The new ruling is being hailed as a victory for retirement plan participants as well as a potentially important precedent-setting case impacting the special three-year statute of limitations that exists under the Employee Retirement Income Security Act.
The U.S. Supreme Court has ruled unanimously against the arguments of the Intel Corp. in the complex but significant lawsuit known as Intel Corporation Investment Policy Committee v. Sulyma.
As has been the case with previous Supreme Court decisions directly affecting the retirement planning industry—for example Tibble v. Edison and Fifth-Third Bank v. Dudenhoeffer—it will take some time for the full implications of the 14-page ruling to come to light. At this early juncture, the consensus among attorneys specializing in the Employee Retirement Income Security Act (ERISA) seems to be that the ruling, which spells out the high court’s understanding of the question of what establishes “actual knowledge” of a potential fiduciary breach under ERISA, will have a potentially significant effect on the law’s special three-year statute of limitations.
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For her part, Karen Handorf, partner at Cohen Milstein and chair of the firm’s employee benefits and ERISA practice group, says the ruling is far from surprising. Notably, Handorf represents the plaintiffs in another ERISA lawsuit awaiting a ruling from the Supreme Court, Thole v. U.S. Bank.
“In my view, this new ruling affirms something that is obviously established by the statue, and so in that sense, its impact may not end up being as significant as some people are saying,” Handorf says. “As a plaintiffs’ attorney, I can tell you that I already apply the same understanding of the statute of limitations under ERISA that is affirmed in this new ruling. For us, it will not mean more cases to file.”
Handorf says that the judges in various circuits who have embraced an alternative understanding of the actual knowledge issue—i.e., that the existence of plan disclosures is in itself enough to establish actual knowledge for the purpose of ERISA litigation—were “trying to read something into the law that just isn’t there.” These lower courts have now been effectively rebuffed by the Supreme Court, Handorf says, representing an important victory for plan participants who feel they have suffered from a fiduciary breach.
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