In Sulyma v. Intel Corporation Investment Policy Committee, No. 17-15864 (9th Cir. 2018), a panel of the Ninth Circuit Court of Appeals (the “Panel”) reversed the district court’s grant of summary judgment in favor of the defendants in an ERISA action on the ground that the limitations period had expired.
In this case, a former employee and participant in Intel’s retirement plans sued the company for allegedly investing retirement funds in violation of ERISA section 1104 (breach of fiduciary duty). The district court concluded that the employee had the requisite “actual knowledge” to trigger ERISA’s three-year limitations period, 29 U.S.C. § 1113(2), so that the period of limitations for bringing the suit had expired.
The Panel held that a two-step process is followed in determining whether a claim is time- barred by section 1113(2). First, the court isolates and defines the underlying violation on which the plaintiff’s claim is founded. Second, the court inquires whether the plaintiff had “actual knowledge” of the alleged breach or violation. The Panel held that actual knowledge does not mean that a plaintiff had knowledge that the underlying action violated ERISA, nor does it merely mean that a plaintiff had knowledge that the underlying action occurred. Rather, the defendant must show that the plaintiff was actually aware of the nature of the alleged breach more than three years before the plaintiff’s action was filed. In an ERISA section 1104 case, the plaintiff must have been aware that the defendant had acted and that those acts were imprudent. Disagreeing with the Sixth Circuit, the Panel held that the plaintiff must have actual knowledge, rather than constructive knowledge.
The Panel concluded that disputes of material fact as to the plaintiff’s actual knowledge precluded summary judgment, and remanded the case to the district court for further proceedings.