![]() Some are saying Congress should get involved and either reduce the disclosure burden, or just change the default rules to state that it is indeed reasonable to expect that people will read important disclosures.”Īnother point where Levine and Walsh feel there is some uncertainty is in terms of this decision’s potential effect on class certification issues under ERISA. The Supreme Court has stated that even the DOL can’t keep up with reading them, so there’s a sense that something’s got to give. “The Supreme Court’s view is now clearly stated that they don’t believe people are reading or understanding these disclosures. “Writing and sending disclosures is expensive,” Walsh explains. Walsh and Levine add that they have already heard frustrations voiced by plan sponsors and other industry stakeholders about this decision. A lot will depend on how the lower courts interpret all this.” “You can have people acknowledge that they have opened documents, but what do you need to do to be able to show they have read something, let alone understood it? And what about if they understood something and then genuinely forgot it? If you look at recordkeeping technology today, it’s already pretty sophisticated in terms of analyzing participants’ behaviors online. “As we move towards electronic disclosure, there will still be challenges,” Levine says. Levine says the electronic delivery discussion is “interesting,” but he is less sure about whether e-delivery will really allow plan sponsors to rely on the shorter limitations period. If you sent it electronically, you can theoretically get them to confirm that they opened it, and you can even go so far as to ask whether someone understands something.” Is E-Delivery the Answer? “With paper mailings, even if you have confirmation of receipt, you can’t really say if someone read something, nor if they understood it. “Why is it less of a big deal for private litigants over time? Simply, the potential impact of default electronic disclosures could perhaps help to maintain the shorter limitations period,” Walsh speculates. In effect, this new ruling gives the DOL a six-year lookback period to file fiduciary breach litigation. Walsh notes that the decision explicitly states that it would be unreasonable to assume that the DOL is able to review and digest-i.e., produce “actual knowledge” about-all the disclosures it receives. “It’s potentially a bigger deal in the long run for the Department of Labor’s ability to bring lawsuits against plan fiduciaries.” ![]() “My view is that this ruling is a bigger deal in the short term, and potentially a less big deal in the long run, especially for private litigants,” Walsh suggests. On the other hand, if they don’t have that actual knowledge, there is a longer, six-year statute of limitations period in which they could first learn about and then challenge the decisions of fiduciaries in court. In other words, under ERISA, if the DOL or a private individual participant has “actual knowledge” of a potential fiduciary breach, they have three years to file a claim. In short, the Supreme Court has affirmed that actual knowledge is only established by genuine subjective awareness of the information being considered-not by the mere provision of documents or the theoretical availability of the information in plan disclosures sent to retirement plan participants and filed with the Department of Labor (DOL).Īs explained by David Levine and Kevin Walsh, both principals with Groom Law Group, this distinction matters because of the special three-year statute of limitations period which begins when plaintiffs can be shown to have gained “actual knowledge” of an alleged fiduciary breach. The 14-page ruling clarifies what establishes “actual knowledge” of a potential fiduciary breach under the Employee Retirement Income Security Act (ERISA). in the complex but significant lawsuit known as Intel Corporation Investment Policy Committee v. Supreme Court ruled unanimously against the arguments of the Intel Corp.
0 Comments
Leave a Reply. |