The U.S. District Court for the Northern District of Illinois recently granted a Rule 12(b)(1) and (6) motion to dismiss a former employee’s complaint alleging retaliation under the Illinois Whistleblower Act (“IWA”).  Huang v. Fluidmesh Networks, LLC, No. 16-cv-9566 (N.D. Ill. July 18, 2017).

Background.  Plaintiff was a Supply Chain and Manufacturing Manager for Defendant.  He alleged that Defendant’s Chief Technology Officer (“CTO”) falsely told a third party that a publicly-traded client intended to purchase Defendant.  Plaintiff alleged that because he thought this allegedly false information could impact the client’s stock price, he reported it to his direct supervisor, the CTO and the CTO’s supervisor.  Plaintiff claims that he told these individuals that the disclosure of the information was “illegal” and that he would report the violation to the appropriate authorities.  Plaintiff’s employment was terminated subsequent to his internal reports and he alleged that he received no explanation as to the basis for the termination.

Ruling.  Following his discharge, Plaintiff filed a complaint alleging that his employment was terminated in violation of the IWA.  Defendant moved to dismiss the claim, arguing that Plaintiff failed to state a claim under the IWA, as he did not allege that: (1) he reported a violation externally (as required by 740 § ILCS 174/15(a) and (b)); (2) he refused to participate in illegal activity (as required by 740 ILCS § 174/20); (3) any of his allegations involved public corruption (as required by 740 ILCS § 174/20.1); or (4) he was threatened by his employer (as required by 740 ILCS § 174/20.2).  The court agreed.  The court also found that Plaintiff lacked standing to bring an IWA claim due to a “lack of any meaningful connection to Illinois,” as the only connection of the lawsuit to Illinois was that Defendant has its principal place of business in Illinois.  But Plaintiff lived and worked in Taiwan and California and no one implicated by Plaintiff’s allegations lived or worked in Illinois.

Implications.  This case shows that courts are apt to strictly apply the requirements of the IWA and will require a plaintiff alleging claims under Illinois state law to establish a clear nexus to Illinois.

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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.