February 27, 2020
In settling one dispute over the law that governs retirement plans, the Supreme Court may have opened the door for others down the road.
The court set a new standard for determining the deadline for litigation over 401(k) plans under the Employee Retirement Income Security Act in a unanimous ruling Wednesday, but attorneys for plan sponsors say the decision left additional questions unanswered that could make their way back into court.
Sending employees and retirees plan information online or by mail isn’t enough for employers to shorten the six-year deadline for litigation to three years, the high court found. The justices said plan participants must read those documents because the law requires “actual knowledge” of the alleged violation in order for the lawsuit window to shrink.
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The court explicitly noted that it wasn’t asked, and therefore didn’t address, what exactly a plaintiff must actually know about a defendant’s conduct and the relevant law in order to trigger a shorter filing deadline. The statement came in a footnote and reads like an invitation for defense attorneys to raise the question in future litigation.
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Attorneys for plan participants are less concerned that these questions will become big battleground areas in ERISA litigation.
What information plan participants must know theoretically is an open issue, said Michelle Yau, a partner at Cohen Milstein Sellers & Toll PLLC, but she predicted it won’t see much action in court.
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