Compliance News | February 27, 2020
Yesterday, in the Intel v. Sulyma case, the U.S. Supreme Court ruled unanimously in the participant’s favor, finding that a participant does not necessarily have “actual knowledge” of the information contained in DC plan investment disclosures that the participant received but does not read or cannot recall reading.
Whether a participant has “actual knowledge” of information in DC plan investment disclosures determines the time period in which they can sue under ERISA with respect to an allegedly imprudent plan investment. The ERISA statute of limitations is generally six years, but it is shortened to three years if the participant has actual knowledge of the alleged violation.
In this case, the participant sued Intel in 2015 in connection with plan investments made between 2010 and 2012 in hedge funds and private equity. Intel argued that the claim was “time barred” because the participant properly received disclosures relating to these investments more than three years before he filed his lawsuit.
While the parties agreed that Intel sent the disclosures in a timely manner, the participant said he did not recall having read them. The Unites States District Court, Northern District of California agreed with Intel that the claim was time barred, but the Ninth Circuit Court of Appeals reversed that decision on the basis that the participant did not have actual knowledge because he said he did not recall reading the disclosures — and, therefore, the general six-year statute of limitation applies. The Supreme Court affirmed the Ninth Circuit’s decision.
This ruling could have significant implications for the content and/or distribution process of plan investment-related disclosures. Segal will be sharing a more detailed summary of the decision in the near future.
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