United States District Court, N.D. California
CHRISTOPHER M. SULYMA, et al., Plaintiffs,
INTEL CORPORATION INVESTMENT POLICY COMMITTEE, et al., Defendants.
ORDER GRANTING DEFENDANTS' MOTION FOR SUMMARY
JUDGMENT RE: DKT. NO. 122
NATHANAEL M. COUSINS United States Magistrate Judge
putative class action, former Intel employee Christopher
Sulyma sues various fiduciaries of his Intel retirement
accounts. While he worked for Intel, Sulyma participated in
two retirement plans that invested in conventional
investments, such as stocks and bonds, but also invested
substantially in alternative investments, such as hedge funds
and private equity. Sulyma sues plan fiduciaries for what he
alleges were imprudent investments and inadequate
move for summary judgment on all of Sulyma's claims,
arguing that the claims are time-barred under the statute of
limitations. The key issue is whether Sulyma had actual
knowledge of the underlying facts constituting his claim
within 3 years of filing his lawsuit. If Sulyma had such
knowledge, under federal law his claims are time-barred.
Because there is no genuine dispute of material fact that
Sulyma had actual knowledge of the facts comprising claims I
and III, as well as knowledge of the disclosures he alleges
were unlawfully inadequate in claims II and IV, the Court
GRANTS defendants' motion for summary judgment on those
claims, finding them time-barred.
live primary claims, the Court also GRANTS summary judgment
on Sulyma's derivative duty to monitor and co-fiduciary
liability claims (claims V and VI).
putative class action seeking relief under the Employee
Retirement Income Security Act (ERISA), Sulyma seeks to
represent two classes of plaintiffs: (1) participants in the
401(k) Plan and the Retirement Plan whose accounts were
invested in the Target Date Fund 2045 (TDF); and (2)
participants in the 401(k) Plan and the Retirement Plan whose
accounts were invested in the Global Diversified Fund (GDF).
Dkt. No. 93 at 4. Defendants include the members of the
Investment Committee,  the Administrative Committee,
the Finance Committee of the Intel Board of Directors,
well as the committee entities. Sulyma also names the Intel
Corporation 401(k) Savings Plan and the Intel Retirement
Contribution Plan as nominal defendants. Id. at
gravamen of Sulyma's complaint is that the defendant
fiduciaries of the Retirement Plan and 401(k) Plan
imprudently over-allocated to hedge funds and private equity
investments. Dkt. No. 93 at 4. Defendants allegedly breached
their fiduciary duties by investing in such funds, which
“presented unconventional, significant and undue risk
of unduly high fees and costs.” Id. These
allocations “departed dramatically” from
prevailing industry standards. Id. According to
Sulyma, these investment decisions caused “massive
losses and enormous excess fees” to the plans and their
brings six claims: claims I and III allege the Investment
Committee Defendants breached their fiduciary duties by
over-allocating the assets of the 401(k) Plan and Retirement
Plan to hedge fund, private equity, and other alternative
investments. Id. at 64-66, 68-70. Claims II and IV
allege the Administrative Committee Defendants breached their
fiduciary duties by failing to disclose required information
about the funds. Dkt. No. 93 at 67-68, 70-72. Claim V alleges
that the Finance Committee Defendants breached their
fiduciary duties by failing to monitor the Investment
Committee and Administrative Committee. Id. at
72-73. Claim VI alleges that each defendant has derivative
liability for the actions of the other defendants.
Id. at 73-75.
move for summary judgment on all claims. Dkt. No. 122 at 7.
According to defendants, Sulyma had actual knowledge of the
facts constituting the alleged violations of ERISA more than
three years before he sued, through “annual notices,
quarterly Fund Fact Sheets, targeted emails, and two separate
websites.” Id. at 7-8. The Court held a
hearing on defendants' motion on December 14, 2016. Dkt.
No. 140. All parties consented to the jurisdiction of a
magistrate judge under 28 U.S.C. § 636(c). Dkt. Nos. 30,
Findings of Fact
worked for Intel between 2010 and 2012, and participated in
two ERISA-governed retirement plans. Dkt. No. 93 at 9. The
first was the Intel Retirement Contribution Plan, where
Sulyma's retirement assets were invested in the GDF.
Id. The second was the Intel 401(k) Savings Plan,
where Sulyma's retirement assets were invested in the
to Sulyma, while he worked at Intel, he had little experience
with financial issues, and didn't know what “hedge
funds, ” “alternative investments, ” and
“private equity” were. Dkt. No. 134 at 13. While
an Intel employee, as Intel's exhibits demonstrate,
Sulyma had access to a number of financial documents
pertaining to the GDF and TDF. Many of these documents, such
as Fund Facts Sheets, Qualified Default Investment
Alternatives Notices, and Summary Plan Descriptions, were
made available by Fidelity Workplace Services LLC,
“which is the service provider for . . . Intel
Retirement Contribution Plan and Intel 401(k) Savings
Plan.” Dkt. No. 122-1 at 1-2 (Vogel Decl.). Fidelity
made these documents available on the NetBenefits website.
Id. at 2. Sulyma never saw the Fund Facts Sheets or
Morningstar reports, and cannot recall receiving or review
the Intel plans' Summary Plan Descriptions. Dkt. No. 134
at 13. Sulyma acknowledged it was possible he
accessed the NetBenefits website 68 times during his
employment at Intel. Dkt. No. 135-3 (Sulyma Dep.) at 27.
Sulyma asserts the financial documents Intel uses to
attribute actual knowledge on his part were not easily
accessible, and often misleading or inconsistent, though he
admits he never looked at those documents to begin with. Dkt.
No. 134 at 27 (“Mr. Sulyma repeatedly testified that he
had not seen the purported “disclosures” on
Intel's website.”). The documents Sulyma
acknowledges receiving and reviewing are the Intel 401(k) and
Intel Retirement Contribution Retirement Savings Statements,
which “consistently advised him from 2010 to 2013 that
he was invested in ‘stock 63 percent, bonds 16%,
short-term 21 percent.'” Id. at 14;
see Dkt. Nos. 128-3 (Defs. Ex. 29), 128-4 (Defs. Ex.
30). The Savings Statements say nothing about investments in
private equity or hedge funds.
judgment may be granted only when, drawing all inferences and
resolving all doubts in favor of the nonmoving party, there
is no genuine dispute as to any material fact. Fed.R.Civ.P.
56(a); Tolan v. Cotton, 134 S.Ct. 1861, 1863 (2014);
Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986).
A fact is material when, under governing substantive law, it
could affect the outcome of the case. Anderson v. Liberty
Lobby, Inc., 477 U.S. 242, 248 (1986). A dispute about a
material fact is genuine if “the evidence is such that
a reasonable jury could return a verdict for the nonmoving
party.” Id. Bald assertions that genuine
issues of material fact exist are insufficient. Galen v.
Cnty. of L.A., 477 F.3d 652, 658 (9th Cir. 2007).
moving party bears the burden of identifying those portions
of the pleadings, discovery, and affidavits that demonstrate
the absence of a genuine issue of material fact.
Celotex, 477 U.S. at 323. Once the moving party
meets its initial burden, the nonmoving party must go beyond
the pleadings, and, by its own affidavits or discovery, set
forth specific facts showing that a genuine issue of fact
exists for trial. Fed.R.Civ.P. 56(c); Barthelemy v. Air
Lines Pilots Ass'n, 897 F.2d 999, 1004 (9th Cir.
1990) (citing Steckl v. Motorola, Inc., 703 F.2d
392, 393 (9th Cir. 1983)). All justifiable inferences,
however, must be drawn in the light most favorable to the
nonmoving party. Tolan, 134 S.Ct. at 1863 (citing
Liberty Lobby, 477 U.S. at 255).
issues presented are (1) whether claims I-IV (primary breach
of fiduciary duty claims) are time-barred; and (2) if so,
whether Sulyma's derivative liability claims (V and VI)
are also time-barred.
Claims I and III Are Time-Barred.
I and III allege the Investment Committee Defendants breached
their fiduciary duties by over-allocating the assets of the
401(k) Plan and Retirement Plan to hedge fund, private
equity, and other “alternative investments.” Dkt.
No. 93 at 64-66, 68-70.
Standard For Fiduciary Duties and Statute of Limitations
prudent man standard of care, 29 U.S.C. § 1104(a)(1)
(ERISA § 404), provides that the plan fiduciary must
discharge his plan duties “solely in the interest of
the participants and beneficiaries” and:
(A) for the exclusive purpose of:
(i) providing benefits to participants and their
(ii) defraying reasonable expenses of administering the plan;
(B) with the care, skill, prudence, and diligence under the
circumstances then prevailing that a prudent man acting in a
like capacity and familiar with such matters would use in the
conduct of an enterprise of a like character and with like
ERISA's statute of limitations for breaches of fiduciary
duties bars actions commenced “after the earlier
of” either 6 years after the act or omission
constituting the breach, or 3 years “after the earliest
date on which the plaintiff had actual knowledge of the
breach.” 29 U.S.C. § 1113 (ERISA § 413). The
three-year limitations period begins on “the date on
which the person bringing the suit acquires actual
knowledge.” Landwher v. DuPree, 72 F.3d 726,
733 (9th Cir. 1996). Constructive knowledge, or
“knowledge of facts sufficient to prompt an inquiry
which would have uncovered the breach, ” does not
suffice. Martin v. Pac. Lumber Co, 1993 WL 832744,
at *2 (N.D. Cal. Jan. 15, 1993); but see Brown v. Owens
Corning Inv. Review Comm., 622 F.3d 564, 571 (6th Cir.
2010) (finding that where participants were provided access
to Summary Plan Descriptions, but there existed no proof the
plaintiffs “actually saw or read the documents that
disclosed the allegedly harmful investments, ” actual
knowledge existed) (internal quotations marks omitted).
apply the statute of limitations requiring “actual
knowledge, ” the court “must first isolate and
define the underlying violation.” Ziegler v. Conn.
Gen. Life Ins. Co.,916 F.2d 548, 550-51 (9th Cir.
1990). Second, the Court must inquire when the plaintiff had
“actual knowledge” of the alleged breach or
violation. Id. at 552. “This inquiry into
plaintiffs' actual knowledge is entirely factual,
requiring examination of the record.” Id.
Therefore, as to claims I and III, the Court must look to the
evidence presented to see if the financial disclosures
presented notice sufficient to “isolate and define the
underlying violation” and provide “actual