Defendant Steven R. Lollo appeals from a judgment entered after a bench trial before Judge Nickerson, who found that Lollo had conspired to defraud various ERISA funds of contributions and was liable under New York law in the amount of $157,385.39. Cement & Concrete Workers’ Dist. Council Welfare Fund, Pension Fund, Legal Servs. Fund and Annuity Fund v. Lollo, No. CV 89-3784,
In 1984 and 1987, the Union entered into collective bargaining agreements (“CBAs”) with Lollo, Inc., a construction company (“Company”), under which the Company agreed to make contributions to the Funds based on employee work hours. The Company failed to comply with this obligation. Plaintiffs filed suit against seven members of the Lollo family, all of whom operated or were employed by the Company, seeking to hold them personally liable for various claims of breach of contract, fraud, misappropriation, and ERISA violations. The district court granted summary judgment in favor of all defendants except Jeffrey and Steven Lol-lo, against whom the district court granted summary judgment in plaintiffs’ favor. On appeal, we reversed that part of the district court’s judgment holding Steven Lollo liable for violating ERISA, affirmed the district court’s judgment in all other respects, and remanded for further proceedings. Cement & Concrete Workers’ Dist. Council Welfare Fund, Pension Fund, Legal Servs. Fund and Annuity Fund v. Lollo,
The facts pertinent to Steven Lollo’s (“Lol-lo”) liability are as follows'. In order to obtain payments from two general contractors, Lollo, a vice president of the Company, submitted to. the contractors requisition forms that stated that no money was owed to the Funds under any CBA. Those statements were false. As a result, Lollo obtained payments of several million dollars from the contractors, and no money was withheld from these payments to cover unpaid contributions to the Funds. Lollo I,
In Lollo I, we held that an individual is not liable for corporate ERISA obligations solely by virtue of his or her role as officer, shareholder, or manager. See id. at 33 (“Beyond his status within the corporate structure, the district court must examine the officer’s actual role in the company’s affairs and relationship to the company’s wrongdoing.”). We also noted, however, one circumstance pertinent to this matter in which a corporate official might be personally liable .under ERISA — namely where “a controlling corporate official defrauds or conspires to defraud a benefit fund of required contributions.” Id. at 32 (quoting Leddy v. Standard Drywall, Inc.,
Leddy was the first ease in this circuit to hold an individual corporate officer responsible for the corporation’s unpaid ERISA contributions, relying on Fair Labor Standards Act precedents that imposed liability on “a corporate officer with' operational control who is directly responsible for a failure to pay statutorily required wages.” Id. at 387. In Leddy, liability was appropriate because the defendant was not only the president and a major shareholder of the corporation but also acknowledged his culpability in the corporation’s wrongdoings by pleading guilty to a charge of conspiring with the corporation to defraud an ERISA fund of contributions. See id. at 387-88.
In light of Leddy, Lollo I held that factual issues remained as to: (i) whether Lollo qualified as a “controlling corporate official,” and (ii) whether Lollo “defrauded the funds.”
Whether Lollo was a “controlling corporate official” need not be addressed because we conclude that Lollo did not defraud the Funds for purposes of either ERISA or New York law. We stated in Lollo I that to prove fraud, a plaintiff must demonstrate: (i) a material false representation or omission of an existing fact, (ii) the defendant’s knowledge of the falsity, (iii) the defendant’s intent to defraud, (iv) the plaintiffs reasonable reliance upon the misrepresentation or omission, and (v) consequent damage to the plaintiff.
On remand, the district court did not find that plaintiffs were deceived by Lollo’s fraudulent statements. It found only that the contractors were deceived, and that by “deceiving the prime contractors Steven Lollo in fact caused damage to plaintiffs.” District Court Order,
To be sure, the contractors were deceived. The relevant question, however, is whether a plaintiff establishes the reliance element of fraud by proving that a third party was deceived. Diduck does not answer that question, it stands only for the proposition that the person to whom misrepresentations are made must rely upon them. See 974 F.2d at 278-79. The question here is whether the plaintiff must be the person to whom the misrepresentation was directed, who knew of it, and who relied upon it. See Rosen v. Spanierman,
We hold that a plaintiff does not establish the reliance element of fraud for purposes of ERISA or New York law by showing only, that a third party relied on a defendant’s false statements. See Kelly v. L.L. Cool J.,
Shaw, a case relied on by plaintiffs and the district court, is not inconsistent with our view. In Shaw, the issue was whether a plaintiff seeking to recover under the civil-remedies provision of the Racketeer Influenced and Corrupt Organizations Act (“RICO”), 18 U.S.C. § 1964, must, in order to satisfy Section 1964(c)’s “causation” requirement, prove that he or she relied on a defendant’s acts where those acts constituted mail fraud under 18 U.S.C. § 1341. See 726
Because the district court did not find that plaintiffs had proven their reliance on Lollo’s misrepresentations and because there is no evidence that they did so rely, Lollo is not liable under either ERISA or New York law.
We therefore affirm in part and reverse in part.
Notes
. Lollo argues that plaintiffs’ common-law fraud claim is preempted by ERISA. We need not resolve the preemption issue because, as discussed above, their fraud claim lacks merit.