Arguments were held last week at the Supreme Court in a case involving two Intel Corporation retirement plans and Intel’s former employee, Christopher Sulyma (Intel Corporation Investment Policy Committee, et al., Petitioners v. Christopher M. Sulyma 18-1116). The petitioners in this case are the Intel retirement plans. Sulyma was an engineer at Intel who used the retirement investment service. He alleged that the Intel retirement plans violated their fiduciary duties by “imprudently over-allocating funds… to alternative investments.” The investment fund provided Sulyma with documentation via email at the time the investments were being made, including alerting him to any problems with the investments.
The question at hand is “whether the three-year limitations period in Section 413(2) of the Employee Retirement Income Security Act, 29 U.S.C. 1113(2), which runs from ‘the earliest date on which the plaintiff had actual knowledge of the breach or violation,’ bars suit where all of the relevant information was disclosed to the plaintiff by the defendants more than three years before the plaintiff filed the complaint, but the plaintiff chose not to read or could not recall having read the information.” The petition for a writ of certiorari was filed by Intel’s retirement plans in February 2019. The petition holds that the ruling by the Ninth Circuit, that Sulyma was safe from the three-year limitation period due to his lack of knowledge and in spite of the fact that he had the knowledge at his disposal, contradicts the Sixth Circuit analysis in Brown v. Owens Corning Investment Review Committee (Brown et al v. Owens Corning Investment Review Committee et al 3:06-cv-02125). The Ninth Circuit referred to the knowledge in Brown v. Owens as “constructive knowledge” which on its own does not initiate the statute of limitations. The Ninth Circuit’s ruling overturned the district court’s dismissal of the case due to the statute of limitations.
Reuters reported that the Supreme Court justices seemed “skeptical of Intel Corp’s bid to avoid a lawsuit.” Arguments lasted an hour. Sulyma received bipartisan sympathy as well as support from President Trump’s administration. Liberal Justice Ruth Bader Ginsburg said, “I must say, I don’t read all the mailings that I get about my investments.”
Conservative Justice Brett Kavanaugh commented that “Most people don’t read them, or many,” and posed the question “how do you have actual knowledge if you haven’t read it?”
The phrase ‘actual knowledge’ is key because without this actual knowledge the statute of limitations for this alleged violation of the Employee Retirement Income Security Act (ERISA) doubles to six years.
Sulyma maintains that he had no knowledge that the company had made serious investments in hedge funds and private equity, something that similar programs did not do, that he doesn’t know what hedge funds are, and that he had no idea the investments were performing badly. The investment fund stated that the investments were an attempt to diversify portfolio.
