breach of fiduciary duty

Late last year, the Ninth Circuit held that in order to trigger ERISA’s three-year statute of limitations a defendant must demonstrate that a plaintiff has actual knowledge of the nature of an alleged breach. Accordingly, the court held that merely having access to documents describing an alleged breach of fiduciary duty is not sufficient to cause ERISA’s statute of limitations to begin to run. Instead, the court rejected the standard embraced by other courts and ruled that participants should not be charged with knowledge of documents they were provided by did not actually read. The Ninth Circuit’s decision underscores circuit split over what is sufficient to demonstrate the existence of actual knowledge for purposes of triggering ERISA’s three-year statute of limitations.

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The US Court of Appeals for the First Circuit has solidified a circuit split on who has burden of proving loss causation in ERISA breach of fiduciary duty cases. The First Circuit joined the Fourth, Fifth and Eighth Circuits holding that once a plaintiff demonstrates a fiduciary breach, the defendant has the burden to negate loss causation. Other circuits, including the Sixth, Ninth, Tenth and Eleventh Circuits, have held that a plaintiff bears to burden to establish loss causation. This issue is ripe for Supreme Court review.

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