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, 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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