DOL Deadline to Bring Breach of Fiduciary Duty Claim Effectively Extended
A recent Supreme Court case, Intel Corp. Investment Policy Committee v. Sulyma, is allowing the Department of Labor (“DOL”) to effectively extend the amount of time it can bring a breach of fiduciary duty claim. Under ERISA, generally breach of fiduciary duty claims must be filed before the earlier of (a) six years after the date of the last action which constituted a part of the breach or violation, or (b) three years after the earliest date on which the plaintiff had actual knowledge of the breach or violation.
In Intel Corp., a participant brought suit alleging that the administrators of retirement plans managed the plans imprudently. While the participant had visited the plans’ website which disclosed investment decisions, the court held that did not give the participant “actual knowledge” of the breach because he did not actually review the relevant disclosures and was unaware of the imprudent investments. The Court explained that actual knowledge “requires more than evidence of disclosure alone.” If he did not have actual knowledge of the breach, he had an extended timeframe of six years after the breach to file the suit instead of only three years after discovering the breach.
The DOL is now using this precedent to extend its deadline to bring breach of fiduciary duty claims. In a recent federal court case in Hawaii, the DOL argued that the filing of the Form 5500—which usually contains the information necessary to discover a breach of fiduciary duty—does not alone mean that the DOL has actual knowledge of the breach. Because the agency did not actually review the form until more than a year after submission, the court held that the statute of limitations began tolling at that point, not when the form was submitted.
This effective extension of the statute of limitations gives the agency much more flexibility since it is common for the agency to run up against the deadline as it completes investigations which can often take years.