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ARB Clarifies Burden Whistleblowers Bear for Equitable Extension of SOX Statute of Limitations

By Allen B. Roberts on June 7, 2010
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On the heels of its 2-1 decision in Hyman v. KD Resources, allowing equitable estoppel to extend the Sarbanes-Oxley (SOX) statute of limitations (noted in our blog posting of April 20, 2010), the Department of Labor Administrative Review Board (ARB) has issued a unanimous decision clarifying the burden for whistleblowers to survive dismissal of complaints that are not filed within the explicit 90-day statute of limitations. Daryanani v. Royal & Sun Alliance, ARB No. 08-106, ALJ No. 2007-SOX-79 (ARB May 27, 2010).

Adhering to the principle that equitable estoppel may apply when certain employer conduct interferes with a whistleblower-employee’s exercise of rights, the ARB nevertheless refused to extend the SOX statute of limitations on the basis of alleged inaction by an employer. Holding equitable estoppel would not be available in the circumstances, the ARB observed that the employer had no affirmative obligation to:

  • inform the employee of potential causes of action,
  • inform the employee of time limitations applicable under statutes creating a cause of action, or
  • counter-sign a severance release agreement within the statute of limitations deadline.

The ARB also clarified that:

  • responsibility for discovering a cause of action and filing a timely complaint remains an obligation of the complainant, and
  • a complainant’s delayed awareness of a possibly retaliatory motive for an adverse employment action is not a ground for equitable estoppel. 

Administrative Appeals Judge Wayne C. Beyer, who dissented in Hyman v. KD Resources, wrote a concurring opinion to emphasize two supplemental points. First, he would find a pre-complaint settlement agreement and release of “all claims” binding, even though the release did not expressly refer to SOX claims. Second, consistent with his Hyman v. KD Resources dissent, he would not allow settlement discussions to toll the limitations period.

While Hyman v. KD Resources may have created a broader opening of the equitable estoppel door, Daryanani v. Royal & Sun Alliance helps to define the space within by placing the burden squarely on the complainant – even while ARB members continue to show different tolerances for applying principles of equitable modification.

  • Posted in:
    Employment & Labor
  • Blog:
    Workforce Bulletin
  • Organization:
    Epstein Becker & Green, P.C.

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