The suit alleged that the employer breached its ERISA fiduciary duties by not telling the participant that if he had filled out a time sheet on his last day of work, he would have been entitled to 100% vesting of his plan benefits, rather than the 30% he received.
The US District Court for the Western District of Virginia held that the Employee Retirement Income Security Act’s (ERISA) three-year statute of limitations (SOL) for fiduciary breach claims barred a profit-sharing plan participant’s claim and denied an attempt to apply the six-year SOL for claims regarding fiduciary breach involving fraud or concealment.
Bowman Apple Products Co.’s profit sharing plan provided that employees were 100% vested after completing 15 years of service. However, effective September 1, 1989, the plan was amended to allow employees to become fully vested after only five years with the company.
That was just a day before Michael W. Davis, an employee of Bowman, tendered his resignation. While Davis reported to the office on the morning of September 1 and performed some minor tasks, he did not fill out a time sheet for that day. Davis was later informed that the company considered August 31 to be his last day of work – and since he was not an employee on September 1, his vesting was determined by the prior vesting schedule.
Davis didn’t actually receive his profit sharing plan payment until five years later (1994), as provided for by the plan. However, he waited until 2000 to file a lawsuit alleging he was entitled to additional benefits and that Bowman breached its fiduciary duties by not considering him 100% vested.
Davis’ claim was dismissed by the district court as time-barred under Virginia’s five-year statute of limitations for contract actions. Regarding Davis’s fiduciary breach claims, the court found that an issue of material fact existed as to whether Bowman had made a material misrepresentation by telling Bowman in 1989 that he was only entitled to 30% vesting, rather than mentioning that he would be entitled to a higher level of vesting if he had waited a day.
The court further found that Davis’ fiduciary breach claim was barred under ERISA’s three-year statute of limitations for fiduciary duty claims – and also refused to apply ERISA’s six-year limitations period for fiduciary breach claims involving fraud or concealment because it found Davis had knowledge of possible breaches by Bowman going back to shortly after his departure from the company.
The case is Davis v. Bowman Apple Products Co., W.D. Va., No. 5:00CV00033, 3/29/02.