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ARB Denies Equitable Tolling of 180-Day Statute of Limitations Under SOX

On June 29, 2020, the Administrative Review Board (“ARB”) upheld the dismissal of a whistleblower retaliation complaint under Section 806 of the Sarbanes-Oxley Act (“SOX”) for failure to file within the 180-day statutory deadline.  Xanthopoulos v. Marsh & McLennan Companies, Inc., ARB Case No. 2019-0045 (June 29, 2020).

Background

Complainant was an employee of Mercer Investment Consulting, an operating company owned by Marsh & McLennan Companies.  Complainant was fired on October 3, 2017, and though he made several filings with the SEC, he did not file his complaint with OSHA until 350 days later on September 18, 2018.  As a result, OSHA dismissed the complaint as untimely, and the Administrative Law Judge (“ALJ”) agreed, holding that Complainant’s claims did not merit equitable tolling of the 180-day statute of limitations under SOX.  Complainant petitioned the ARB for review.

Ruling

The ARB noted that there are four situations in which equitable tolling of the SOX statute of limitations is appropriate: 1) when the defendant has actively misled the plaintiff with respect to the cause of action; 2) the plaintiff has in some extraordinary way been prevented from asserting his rights; 3) the plaintiff has raised the precise statutory claim in issue but has mistakenly done so in the wrong forum; and 4) the employer’s acts or omissions have lulled the complainant into forgoing prompt action to vindicate his rights.

Complainant argued that his SEC filings were actually SOX claims filed in the wrong forum, due to his mistaken belief that the SEC would investigate his retaliation claims.  According to Complainant, he was not aware until August 2018 that the SEC was not responsible for investigating his allegations of retaliation.

The ARB rejected these arguments.  In his SEC filings, though Complainant stated that his termination was retaliatory, he did not seek employment-based remedies such as reinstatement, back pay or other damages associated with his termination.  Instead, his only mention of monetary relief was in seeking an award under the SEC’s Whistleblower Program, which rewards individuals with a percentage of any money collected due to a SEC enforcement action based on information they provide.  Thus, the ARB found that based on Complainant’s filings, his complaints were concerned more with potential harms to the investing public than those resulting from his termination.

In addition, Complainant stated in his SEC filings that he would “keep the SEC posted of [his] legal actions” regarding “this possible case of sexual harassment, wrongful termination, and/or illegal retaliation under the whistleblower protection of the Dodd-Frank Act.”  The ARB found that these statements demonstrated that Complainant was aware that the SEC’s investigation was separate and would not cover any employment-related claim under SOX.  Furthermore, Complainant admitted to discussing his situation with a member of a civil rights organization he was a part of, who advised him that he should file a claim regarding his discharge with OSHA.  Thus, the ARB concluded, “it is clear that Complainant did not mistakenly file a SOX whistleblower claim with the SEC, but deliberately filed with the SEC a non-SOX claim for the purpose of remedying Respondent’s wrongful conduct that he complained of and seeking a whistleblower award.”

Implications

This decision reinforces that the 180-day statute of limitations for SOX whistleblower retaliation claims is strictly construed and equitable tolling of this deadline will only be granted in narrow circumstances.

© 2020 Proskauer Rose LLP. National Law Review, Volume X, Number 218

TRENDING LEGAL ANALYSIS


About this Author

Lloyd B Chinn, Financial, Whistleblower Attorney, Proskauer Law Firm
Partner

Lloyd B. Chinn is a Partner in the Labor & Employment Law Department and co-head of the Whistleblowing & Retaliation Group. He litigates employment disputes of all types before federal and state courts, arbitration tribunals (e.g., FINRA, JAMS and AAA), and before administrative agencies in New York and across the country. Lloyd's practice ranges from litigating compensation disputes to defending whistleblower, discrimination and sexual harassment claims. Although he represents employers in a wide range of industries, including law, insurance, health care, consulting, media,...

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Pinny Goldberg Labor and Employment Lawyer Proskauer Rose Law Firm
Associate

Pinny Goldberg is an associate in the Labor & Employment Law Department. Pinny represents employers in a broad array of matters before federal and state courts, FINRA and other arbitration panels, and administrative agencies, including the EEOC and its state equivalents, and in pre-litigation negotiations. Matters he works on include discrimination and harassment, wage and hour, wrongful discharge, whistleblowing and retaliation, covenants not to compete, breaches of fiduciary duty, unjust enrichment, and tort and contract claims. 

In addition to handling litigation and dispute resolution, Pinny regularly advises clients on a wide variety of employment issues, including drafting, reviewing and revising handbooks and workplace policies. He also addresses questions and concerns related to hiring, wage and hour issues, employee leave, performance problems, terminations of employment, and separation agreements and releases.

Prior to joining Proskauer, Pinny was a Labor and Employment associate at Seyfarth Shaw LLP. While in law school, he served as an editor for the Cardozo Law Review.

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Scott S. Tan Law Clerk Proskauer  Employment Litigation & Arbitration Group
Law Clerk

Scott Tan is a law clerk in the Labor & Employment Law Department and a member of the Employment Litigation & Arbitration Group.

Scott earned his J.D. from the UCLA School of Law, where he served as a problem developer and member of the Moot Court Honors Board. He also worked as a research assistant for Dean Jennifer Mnookin and Professor Hiroshi Motomura.

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