U.S. Supreme Court Agrees to Hear Two ERISA Cases

The United States Supreme Court recently agreed to hear two ERISA class-action cases next term that were decided by the lower courts in favor of plan participants. First, the Supreme Court agreed to review Retirement Plans Committee of IBM et al. v. Larry W. Jander, an employer stock-drop case from the Second Circuit.  IBM workers claimed that IBM’s Retirement Plans Committee breached its fiduciary duty by allowing workers’ retirement funds to be invested in artificially-inflated IBM stock. The Second Circuit applied the “more harm than good” standard that was set forth in Fifth Third Bancorp v. Dudenhoeffer and found that the Committee did not meet this standard as it could not have reasonably thought it was better to do nothing rather than something when they learned of IBM’s failing microchip division.

Second, the Supreme Court agreed to hear Intel Corp. Investment Policy Committee et al. v. Sulyma, a Ninth Circuit case. At issue is when a participant has actual knowledge of a potential fiduciary breach for purposes of applying the statute of limitations period. Intel argued that a participant has actual knowledge, and the statute of limitations period begins to run, when the participant receives the financial documents. The Ninth Circuit rejected Intel’s argument and found that a participant has actual knowledge of an alleged breach, and the three-year statute of limitations period begins to run, when the participant reads the provided financial documents.

There is ongoing speculation surrounding how the Supreme Court will rule in these two cases and many plan fiduciaries are hopeful that the Supreme Court will overturn the Circuit Courts’ opinions.

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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