In Tibble v Edison International, the U.S. 9th Circuit Court of Appeals affirmed a California court’s decision on March 23, 2013, involving Erisa’s statute of limitations (SOL) on a claim involving breach of fiduciary duty. The plaintiffs’ represented the workforce for the company and were suing as a class action claiming their investments were a result of imprudent investing and self dealing. ERISA § 413 provides that no action may be commenced “after the earlier of”: (1) six years after (A) the date of the last action which constituted a part of the breach or violation, or (B) in the case of an omission the latest date on which the fiduciary could have cured the breach or violation, or (2) three years after the earliest date on which the plaintiff had actual knowledge of the breach or violation unless it’s a case for fraud or concealment. The Court decided that there was no actual knowledge for the three year SOL to be applicable and therefore upheld the six year SOL. The Department of Labor’s (DOL) interpretation of the ‘safe harbor’ provision was consistent with the statutory interpretation and therefore did not bar the claim since the breach or loss was not a “direct and necessary” result of the beneficiary’s action.
As for the claim of breach of fiduciary duty by failing to invest prudently and involving self dealing, the Court relied on the established law that ERISA administrators abuse their discretion if they act without explanation or “construe provisions of the plan in a way that conflicts with the plain language of the plan” or violate the requirement that the fiduciaries are to employ the appropriate methods to investigate the merits of the investment and to structure the investment. Here, the administrators of the Plan took the necessary steps to diversify the investments; the only exception was for the three specific mutual funds, which were not properly investigated.
Feel free to contact one of the lawyers at Burke, Harvey, & Frankowski LLC to help with any questions or concerns you may have involving your long term disability policy.