In Fulghum v. Embarq Corporation, No. 13-3230 (10th Cir. 2015), the plaintiffs represent a class of retirees formerly employed by Sprint-Nextel Corporation (“Sprint”), Embarq Corporation (“Embarq”), or a predecessor and/or subsidiary company of either Embarq or Sprint (such companies being the defendants). The plaintiffs brought this suit after the defendants altered or eliminated health and life insurance benefits for retirees. Plaintiffs claimed, among other things, that the defendants had breached their fiduciary duty by misrepresenting the terms of multiple welfare benefit plans. One issue faced by the Tenth Circuit Court of Appeals (the “Court”) was whether the statute of limitations for bringing this claim had expired. Here is what the Court said on this issue:
This Court has previously held that section 413 of ERISA governs the time for filing a breach of fiduciary duty claim arising from an alleged violation of the duties imposed on ERISA plan fiduciaries by section 404(a)(1) of ERISA. Section 413 sets out the following six-year limitations period:
No action may be commenced under this subchapter with respect to a fiduciary’s breach of any responsibility, duty, or obligation under this part, or with respect to a violation of this part, after the earlier of–
(1) six years after (A) the date of the last action which constituted a part of the breach or violation, or (B) in the case of an omission the latest date on which the fiduciary could have cured the breach or violation. . . .
That is, a plaintiff has six years to file his or her suit for breach of fiduciary duty–the six-year period being measured from (1) the date of the last action constituting a part of the breach or (2) the latest date on which the breach could have been cured by the fiduciary.
Section 413 has a separate three-year statute of limitations which is not applicable here. But section 413 also says that in the case of fraud or concealment, a civil enforcement action may be commenced not later than six years after the date of discovery of the breach or violation. When does the “fraud or concealment” provision apply? The Circuit Courts are split. This Court believes that this provision is a legislatively created exception to the general six-year rule, rather than being a separate statute of limitations. This exception generally applies when either: (1) the alleged breach of fiduciary duty involves a claim that the defendant made a false representation of a matter of fact which deceives, and is intended to deceive, another person that this person acts upon it to his legal injury or (2) the defendant conceals the alleged breach of fiduciary duty.
There remains the question here of whether the breach of fiduciary duty claims raised by Plaintiffs fall under the fraud or concealment exception to the general six-year rule. There is no concealment here. And the Court remanded the case back to the district court to determine if the plaintiffs’ claims are based on a theory of fraud.