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Happening Today: Oral Arguments Set for Intel Corp. Investment Policy Committee v. Sulyma (U.S. Supreme Court)


This morning, oral arguments are set in the U.S. Supreme Court in Intel Corp. Investment Policy Committee v. Sulyma, a case out of the Ninth Circuit that addresses whether the three year limitations period in Section 413(2) of the Employee Retirement Income Security Act ("ERISA"), which runs from "the earliest date on which the plaintiff had actual knowledge of the breach or violation" bars suit when all the relevant information was disclosed to the plaintiff by the defendants more than three years before the plaintiff filed the complaint, but the plaintiff chose not to read or could not recall having read the information.  (Did you get that?  Go ahead and read it a second or third time if needbe.)

Before we get into the more nuanced portions of this case and ERISA, let us first take a step back.  Section 1113(1) provides a six year statute of limitations for claims brought under ERISA.  That six year period applies, unless a plaintiff had "actual knowledge of the breach or violation."  Therefore, Section 413(2) prohibits an action commenced more than three years after "the earliest date on which the plaintiff had actual knowledge of the breach or violation." 

In the present case, Christopher Sulyma ("Sulyma") was a former engineer at Intel.  Two retirement plans for employees of Intel provided extensive disclosures to Sulyma about his retirement plans.  (These disclosures included targeted e-mails alerting Sulyma about important documents that were available online.  Sulyma apparently visited the links provided in the e-mails.)  Included in the disclosures to Sulyma was information about retirement plans' investments and included information about the risks associated with them.  More than three years after this information was provided, Sulyma filed a putative class action and alleged that the retirement plans had imprudently over allocated funds to alternative investments, in violation of the plan administrators' fiduciary duties.  The district court granted summary judgment to the retirement plans and held that Sulyma had "actual knowledge" of the facts on which his claims were based more than three years prior to filing suit (as a result of receiving the e-mails.)

On appeal, the Ninth Circuit Court of Appeals recognized that although detailed information in regard to the investments had been provided to Sulyma more than three years before he filed suit, it could not be established that he had actually read the information received.  (Sulyma testified in a deposition that he did not recall whether he had read the relevant information and denied being subjectively aware of it.)  Consequently, the Ninth Circuit held that a fact issue existed as to whether Sulyma had the "actual knowledge" necessary to trigger the three year statute of limitations. The Ninth Circuit Court of Appeals' ruling therefore stood for the proposition that a plaintiff could overcome an ERISA statute of limitations issue when it was shown that the relevant information was disclosed to the plaintiff by the defendants more than three years before the plaintiff filed the complaint, but the plaintiff did not to read or could not recall having read the information.  Of note, this holding is in conflict with a Sixth Circuit case, Brown v. Owens Corning Investment Review Committee, which held the opposite.  The Ninth Circuit found that the "notice" in this case was "constructive knowledge only" and therefore did not trigger the three year limitations period.

In essence, the matter before the Supreme Court revolves around whether ERISA's "actual knowledge" exception (in regard to a breach of fiduciary duty claim that alleges imprudent investments), requires a plaintiff "to have actual knowledge both that those investments occurred, and that they were imprudent" or whether the exception is instead triggered by a plaintiff having constructive knowledge that the investments occurred by way of a retirement plan's disclosure of information directly to plan participants.

Several briefs have been filed in support of each side (with the Association of Manufacturers, Chamber of Commerce of the United States, and the American Retirement Association) supporting the retirement plans by pointing out that the Ninth Circuit's decision would allow a plaintiff to avoid the three year statute of limitations by simply claiming he/she did not read or could not recall reading a plan's disclosures.  As for Sulyma, several briefs have been filed in support of him (with the AARP and the Pension Rights Center filing briefs with the Court) which argue that the Ninth Circuit correctly delineated a difference between "actual knowledge" and "constructive knowledge."



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