On March 29, 2013, the Department of Labor’s Administrative Review Board (“ARB”) ruled that a “standstill” agreement between an employer and employee that required both parties to provide notice before initiating legal proceedings warranted equitable modification of SOX’s statute of limitations period. Turin v. AmTrust Fin. Servs., Inc. et al., ARB No. 11-062 (Mar. 29, 2013).
In July 2007, Bentzion Turin became Maiden Holdings, LTD’s Chief Operating Officer, General Counsel, and Secretary. On December 15, 2008, Mr. Turin met with Barry Zyskind (Maiden’s President and CEO) and raised concerns regarding corporate governance practices. Later that day, Mr. Zyskind contacted Mr. Turin and told him he was being terminated.
On March 12, 2009, the parties entered into a month-long “standstill” agreement whereby they agreed to provide 10 days’ written notice before pursuing any legal action against the other. On April 2, 2009, after settlement negotiations between the parties failed, Mr. Turin filed a complaint with OSHA alleging that he was terminated in retaliation for engaging in protected activity under SOX.
OSHA dismissed Mr. Turin’s complaint as untimely because it was not filed within 90 days of Mr. Turin’s notice of termination. An ALJ affirmed, holding that the Mr. Turin had received “final, definitive and unequivocal” notice of his termination on December 15, 2008, triggering the clock for the limitations period, and thus his complaint was filed outside the 90-day statute of limitations (this was the statute of limitations period that existed before the Dodd-Frank Act amended SOX to double the limitations period).
The ARB’s Ruling
In reversing the ALJ’s decision, the ARB held that Mr. Turin was entitled to equitable modification of the statute of limitations because of the “standstill” agreement entered by the parties on March 12, 2009. The ARB noted that equitable modification of the statute of limitations applies in four principal situations: (1) when the defendant has actively misled the plaintiff regarding the cause of action; (2) when the plaintiff has in some extraordinary way been prevented from filing his action; (3) when the plaintiff has raised the precise statutory claim in issue but has done so in the wrong forum; and (4) where the employer’s own acts or omissions have lulled the plaintiff into foregoing prompt attempts to vindicate his or her rights. In describing the fourth situation, the ARB noted that the relevant inquiry is “whether the defendant’s conduct, innocent or not, reasonably induced the plaintiff not to file suit within the limitations period.”
The ARB determined that the case warranted equitable modification to the statute of limitations because on the date that Mr. Turin agreed to the “standstill,” he had only three days to file a complaint with OSHA. Therefore, by filing a complaint within the remaining limitations period, Mr. Turin would have been in breach of the agreement’s 10 day notice requirement. Accordingly, the ARB held that “equity requires” that the Respondents be held to the “terms of their agreement” with Mr. Turin.
This decision serves as a reminder that SOX’s statute of limitations may be extended for equitable reasons, including circumstances where the employer has taken steps to induce employees from filing a complaint with OSHA.