Major ERISA Case Gets Argument at Supreme Court

Do plaintiffs lack ‘actual knowledge’ of an ERISA disclosure if they didn’t read it?

Depending on how the U.S. Supreme Court rules on an appeal by Intel, it could open the door to more employees suing over mismanagement of their retirement funds.


When participants in an ERISA plan want to sue for an alleged breach of fiduciary duty, they have to bring their claim either within six years of the alleged violation or three years of when they had “actual knowledge” of it. ERISA, however, doesn’t define what actual knowledge is. Supreme Court justices heard oral argument Wednesday in Intel Corporation Investment Policy Committee v. Sulyma, a case concerning whether the Employee Retirement Income Security Act’s six-year statute of limitations or its three-year window applies. 

Former Intel employee Christopher Sulyma is pushing for a strict definition of the term “actual knowledge,” which would mean a plan beneficiary has actually read the information that shows an alleged ERISA breach and not just that Intel made the information available to the beneficiary. That position has the backing of the Department of Justice.

Intel, however, is arguing for a broader interpretation and that Sulyma had actual knowledge when the company informed him that his plan information was available on a website he could access. 

Justices challenged Intel’s arguing attorney on that point, including Justice Brett Kavanaugh who asked, “Suppose for the group of people who don’t read [the documents], how can you say that they have actual knowledge if they haven’t read something?”

Justice Ruth Bader Ginsberg also commented, “[I]t’s hard to read the word ‘actual’ to mean something other than yes, I, in fact, know.”

Donald Verrilli, representing Intel, said the “actual knowledge” should be interpreted in the context of the rest of the statute. The limitation is “a unicorn,” Verrilli said, noting that ERISA might be the only federal law where a statute of limitations hinges on “actual knowledge.”

Kavanaugh continued to press Intel’s lawyer later on: “It’s an unusual statute … but we shouldn’t rewrite it ourselves.”

In 2010, Intel’s retirement plan administrators disclosed, on documents hosted on two websites, that the plan performed poorly when it shifted investments toward more hedge funds. Sulyma claims he didn’t recall reading those disclosures, though he eventually learned of the poor performance and sued Intel in 2015 for making imprudent investments.

But the district court sided with Intel’s argument that Sulyma’s claim was time-barred under the three-year “actual knowledge” statute of limitations. The 9th Circuit Court of Appeals reversed, however, finding it insufficient that Intel told Sulyma and other plan beneficiaries through email where they could access the plan performance information.

The actual knowledge dispute is “a big deal” in the ERISA litigation world, said Michael Beaver, a partner at Holland & Hart in Denver who counsels and litigates in ERISA issues and teaches ERISA law at the University of Denver Sturm College of Law. Employers that manage their own ERISA plans risk facing class actions from beneficiaries claiming they made imprudent moves with their 401k.

“For employers that matters a lot, because … at what point are you able to put any given year to bed?” Beaver said. “At what point do you have peace with regard to the administration of the plan for a particular year?”

ERISA requires employers to make rigorous and extensive disclosures to beneficiaries about the retirement plan, Beaver said. To say the statute gives beneficiaries more time to sue if they don’t read those disclosures would disincentivize them from ever reading that information, which could be an absurd result, Beaver said.

“So it raises the question, what good are [ERISA disclosures] if employees don’t actually have to read them, and better yet, they’re better off if they don’t read them?” Beaver said.

The U.S. Supreme Court sees a steady trickle of ERISA cases from year to year. Beaver said the court has traditionally taken a “40,000-foot view” to consider an issue within the broad context of the statute. “Their willingness to do that in the past suggests that Intel’s argument at least will get that kind of consideration.”

Sulyma’s attorney also faced skeptical questioning from justices on his less forgiving interpretation of actual knowledge.

“[T]he problem is how easy one can say I didn’t read it,” Ginsberg said to arguing attorney Matthew Wessler. “If the plaintiff says, I didn’t read it, the court has to accept that?”

Wessler replied that it depends on the facts of the case — in Sulyma’s case, his statement that he didn’t read the disclosure statements would be enough for his case to survive summary judgment, seeing that at it could raise “fact-specific questions.”

Wessler also argued, responding to a question from Justice Elena Kagan, that it’s not enough for a plaintiff to read an ERISA disclosure to establish actual knowledge — they also have to understand it. He noted, however, that for the sake of this particular case, the petitioners asked the court to assume that reading the disclosures would have met the “high bar” of actual knowledge.

— Doug Chartier

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