ERISA requires plaintiffs with “actual knowledge” of an alleged fiduciary breach to file suit within three years of gaining that knowledge under 29 U. S. C. §1113(2). For plaintiffs without “actual knowledge, a 6-year period applies. The United States Supreme Court addressed the requirements for having “actual knowledge” in a case decided on February 26, 2020.[1]

The case involved a former Intel employee who had been a participant in two ERISA plans who sued alleging that the plans had been imprudently managed. The action was filed in 2015. The defendant Investment Policy Committee asserted the defense that the suit was untimely filed under §1113(2) because the plaintiff filed it more than three years after the Committee had disclosed their investment decisions to him. Although the plaintiff had visited the website that hosted many of the investment policy disclosures many times, the plaintiff testified that he did not remember reviewing the relevant disclosures themselves, and that he was unaware of the allegedly imprudent investments while employed at Intel. The District Court granted summary judgment to the defendant under 29 U. S. C. §1113(2). The Ninth Circuit court of Appeals reversed.

The Supreme Court held, “A plaintiff does not necessarily have “actual knowledge” under §1113(2) of the information contained in disclosures that he receives but does not read or cannot recall reading. To meet §1113(2)’s ‘actual knowledge’ requirement, the plaintiff must in fact have become aware of that information.”[2] In announcing this unanimous decision, the Court noted, “This opinion does not foreclose any of the ‘usual ways’ to prove actual knowledge at any stage in the litigation. … Plaintiffs who recall reading particular disclosures will be bound by oath to say so in their depositions. Actual knowledge can also be proved through ‘inference from circumstantial evidence.’ …  And this opinion does not preclude defendants from contending that evidence of ‘willful blindness’ supports a finding of ‘actual knowledge.’”[3]

The implications of this decision are apparent. ERISA plan fiduciaries are at greater risk of litigation from plan participants who scrutinize their actions with a distant mirror as the defense of §1113(2) is substantially weakened. Whether this standard for determining “actual knowledge” is applied broadly in the many other instances where the statutory language “actual knowledge” is employed, remains to be seen.

[1] Intel Corp. Investment Policy Committee v. Sulyma, No. 18-1116.

[2] Id., pp. 5–12.

[3] Id., pp. 11–12.