A recent U.S. Supreme Court decision will give employers facing certain Occupational Safety and Health Administration (OSHA) citations a powerful new defense. In a rare unanimous decision issued on February 27, 2013, the Court held that the Securities and Exchange Commission could not take advantage of the “discovery rule” to avoid the statute of limitations applicable to its enforcement action against investment advisors. In Gabelli v. SEC, 568 U.S. __ (2013) the Court construed 28 U.S.C. §2462, which requires the government to file suits seeking civil penalties “within five years from the date when the claim first accrued,” as an absolute statute of limitations, which was not tolled until the allegedly unlawful activity was discovered by government investigators. In short, the Court held that a statute of limitations in the civil penalties context means what it says: the government must file suit seeking civil penalties within the allotted time, and the time for filing is not delayed until the government discovers or reasonably could have discovered the allegedly unlawful act.

This is an important ruling not just in the securities fraud setting, but in all situations in which the government is seeking civil penalties against private parties. Practitioners in the workplace safety field, for example, have long struggled with OSHA’s argument that records keeping violations are tolled until such time as an OSHA investigator discovers such violations, which typically occurs during the investigation of an unrelated workplace accident. The Gabelli case should provide employers with an antidote to such claims, and affirm the absoluteness of the six-month statute of limitations applicable to alleged OSHA violations—whether recordkeeping or otherwise.

Importantly, the Court distinguished between government actions seeking penalties and private actions brought by allegedly injured plaintiffs, noting that the government employs investigators who have the power and duty to seek out violations of law, while private plaintiffs have no such investigatory powers. Further, the Court found that private plaintiffs taking advantage of the discovery rule to be made whole are distinguishable from government agencies seeking to punish violations that may have happened—and ceased—long ago.

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