneficial interest..." (312a)

(emphasis added). "The nature of any particular beneficiary's interest in the assets

of the REAL VEBA Trust is irrelevant.

(313a).

. .."

--4-proof that anything they did ever resulted in diminution of the benefits owed to the

real people entitled to any benefit. (313a).

The first issue

the Secretary's representational standing to seek monetary

damages on behalf of theoretical plans, in the absence of any concrete injury to any

real person

is one of first impression in this Court and obvious national

importance. The issue of concrete injury in ERISA cases has already divided the

circuits. It seems commonly sensible that before the government dismantles people

with its unlimited resources, it should at least have to demonstrate more than

theoretical harm

especially when the object is money. Congress, after all, did not

bestow on any "plan" any rights or a juridical body.

The second issue faces this Court for the first time because the courts below

ignored Petitioner's right, as the one person with settlor, sponsor, administrator,

and even trustee powers, to choose state trust law to govern the arrangement, and

make sure ERISA could not apply, rather than suffer the fluid theories and endless

resources of a federal regulator. Petitioner's act of executing a critical amendment

document is uncontested, and that should have been enough to end this case in

2009, considering that Petitioner controlled the arrangement and wrote all the

governing documents. This Court should decide whether ERISA standing of the

Secretary ultimately depends on a settlor's intent and whether the settlor's

reasonable construction of all governing documents, even amendments, deserves

deference in the federal courts --just like the common law of trusts.

Without review of the third question, Petitioner is wrongfully barred for life

--5-from his profession under a permanent injunction that federal courts never had

authority to grant. Congress only barred certain felons from certain positions

involving ERISA plans 29 U.S.C. § 1111

not all plans, and not all trusts with a

possible ERISA connection. The rulings below have no historical precedent in any

treatise or case of this court involving ERISA or the general law of trusts. Lower

courts are not empowered to invent novel ERISA remedies. Massachusetts. Mut.

Life Ins. Co. v. Russell, 473 U.S. 134 (1985).

L---------------------------------

Erm

STATEMENT OF THE CASE

A. PETITIONER AND THE TRUST STRUCTURE

Petitioner John J. Koresko, V was at all relevant times the president of both

Koresko Law Firm, P.C. and PennMont Benefit Services, Inc ("PennMont").2 In

2002, Petitioner, through the firms he controlled, created an unincorporated

association of unrelated employers called the Regional Employers Assurance

Leagues" ("REAL," "League"). He offered unrelated employers the opportunity to

create and adopt welfare benefit arrangements, particularly death benefit plans,

through the REAL Voluntary Employees' Beneficiary Association ("REAL VEBA")

Trust. PennMont was named Plan Administrator in all governing documents. It

possessed the authority of a trustee (78a, 80a, 91a: §2.04,6.03), and it spoke for the

League. (87a §11.3). Petitioner was also sole director of Penn Public Trust, a nonprofit corporation ("PPT"), which served as trustee at various times. Petitioner

wrote all of the plan and trust documents, and under a Custodial Agreement (114a)

had authority as agent of the custodial trustee, Community Trust Co., to "effectuate

the terms of REAL VEBA trust, including, but not limited to, surrender of.

withdrawal of cash value from, and/or borrowing from an Insurance Policy." He ran

the League, or he was the League. (Perez, supra, at 315 (171a)).

More than 400 employers (called "participating employers") adopted

arrangements under REAL VEBA, all offering death benefits. Each executed an

The Circuit Court relied on the facts stated by the District Court in its

memorandum supporting partial summary judgment (Solis, 236a) and its subsequent

opinion (Perez, 151a). See 36a 39a.

--7-Adoption Agreement to join the League and subscribe to the trusts. (124a, 172a)

The employers paid League set up fees and ongoing administration fees when billed

by PennMont. In joining the League, employers agreed to be bound by the

governing documents including the Master Trust Agreement (78a), REAL VEBA

master Plan Document (91a), and their individual Adoption Agreement. (124a).

Participating employers selected the type and amount of benefits offered and set

certain eligibility requirements for their employees. (124a, 173a). Only eligible

employees could participate. (124a, 131a). The trust property consisted of employer

contributions, which the adoption agreements required, and life insurance policies

taken out on the lives of participating employees to fund the benefits. (91a).

Benefits were then paid according to each adoption agreement, subject to the

governing documents for the trust. (174a).

Death benefits were defined as a multiple of a participant's compensation

(131a), but no benefits were payable unless they were insured. (91a, §7.05(g)). The

only amounts in the trust fund absolutely committed to benefit payments were

amounts received from insurance carriers. (Id., 307a) PennMont had broad

discretion to determine all elements of participation, eligibility for benefits,

calculation and method of payment, accounting, every other relevant matter

relating to operation of the trust and any underlying arrangement. (Id., see e.g.

§6.03,174a). PennMont had discretion to classify any amounts in the trust as

experience-gains and surplus, which amounts also were not committed to payment

of any benefit. (Id. § 9.02(c)).

REAL VEBA's trustee and administrator paid the insurance policy premiums.

The trustee was the owner and beneficiary of each policy. (Id. § 7.05). Each

Adoption Agreement defined the interest of any participant as "year to year"

coverage, having "no economic benefit" or cash surrender value. (124a, par. 8). No

interest in any trust property existed in anyone beyond that created by the

governing documents. REAL VEBA did not ever maintain separate accounts in any

participant's name or define benefits by any account balance. (91a, § 8.01, 8.04).

Each prospective participant in REAL VEBA was required to execute a

Participation Agreement acknowledging his consent to the arrangement along with

a limited power of attorney for Petitioner, his firm, the administrator and trustee of

REAL VEBA to act on his or her behalf. (131a). The Master Plan, §10.21, gave

PennMont, the Trustee or its delegate (including Petitioner) power of attorney to act

on behalf of each participating employer with respect to all "questions, controversies

and issues relating to the Plan * * * involving the Department of Labor." In the

event of failure of the Plan Administrator, each Adoption Agreement named

Petitioner as Secretary of a "Plan Committee" with authority to exercise the

Administrator's powers. (124a, par. 9).

The trust, or any employer arrangement, could be terminated or amended in

whole or part at any time, for any reason, with or without the consent of any

employer. Petitioner could amend under any of four provisions: as designated

representative of any employer (Plan § 9.03(a)), the League (Plan § 9.03(b)),

Administrator (Plan § 6.03), and under the League's 2002 revised power. (Trust §

9.1, 11.3). In the event of any conflict in the documents, the Trust document

controlled (Plan §10.22)(113a); and it contained no anti-discrimination provision.

B THE SECRETARY'S SUIT AND THE 2009 AMENDMENT

In March 2009, the Secretary ' i. .y sued Petitioner, his law firm, PennMont

and other affiliates in the Eastern District of Pennsylvania. NO, 09-cv-00988. The

Secretary alleged a breach of fiduciary duties with respect to several individual

Welfare benefit plans. (38a).

Petitioner contested the authority of the Secretary to proceed under ERISA,

citing the Secretary's published opinions that multiple employer arrangements like

REAL VEBA are not ERISA plans. (299a-300a). Petitioner expected that typical

laws of property should apply: (1) plans and trusts do not own anything; (2) if a

trust is not an ERISA plan, a plan does not "own" the trust's assets; and (3)

unvested contract rights are executory, not equitable remainder interests. (254a.)3

In July 2009, Petitioner believed he had discretion to amend the governing

documents. He amended them to provide that no future benefits would be payable

to any person not an owner-employee ("OE") or the spouse of an OE. (44a, 116a,

304a). Petitioner and his brother signed as President and Vice-President of

PennMont, respectively; and Petitioner signed "as Attorney-in-Fact for all

participating employers" and "participating employees." (Id.). DOL litigation was

The District Court noted the simplicity of the arguments, based on property

and contract law, and that participants in a defined benefit plan have no interests

in trust assets; but said that defined benefit plan analysis only applies to pension

plans and "overlooks the dispositive context in which the plans operate." (254a).

still in the starting blocks. Thereafter, Petitioner, PennMont, PPT, and his

affiliates treated the trusts and arrangements as amended and terminated with

respect to any benefits involving non-owner employees ("NOEs"), and accordingly,

not within the scope of ERISA.

Petitioner and the other defendants filed a motion to dismiss the Secretary's

complaint, alleging the district court lacked subject-matter jurisdiction because

ERISA did not apply, and the Secretary lacked Article III standing. The district

court, Jones, J., denied the motion in a memorandum dated August 31, 2009. [Doc.

107.1 The court denied the Secretary's first request for preliminary injunction on

January 11, 2010.

In the two years following the amendment, the trustee PPT obtained loans

from various insurance companies and Petitioner acted, pursuant to his authority,

to apply other surplus funds to other investments. Surplus was used to pay

expenses of operations. The Secretary filed a "supplemental complaint" in 2012

[Doc. 349] alleging that all these actions were ERISA prohibited transactions.

(161a).

C. THE DISTRICT COURT JUDGMENTS

2012

to 2015

On August 3, 2012, the United States District Court for the Eastern District of

Pennsylvania (McLaughlin, J.) entered an order granting in part and denying in

part the Secretary's motion for partial summary judgment. (236a, Solis, supra).

Judge McLaughlin said that Petitioner did not in 2009 follow the amendment

procedure of the documents he wrote. Even though the court wrote that he signed

--11-"as attorney in fact for each of the adopting employers," the court said there was no

"argument" that Petitioner signed in that settlor/sponsor capacity. Further, such an

amendment was allegedly contrary to public policy. Solis, at 280.

On September 16, 2013, the District Court granted the Secretary's application

for a temporary restraining order and preliminary injunction [61a, Doc. 496],

removing Petitioner and other defendants from "any position they may currently

hold with regard to the [Trusts]." That Order also appointed an Independent

Fiduciary for the Trusts (defined below) and barred the Trusts from advancing

defense costs to Petitioner or his affiliates. [61a, at ¶ 12]. The Court also imposed a

prejudgment seizure of the bank accounts of Petitioner's law firms and affiliates,

and effectively put them out of business. Petitioner appealed the injunction, again

contesting the Secretary's standing and statutory authority, but the Third Circuit

never considered the merits. No. 13-3827 (C.A. 3 June 2015). Two weeks after the

injunction, the Secretary filed a motion for contempt, which the court denied a year

later. (Doc. 990).

After having allowed Petitioner and his affiliates the money necessary to hire

counsel to defend the contempt proceedings, the District Court scheduled a trial and

terminated all indemnification and legal fees. (161a). The District Court conducted

a bench trial on June 9, 10 and 11, 2014, receiving only the Secretary's evidence.

Petitioner was unrepresented. (168a). Shortly afterward, on June 27, 2014, the

Court allowed counsel to reappear for Petitioner to assert his post-trial rights and

certain "limited tasks." (Doc. 898; & 168a).

--12-In February 2015, the district court issued a memorandum opinion that

tracked the Secretary's version of Petitioner's alleged violations of ERISA. (Perez,

151a-235a). ERISA applied because Petitioner's amendment was ineffective with

respect to over 400 welfare benefit plans. Nowhere did the Court say that any

benefit payable to anyone was reduced or put at risk by the contested "payments"

and "investments." The Court ruled that Petitioner's affiliates had never been

permitted to pay themselves fees, or to place money into multiple accounts, or

invest, despite their undisputed control of the entire arrangement, the expansive

powers granted them by employers, employees, and other fiduciaries, and the

settlor/sponsor/administrator/and trustee powers they drafted into the governing

documents.

The, Court entered a judgment in March 2015 (55a, 68a) consisting of three

elements, including a monetary award it called "restitution and disgorgement."4

First was a money judgment for over $38 million, immediately reduced by over $19

million previously seized from Petitioner's affiliates. The court then ordered

Petitioner to turn over any plan assets

if they were in his possession. Finally,

going beyond the Secretary's prayer in any filed complaint and the statute, the

court barred Petitioner, forever, from ever serving in any capacity in connection

with any ERISA arrangements (268a) but the judgment extends the bar to any

"employee benefit plan." (55a).

The Court specified that the monetary relief flowed from 29 U.S.C. §

1132(a)(2) (267a), while the injunction and permanent bar flowed from § 1132(a)(5)

(268a).

--13-Nothing in the district court's opinion or in the separate final judgment order

gave any relief or monetary award in favor of the Secretary. (Id., 17a). The relief

was specifically entered in favor of the "Plans" and "Trusts." (Id.)

The Court denied Petitioner's motion for a new trial. (38a). After Petitioner

appealed the Court's March 2015 judgment, the Court issued an order on August 4,

2015 appointing a permanent independent fiduciary over the non-ERISA trusts and

the "plans." (61a).

D. THE THIRD CIRCUIT'S DECISIONS 2016 to 2018 AND CIVIL

INCARCERATION

The Third Circuit rejected Petitioner's assertion that ERISA never applied to

this case because the 2009 Amendment validly eliminated any possible

participation of non-owner employees. Sec'y U.S. Dept. of Labor v. Koresko, 646 F.

Appx. 230, 241-43 (3d Cir. 2016). Although aware that all the adopting employers

had expressly vested settlor, sponsor and administrator powers in Petitioner,5 id.,

the Circuit Court affirmed the district court's determination that even though

REAL VEBA was not an ERISA plan, individual theoretical "plans" held property

rights in trust assets that could be enforced by the Secretary under a strict liability

5 Petitioner's brief spoke of his settlor powers:

"Mr. Koresko executed the Master Trust Agreement on behalf of REAL as its

attorney in fact. [GX-48]. Although he signed the 2009 Amendment "as Attorney in Fact

for all Participating Employers," since the participating employers are REAL, it is a

distinction without a difference and should not affect the validity of the 2009

Amendment. Mr. Koresko was authorized to approve the 2009 Amendment and he did

so. Any other conclusion elevates form over substance."

Brief of Appellant, available at 2015 WL 5697497 (C.A.3), at *22 23.

14- -

statute, 29 U.S.C. § 1106. There is not one word about the rights of real people by

any of the courts below, id. at 236 245, because the Secretary sued "on behalf of

the Plans," not on behalf of beneficiaries. [Doc. 107, p. 17.1 The courts thus

adopted the position of the Secretary that (i) a plan is an entity with its own

"beneficial ownership interests" in property under ERISA; (ii) the Secretary can

assert representational standing for a legal fiction; and (iii) a court is free to ignore

the procedures of trust amendment implemented by the person who possessed every

conceivable power to control the trust and any underlying benefit plan.

The Third circuit's nonprecedential opinion appeared in April 2016 but did not

dispose of the entire case.6 Simultaneously, the Secretary attacked Petitioner for

alleged failure to turn over "plan assets," including $1.68 million that was already

included and double-counted in the original money judgment of March 2015. [A320,

Doc. 1134-1, Lines 1, 2, 3]. Petitioner surrendered after a new judge, Beetlestone,

J., refused him indemnification for counsel and declared him in contempt of the

2013 preliminary injunction. (Doc. 1307, 1311). He was put in solitary confinement

on May 5, 2016, deprived of counsel, and rendered unable to seek rehearing or

review in this Court of the Third Circuit's April 2016 decision. He was not able to

appeal the contempt matter until September 29, 2016. (3a).

This case arises now on appeal from decisions of the Third Circuit which

affirmed the validity of the incarceration and its use by the Secretary to collect

Petitioner appealed the District Court ruling that he bear the future costs of the

fiduciary's appointment. That appeal was dismissed for lack of a final order, and there is

not yet a final order relating to the total due. (49a-52a).

--15-parts of a money judgment that never granted one penny of relief contemplated by

ERISA to the Secretary or any other real person or juridical entity. (la, 3a).*

In footnote 4 of its May 2018 opinion, the Third Circuit rejected Petitioner's

reassertion that the district court never had jurisdiction because the Secretary

never had statutory authority or Article III standing to continue the suit as of the

retroactive date of amendment, April 2009. (iGa). Observing that Petitioner cited

"two recent Supreme Court decisions, Ziglar v. Abbasi,

(2017), and Spokeo, Inc. v. Robins,... 136 S.Ct. 1540 .

137 S.Ct. 1843

(2016) for the proposition

that the DOL lacked standing to seek relief against him because.. the Plans did

not sustain a pecuniary loss," the Circuit Court found those cases only "instructive

in the areas of immigration.

and the Fair Credit Reporting Act (Spokeo, Inc.)."

The Court said that Ziglar and Spokeo "have nothing to do with standing to obtain

redress for an ERISA fiduciary's breach of duties." Instead, it followed Edmonson V.

Lincoln, National Life Insurance Co., 725 F.3d 406, 417 (3d Cir. 2013), saying: "a

financial loss is not a prerequisite for standing to bring a disgorgement claim under

ERISA," id., at 428, assuming that "plans" have rights the Secretary can enforce in

equity, in the presence of a clearly adequate and crippling monetary judgment. The

district court continues to this day its actions to liquidate REAL VEBA trust and

infringe Petitioner's interests therein.

District Judge Beetlestone held Petitioner in federal prison twenty-four months

after he was deposed and swore he had no plan assets. Judge McLaughlin never

said he possessed any, as of the 2015 judgment or thereafter. (55a)

-------------------------------- U--------------------------------*

16--

REASONS FOR GRANTING THE PETITION

I. The First Question The Secretary's Standing in Cases of Reduced

Plan Surplus, Without Concrete Harm to Real People or Their

Benefits Warrants Further Review.

A. The Third Circuit's Decision Contradicts The

Uniform View of This Court And The Other Circuits

In Cases Involving Defined-Benefit Arrangements.

This Court held in 1995, in Hughes Aircraft v. Jacobson, 525 U.S. 432 (1995),

that a fiduciary could amend a defined benefit pension arrangement, freeze any

accrued benefits due to participants, and then, if there were any surplus, refund it to

the sponsor of the arrangement. This Court agreed that a plan sponsor could remove

millions out of an ERISA plan after amendment, without triggering liability (see 29

U.S.C. § 1106), once that sponsor determined that accrued benefits were fully-funded.

To arrive at that holding this Court agreed that in the case of defined benefit

pension plans, the participants and beneficiaries have no interests in "plan assets."

See Malia v. General Elec. Co., 23 F.3d 828 (3d Cir. 1994), at 830 n.2, 831-832. When

the benefit is defined by plan terms, not by an account balance, a participant's only

interest is in the plan's contractual promise of that benefit. Id. And so long as the

plan pays promised and vested benefits, or has enough assets to pay them, any excess

money is not locked in forever, and not within the realm of ERISA's concern. Id.

That result is consistent with the historic law of trusts, when a settlor expressly

reserves a reversionary interest to himself, or implicitly does so by retaining the

ability to revoke or amend a trust in its favor. Moreover, that holding respects the

--17-fundamentally contractual nature of benefits in the employment context, especially

non-pension benefits like those at issue in this case.

In Hughes Aircraft, this Court thus established the circumstances under

which people articulate a harm sufficient to trigger an ERISA remedy in a case

of reduced corpus. ERISA remedies depend on how each arrangement is

constructed and what it promises. Participants in a defined-benefit plan have no

"claim to any particular asset that composes a part of the plan's general asset

pool." 525 U.S. at 440. Instead, participants have only "a right to a certain

defined level of benefits." Ibid. In other words, defined-contribution-plan

participants have rights in certain specific assets in the plan; but definedbenefit-plan participants do not. The ability to sue tracks the contract right.

This Court reaffirmed that distinction in LaRue v. DeWoiff, Boberg & Assocs.,

Inc., 552 U.S. 248, 255 (2008), clearly spelling out when an ERISA plan participant

can demonstrate a personal harm for purposes of an ERISA cause of action. 552

U.S. at 253. A plaintiffs cause of action for fiduciary misconduct depends on the

status of his benefits under the plan and the directness of his interest in assets.

An actionable "loss" resulting from breach of fiduciary duties, 29 U.S.C. § 1109(a),

requires loss of money or profits that people have an expectation of enjoying. If

the participant belongs to a "defined-contribution plan," where he owns certain

assets held by the plan on his behalf, he can sue if he shows a real harm

when

fiduciary misconduct "diminishes plan assets payable to all participants * * * or

only to persons tied to particular individual accounts" that include his. LaRue,

--18-552 U.S. at 256. But if he belongs to a "defined-benefit plan," where people are

not entitled to certain assets in the plan, misconduct by the fiduciary does not

suffice "unless it creates or enhances the risk of default by the entire plan." Id. at

255.

Hughes Aircraft cemented the view that a defined benefit plan consists of two

"pots." ERISA protects the pot of assets necessary for payment of benefits. LaRue,

supra, at 255. The remainder (if any) of a fund, consisting of "surplus" does not

demand a razor-edged application of ERISA for at least two very practical and

important reasons. ERISA is not a vehicle for employee windfall; and an employee

benefit arrangement is not charitable.

Accordingly, the Circuit Courts have unanimously agreed, in a variety of factual

settings, that even if there is an act by a fiduciary that may appear actionable as a

breach of fiduciary duty (29 U.S.C. 1109) or prohibited transaction (29 U.S.C. § 1106),

participants and beneficiaries suffer no injury-in-fact necessary for suit under ERISA

§ 502(a) (29 U.S.C. § 1132(a)) when there is an alleged reduction of surplus, so long

as there are sufficient amounts remaining in a fund to pay vested benefits. See

Duncan v. Muzyn, 885 F.3d 422, 427 (6th Cir. 2018); Thole v. U.S. Bank, Nat'l Assn,

873 F.3d 617, 630 (8th Cir. 2017); pet. for cert pending No. 17-1712; Lee v. Verizon

Commc'ns, Inc., 837 F.3d 523, 546-47 (5th Cir. 2016), cert. denied sub nom. Pundt v.

Verizon Commc'ns, Inc., 137 S. Ct. 1374, 197 L. Ed. 2d 568 (2017) (finding

participants did not have standing when a plan was only 66% actuarially funded);

Soehnlen v. Fleet Owners Ins. Fund, 844 F.3d 576, 583 (6th Cir. 2016); Perelman v.

__19__

Perelman, 793 F.3d 368 (3d Cir. 2015); David v. Aiphin, 704 F.3d 327, 338 (4th Cir.

2013); McCullough v. AEGON USA Inc., 585 F.3d 1082, 1084 (8th Cir. 2009); Cent.

States Se. & Sw. Areas Health & Welfare Fund v. Merck-Medco Managed Care, L. L. C.,

433 F.3d 181, 199 (2d Cir. 2005); Kendall v. Emps. Ret. Plan of Avon Prods., 561 F.3d

112, 121 (2d Cir. 2009).

The foregoing cases repeat the reasoning of Harley v. Minn. Mining & Mfg. Co.,

284 F.3d 901, 906 (8th Cir. 2002), which relied directly on the dichotomy established

in Hughes Aircraft. Since surplus only relieves sponsors from future contributions

necessary to fund benefit obligations, the sponsors have the predominant property

interest; and therefore, a "loss" involving erosion of surplus does not implicate any

concern in ERISA. Ibid. There may be a loss, but not a legal damage.

The foregoing cases all involved pension plans, which require that some or all of

a benefit promise become vested (i.e., nonforfeitable) at a time dictated by statute.

In contrast to pensions, welfare benefits (like those at issue in this case) are not

vested. M&G Polymers USA, LLC v. Tackett, 524 U.S.

135 S. Ct. 926, 944 (2015).

A plan sponsor can amend, change, or eliminate benefits at any time, for any reason.

Id.; Curtis-Wright Corp. v. Schoonejongen, 514 U.S. 73, 78 (1995) ("[e]mployers or

other plan sponsors are generally free under ERISA, for any reason and at any time,

to adopt, modify or terminate welfare plans."). Welfare benefits arrangements have

the least amount of ERISA regulation, especially when the benefits are fully-insured

and do not depend on investment acumen. The fully-insured welfare arrangements

in this case, of the defined benefit variety, were the least regulated of anything

touched by ERISA.

Despite the foregoing, the courts below allowed the Secretary to sue Petitioner

and proceed under ERISA to seize assets

benefit plans (non-trusts)

allegedly "beneficially owned" by welfare

that were never promised to participants and which

participants could not obtain in any suit on their own. Under Hughes Aircraft and

its progeny, no real person had statutory or Article III standing to complain about

the particular assets at issue in this case

those not necessary to discharge any

vested obligations set forth in the documents governing any alleged ERISA plan. The

foregoing cases that evolved from Hughes Aircraft all confirm that a participant's suit

"on behalf of a plan" is not permitted without concrete, individualized harm to a real

person, whether viewed in terms of Article III standing or the statutory zone of

interests shared by ERISA plaintiffs.

See Lexmark Intl, Inc. v. Static Control

Components, Inc., 134 S. Ct. 1377, 1384 86 (2014). It does not matter whether the

erosion of plan surplus (allegedly caused by a fiduciary's act) is $25.00 or $25 million.

In short, loss to surplus does not translate into an actionable loss to "the plan" (within

the meaning of ERISA), especially when (as here) the party with authority retains

the power to amend and thereafter remove surplus from any arrangement.

There is nothing in the statutory design to indicate that the Secretary of Labor

obtained from Congress any broader statutory zone of interests than participants.

Ibid. Participants are the people who have whatever rights Congress intended to

protect, 29 U.S.C. § 1001(b), and only their rights (not regulatory desires) define the

boundaries of ERISA enforcement, especially when the object is monetary award

--21-under 29 U.S.C. § 1109.

Accordingly, given the uniform message of Hughes Aircraft and the cases

relying upon it, prior to this case, an actual or functional fiduciary of any welfare plan

(like Petitioner) could not reasonably discern that his duty was greater, and more

subject to strict liability, than if this were a matter involving a pension plan. Given

Curtis-Wright, a fiduciary could not know that his right to amend could be abolished,

and his intention to secure the same outcome of Hughes Aircraft could be supplanted

in favor of previously unknown "rights" and "beneficial interests" of a "plan."

Certainly, the breadth of the Secretary's power is an issue of national

importance that warrants this Court's attention. This is especially urgent in the light

of this case where the courts below allowed the Secretary virtually every remedy

imaginable, when there was not a dollar of proven harm to the promises made to

anyone. This Court should review whether the Secretary can sue, take over nonERISA trusts, obtain crippling money judgments, and then jail people, to satisfy only

the Secretary's regulatory appetite.

B. The Decision Below Conflicts With This

Court's Well-Established Doctrines

Involving Standing and The Law of Trusts.

1. Conflict with Spokeo v. Robins.

This Court has never treated an ERISA "plan" as an entity which could,

because of its personal injury, be the focus of representational standing by the

Secretary. The premise of a remedy based on entity injury disregards that

Congress intended that the duties of plan fiduciaries be informed by the law of

-22-

trusts; and it ignores centuries of law rejecting any notion that a trust—as an

entity

could sue for breach of fiduciary duty. It ignores that equity courts only

acted to protect the rights of people.

This Court's Article III precedents require injury-in-fact. The individual

plaintiff must allege some personal injury fairly traceable to the defendant's

allegedly unlawful conduct and likely to be redressed by the requested relief.

Spokeo, Inc. v. Robins, 136 S. Ct. 1540, 1547

48 (2016) (citations omitted). Even

in cases of private suits involving public rights, a plaintiff must allege a personal

concrete harm. Ibid

An actual injury must exist for the plaintiff, or some real

person he can represent, because the mere allegation of procedural violation,

"divorced from any concrete harm" cannot "satisfy the injury-in-fact requirement

of Article III." Ibid. (citing Summers v. Earth Island Institute, 555 U.S. 488, 496

(2009)).

The standing of the Secretary of Labor to assert a claim for money (under a

legal or equitable theory) for breach of fiduciary duty under ERISA, 29 U.S.C. §

1132(a)(2), must, therefore, depend on whether a vested interest of a citizen has

been harmed by an alleged violation of ERISA. The Secretary has no typical basis

to assert representational standing, like contractual assignment, see Sprint

Communications Co. v. APCC Services, Inc., 554 U.S. 269, 274 (2008), or statutory

sharing of any pecuniary interest. See Vermont Agency of Natural Resources v.

United States ex rel. Stevens, 529 U.S. 765, 775-777 (2000)(qui tam).

The Third Circuit's decision conflicts with this Court's precedents,

--23-particularly Spokeo, Inc. v. Robins, 136 S. Ct. 1540, 1547 (2016). In Spokeo, this

Court vacated the Ninth Circuit's decision for failure to consider that an injury in fact

under a statute must be both "particularized" and "concrete." Id. at 1544, 1550. This

Court elaborated that "[fl establish injury in fact, a plaintiff must show that he or

she suffered 'an invasion of a legally protected interest' that is 'concrete and

particularized' and 'actual or imminent, not conjectural or hypothetical." Id. at 1548

(citation omitted). Injury is not concrete simply because a plaintiff alleges violation

of his statutory rights. Id. A plaintiffs "personal interests" in the statutory goal

"[a]re individualized rather than collective." Id.

Those reasons "concern

particularization, not concreteness." Id.

Under the plain language of Spokeo the Secretary of Labor does not satisfy

"the injury-in-fact requirement" simply because ERISA "grants [him] a statutory

right and * * * authorize [s] him to sue to vindicate that right." Ibid. He must show

that the alleged statutory injury has resulted in actual harm to the ability of "the

plan" to satisfy in full its obligations to pay real people their vested levels of

no ndiscre tio nary benefits.

If the Secretary had sought the penalties he can assess under 29 U.S.C.

1132(a)(6), (i) or (1) for violations of the prohibited transactions provisions of

ERISA, at least he would have asserted some "concrete injury" to the United

States "in the context of statutory violation." Id. He did not.

2. Trust law confirms the purely theoretical injury here.

In Spokeo, this Court stated that a "concrete injury" must be "real" and not

--24-"abstract." Ibid. at 1548-49. While "intangible injuries can nevertheless be

concrete" for constitutional standing purposes, ibid. at 1549, an intangible injury

also assumes the existence of an intangible right possessed by a natural or legal

person. This Court elaborated that "[i]n determining whether an intangible harm

constitutes injury in fact, both history and the judgment of Congress play

important roles." Ibid. First, "it is instructive

whether an alleged intangible

harm has a close relationship to a harm that has traditionally been regarded as

providing a basis for a lawsuit in English or American courts." Ibid. Second,

"because Congress is well positioned to identify intangible harms that meet

minimum Article III requirements, its judgment is also instructive and

important." Ibid. In this case, there is no traditional basis for assuming that

Congress identified an intangible harm as catalyst for the Secretary's suit.

As a matter of the common law in England and America, trusts have no

rights that can be harmed, they cannot sue, and nobody sues for a trust as "its"

representative. A trust is "an abstraction" at law. Greenough v. Tax Assessors

Of City Of Newport 331 U.S. 486, 494 (1944). Sometimes Congress deals with a

trust as though it has a separate existence, but "the economic pinch is felt by men

of flesh and blood." Id.; citing Anderson v. Wilson, 289 U.S. 20, 27 (1933). A trust

is simply the division of simultaneous interests in property: the equitable interest

in the res of the beneficiary and the legal interest of the trustee. Greenough,

supra. The trust estate cannot make a promise. Greenough, 331 U.S. at 495.

Neither a trust estate nor trust property are recognized as separate legal or

--25--

equitable entities. George Gleason Bogert, The Law of Trusts and Trustees_

718, 731.

A trust case always involves a duty relating to a right of a real person. At

common law, only a "beneficiary whose rights are or may be adversely affected by

the matter(s) at issue" may bring "suit to enforce a private trust." Restatement

(Third) of Trusts § 94 cmt. b. (2007) (emphasis added). While beneficiaries of

common-law trusts may have "an equitable interest in the trust corpus,"

participants in ERISA defined-benefit plans "have an interest solely in their

defined benefits, not in the 'general pool' of Plan assets." Duncan, 885 F.3d at 429;

see Hughes, 525 U.S. at 440 ("Given the employer's obligation to make up any

shortfall, no plan member has a claim to any particular asset that composes a

part of the plan's general asset pool."). Unless the challenged conduct puts their

individual benefits at risk, participants' rights are not "adversely affected."

Restatement (Third) of Trusts § 94 cmt. b. There is no precedent recognizing that

a quasi-trust (like the plans here) can have property interests in another trust.

As a matter of legal history, harm to a trust is at best only "abstract" and

intangible, not concrete. All Congress had to do was make a plan an entity for

purposes of 29 U.S.C. § 1132(a)(2) to take plan injury out of the abstractions

resulting from application of the law of trusts. Alternatively, it could have

expressly compelled recognition of intangible harm to secure standing for the

Secretary. But Congress did neither.

Congress did not make the ERISA "plan" a new entity with property rights

--26-in need of protection by the Secretary. Plans are not among the limited classes

of ERISA plaintiffs set forth in § 1132(a). Any notion of injury to the "rights" of

a legal abstraction

an amorphous "plan"

is about as theoretical and not

concrete as could be imagined. Nothing could be farther from ERISA's purpose or

the reason for the injury-in-fact component of Article III.

C. The Third Circuit's Decision, Expressly

Rejecting Spokeo v. Robins in ERISA Cases,

Creates An Exception For The Secretary In

Conflict With The Other Circuits

A defined-benefit-plan participant has no stake in his plan's assets, but

merely an interest in the defined benefit he is to receive at some future date.

Hughes Aircraft, 525 U.S. at 439. It does not matter what type of benefit, pension

or welfare, is involved. The participant only has standing if he can show a

fiduciary's actions created an imminent risk that promised benefits will not be

paid

i.e., so-called "plan default." See LaRue, 552 U.S. at 255; Hughes Aircraft,

525 U.S. at 439-40. Such reasoning reflects the requirement of concrete harm,

other than mere statutory violation in an ERISA case. Spokeo, Inc. v. Robins, 136

S. Ct. 1540, 1549 (2016).

In this case, the Secretary could not make that showing as the

representative of any participant and did not even try. The Secretary confined

its suit to the hyper-technical issue of whether certain uses of assets created strict

liability in the absence of harm to any person. That position was questionable

prior to Spokeo, but now there is a clear conflict as to whether Spokeo applies in

an ERISA case.

-27-

The Fifth Circuit's decisions in Lee v. Verizon Commc'ns, Inc., 837 F.3d 523,

547-48 (5th Cir. 2016) illustrate the present conflict with the Third Circuit. In

2015, the court held that participants in an ERISA defined-benefit plan lacked

Article III standing to assert fiduciary breach claims where the plan, but not the

individual, had been injured. Lee v. Verizon Commc'ns, Inc., 623 F. App'x 132, 150

(5th Cir. 2015) (rejecting "quasi-representative" standing). After deciding Spokeo,

this Court remanded Lee to the Fifth Circuit to consider Spokeo's clarifications.

On remand, the Fifth Circuit confirmed that its previous decision

"remain[ed] valid in light of Spokeo." Lee, 837 F.3d at 529. The "bare allegation of

improper defined-benefit-plan management under ERISA, without concomitant

allegations that any defined benefits are even potentially at risk does not meet

the dictates of Article III," * * * "even in the context of a statutory violation.' " Id.

at 530 (quoting Spokeo, 136 S. Ct. at 1549). In doing so, the Fifth Circuit

reaffirmed its holding that "representational standing" requires a personal harm

to the plaintiff or his privy. "[C]oncluding otherwise would vitiate the Supreme

Court's explicit pronouncement that 'Article III standing requires a concrete injury

even in the context of a statutory violation." Id. at 546-47 (5th Cir. 2016), (quoting

Spokeo, supra at 1549). The Lee court also relied on Kendall v. Emps. Ret. Plan of

Avon Prods., 561 F.3d 112, 120 (2d Cir. 2009). The Kendall court dismissed ERISA

claims based on alleged "general" breaches of fiduciary duty without any violation of

"specific" rights impaired by the breach. Kendall, 561 F.3d at 119.

After this Court decided Spokeo, the Sixth Circuit revisited the issue of

--28-representational standing. In Soehnlen v. Fleet Owners Ins. Fund, 844 F.3d 576,

584 (6th Cir. 2016) the court confirmed the holding of Spokeo that Article III

requires plaintiffs to "show that the deprivation of a right created by statute is

accompanied by 'some concrete interest that is affected by the deprivation.'

Soehnlen, 844 F.3d at 582 (quoting Spokeo,136 S. Ct. at 1548). Soehnlen thus

concluded that plaintiffs cannot establish Article III standing merely by showing

"[d]efendants' violations of their ERISA rights"; they must also demonstrate

"what concrete harm they suffer as a result." Ibid.; see id. at 583 (recognizing

Kendall reached the same conclusion).

Soehnlen applied this post-Spokeo reasoning in rejecting the plaintiffs'

breach of fiduciary duty claim (§ 1132(a)(2)) and the plaintiffs' § 1132(a)(3) claim

(for "appropriate equitable relief') premised on the allegation that the defendants

"breached their fiduciary obligations" to the ERISA plan in question by

"subjecting it to over $15,000,000 in taxes and penalties." Id. at 584. The

allegation was "plan injury." Citing the Second Circuit's Kendall decision, the

court explained that ERISA plaintiffs cannot merely allege a plan is "deficient,"

but must instead show that a "specific right owed to them" g., the right to the

disclosure of particular information, or to the payment of particular benefits—

"was infringed." Ibid. Otherwise, a plaintiff's claim would suffer from a "lack of

concreteness." Ibid.

And although the court recognized that more general

fiduciary misconduct might "create an injury if 'it creates or enhances a risk of

default by the entire plan," (an allusion to Hughes Aircraft and LaRue, supra)

--29-the court held the plaintiffs before it had made "no showing of actual or imminent

injury to the Plan itself." Ibid. Plaintiffs therefore lacked standing. Ibid.

In a pre-Spokeo decision, the Fourth Circuit likewise held that Article III

prevents federal courts from entertaining claims by ERISA plan participants for

injuries not suffered by any individual. David v. Aiphin, 704 F.3d at 334-35.

"Where there is no actual injury, we see little to be gained from an abstract

challenge to alleged fiduciary misconduct at the cost of the plan * * *

Id. at

336. The court said that a risk to possible future benefits "as a result of the

present alleged ERISA violations is too speculative to give rise to Article III

standing." Id. at 338. The court also rejected the plaintiffs' contention that a

violation of their statutory right alone conferred standing. Ibid.

Similarly, the Eighth Circuit has held that the statutory provision at issue

here-29 U.S.C. § 1132(a)(2)

does not give a plan participant standing to bring a

claim on behalf of the plan for losses to the plan. Harley v. Minn. Mining & Mfg.

Co., 284 F.3d 901, 906-07 (8th Cir. 2002). The alleged "plan loss" of over $20

million was not a personal harm. That court was clear that mere statutory

entitlement to sue was not be enough to satisfy Article III. Ibid. Accord Thole v.

U.S. Bank, Nat'lAss'n, 873 F.3d 617, 630 (8th Cir. 2017); pet. for cert pending No. 171712.

The decision of the Third Circuit in this case conflicts with its own

contemporaneous interpretation of standing for purposes of ERISA. In Perelman

v. Perelman, 793 F.3d 368, 373 (3d Cir. 2015), the court addressed participants'

standing to bring a claim under Section 1132(a)(3) "in the form of restitution or

surcharge." Following the other circuit courts, the court rejected the argument that

a plaintiff "need not prove an individualized injury insofar as he seeks monetary

equitable remedies in a 'derivative' or 'representational' capacity on behalf of the

Plan." Perelman, 793 F.3d at 375-76. The Third Circuit noted that its "own case

law provide [d] no support for this theory, and other federal appellate courts have

unanimously rejected it." Id. at 376.

In Penman, the Third Circuit concluded that standing, for purposes of suit with

respect to a defined benefit plan, depended on individual monetary loss. Id. at 373-76.

But in reaching that conclusion, the court confirmed that plaintiffs seeking injunctive

relief need not show individual monetary loss to establish an Article III injury: "With

respect to claims for injunctive relief, such injury may exist simply by virtue of the

defendant's violation of an ERISA statutory duty." Id. at 373. That conflicts with

the reading of Spokeo announced in Lee, supra, and Soehnlen, supra. In this case,

however, the Secretary sought and secured millions of dollars of strict liability

damages for breach of statutory duty. See Judgment, par. 1 (55a).

By expressly rejecting application of Spokeo in ERISA cases (16a), in direct

conflict with Lee, supra, and Soehnlen, supra, the Third Circuit stands alone in its

view that Spokeo has no application to cases of legal or equitable relief under

ERISA (and the notion that a multi-million-dollar judgment enforced by

--31-garnishment7 is equitable relief). In the Third Circuit, the Secretary can allege

only theoretical "plan injury" (even if it demands damages under an equitable

label) to get into court. There is no logic for the distinction, especially when

Congress did not protect welfare benefits like pension benefits.

The requirement of concrete injury should apply uniformly among all ERISA

plaintiffs described in 29 U.S.C. § 1132(a) with respect to pension and welfare

plans, alike. The issue merits review.

II. The Second Question Should Be Reviewed Because ERISA Does Not

Prohibit Any Amendment By A Person Who Has

Settlor/Sponsor/Administrator and Trustee Powers, Even If It

Operates to Deprive The Secretary Of Standing.

The second issue is a matter of public importance concerning an important

issue of federal law. It addresses the standing of the Secretary of Labor in an

ERISA action and thus affects over 150 million Americans. It is an issue of first

impression.

ERISA does not bar an amendment, simply because it takes any plan out of

the statute's scope and coverage, and thereby, deprives the Secretary of standing.8

The garnishment of an account, not traced to any plan, was affirmed in the

consolidated case, No. 17-1140 (3d. Cir.)

8 The courts below correctly discerned that the Secretary's standing to sue is

irrevocably intertwined with the fundamental issue of ERISA jurisdiction since the

Secretary cannot act in the absence of an ERISA plan. (45a). See Yates v. Hendon,

541 U.S. 1, 21 (2004) (ERISA only applies when plans cover non-owner employees).

Plainly, ERISA jurisdiction must exist at all stages of a suit, even now. See

Kontrick v. Ryan, 540 U.S. 443, 455 (2004) ("A litigant generally may raise a court's

lack of subject-matter jurisdiction at any time in the same civil action, even initially

--32-The district court below said the 2009 amendment was against public policy.9

(305a). The Circuit Court's position was plainly colored by Petitioner's defensive

motivation, as demonstrated by its footnote 15 (54a) agreeing with the district court

and calling it "troubling" that Petitioner could amend a plan out of ERISA. While it

spoke directly to disregard plain words of REAL VEBA, the Circuit Court did not

overrule the district court's holding and left a gaping exception. If a plan draftsman

can create ERISA standing with his words, then, consistent with this court's

jurisprudence, his words and the powers they allocate should receive deference,

even if an amendment ends ERISA jurisdiction.

The decision of the Third Circuit Court fails to respect the clearest holdings

of this Court to regularly reverse other decisions based on judicial deviation from

the terms of governing plan documents. See U.S. Airways v. McCutchen, 133 S.Ct.

1537 (2013); Curtiss-Wright Corp. v. Schoonejongen, 514 U.S. 73 (1995). The Circuit

Court looked at the amendment process as if it were some static event frozen in

time in 2009. Virtually every time he addressed the district court after the

Secretary's suit, Petitioner said that the arrangement was amended, and he acted

as if it were. The only way to disregard the plain demonstration of intention to

amend was to find that Petitioner never had actual or apparent authority despite

at the highest appellate instance." The issue cannot be waived, despite parts of

opinions below that suggested Petitioner waived argument of the plain and

dispositive language in the governing documents. See Insurance Corp. of Ireland v.

Compagnie des Bauxites de Guinee, 456 U.S. 694, 704(1982) (no waiver of subject

matter jurisdiction). See also 28a (Petitioner challenged subject-matter jurisdiction).

The true policy issue is Congress' decision to not subject all employee benefit

arrangements to federal law and thus limit the jurisdiction of the federal courts.

--33-his many roles. Though he had sufficient authority over REAL VEBA and its assets

to paint him as a fiduciary

indeed, like a settlor he could fire the Trustee and

name a trustee (which he did in 2009, naming his affiliate PPT)

liable for $39 million of "transfers" as if he were a trustee

and he was held

the courts rejected his

most fundamental settlor powers. Sec of Labor v. Koresko, 616 Fed. Appx. 241

243. That was a mistake of law because there is no factual dispute as to what the

documents said and how the decisions below changed the words in favor of some

notion of equitable relief. "It is still hornbook law that the pole star in every trust

(and in every will) is the settlor's (or testator's) intent and that intent must prevail."

In re Trust Estate of Pew, 411 Pa. 96, 106, 191 A.2d 399,

(1963) (citations

omitted).

The mistake below is fundamental because courts and the Secretary only

have limited authority in ERISA cases. Mertens v. Hewitt Associates,

508 U. S. 248, 256 (1993). The section under which this suit is brought "does not,

after all, authorize 'appropriate equitable relief at large," Mertens 508 U. S. at 253

1993 (quoting §1132(a)(3)); rather, it countenances only such relief as will enforce

"the terms of the plan" or the statute, §1132(a)(3) [,(2), or (5)]. McCutchen, supra.

That limitation reflects ERISA's principal function: to "protect contractually defined

benefits." Massachusetts Mut. Life Ins. Co. v. Russell, 473 U. S. 134, 148 (1985). The

statutory scheme, "is built around reliance on the face of written plan documents."

Curtiss-Wright Corp. v. Schoonejongen, 514 U. S. 73, 83 (1995). "Every employee

benefit plan shall be established and maintained pursuant to a written instrument,"

34-

§1102(a)(1), and an administrator must act "in accordance with the documents and

instruments governing the plan" insofar as they accord with the statute,

§1104(a)(1)(D). Nevertheless, amendment is a settlor act divorced from any

requirement of fiduciary loyalty. Curtiss-Wright, supra.

Petitioner wrote the documents; and whether as creator, settlor, sponsor,

officer, administrator, principal, agent, or attorney (at law or in fact), he amended

the arrangement for the League, every plan committee, and all employers. The

courts disregarded the legal import of his words, the "terms of the plan" and the

"other manifestations of the parties' intent." Firestone Tire & Rubber Co. v. Bruch,

489 U. S. 101, 113 (1989). Not one word of the amendment or the amendment

procedure contradicted any part of ERISA. Petitioner's interpretation was

reasonable and should not have been disturbed, even without his extra settlor

powers. Firestone, supra at 111 (citations omitted.).

There were four separate amendment provisions

three in the Plan, one in

the Trust. The courts below failed to apprehend that the Master Plan document

was also incorporated into the Master Trust, via Plan § 10.22; and in cases of

conflict between documents, the Master Trust prevailed:

In the event of any conflict between the Provisions of this Plan Document and

the Trust document. the terms of the Trust document shall control; and the

terms of the Trust shall be incorporated by reference into this Plan.

Id. (113a).

Petitioner said the Trust overruled the Plan, since he wrote it that way. That

should have been enough, especially because the discretionary power of amendment

--35-was a settlor power. The Circuit Court concluded that its interpretation of the Plan

overruled the Trust; and that is an error of law. Schreibner v. Kellogg, 50 F.3d 264,

266 (3d Cir. 1995) (applying Pennsylvania law).

Trust § 9.01(a) (86a), created in 2002, empowered "the League" to amend the

Trust, and logically, all Plan documents included in the Trust. There was no

additional requirement that any amendment be nondiscriminatory. Petitioner was

the League, or he ran it as "a fictitious entity" consisting of Petitioner and his

brother. Koresko, 647 Fed. Appx. at 241. Employers joined it, and they gave

Petitioner power of attorney to act "with respect to all questions, controversies, and

issues relating to the Plan before

the Department of Labor." Plan § 10.21.

Plan § 9.03(a) (110a) allowed employers to amend, without any condition of

nondiscrimination. Since Petitioner had powers of attorney from all employers, he

could exercise employer power under this provision, or the superior provision, Trust

§ 9.01(a), via League power, to eliminate participation of non-owner employees. The

Circuit Court called this argument "convoluted." Koresko, at 240-41.

Third, Plan § 6.03 (107a) allowed each Plan Committee to determine all

questions of eligibility [6.03(a)] and to amend without any nondiscrimination

condition [6.03(g)] (304a). The Administrator exercised any Committee power. Id.

Thus, PennMont could amend. The Third Circuit rejected PennMont's authority to

amend, because "the role of administrator

...

does not automatically entail the

authority to amend the plan." 246 Fed. Appx. at 242. But, in this Plan, the named

administrator could amend, and do so without any nondiscrimination limitation.

--36-Finally, Plan § 9.03(b) and (c) gave the League power to create

amendments that did not discriminate in favor of highly compensated employees

(305a). The Court rejected Petitioner's contentions that this clause had a limited tax

purpose and was subordinate to the unrestricted and conflicting Trust power.

Just as in Hughes Aircraft, supra, and Curtis-Wright, the lower courts

interfered with a settlor act executed by people who had plenary powers beyond

those of simple administration. Further, the Third Circuit misconstrued the rule of

law stated in Firestone, because the applicable rule of deference to a fiduciary's

interpretation depends on actual powers stated in documents, not whether an entity

with trustee powers happens to be called "administrator." This Court should clarify

that there is no public policy exception to the holdings of Curtiss-Wright and

Firestone, even if an amendment impacts federal court jurisdiction and the standing

of the Secretary of Labor.

III. The Third Question Should Be Reviewed Because Congress Did Not

Give Federal Courts Authority To Permanently Bar Any Non-Felon

From Providing Services To Any Employee Benefit Plans, Whether

Or Not Covered By ERISA, Or To Issue Punitive Sanctions In Favor

Of The Secretary Of Labor

This Court has held that ERISA's list of plaintiffs, and the limited remedies

available for each, are sufficiently indicative of Congressional intention not to

include others. Massachusetts Mut. Life Ins. Co. v. Russell, 473 U. S. 134, 148

(1985). "Congress does not hide elephants in mouseholes." Whitman v. Am.

Trucking Assn, 531 U.S. 457, 468 (2001).

--37-In 29 Usc § 1111, Congress barred only certain felons from serving in a

fiduciary capacity with respect to an ERISA plan. After conviction, the bar expires,

inter alia, in 13 years or upon court order. That penalty is statutory, not equitable,

and it does not apply to a non-felon like Petitioner. The penalty in this case finds no

historical precedent in any trust case or authoritative treatise.

In Great West Life & Annuity Ins. Co. v. Knudson, 534 U.S. 204, 209 (2002)

(quoting Mertens v. Hewitt Assocs., 508 U.S. 248, 258 n.8 (1993)) this Court

explained that "'[e]quitable' relief must mean something less than all relief,"

implying that there must exist at least some remedies which do not follow on the

coattails of injunctive authority. The Court provided an example of a non-equitable

remedy in Tull v. United States, 481 U.S. 412, 422 (1987), holding that civil

penalties are not available as a remedy to courts sitting in equity. A permanent bar

is plainly a punitive remedy with no less a monetary effect as any other penalty. It

is worse.

Under the doctrine of Meyer v. Nebraska, 262 U.S. 390, 399 (1923), a person

has a fundamental liberty interest in pursuing "any of the common occupations of

life." "[T]his liberty interest may not be interfered with under the guise of

protecting the public interest * * *" by arbitrary legislative action." Id. at 400. In

ERISA, Congress exercised that power with a limited bar. 29 USC § 1111.

Petitioner is not a felon; consequently, the rulings that imposed a bar, penal award,

and punishments on him must be assumed as arbitrary usurpations of legislative

perogative. Massachusetts Mut. Life Ins. Co. v. Russell, supra.

--38-The courts below misconstrued the rules of law applicable to ERISA remedies

and the authority of the federal courts. This Court should review the question of

whether the Secretary has any authority to ever seek a bar beyond the limited

settings of § 1111. Since ERISA remedies do not include punitive sanctions, there is

also a valid and related question as to whether the courts had any authority (i) to

grant monetary sanctions to the Secretary; or (ii) to allow punitive incarceration as

"equitable relief" to aid satisfaction of the money judgment in this case. See Kokesh

v. SEC, 137 S. Ct. 1635, 1642 (2017) (citing Huntington v. Attrill, 146 U.S. 657, 667 (1892)).

0 --------------------------------CONCLUSION

The petition for a writ of certiorari should be granted.

Respectfully,

John J. Koreko. \

Petitioner, Pro So

October 24, 2018

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.