UNITED STATES COURT OF APPEALS FOR THE FOURTH CIRCUIT

No. 20-1252

MARTY WALSH, Secretary of Labor, United States Department of Labor,

Plaintiff - Appellee,

v. ADAM VINOSKEY; THE ADAM VINOSKEY TRUST,

Defendants - Appellants,

and EVOLVE BANK & TRUST; MICHAEL NEW; SENTRY EQUIPMENT ERECTORS, INC.; THE SENTRY EQUIPMENT ERECTORS, INC. EMPLOYEE STOCK OWNERSHIP AND SAVINGS PLAN,

Defendants. ------------------------------ KIM BLAUGHER, Executive Director of the Beyster Institute at the University of California San Diego’s Rady School of Management; AMERICAN SOCIETY OF APPRAISERS,

Amici Supporting Appellant.

Appeal from the United States District Court for the Western District of Virginia, at Lynchburg. Norman K. Moon, Senior District Judge. (6:16-cv-00062-NKM-RSB)

Argued: September 22, 2021 Decided: December 6, 2021 Before NIEMEYER, DIAZ, and QUATTLEBAUM, Circuit Judges.

Affirmed in part and reversed in part by published opinion. Judge Quattlebaum wrote the opinion, in which Judge Niemeyer and Judge Diaz joined.

ARGUED: Lars Calvin Golumbic, GROOM LAW GROUP, CHARTERED, Washington, D.C., for Appellants. Stephen Silverman, UNITED STATES DEPARTMENT OF LABOR, Washington, D.C., for Appellee. ON BRIEF: Kate S. O’Scannlain, Solicitor of Labor, G. William Scott, Associate Solicitor for Plan Benefits Security, Jeffrey Hahn, Litigation Counsel, Stephanie Bitto, B.A. Schaaf, Plan Benefits Security Division, Office of the Solicitor, UNITED STATES DEPARTMENT OF LABOR, Washington, D.C., for Appellee. Bennett L. Cohen, Denver, Colorado, Robert D. Grossman, Kansas City, Missouri, Gregory K. Brown, Christopher K. Buch, POLSINELLI PC, Chicago, Illinois; Mitchell G. Miller, Solana Beach, California, for Amicus Kim Blaugher. Lynn E. Calkins, Washington, D.C., Louis L. Joseph, Chelsea A. McCarthy, William F. Farley, HOLLAND & KNIGHT LLP, Chicago, Illinois, for Amicus American Society of Appraisers.

2 QUATTLEBAUM, Circuit Judge:

The Employee Retirement Income Security Act of 1974 (ERISA) prohibits any fiduciary of an employee benefit plan from causing the plan to engage in transactions with a “party in interest” when the party in interest receives more than fair market value. A fiduciary who violates this prohibition is liable for the resulting losses to the plan. Further, a non-fiduciary who “knowingly participates” in the fiduciary’s breach is also liable for such losses. The question for us in this appeal is whether the district court, after conducting a bench trial, erred in imposing liability and calculating damages against an alleged knowing participant in a fiduciary’s ERISA breach. For the reasons discussed below, the district court did not clearly err in its liability findings. However, we reject the district court’s legal conclusion concerning the damages award. Thus, we affirm in part and reverse in part.

I.

A.

With only a high school diploma and some practical experience from the military and later working in the beverage industry, Adam Vinoskey in 1980 founded Sentry Equipment Erectors, Inc. Sentry primarily supplies equipment to soft drink manufacturers. He and his wife, Carole Vinoskey, originally owned 90% of the company.

Since “day one” of Sentry, Vinoskey hoped and planned for Sentry’s employees to eventually own the company. See J.A. 353. To accomplish that, in 1993, Sentry formed an

3 employee stock ownership plan (ESOP). 1 Sentry then periodically contributed to the ESOP. Those contributions were in turn used to purchase shares of Sentry stock. By 2004, the ESOP owned 48% of