In David v. Alphin, No. 11-2181 (4th Cir. 2013), the plaintiffs were a class of plan participants in a 401(k) plan (the "Plan"), which was sponsored by the Bank of America Corporation (the "Bank"). The plaintiffs had brought suit under ERISA against the defendants, who were the Bank and individual members of the Bank's Corporate Benefits Committee, the committee being a plan fiduciary. The plaintiffs had alleged, among other things, that the defendants had engaged in prohibited transactions and breached their fiduciary duties by selecting and maintaining Bank-affiliated mutual funds in the Plan's investment menu. The district court granted summary judgment to the defendants, ruling that the plaintiff's claims with respect to the Plan were time-barred. The plaintiffs appealed.
In analyzing the case, the Fourth Circuit Court of Appeals (the "Court") noted that, under ERISA § 413, a plaintiff is limited by a general six-year limitations period. The six-year limitations period is shortened to three years in instances where the plaintiff had actual knowledge of the breach. The Court said that § 413's limitations period begins immediately upon the last action which constituted a part of the breach or violation. Accordingly, the limitations period begins running when a specific event occurs, regardless of whether a cause of action has accrued or whether any injury has resulted. Here, the plaintiffs' claims of prohibited transactions and breach of fiduciary duty challenge the initial selection of the Bank-affiliated funds, which undisputedly occurred no later than 1999, as opposed to the repeated failure of the defendants to remove the funds from the Plan's investment menu. The initial section started the running of the limitations period. Accordingly-since the suit was brought in 2006-the plaintiffs' claims are time-barred under the 6-year limitations period of § 413. Therefore, the Court affirmed the district court's summary judgment in the defendants' favor.
In the case, the district court had also dismissed the plaintiffs' claims of ERISA violations by the defendants in selecting and maintaining Bank-affiliated mutual funds in the investment menu of the Bank's pension plan, on the grounds that the plaintiffs lacked standing to bring such claims. The Court affirmed the district court's dismissal of these claims.