The U.S. District Court for the Eastern District of Wisconsin ruled that an Illinois-based bank employee could not state a claim under the whistleblower protection provision in Dodd-Frank because his complaints alleged violations of banking laws, not securities laws.  Zillges v. Kenney Bank & Trust, No. 13-cv-01287 (E.D. Wis. June 4, 2014).

Plaintiff Zillges was the President and CEO of Kenney Bank & Trust (Bank) from 2011 until his employment was terminated in July 2013.  Plaintiff alleged that, during his two-year long tenure with the Bank, he observed conduct that violated federal banking laws, and that he reported the conduct to the Bank’s Board of Directors, the Federal Deposit Insurance Corporation and the Federal Trade Commission.  He also alleged that he took steps to prevent and correct the regulatory violations.  Plaintiff further alleged that the Defendants (i.e., the Bank and several affiliated entities and individuals) sought retribution by terminating his employment.

After filing an initial complaint against Defendants in November 2013, Plaintiff sought leave to file an amendment that added claims under the Dodd-Frank whistleblower anti-retaliation provision.  Defendants opposed the motion, arguing that such an amendment was futile because Dodd-Frank did not cover complaints about alleged violations of banking laws or regulations.  The court agreed with Defendants, ruling that Plaintiff did not qualify as a Dodd-Frank whistleblower because he did not allege “a violation of the securities laws.”  Thus, the court concluded that Plaintiff could not state a claim upon which relief may be granted under Dodd-Frank.

As we have discussed in recent posts (see our discussion of decisions from district courts in Nebraska, New York and Florida), the issue of what it takes to be a Dodd-Frank whistleblower (in particular, whether one must complain to the SEC to receive protection) is currently a subject of debate.  But the Zillges decision underscores that, at a minimum, the complaint must implicate federal securities laws – and not merely banking or other financial laws or related regulations.

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Photo of Steven J. Pearlman Steven J. Pearlman

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

Steven’s practice covers the full spectrum of employment law, with a particular…

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

Steven’s practice covers the full spectrum of employment law, with a particular focus on defending companies against claims of employment discrimination, retaliation and harassment; whistleblower retaliation; restrictive covenant violations; theft of trade secrets; and wage-and-hour violations. He has successfully tried cases in multiple jurisdictions, and defended one of the largest Illinois-only class actions in the history of the U.S. District Court for the Northern District of Illinois. He also secured one of only a few ex parte seizures orders that have been issued under the Defend Trade Secrets Act, and obtained a world-wide injunction in federal litigation against a high-level executive who jumped ship to a competitor.

Reporting to boards of directors, their audit committees, CEOs and in-house counsel, Steven conducts sensitive investigations and has testified in federal court. 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.

Steven was recognized as 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 describes Steven as an “outstanding lawyer” who is “very sharp and very responsive,” a “strong advocate,” and an “expert in his field.” 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 Burton Award Winner (U.S. Library of Congress) for “Distinguished Legal Writing.”

Steven has served on Law360’s Employment Editorial Advisory Board and is a Contributor to Forbes.com. He has appeared on Bloomberg News (television and radio) and Yahoo! Finance, and is regularly 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. He was appointed to serve as a Special Assistant Attorney General for the State of Illinois in employment litigation matters. He has presented with the Solicitor of the DOL, the Acting Chair of the EEOC, an EEOC Commissioner, Legal Counsel to the EEOC and heads of the SEC, CFTC and OSHA whistleblower programs. He is also a member of the Sedona Conference, focusing on trade secret matters.

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