Case No. 18-1116 | 9th Cir.
Preview by Jalen LaRubbio
Under the Employee Retirement Income Security Act (“ERISA”), does a plaintiff have “actual knowledge” of a breach or violation when the defendant disclosed all of the relevant information to the plaintiff, but the plaintiff either chose not to read or could not recall having read the information?
Under ERISA, there is a six-year general limitations period, which applies unless the three-year limitations period comes earlier and the plaintiff has “actual knowledge of the breach or violation.” 29 U.S.C. § 1113(2). If applicable, the three-year limitations period runs from “the earliest date on which the plaintiff had actual knowledge.” Id.
Christopher Sulyma, an employee of Intel, was automatically enrolled in the company’s 401(k) plan and an additional retirement plan. Sulyma received quarterly account statements by mail, as mandated by ERISA, and also had access to “fact sheet” documents posted online, which included additional information regarding his plans. However, though Sulyma set up an account and visited the website periodically, he claims that he did not actually access the relevant fact sheets. Consequently, Sulyma alleges that he did not know that his plans were imprudently invested. He commenced this suit against Intel within ERISA’s general six-year limitations period.
In its motion to dismiss, Intel contended that the three-year limitations period should apply. Sulyma v. Intel Corp. Inv. Policy Comm., 909 F.3d 1069, 1072 (9th Cir. 2018). The district court agreed and granted summary judgment, finding that Sulyma had “actual knowledge.” Id. However, the Ninth Circuit unanimously reversed, holding that the plaintiff had to be “actually aware of the facts constituting the breach” for the three-year limitations period to apply. Id. at 1076. The Supreme Court granted certiorari to determine what constitutes “actual knowledge” under ERISA, and to resolve a circuit split that resulted from the Ninth Circuit’s ruling, which was contrary to the Sixth Circuit’s view in Brown v. Owens Corning Inv. Review Comm., 622 F.3d 564 (6th Cir. 2010).
In its brief, Intel contends that, based on ERISA’s text, statutory structure, and purpose, a plan participant has actual knowledge of information that is disclosed to him, whether he chooses to read it or not. Brief for the Petitioners at 17, Intel Corp. Inv. Policy Comm. v. Sulyma, No. 18-1116 (U.S. filed Aug. 21, 2019). Accordingly, says Intel, “purely subjective cognition of a particular fact” is not necessary to establish “actual knowledge” under ERISA. Id. at 24. Further, Intel argues that a purely subjective rule would upset the balance that Congress has struck between the competing concerns of employee rights and employer burdens by “requiring individualized determinations of every plaintiff’s subjective state of mind.” Id. at 40.
In response, Sulyma argues that the “actual knowledge” provision’s plain text requires an inquiry into whether a plaintiff actually knows the facts constituting the breach, and that therefore, constructive knowledge through available disclosures is insufficient. Brief of Respondent at 17–18, Intel Corp. Inv. Policy Comm. v. Sulyma, No. 18-1116 (U.S. filed Oct. 21, 2019). Thus, Sulyma’s mere receipt of information on how to access a document does not provide him with “actual knowledge” of the document’s contents. Id. at 21–22. Sulyma maintains that along with its plain text, ERISA’s structure and history confirm his interpretation. Id. at 18–19.