SCOTUS Defines “Actual Knowledge” for ERISA’s Three-Year Limitations Period

On February 26, 2020, the United States Supreme Court unanimously held in Intel Corporation Investment Policy Committee v. Sulyma, 140 S.Ct. 768 (2020) that to meet the “actual knowledge” requirement triggering the three-year limitations period in Section 413(2) of the Employment Retirement Income Security Act of 1974 (“ERISA”), a plaintiff must in fact become aware of the information contained in disclosures that he receives but does not read or cannot recall reading.

In Sulyma, Christopher Sulyma worked at Intel from 2010 to 2012 and participated in two retirement plans sponsored by Intel. The Intel Investment Policy Committee invested his retirement funds mostly in stocks and bonds, but also alternative assets like hedge funds, private equity, and commodities. Sulyma’s funds did not do well relative to other funds, so, in October 2015, he brought suit against the Committee and other plan administrators under ERISA for breach of fiduciary duty.

ERISA Section 413 provides that a plaintiff must file suit against a plan fiduciary for breach of fiduciary duty within six years of “the date of the last action which constituted a part of the breach or violation” (or, in the case of a breach by omission, “the latest date on which the fiduciary could have cured the breach or violation”). This filing deadline is accelerated to three years when the plaintiff gains “actual knowledge of the breach or violation.”

The defendants argued that ERISA Section 413(2) barred his suit because, while it was filed within the six-year period, it was outside of the three-year period, which applied because the defendants had sent, and Sulyma received, ERISA-mandated disclosures regarding the investment of his funds. Such disclosures included emails informing him that documents regarding investment of his funds were available to view on a third-party website as well as a summary plan description explaining how the funds were invested. Sulyma testified that he did not “remember reviewing” these disclosures and was “unaware” that his funds were being invested in alternative assets.

The District Court granted the defendants’ motion for summary judgment based on ERISA Section 413(2)’s three-year limitation period, but the Ninth Circuit reversed. The Supreme Court granted certiorari, affirmed the Ninth Circuit’s decision, and held that ERISA Section 413(2)’s language was plain and unambiguous, and “to have ‘actual knowledge’ of a piece of information, one must in fact be aware of it.”

Justice Alito was careful to point out that nothing in the Court’s opinion was meant to prevent a party from proving actual knowledge through inference from circumstantial evidence such as evidence of disclosure, electronic records showing the plaintiff accessed the relevant disclosures, and evidence suggesting that the plaintiff took action in response to information in the disclosures. Justice Alito also noted that the Sulyma decision “does not preclude defendants from contending that evidence of ‘willful blindness’ supports a finding of ‘actual knowledge.’”

This decision and definition of “actual knowledge” in ERISA Section 413(2) is consistent with the Third Circuit’s jurisprudence on the issue. See Gluck v. Unisys Corp., 960 F.2d 1168 (3d. Cir. 1992) (finding “actual knowledge” requires plaintiff have actual knowledge of all material facts necessary to understand that some claim exists).

Plan fiduciaries should continue to keep track of disclosures sent to plan participants and beneficiaries in addition to storing electronic data that shows a participant or beneficiary accessed ERISA disclosures, if such disclosures are housed on a website.