February 26, 2020

Supreme Court Decides Intel Corporation Investment Policy Committee v. Sulyma

On February 26, 2020, the U.S. Supreme Court decided Intel Corporation Investment Policy Committee v. Sulyma, holding that, for purposes of ERISA’s three-year statute of limitations, a plan beneficiary does not have “actual knowledge” of a breach of fiduciary duty based on information that he receives in an ERISA plan’s disclosures but does not read or recall reading.

ERISA requires that claims for breach of fiduciary duty be brought within the shorter of (1) six years after the alleged breach occurs; (2) three years after the plaintiff gains “actual knowledge” of the alleged breach; or (3) in cases of fraud or concealment, six years after the plaintiff discovers the alleged breach.

Christopher Sulyma, a former Intel Corporation employee, participated in two Intel retirement plans managed by the Intel Investment Policy Committee. The plans invested in funds that mostly comprised stocks and bonds. After the stock market decline in 2008, the Committee increased the funds’ investments in alternative assets, such as hedge funds, private equity and commodities. Sulyma filed suit on behalf of a putative class in October 2015, alleging that the funds’ overinvestment in those alternative assets was a breach of fiduciary duty under ERISA. Sulyma commenced his suit within six years of the alleged breaches, but more than three years after Sulyma had received various disclosures from Intel that disclosed the exact breakdown of the plans’ investments.

The district court granted summary judgment to Intel, holding that Sulyma gained actual knowledge of the alleged breaches when he received Intel’s disclosures that revealed the breakdown of the plans’ investments. The Ninth Circuit reversed, holding that Sulyma’s testimony that he did not review the disclosures created a question of fact as to whether and when Sulyma gained “actual knowledge” of the alleged breaches.

The Supreme Court affirmed, resolving a circuit split as to whether the “actual knowledge” standard can be satisfied by sufficient disclosures by holding that to have gained actual knowledge of information contained in disclosures, “the plaintiff must in fact have become aware of that information.” The Court noted that the plain and unambiguous meaning of actual knowledge means knowledge “existing in fact or reality,” as distinguished from constructive or imputed knowledge. Other sections of ERISA distinguish between actual and constructive knowledge, and the Court interpreted Congress’s omission of a constructive knowledge standard in the three-year statute of limitations for breach of fiduciary duty claims as intentional. The Court left open the question whether defendants might be able to establish actual knowledge through circumstantial evidence or through a willful blindness theory, finding that the Intel defendants had failed to make any such arguments.

Justice Alito authored the unanimous opinion of the Court.

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