Supreme Court Agrees to Hear Ninth Circuit “Actual Knowledge” Requirement for ERISA Statute of Limitations

Recently, the Ninth Circuit ruled that the three-year statute of limitations contained in ERISA requires the plaintiff to read the plan documents before the statute begins to run. The U.S. Supreme court has agreed to hear arguments on this issue. Specifically, the court will be deciding whether the plaintiff must have “actual knowledge” from having read the plan documents before the statute of limitations can begin.

Sulyma v. Intel Corp. Investment Policy Committee

This case revolves specifically around ERISA § 413(2) which sets the statute of limitations and bars actions older than three years after “the earliest date on which the plaintiff had actual knowledge of the breach or violation.” The Ninth Circuit debated what qualified as “actual knowledge.” Was it:

1) the receipt of all relevant information; or

2) the reading of that information in a manner that constituted “actual knowledge” sufficient to start the running of the statute?

According to the Ninth Circuit, the knowledge occurred when she remembered reading the relevant material.

Brown v. Owens Corning Investment Review Committee

The Sixth Circuit took a different view of the issue, finding that a failure to read provided documents did not stop a plaintiff from having “actual knowledge” of an issue. This is consistent with rulings from a number of district court cases across the country that have found that the three year period begins upon document receipt, not when the documents are read. Certainly, receipt is an easier date to track and confirm than is the day when documents were actually read.

U.S. Supreme Court Review

As Sulyma v. Intel goes before the Supreme Court, the court’s decision will create an interpretation of “actual knowledge” that will set the nationwide precedent going forward. In considering their decision, the Supreme Court justices will take into considerations different opinions from across the country as well as how statutes of limitations are crafted in other regulations. Further, they are likely to pay attention to policy considerations such as the difficulty of establishing when the three-year period begins on an uncertain timeline based on someone’s private reading of, or recollection of, complicated material.

There is currently no ruling, simply a statement from the Supreme Court that the petition for writs of certiorari is granted. Intel’s opening brief will be the next document filed in the lawsuit. The attorneys at Hall Benefits Law will pay close attention to this case, and the arguments the lawyers make on both sides, as it develops. This helps us better craft documents and procedures for our clients to avoid litigation and otherwise minimize risk. Call our office today at 678-439-6236, or visit the Hall Benefits Law website to learn more about our services.

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Hall Benefits Law, LLC

HBL offers employers comprehensive legal guidance on benefits in mergers and acquisitions, Employee Stock Ownership Plans (ESOPs), executive compensation, health and welfare benefits, healthcare reform, and retirement plans. We counsel a wide spectrum of clients including small, mid-sized, and large companies, 401(k) investment advisors, health insurance brokers, accountants, attorneys, and HR consultants, just to name a few. HBL is passionate about advising clients, and we are dedicated to our mission: to provide comprehensive, personalized, and practical ERISA and benefits legal solutions that exceed client expectations.

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