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).

Background

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.

Implications

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.

Posted in SOX Whistleblower Decisions
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Photo of Steven J. Pearlman Steven J. Pearlman

Steven J. Pearlman is a partner in the Labor & Employment Law Department, where he is Head of the Restrictive Covenants, Trade Secrets & Unfair Competition Group and Co-Head of the Whistleblowing & Retaliation Group.

Employment, Restrictive Covenant & Trade Secret, and Whistleblower…

Steven J. Pearlman is a partner in the Labor & Employment Law Department, where he is Head of the Restrictive Covenants, Trade Secrets & Unfair Competition Group and Co-Head of the Whistleblowing & Retaliation Group.

Employment, Restrictive Covenant & Trade Secret, and Whistleblower Practice. Steven’s national practice focuses on defending companies in federal and state courts and in arbitration fora against the full spectrum of employment-related claims, including claims of executives; restrictive covenant violations; employee raiding; theft of trade secrets; whistleblower retaliation under the Sarbanes-Oxley Act, the Dodd-Frank Act and similar state laws; and wage-and-hour violations, including class, collective and PAGA actions.

Steven has successfully handled trials in multiple jurisdictions; prevailed in seeking and defending against applications for temporary restraining orders and preliminary injunctions; defended one of the largest Illinois-only class actions in the history of the federal courts in Illinois (over 90k putative class members); and prevailed following his oral arguments before federal and state appellate courts. He brings his litigation experience (beginning in 1998) to bear in counseling clients to minimize risk and avoid or prepare for success in litigation.

Investigations. Reporting to boards of directors, their audit committees, CEOs and in-house counsel, Steven conducts sensitive investigations and has the unusual experience of testifying in federal court in connection with investigations. His investigations have involved complaints of sexual harassment involving C-suite officers; systemic violations of employment laws and company policies; and fraud, compliance failures and unethical conduct.

Thought Leadership and Accolades. Steven was named Lawyer of the Year for Chicago Labor & Employment Litigation in the 2023 edition of The Best Lawyers in America. He is a Fellow of the College of Labor and Employment Lawyers. Chambers has reported:

  • Steven is “one of the best in the country and has a lot of experience”;
  • Steven is as an “outstanding lawyer” who is “very sharp and very responsive,” a “strong advocate,” and an “expert in his field”;
  • He is thoughtful, attentive and demonstrates an acute understanding of matters top of mind for business-minded general counsel; and
  • “He is someone who can navigate the twists and turns of litigation without difficulty.”

Steven was 1 of 12 individuals selected by Compliance Week as a “Top Mind.” Earlier in his career, he was 1 of 5 U.S. lawyers selected by Law360 as a ”Rising Star Under 40” in the area of employment law and 1 of “40 Illinois Attorneys Under Forty to Watch” selected by Law Bulletin Publishing Company. Steven is a U.S. Library of Congress Burton Award Winner for “Distinguished Legal Writing.”

Steven was appointed to Law360’s Employment Editorial Advisory Board and selected as a Contributor to Forbes.com. He has appeared on Bloomberg News (television and radio) and Yahoo! Finance, and is often quoted in leading publications such as The Wall Street Journal. The U.S. Chamber of Commerce has engaged Steven to serve as lead counsel on amicus briefs to the U.S. Supreme Court and federal circuit courts of appeal.

In 2024, Steven received the Excellence in Pro Bono Service Award from the United States District Court for the Northern District of Illinois and the Chicago Chapter of the Federal Bar Association.

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