The 7th U.S. Circuit Court of Appeals ruled in the suit filed by plaintiff Sandra C. Leister against former employer Dovetail Inc. that the dispute was governed by the 10-year statute of limitations for breach of written contract claims and not the six-year time limit for fiduciary breach actions under the Employee Retirement Income Security Act (ERISA)
Circuit Judge Richard A. Posner, writing for the court, noted that Leister’s claims for missing benefits in her contract breach claim were more than benefits at stake in her ERISA breach complaint so the longer statute of limitations applies.
Posner also asserted that the lower court was wrong in not giving Leister statutory penalties for the employer’s failure to provide plan documents, which prevented the employee from determining her rights. The court said the employer’s conduct was in bad faith and resulted in prejudice, and thus penalties were warranted.
According to the ruling, Leister alleged that Dovetail and its two corporate officers, Michelle and Evan Peterson, failed to make employer contributions to her 401(k) account from 1998 through 2003 and that some of her own contributions were withheld from her paychecks and not properly deposited into the plan.
The lower court found that Dovetail and the Petersons breached their fiduciary duties, and awarded Leister her contributions (see “Case Sensitive: Double Duty“). The district court, however, declined to impose statutory penalties because of Dovetail’s faltering financial position.
The case is Leister v. Dovetail Inc., 7th Cir., No. 07-2242, 10/23/08.