The Sixth Circuit continues to liberally define the "actual knowledge" required to trigger the 3-year ERISA statute of limitations and, in doing so, affirmed summary judgment in favor of the defendants in Brown v Owens Corning Investment Review (Case No. 09-3692).
The Court confirmed its earlier rejection in Wright v. Heyne, 349 F.3d 321 (6th Cir. 2003) of the Third Circuit's more stringent definition of "actual knowledge." The Court also declined to follow what it considered dicta from the Eight Circuit's ruling in Brown v. American Life Holdings, Inc., 190 F.3d 856 (8th Cir. 1999), that in the context of a breach of fiduciary duty through "imprudent investment," actual knowledge requires knoweldge of how the fiduciary selected its investments.
Instead, the majority held that the Plaintiffs had actual knowledge of the facts supporting their claim when they knew (1) that the value of their ERISA investments plummeted when the company declared bankruptcy and (2) that someone had the power to close the fund that had invested in Owens Corning stock and permit transfers of monies already invested in the fund. This knowledge of "the facts or transaction that constituted the alleged violation" was enough to start the three-year limitations clock running. Because Plaintiffs filed their suit six years after the bankruptcy, they were too late.
Judge White did not join the majority's discussion of whether the Plaintiffs had acutal knowledge of the breach but concurred in the outcome and the other portions of the opinion, stating that SPD's that were not transmitted in accordance with the ERISA rules should not be used to impute actual knowledge to the Plaintiffs. Even Judge White, though, found from the other evidence that the Plaintiffs had acutal knowledge of the key facts of their claim at the time of the bankruptcy.