U.S. Solicitor General Noel Francisco asked the Supreme Court to support a participant in two Intel Corp. defined contribution plans, who claimed that plan fiduciaries violated their ERISA duties by failing to adequately explain changes in the plans' investment lineup.
Oral argument is set for Dec. 4 in the case of Intel Investment Policy Committee et al. vs. Christopher M. Sulyma, who worked for Intel from 2010 to 2012.
Mr. Sulyma's initial lawsuit accuses Intel of failing to adequately disclose the expenses, risks and fees of investment lineups that contained alternatives such as hedge funds and private equity.
Intel had petitioned the Supreme Court to review an adverse ruling by 9th U.S. Circuit Court of Appeals, San Francisco. The appeals court had reversed and remanded a pro-Intel decision by a U.S. magistrate judge. Mr. Francisco wrote that the Intel petitioners had misread and/or misapplied the ERISA statute governing the dispute with Mr. Sulyma.
"Petitioners' reading (of ERISA) threatens to frustrate the enforcement of the statute by other fiduciaries and the secretary of labor," he wrote in an Oct. 28 friend-of-the-court brief. He was joined in the brief by top lawyers from the Department of Labor.
Intel makes a "legal presumption that has no basis in the statutory text structure or history," Mr. Francisco wrote. He also asked the justices for permission to participate in the oral argument.
The Intel case focuses on two key issues in addition to Mr. Sulyma's criticism of the Intel fiduciaries' actions — the time limit for filing an ERISA lawsuit and the legal definitions of "actual knowledge" and "constructive knowledge."
ERISA provides for a six-year period for a plaintiff to sue, "running from 'the date of the last action which constituted a part of the breach or violation, or in the case of an omission that latest date on which the fiduciary could have cured the breach or violation.'" Mr. Francisco wrote in describing the law. However, there are exceptions. One states that "no civil action can be brought more than 'three years after the earliest date on which the plaintiff had actual knowledge of the breach or violation,' " Mr. Francisco wrote in outlining the exception affecting the Intel case.
In his brief to the Supreme Court, Mr. Francisco wrote that actual knowledge "is knowledge a person in fact has or acquires." Constructive knowledge refers to something that is "imputed as a matter of law," he wrote.
Mr. Francisco wrote that ERISA's distinction between actual and constructive knowledge is clear because the original 1974 version of the law contained both knowledge requirements. However, "constructive knowledge" was eliminated by Congress in 1987, he wrote.
Intel argued that Mr. Sulyma had "actual knowledge" of the changes, strategy and terms of the investment lineups, which include alternative investments such as hedge funds and private equity.
Court documents show that Mr. Sulyma received but didn't review fund fact sheets and that he didn't recall receiving summary plan descriptions. He said he had "little experience with financial issues" and didn't know anything about alternative investments.
Mr. Sulyma sued in 2015, but Intel said the suit was filed after the three-year period covered by the concept of actual knowledge.
In March 2017, a U.S. magistrate judge in San Jose, Calif., granted Intel's request for summary judgment, saying Mr. Sulyma's lawsuit was "time-barred under the statute of limitations." The judge agreed with Intel that Mr. Sulyma had "actual knowledge" of the plans' investments.
In November 2018, the appellate court reversed and remanded the ruling. The appeals court said Mr. Sulyma lacked actual knowledge of the plans' investments and that the three-year time limit didn't apply.
Intel asked the U.S. Supreme Court in February to review the case. The court agreed in June.
