Actual Knowledge Means Aware: Supreme Court Upholds Participant Win in Intel Case

As reported in our June 2019 newsletter, the Ninth Circuit in Intel Corp. Investment Policy Committee et al. v. Sulyma addressed when a participant has actual knowledge of a potential fiduciary breach. The actual knowledge standard is significant given it can shorten the typical 6-year window under ERISA to sue for fiduciary breaches to 3 years.  The Ninth Circuit ruled for participants who had argued that the shortened limitations period begins to run once the participant reads the disclosure containing information on the alleged violation, not merely when the disclosure is received, and on February 26, 2020, the Supreme Court agreed. In the unanimous ruling, the Court found “[t]hat all relevant information was disclosed to the plaintiff is no doubt relevant in judging whether he gained knowledge of that information. To meet §1113(2)’s “actual knowledge” requirement, however, the plaintiff must in fact have become aware of that information.” The Supreme Court’s holding significantly raises the bar for plan administrators to ensure that plan disclosures are not merely provided and received, but that they are also reviewed, in order to satisfy the heightened “actual knowledge” standard and shorten the applicable limitations period. What, then, can be done to establish actual knowledge? Records showing that a participant viewed the disclosure and evidence suggesting that action was taken in response to information contained in a disclosure are cited by the Supreme Court as ways to prove “actual knowledge.”

KMK Law articles and blog posts are intended to bring attention to developments in the law and are not intended as legal advice for any particular client or any particular situation. The laws/regulations and interpretations thereof are evolving and subject to change. Although we will attempt to update articles/blog posts for material changes, the article/post may not reflect changes in laws/regulations or guidance issued after the date the article/post was published. Please consult with counsel of your choice regarding any specific questions you may have.

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