By Emily Gilbert
Yesterday, the Supreme Court heard oral argument in Intel Corp. Investment Policy Comm. v. Sulyma. PRC had filed a friend-of-the-court brief in the case, and I was excited to get to be there in person.
Oral arguments are open to the public, but there are usually only 20-30 seats available on a first come first served basis. On days when the Court is hearing cases that are very high profile, people start lining up as early as 5 am! Luckily this wasn’t the case yesterday, and when I arrived at 8:45 am, there were only about 10 people in front of me. After standing outside in the cold for 45 minutes, we were led inside, taken through security, told to put all our personal belongings in lockers, and then seated in the court room.
About the case
The Employee Retirement Income Security Act (ERISA) requires retirement plan officials to act wisely and carefully and in the best interests of retirement plan participants. This is called a fiduciary duty. The question in this case relates to a provision of ERISA that sets the time limit for a participant to claim a breach of fiduciary duty. The provision says that a participant has 6 years from the act that constitutes the breach; however, if the participant has “actual knowledge,” of the breach that time limit is shortened to 3 years.
Christopher Sulyma filed a lawsuit against Intel’s Investment Policy Committee, arguing that it had poorly invested the funds in his retirement plans. Intel says that he is too late to bring this suit, because he had access to documents about the plan’s investment decisions more than three years before he filed his claim. Sulyma says that even though he had access to the documents online, he did not read them, and therefore did not know that his funds were being mismanaged. Most people trust fiduciaries to act in their best interests, and do not read all of the long and complicated disclosures posted on plan websites.
The attorney representing Intel was given 25 minutes to present his argument and answer questions from the Justices, and then 5 more minutes for a closing statement. Christopher Sulyma’s attorney shared his 30 minutes with the attorney representing the U.S. government. Because this was such a short amount of time things moved very quickly, and the Justices asked many questions. You can read the full transcript here.
Intel argued that the plans provided Sulyma with the information he needed to understand how the money in his plans was being invested. For example, he received an email with a link to a website that, among other information, included a fact sheet that explained that a portion of his money was invested in hedge funds and commodities. Sulyma says he does not remember seeing this online fact sheet, and even if he had read it, he would not have understood what it meant. This argument is echoed in our amicus brief, which says “most participants are not financially sophisticated, and no matter how well-educated, lack the financial expertise to evaluate plan investment decisions based simply on plan disclosures.”
For the most part, the focus was on the meaning of “actual knowledge” in the law. If Sulyma received an email with a link to online documents with information about his retirement plans, is that enough to say he had actual knowledge of what the plans were doing? What if, as he said, he never read it? What if he had read it, but didn’t understand it?
Many of the justices on the Court seemed to think that just sending a link in an email is not enough. Justice Brett Kavanaugh said, “many people don’t read them,” and Justice Ruth Bader Ginsberg even admitted to not reading every document she receives about her own investments.
Why is this important?
This case was very timely, because it relates to the topic of our last blog post: a recent rule proposed by the Department of Labor that would overturn the current requirement that people who do not work with computers must receive important information about their retirement plan by mail, unless they notify the plan that they want to receive this information electronically. Many of the questions the justices asked yesterday highlighted the concerns we have with this proposed “notice and access” rule that would allow plans to simply send individuals emails telling them that they could find critical retirement plan information on a website. Participants would only be told one time that they could contact their plan and ask to receive their documents in the mail instead.
It is unreasonable to assume that the average person will read every email and then go hunt for documents on websites – and then understand these often lengthy and complicated documents if they do. This rule also doesn’t account for people who don’t have internet access in their homes and assumes a basic level of internet savvy that is not realistic for everyone.
We hope the Department of Labor withdraws this proposal, and we hope the Supreme Court rules in favor of Christopher Sulyma.
Read more about the case:
Intel Corp. Investment Policy Committee v. Sulyma to shape ERISA fiduciary lawsuits
Justices Wary of Intel Committee Position in 401(k) Dispute
Read more about the Labor Department’s proposed rule:
Labor Department proposes default electronic retirement plan disclosures