That was a key argument advanced in a friend of the court brief filed by U.S. Department of Labor (DoL) Secretary Hilda L. Solis urging an Illinois federal judge to throw out a former plan trustee’s arguments that the legal time limit could be triggered instead when a fiduciary not directly involved in the suit finds out about potential ERISA wrongdoing.
Greatbanc Trust Co, of Lisle, Illinois, had argued in its request that the ERISA breach suit against it be thrown out because it was filed after the legal time limit. Greatbanc asserted that a non-party trustee for the Antioch Company Employee Stock Ownership Plan (ESOP) knew about the alleged breaches more than 36 months before the suit filing. Legally, Greatbanc contended, that knowledge could be carried over to the plaintiffs, which would make the case initiation too late and justify its dismissal.
“Because the three-year period requires that ‘the plaintiff’—not ‘the plan’ or some person other than the party actually bringing the case—had the triggering ‘actual knowledge,’ a plaintiff cannot be charged with sleeping on claims that he never knew he had,” DoL lawyers wrote in the brief. “Accordingly, (ERISA) does not senselessly start the clock ticking based on the state of mind of a plan fiduciary who failed to pursue the claim or even to alert the innocent plan participant to its existence.”
Four ESOP participants and the plan’s current trustee Evolve Bank & Trust filed the suit concerning a dispute over a complicated Antioch corporate refinancing involving a company stock buyback that court papers indicate eventually left the firm in bankruptcy and the ESOP worthless. The suit claims the company fiduciaries and Greatbanc grossly mishandled the refinancing in ways that constituted ERISA fiduciary breaches.
The case is Fish v. Greatbanc Trust Co., N.D. Ill., No. 09 CV 1668. The DoL brief is here.