On February 28, 2023, the U.S. District Court for the Central District of Illinois granted a defendant-employer’s motion to dismiss a SOX whistleblower retaliation claim, holding that the plaintiff failed to adequately plead that he engaged in protected activity because his alleged attempt to raise safety concerns did not plausibly allege that he subjectively believed that he was reporting fraud.  Magnuson v. Exelon Generation Company, LLC, No. 21-cv-4142.

Background

Plaintiff, an Operations Shift Manager at a nuclear power plant, was responsible for ensuring compliance with state and federal regulations set by the Nuclear Regulatory Commission (“NRC”) (the federal agency responsible for regulating nuclear power plants and other uses of nuclear materials).  Plaintiff alleged that the Company retaliated against him after he reported various purported safety violations, including by removing his security clearance, deactivating his NRC license, suspending him, requiring him to undergo a psychological evaluation, and ultimately placing him on an involuntary leave without pay.  During this time, Plaintiff filed four separate complaints with OSHA.  He subsequently filed suit, alleging various claims under state and federal law, including a whistleblower retaliation claim under SOX.

Ruling

The court granted the Company’s motion to dismiss the SOX whistleblower retaliation claim, holding that Plaintiff failed to allege that he engaged in protected activity because none of his allegations “suggest that his disclosures were motivated by a subjective belief that he was reporting fraud within SOX’s purview but rather demonstrate a concern for nuclear safety.”  The court noted that “Plaintiff’s words, actions, and the animating beliefs he alleges overwhelmingly demonstrate that a concern for nuclear safety, not fraud, motivated his [complaints].”

Implications

This decision reaffirms the principle that SOX does not extend whistleblower protection to complaints about any form of purportedly improper conduct, but only protects complaints that are related to one of the six categories of misconduct enumerated in Section 806 of SOX.

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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.

Photo of Pinchos Goldberg Pinchos Goldberg

Pinny Goldberg is a senior counsel in the Labor & Employment Law Department and a member of the Whistleblowing & Retaliation and Wage & Hour Practice Groups.

Pinny represents employers in a broad array of matters before federal and state courts, FINRA and…

Pinny Goldberg is a senior counsel in the Labor & Employment Law Department and a member of the Whistleblowing & Retaliation and Wage & Hour Practice Groups.

Pinny represents employers in a broad array of matters before federal and state courts, FINRA and other arbitration panels, and administrative agencies, including the EEOC and its state equivalents, and in pre-litigation negotiations. Matters he works on include discrimination and harassment, whistleblowing and retaliation, wage and hour, covenants not to compete, and tort and contract claims.

As an experienced trial lawyer, Pinny has successfully litigated numerous cases from complaint through jury verdict or arbitral award. Notably, Pinny served as trial counsel to King & Spalding LLP in a widely publicized wrongful termination lawsuit brought by a former associate in which the jury returned a complete defense verdict on the seventh day of trial.

In addition to handling litigation and dispute resolution, Pinny regularly advises clients on a wide variety of employment issues, including drafting, reviewing and revising handbooks and workplace policies. He also addresses questions and concerns related to hiring, wage and hour issues, employee leave, performance problems, terminations of employment, and separation agreements and releases.

Pinny represents employers across a broad range of industries, including financial services, insurance, law firms, media and entertainment, professional sports, and higher education.

In addition to his active practice, Pinny serves as an editor for the Proskauer Whistleblower Defense Blog and Proskauer on Trade Secrets Blog. He is also a regular author of “Expert Analysis” articles for Law360.

While in law school, Pinny served as an editor for the Cardozo Law Review.

Photo of Jennifer McGrew Jennifer McGrew

Jennifer McGrew is a law clerk in the Labor Department and a member of the Labor General Group. Jennifer earned a J.D. from Duke University School of Law, where she was a member of the Black Law Students Association, Womxn of Color Collective…

Jennifer McGrew is a law clerk in the Labor Department and a member of the Labor General Group. Jennifer earned a J.D. from Duke University School of Law, where she was a member of the Black Law Students Association, Womxn of Color Collective, and First-Generation Professionals. While at Duke, Jennifer worked as a Faculty Research Assistant focusing on discrimination in the workplace.

Prior to law school, Jennifer earned a M.Ed. from Boston College and is currently completing her Ph.D.