On April 12, 2017, the Third Circuit partially revived a former in-house attorney’s whistleblower retaliation lawsuit against his previous employer.  Danon v. Vanguard Group, Inc., No. 16-cv-2881.

Plaintiff, a former in-house tax lawyer, previously raised retaliation claims against the Company in New York State Court under the New York False Claims Act, alleging he was discharged in retaliation for informing senior employees of his belief that the Company was violating certain tax and corporate laws.  The state court dismissed the case based on the plaintiff’s failure to demonstrate that the Company knew he was involved in any protected conduct at the time of his termination.  Plaintiff then filed suit against the Company in the District Court for the Eastern District of Pennsylvania alleging whistleblower retaliation in violation of SOX, Dodd-Frank, and the Pennsylvania Whistleblower Law.  His claims again were dismissed because the court determined he was precluded from asserting the Company’s knowledge of his allegedly protected conduct (we previously wrote about the SEC’s amicus brief to the district court in support of the plaintiff’s arguments here).

Plaintiff appealed the dismissal of his Dodd-Frank claim to the Third Circuit.  The Third Circuit reversed, concluding that while the state court had considered whether he had adequately pled his whistleblower claim, it had not actually determined whether, in fact, the Company knew about his allegedly protected activities.  Further, the Court noted that Plaintiff’s federal complaint alleged Company knowledge, and thus did not suffer from the safe defects as his state court complaint.  The court vacated the dismissal of the Dodd-Frank claim, and remanded for further proceedings.

The Third Circuit court has yet to address the critical underlying issue, raised by the Company in October of 2016, of whether an employee who complains internally but neglects to raise complaints with the SEC is protected from retaliation under Dodd-Frank.  Now that the district court must consider the merits of the claim on remand, the Third Circuit will likely confront the issue.

As noted, this case involves an attorney whistleblower—a dynamic that carries its own set of risks.  Links to our prior posts about the complexities of litigation brought by attorney whistleblowers can be accessed here, here and here.

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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, Whistleblower, Restrictive Covenant and Trade Secret Practice.

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, Whistleblower, Restrictive Covenant and Trade Secret Practice. Steven’s national practice focuses on defending companies in federal and state courts and arbitration against claims of: discrimination, retaliation and harassment, including claims brought by high-level executives; whistleblower retaliation; restrictive covenant violations; theft of trade secrets; and wage-and-hour violations (including class, collective and PAGA actions).

Illustrating his versatility, Steven has successfully handled bench and jury trials in multiple jurisdictions (e.g., Illinois, California, Florida and Texas); defended one of the largest Illinois-only class actions in the history of the federal courts in Chicago; and prevailed following his oral arguments before the Seventh Circuit and state appellate courts. Steven brings his litigation experience 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 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.

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 was also named as One of the Top 10 Impactful Labor & Employment Lawyers in Illinois for 2023 by Business Today. 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.” Chambers also reports that “He is someone who can navigate the twists and turns of litigation without difficulty. Steven is great with brief-writing, crafting arguments, and making sure the client is always happy.”

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 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. 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.

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.