Fiduciary Breach Statute of Limitations Does Not Begin Without Actual Knowledge


In Sulyma v. Intel Investment Policy Committee the Ninth Circuit Court of Appeals ruled that in order for the statute of limitations to begin on a fiduciary breach, the one alleging the breach must have actual knowledge of imprudent plan investments.

The court reached a middle ground between lax mere knowledge of alternative investments like hedge funds that had higher fees and lower returns during a strong equity performance, and the too stringent legal knowledge that there was a breach of ERISA rules and regulations. With this new standard, there must be knowledge of the facts at hand knowing that the fiduciary’s financial actions were imprudent.

Even if the alternative investments were disclosed via something like a fact sheet, the court found that the plaintiff would not be constructively aware that they were imprudent investments. The court found that to start the statute of limitations running, the plaintiff had to have actual knowledge.

This case will likely make it more difficult to dismiss court cases for fiduciary breaches based on the statute of limitations expiring. The actual knowledge standard makes it more likely for fiduciary breach claims to make it to trial.

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