Document Type

Article

Publication Date

2-26-2020

Abstract

In October of 2015, after Christopher Sulyma, a former Intel employee, sued Intel’s plan fiduciaries for imprudently managing the retirement plans sponsored by the company, Intel moved to dismiss the complaint as time-barred under Section 413(2) of the Employee Retirement Income Security Act of 1974.

Section 413(2) of ERISA imposes a three-year limitations period from the earliest date on which the plaintiff “had actual knowledge” of the alleged fiduciary breach. The three-year window under Section 413(2) shortens the six-year period that otherwise runs from the end of the fiduciary breach, violation or omission.

During the years that Sulyma was a participant in the Intel plans, Intel (used here to refer to the petitioners, which include Intel’s investment committee, administrative committee and finance committee) provided directly, or made available on a website, various disclosures about its retirement plans. These disclosures included information about fund investment allocations, including the allegedly imprudent allocation to “alternative” investments in hedge funds and private equity. Sulyma accessed some of the materials, but testified that he was not actually aware three years before filing suit that his retirement accounts were invested in hedge funds and private equity.

The district court ruled that based on the disclosure documents provided by Intel, Sulyma had actual knowledge of the relevant facts more than three years before filing suit. The U.S. Court of Appeals for the 9th Circuit reversed, holding that the phrase “actual knowledge” means that “the plaintiff is actually aware of the facts constituting the breach, not merely that those facts were available to the plaintiff.”

In a unanimous decision written by Justice Samuel Alito, the Supreme Court agreed, holding that a plaintiff does not necessarily have actual knowledge of the information contained in disclosures that he receives but does not read or cannot recall reading. To satisfy the actual knowledge requirement, the plaintiff must “in fact have become aware of that information.”

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