How long is too long to take issue with 401k plan investments offered and/or made by the plan sponsor?
It was one question central to Tibble v. Edison International, which was argued before the Supreme Court by tort lawyer Jerry Schlichter, and now the high court will once again debate the point at which the proverbial clock starts ticking.
Specifically, the latest case, Intel Corp. Investment Policy Committee v. Christopher M. Sulyma, examines how long, exactly, petitioners have to read plan documents and how and when those documents are provided.
Arguments, set to start on Wednesday, date back to a proposed class action former Intel engineer Christopher Sulyma and another plan participant filed in 2015 against the company and its plan committee.
“They allege the committee over-allocated retirement savings to hedge funds and private equity investments between 2010 and 2012 and failed to properly notify participants,” Bloomberg Law reports.
The plan committee’s response
All well and good, but because plan documents detailing the investments were posted online and participants were sent targeted email notifications, all relevant information had been disclosed to Sulyma prior to 2015, the committee countered, meaning “the three-year window to sue had passed.”
“Section 413(2) of the Employee Retirement Income Security Act (ERISA) prohibits actions commenced more than three years after ‘the earliest date on which the plaintiff had actual knowledge of the breach or violation,’” Intel argued in court documents. “The question presented here is whether this provision bars suit where all of the information relevant to an alleged violation was disclosed to the plaintiff more than three years before the plaintiff filed the complaint, but the plaintiff chose not to read or does not recall whether he read the materials provided to him.”
“Intel Corp’s retirement committee thinks disclosing plan information online or by mail is enough to trigger the three-year deadline for claims that a plan fiduciary breached their duties under the Employee Retirement Income Security Act,” Bloomberg notes.
However, ERISA, “only shortens the default six-year window for litigation to three years when the person suing has ‘actual knowledge’ of the breach. The Supreme Court is now being asked when the clock starts ticking for that three-year window.”