UNPUBLISHED

                    UNITED STATES COURT OF APPEALS
                        FOR THE FOURTH CIRCUIT


                             No. 05-2071



PAUL L. PHELPS; JERRY H. GILSTRAP; JERRY W.
CUDDY; GERALD W. LYDA; NINA POSEY; THOMAS R.
WILLIAMS;   ALVIN   A.  STIWINTER;   TROY   J.
COTTRELL; THOMAS L. CARLSON; ROBERT W. CARTER;
WAYNE F. MCWHORTER; RODNEY K. DEANHARDT, SR.;
MELVIN M. BROCK; EDWARD J. COOLEY; CHARLES A.
FURR; FRANCIS C. AIKEN; ELIZABETH AUDREY
LOREDO; JIMMY S. STATON; NORMAN DAVIS; EUGENE
M. KRENEK; RICHARD N. RYDER, II; KATHERINE D.
LACKEY,

                                              Plaintiffs - Appellants,

           versus


CT ENTERPRISES,     INCORPORATED;   SACO   LOWELL,
INCORPORATED,

                                               Defendants - Appellees,

           and


CLIFF THEISEN; TOM POMIAN; MIKE TEMPLETON;
BRANCH BANKING AND TRUST OF SOUTH CAROLINA,

                                                            Defendants.


Appeal from the United States District Court for the District of
South Carolina, at Greenville. Henry M. Herlong, Jr., District
Judge. (CA-02-3739-HMH)


Argued:   May 26, 2006                        Decided:   August 9, 2006
Before WILKINSON and WILLIAMS, Circuit Judges, and Glen E. CONRAD,
United States District Judge for the Western District of Virginia,
sitting by designation.


Affirmed by unpublished per curiam opinion.


John Robert Peace, Greenville, South Carolina, for Appellants.
Vance Earle Drawdy, OGLETREE, DEAKINS, NASH, SMOAK & STEWART, P.C.,
Greenville, South Carolina, for Appellees.


Unpublished opinions are not binding precedent in this circuit.
See Local Rule 36(c).




                                2
PER CURIAM:

     This appeal arises out of a claim for plan benefits under the

Employee Retirement Income Security Act of 1974 (ERISA), 29 U.S.C.

§ 1001, et seq.; 29 U.S.C. § 1132; 28 U.S.C. § 1331, brought by

former employees (“the Employees”) of Saco Lowell (“Saco Lowell”)

and CT Enterprises (“CT”).       The Employees allege that Saco Lowell

and CT violated their fiduciary duties regarding plan assets.               The

district court, concluding that the defendants did not violate

their fiduciary duties and that the plaintiffs did not suffer any

loss, entered an order granting summary judgment to the defendants.

The Employees appeal the order granting summary judgment.             For the

reasons set forth below, we affirm the judgment of the district

court.



                                    I.

     Saco   Lowell   manufactured     equipment    used    in   the   textile

industry.     Employees   were   eligible   to    participate    in   the    CT

Enterprises Group Health Benefits Plan (“the Plan”), a self-

insured, ERISA-governed, group health plan.               The Plan’s claim

administrator,   Kanawha    Benefit      Solutions,   Inc.      (“Kanawha”),

received contributions, processed claims, and distributed benefits.

     Employees were paid weekly, and participants in the Plan had

contributions withheld from their weekly paychecks on a pretax




                                     3
basis.      From May 25, 2000, to December 12, 2000, Saco Lowell and CT

paid Kanawha administrative fees.1

       Beginning in about July 2000, however, CT did not provide

sufficient funds to Kanawha to pay all outstanding claims of

participants.           On July 21, 2000, Kanawha issued a check log bill

for $84,999.41 in claims, indicating that payment in full was

required.         During approximately the same period, the bank informed

Saco Lowell and CT that it would no longer fund the company.

       In August of 2000, the bank took control of a new account for

Saco Lowell. In September, the bank agreed to forbear from calling

in various promissory notes; the notes provided that any judgment

not paid within 30 days would constitute default.                     Due to these

problems, the company management held meetings to inform employees

of the company’s financial situation, during which shortcomings in

funding claims under the Plan were also mentioned.                  Employees were

told       that   the   company     was   doing   everything   it    could    to   pay

outstanding         claims,   but    they   were    never   told    that     employer

contributions were not being made to Kanawha.                      On November 21,

2000, the Employees were given notice that the Plan would be

terminated on November 28. The Employees were not informed at this

point about the status of claims incurred prior to November 28,

2000, or of the status of employer contributions to the Plan.



       1
      In an amendment to the Plan effective July 1, 2000, CT was
listed as the employer.

                                            4
                                      II.

      On November 5, 2002, twenty-two participants in the Plan, who

had made claims prior to its termination, filed an action against

CT Enterprises, Inc., Saco Lowell, Inc., Cliff Theisen, Tom Pomian,

Mike Templeton, and Branch Banking and Trust of South Carolina2, in

the United States District Court for South Carolina.            They sought

to recover payment for approved but unpaid claims, as well as other

appropriate equitable relief.         The defendants filed a motion to

dismiss, which was granted in part and denied in part by the

district court.         The parties filed cross-motions for summary

judgment, and the district court granted the defendants’ motion.

On appeal, we vacated the district court’s opinion and remanded for

further proceedings.      See Phelps, et al. v. C.T. Enter., Inc., et

al., 

(4th Cir. 2005). We directed the district court

to   reconsider   the    Employees’   theory   that   Saco   Lowell   and   CT

breached a fiduciary duty by failing to remit the Employees’

contributions to Kanawha.

      Following remand, the parties again filed cross-motions for

summary judgment, and the district court granted in part and denied

in part the defendants’ motion, and denied the Employees’ motion.

Both parties submitted motions for reconsideration.               Following

additional submissions, the district court entered judgment in

favor of the defendants. The district court concluded that failure


      2
       The defendant bank was later dismissed.

                                       5
to remit employee contributions to the Plan as soon as practicable

did not result in loss to the Employees, because the Plan was

exempt from the trust requirements of ERISA.     The court also found

that failure to disclose to the Employees that the contributions

were no longer being remitted to Kanawha on a weekly basis did not

constitute a breach of any fiduciary duty.      The Employees filed a

motion to amend/correct the order, which the district court denied.

The Employees now appeal the district court’s decision to grant

summary judgment, contending that Saco Lowell and CT breached their

fiduciary duties in two ways:   they misused employee contributions

and   failed   to   remit   employee    contributions   to   the   plan

administrator as soon as practicable; and they failed to disclose

material information about the Plan to the Employees.



                                 III.

      We review a grant of summary judgment de novo, viewing all

facts and inferences in the light most favorable to the nonmoving

party.   Love-Lane v. Martin, 

, 775 (4th Cir. 2004).

Summary judgment is appropriate only if “there is no genuine issue

as to any material fact and ... the moving party is entitled to

judgment as a matter of law.”    Fed. R. Civ. P. 56(c).




                                  6
                                 IV.

     The Employees contend that Saco Lowell and CT breached their

fiduciary duties by misapplying employee contributions and failing

to remit employee contributions to the plan administrator as soon

as practicable.    Saco Lowell and CT assert that they timely

submitted employee contributions to the Plan and there was no

breach of fiduciary duty.

     The Employee Retirement Income Security Act, or ERISA, was

enacted

     to protect interstate commerce and the interests of
     participants in employee benefit plans and their
     beneficiaries, by requiring the disclosure and reporting
     to participants and beneficiaries of financial and other
     information with respect thereto, by establishing
     standards of conduct, responsibility, and obligation for
     fiduciaries of employee benefit plans, and by providing
     for appropriate remedies, sanctions, and ready access to
     the Federal courts.

29 U.S.C. § 1001(b) (2006).    Assets of an ERISA plan “shall never

inure to the benefit of any employer and shall be held for the

exclusive purposes of providing benefits to participants in the

plan and their beneficiaries and defraying reasonable expenses of

administering the plan.”    29 U.S.C. § 1103(c)(1) (2006). See also

Raymond B. Yates, M.D., P.C. Profit Sharing Plan v. Hendon, 

, 22 (2004) (holding that 29 U.S.C. § 1103(c)(1) “demands

only that plan assets be held for supplying benefits to plan

participants”).   The fiduciary responsibility provisions of ERISA

“apply the law of trusts to discourage abuses such as self-dealing,


                                  7
imprudent investment, and misappropriation of plan assets, by

employers and others.”   

is a requirement of most ERISA plans that the assets be

held in trust.   See 29 U.S.C. § 1103 (2006).   The Saco Lowell and

CT Plan was not subject to the trust requirement, however, because

the Plan was a “cafeteria plan,” as defined by 26 U.S.C. § 125

(2006).3   For cafeteria plans, the Department of Labor does not

assert a violation “solely because of a failure to hold participant

contributions in trust.”   ERISA Technical Release 92-01, 57 Fed.

Reg. 23272 (June 2, 1992).      However, this allowance does not

relieve fiduciaries “of an obligation to ensure that participant

contributions are applied only to the payment of benefits and

reasonable administrative expenses of the plan.”   

the Saco Lowell and CT Plan was not subject to any

trust requirement, there was still a fiduciary duty to ensure that

employee contributions were not used for the company’s general

operating expenses.

     In our earlier decision in Phelps v. C.T. Enterprises, Inc.,

we concluded that the district court had not thoroughly addressed

the Employees’ claim that Saco Lowell and CT failed to remit the

contributions withheld from the Employees’ paychecks to Kanawha.



     3
      A “cafeteria plan” is defined as an arrangement under which
“all participants are employees, and the participants may choose
among 2 or more benefits consisting of cash and qualified
benefits.” 26 U.S.C. § 125 (2006).

                                 

.         We directed attention to the case of Pension

Benefit Guaranty Corp. v. Solmsen, 

(E.D.N.Y.

1987), which held that a defendant who did not forward employee

contributions      to    an    ERISA-governed        plan,       instead   using    the

contributions to pay company expenses, breached a fiduciary duty.

Subsequent to the decision in Solmsen, the Department of Labor

issued a regulation which provided that employee contributions are

plan assets.      29 C.F.R. § 2510.3-102 (2004).                 These contributions

become   plan   assets        “as   of   the    earliest     date     on   which   such

contributions can reasonably be segregated from the employer’s

general assets.”        

which the contributions become plan assets cannot

occur later than 90 days from the date the contributions are

withheld. 

employee contributions are submitted to

the plan within 90 days, however, this fact does not necessarily

establish that an employer has fulfilled its fiduciary duty.                       The

90-day   period    is    not    intended       to   serve   as    a   “safe   harbor.”

Regulation Relating to Definition of “Plan Assets”–Participant

Contributions, 61 Fed. Reg. 41220, 41223 (Aug. 7, 1996).                      An ERISA

Technical Release specifically provides that

     [t]he regulation is not intended ... to allow employers
     to use participant contributions for their own purposes
     ... employers who fail to transmit promptly such amounts,
     and plan fiduciaries who fail to collect those amounts in
     a timely manner, will violate the requirement that plan
     assets be held in trust; in addition, such employers and
     fiduciaries may be engaging in prohibited transactions
     .... The Department wishes to stress that the outside

                                           9
       limit of 90 days is not intended to supercede the
       preceding portion of the rule, that is, the participant
       contributions become plan assets “as of the earliest date
       on which such contributions can reasonably be segregated
       from the employer’s general assets.”

ERISA Technical Release 92-01, 57 Fed. Reg. 23272 (June 2, 1992).

       Considering these basic principles underlying ERISA and the

contours of fiduciary duties regarding plan assets, we conclude

that funds withheld as employee contributions to a plan cannot be

used by an employer for any purpose other than funding the plan.

In this case, if Saco Lowell and CT had used the funds withheld

from the Employees’ weekly paychecks as general assets of the

company, there would have been a clear breach of Saco Lowell’s and

CT’s fiduciary duties.    Even though the cafeteria plan avoided the

trust requirement, there was still a requirement that plan assets,

including employee contributions, be used only to benefit the

participants, and not as general assets of the company.

       In their brief, Saco Lowell and CT claim that “the undisputed

evidence” shows that all amounts withheld from employee paychecks

were ultimately remitted to the Plan. (Appellee Br. at 27).              The

Employees have presented no evidence to the contrary.             Templeton,

Saco    Lowell’s    comptroller,   testified      that      all     employee

contributions were transferred to the Plan.        (J.A. 163, 166, and

168).     He   specifically   verified   that   “all   of   the    employee

contributions that were withheld were ... transferred to Kanawha

for either the payment of claims or the reasonable expense of


                                   10
administering the Plan.”       (J.A. 168).       Clifford Thiesen, Saco

Lowell’s chief executive officer, also testified that all employee

contributions were forwarded to the Plan.         (J.A. 103).

     Until July of 2000, employee contributions were submitted to

the Plan on a weekly basis.    After this point, Saco Lowell withheld

employee contributions on a weekly basis, but stopped making

submissions to Kanawha on a weekly basis.        However, within 90 days

of each weekly paycheck, CT forwarded amounts greater than the sum

of the employee contributions to Kanawha. While these amounts were

not sufficient to pay all the claims, it is now clear that all

employee contributions were remitted to Kanawha within 90 days of

receipt.

     After consideration of the record, which has been expanded

since the case was previously before us, we conclude that Saco

Lowell and CT did not breach any fiduciary duty in the processing

of employee contributions.     All contributions were remitted to the

Plan within 90 days, and there is no evidence that Saco Lowell and

CT used the contributions inappropriately, as general assets of the

company, during the intervening time.            Although Saco Lowell’s

comptroller recognized that funds taken out of employee paychecks

were not sequestered from other company funds (J.A. 163), the

regulations   do   not   require   that   participant   contributions   to

cafeteria plans be held in trust.         ERISA Technical Release 92-01,

57 Fed. Reg. 23272 (June 2, 1992).         In addition, the comptroller


                                    11
agreed that “all of the employee contributions that were withheld

were, in fact, transferred to Kanawha for either the payment of

claims or the reasonable expense of administering the Plan.” (J.A.

168).    The chief executive officer stated that, to the best of his

knowledge, “no amounts held from any Saco Lowell employee’s pay for

the Medical Plan were used for any purpose other than for paying

benefits and/or administrative expenses under the Medical Plan.”

(J.A. 103).       Therefore, viewing the evidence in the light most

favorable to the Employees, there is no support for the claim that

Saco Lowell and CT breached their fiduciary duties by applying the

employee    contributions       to   payroll     or   other    general   company

expenses.       In fact, all evidence is to the contrary, supporting

Saco Lowell and CT’s assertion that employee contributions were not

used as general assets.         Further, to the extent of the Employees’

argument that the change in the timing of payment of employee

contributions      to    the   administrator      constituted     a   breach   of

fiduciary duty, we conclude that CT forwarded contributions to

Kanawha    as   soon    as   practicable,   in    light   of   the    extenuating

financial situation of the company.4


     4
      The facts of this case are distinguishable from those in
Solmsen, in which the employer suffered substantial business
hardship and used employee plan contributions to pay general
expenses of the 

.    While changed
financial circumstances did not justify the misuse of employee
contributions in Solmsen, an employer does not breach a fiduciary
duty merely because the timing of payments to the plan
administrator is altered in the face of an onset of adverse
circumstances.

                                       12
                                     V.

     The Employees also allege that the district court erred in

finding that there was no claim for breach of fiduciary duty

regarding the failure to disclose material information to plan

participants. The district court found that there was no breach of

fiduciary duty because there was no loss caused by any delay in

remission of employee contributions, and the failure to remit

contributions on a weekly basis was therefore not a material fact

that the Employees needed to know.          The Employees claim that Saco

Lowell and CT breached their fiduciary duties in three ways: by

failing to provide complete information in response to beneficiary

questions; by failing to notify the Employees that their required

contributions were no longer being transferred to Kanawha on a

weekly basis; and by failing to notify the Employees that employer

contributions to the Plan were not being paid.              According to the

Employees, this information was material because if the information

had been disclosed to them, they could have obtained other medical

coverage.

     Our Circuit has identified two situations in which an ERISA

administrator has a fiduciary duty to advise beneficiaries.                 See

Griggs v. E.I. DuPont De Nemours & Co., 

, 381 (4th Cir.

2001).      First,   a   fiduciary   must      give   complete   and   accurate

information    to    a   beneficiary      if    the    beneficiary     requests

information. 

must provide “material facts


                                     13
affecting the interest of the beneficiary which he knows the

beneficiary does not know and which the beneficiary needs to know

for his protection.”         

that Saco Lowell

and CT have breached both of these duties.

     The      Employees      first     claim   that    Saco    Lowell     and   CT

misrepresented the status of the Plan in response to a direct

question at the meeting with the Employees in November.                  They base

this claim upon Templeton’s statement in his deposition that “I do

remember questions coming up about the health care [at an employee

meeting] which Cliff [Thiesen] said that we were doing everything

we could to get them paid at the time.”               (J.A. 50).    This is the

only evidence presented by the Employees in support of their claim.

We conclude that, even viewed in the light most favorable to the

Employees, the statement does not support the notion that Templeton

breached a fiduciary duty to provide information.                  The evidence

establishes that Templeton gave information that was correct as he

understood the circumstances at the time of the meeting.

     The Employees also claim that Saco Lowell and CT failed to

disclose material information that beneficiaries needed to know

about   the    status   of    the    Plan.     In   regards   to   the   employee

contributions to the Plan, there were no “material facts affecting

the interest of the beneficiary which [the fiduciary] knows the

beneficiary does not know and which the beneficiary needs to know

for his protection.”         

.         We have concluded


                                         14
that employee contributions were not used as general assets, and

that CT forwarded contributions to Kanawha as soon as practicable

considering the change in Saco Lowell’s and CT’s circumstances, and

within 90 days.     Therefore, we conclude that the district court

properly   held   that    there    was    no   fiduciary   duty   to    disclose

information relating to the employee contributions to the fund, and

there was no loss to the Employees resulting from a failure to

disclose this information.

     Based upon a de novo review of the record, we further conclude

that Saco Lowell and CT adequately informed the Employees about the

circumstances of the Plan and employer contributions to the Plan.

In August, the Employees were told that the company was not

“currently   meeting      all     []   obligations,   that    the      bank   was

controlling the purse strings, and hopefully, [the company] would

be able to resolve this going forward.”             (J.A. 188).        As to the

health care plan, Thiesen testified in his deposition that he told

the participants that “right now we’re having some problems–that

was obvious–and we’re hoping to resolve them in the near future.”

(J.A. 189). According to Thiesen, the Employees were not told that

the plan was no longer solvent, because “we didn’t think that we

were not solvent.        We felt that we had opportunities that were

going to allow us to continue as a business.”          (J.A. 190).       Thiesen

further stated in his deposition that “[w]e had submitted a plan to

the bank that we thought we could get approved and would allow us


                                         15
to continue on.”   (J.A. 192).      These statements demonstrate that

Saco Lowell and CT kept the Employees apprised of the circumstances

of the company and the Plan as they were understood.          We conclude

that the Employees were informed of the status of the Plan to the

extent of Saco Lowell’s and CT’s knowledge, and there was no breach

of the fiduciary duty to inform.



                                 VI.

     Viewing the facts in the record and the reasonable inferences

in the light most favorable to the Employees, we conclude that Saco

Lowell and CT did not breach their fiduciary duties to participants

in   the   ERISA-governed   Plan.        CT   forwarded     all   employee

contributions to Kanawha within 90 days of withholding from weekly

paychecks, and there is no evidence that employee contributions

were misused for general business expenses of the company.             In

addition, representatives of the company did inform the Employees

about the financial status of the Plan and the company, to the best

of the representatives’ knowledge.       They therefore did not breach

a fiduciary duty to inform the Employees about material facts of

which the participants had a need to know.                Accordingly, we

conclude that the district court properly determined that the

defendants were entitled to summary judgment.              We affirm the

decision of the district court, and find it unnecessary to reach




                                    16
the issue of whether the individual plaintiffs would have been

entitled to damages.

     The judgment of the district court is hereby

                                                     AFFIRMED.




                               17