Employers can’t shorten the allowable timeline in which participants can sue in a fiduciary breach case simply by posting relevant documents on their websites and through other electronic mediums.
That was the unanimous decision from the Supreme Court on Wednesday.
The case, Intel Corp. Investment Policy Committee v. Christopher Mo. Sulyma, focused on how long, exactly, petitioners have to read plan documents and how those documents are provided.
Arguments date back to a proposed class-action suit filed by former Intel engineer Christopher Sulyma and another plan participant in 2015 against the company and its plan committee, Bloomberg Law recently reported.
Plaintiffs claimed the committee invested in hedge funds and private equity investments between 2010 and 2012 and failed to notify participants.
The committee countered that because the 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, meaning “the three-year window to sue had passed.”
Court contradicts
The court disagreed and said that more is required that simply “evidence of disclosure alone. That all relevant information was disclosed to the plaintiff is no doubt relevant in judging whether he gained knowledge of that information …however, the plaintiff must in fact have become aware of that information.”
“Although ERISA does not define the phrase ‘actual knowledge,’ its meaning is plain,” the court continues (in a somewhat snarky tone). “Dictionaries are hardly necessary to confirm the point, but they do. When Congress passed ERISA, the word ‘actual’ meant what it means today: “existing in fact or reality” …thus, to have ‘actual knowledge’ of a piece of information, one must in fact be aware of it.
The “ticking clock” question first appeared in the high-profile Tibble v. Edison International case that was also argued before the Supreme Court by tort lawyer Jerry Schlichter. While plan participants typically have six years to make a claim, the window is halved if it’s proven they had actual knowledge sooner.
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
