The U.S. Supreme Court rejected a timeliness challenge to an ERISA class action against Intel, potentially making it easier for retirement plan beneficiaries to sue administrators for investing plan funds imprudently.
The plaintiff in the case, former Intel engineer Christopher Sulyma, alleged Intel’s plan administrators breached their fiduciary duty to beneficiaries by over-investing in alternative assets such as hedge funds, private equity, and commodities.
Intel argued the case was untimely because Sulyma filed it more than three years after he had “actual knowledge” of the company’s investment strategy from notices it had posted on the NetBenefits website and other disclosures.
But in a unanimous decision, the Supreme Court ruled Wednesday that actual knowledge “requires more than evidence of disclosure alone.”
“That all relevant information was disclosed to the plaintiff is no doubt relevant in judging whether he gained knowledge of that information,” Justice Samuel Alito wrote for the court. “To meet [the] ‘actual knowledge’ requirement, however, the plaintiff must, in fact, have become aware of that information.”
Intel’s contention that Sulyma had the requisite knowledge because he effectively held the information in his hand would turn the law into “what it is plainly not: a constructive-knowledge requirement,” Alito added.
The case has been closely watched by retirement plan sponsors and providers. Allowing Sulyma’s suit to proceed “would mean that it would not be enough to provide plan documents, but sponsors would have to prove participants read them, and perhaps prove that they also understood them,” William Delany, an employment attorney at Holland & Knight, told BenefitsPRO.
“That’s a much harder burden of proof to establish the three-year limitation period,” he noted.
Sulyma testified he did not “remember reviewing” the investment disclosures while he worked at Intel between 2010 and 2012 and that he was unaware that his plan contributions had been invested in hedge funds or private equity.
Intel urged the Supreme Court not to allow an ERISA plaintiff to sustain a lawsuit simply by asserting “that he did not read the relevant plan documents, or simply that he cannot recall whether he saw them.”