In an appeals case that the Secretary of the Department of Labor (DOL) brought against the TPP Stock Ownership Plan, the defendants argued that a waiver of statute of limitation rights they had agreed on with the DOL while trying to negotiate a settlement should be nulled.
In so doing, the plan’s trustee, Robert Preston, argued, the DOL’s charge that he breached his fiduciary duty and engaged in self-dealing in 2006 by causing the plan to purchase TPP stock at an inflated price, had passed the Employee Retirement Income Security Act (ERISA)’s six-year statute of limitations by the time of the DOL’s filing deadline of December 31, 2014. The DOL filed a second charge as to the self-dealing, in 2008.
The DOL, however, says that the defendants expressly agreed that they would “not assert in any manner the defense of statute of limitations, the doctrine of waiver, laches or estoppel, or any other matter constituting an avoidance of the Secretary’s claims that is based on the time within which the Secretary commenced such action.”
Since the parties failed to reach a settlement, the DOL filed its action against the TPP Stock Ownership Plan on December 30, 2014, one day before the deadline. The defendants moved to dismiss the Secretary’s complaint on the ground that all alleged violations occurred before December 30, 2008—six years prior to the complaint’s filing and, therefore, beyond the statute of limitations.
The district court agreed with the defendants that ERISA Section 1113(1) constitutes a statute of repose, rather than an ordinary statute of limitations, and “is not subject to waiver—even express waiver.” It dismissed all of the Secretary’s claims arising from events that occurred before December 30, 2008.
In reviewing the case, the U.S. 11th Circuit Court of Appeals considered multiple precedents and ultimately decided that ERISA, Part 4, does not “erect a ‘jurisdictional’ bar, so it is presumptively waivable.” The Secretary had argued (among other things) that the district court’s “categorical” rule that statutes of repose cannot be waived contradicts governing precedent, which instead requires a determination whether the applicable time bar is “jurisdictional.”
“In contrast,” the appeals court said, “Congress housed the ‘jurisdiction’ provisions, which delineate state and federal courts’ subject matter jurisdiction over ERISA claims in an altogether separate part of the statute, namely, Part 5, titled ‘Administration and Enforcement.’ We hold that the provision is non-jurisdictional and, therefore, presumptively waivable. The defendants here executed a series of contracts in which they expressly—and, as they have since acknowledged, knowingly, willingly and voluntarily—renounced their rights under” ERISA Part 4.
While the court agreed that ERISA’s six-year statute of limitations is actually a statute of repose, it did not agree with defendants that such statutes cannot be waived at all. After citing several U.S. and State Supreme Court decisions that supported its decision, the court cited “good ol’ common sense,” noting that people can even waive their rights under the U.S. Constitution. “It would be passing strange—bizarre, in fact—to conclude that while a litigant can renounce his most basic freedoms under the United States Constitution, he is powerless to waive the protection of … ERISA’s statute of repose. No way,” the court wrote.
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