District Court Holds that Interest in Protecting Whistleblowers under the False Claims Act Can Outweigh Companies’ Confidentiality Agreements

Choate Alert

 | May 13, 2016

 | Labor, Employment and Benefits Group

A magistrate judge in the Northern District of Illinois recently dismissed a company’s breach-of-contract counterclaim against a whistleblower for violating the company’s privacy policy and confidentiality agreement.

What you need to know:

In United States ex rel. Cieszyski v. LifeWatch Servs., 2016 U.S. Dist. LEXIS 60993 (N.D. Ill. May 9, 2016), Magistrate Judge Sidney Schenkier dismissed LifeWatch’s breach-of-contract counterclaim against a whistleblowing former employee, Cieszyski. Cieszyski took confidential client information from LifeWatch and submitted it to the U.S. government in order to bolster his whistleblower claim under the False Claims Act (FCA). LifeWatch filed a counterclaim, alleging that Cieszyski breached the confidentiality agreement he signed with LifeWatch when he stole company documents and showed them to the government.

Although Magistrate Judge Schenkier recognized the court “must balance the need to protect whistleblowers . . . against an employer’s legitimate expectations that its confidential information will be protected,” he ultimately dismissed LifeWatch’s counterclaim. The judge found that, because Cieszyski only used the documents to support his whistleblower tip and only disclosed them to the government, the “strong public policy” of encouraging whistleblowing trumped LifeWatch’s breach-of-contract claim, even if Cieszyski may have taken more confidential documents than were necessary to prove his claim.

What you need to do:

Employers should consult with counsel and review their confidentiality agreements and privacy policies. Furthermore, employers should note that the strength of their breach-of-contract claims against whistleblowers who misappropriate company information varies greatly depending on both: a) the jurisdiction in which the suit occurs, and b) the statute under which the whistleblower acts. It is therefore very important to consult with counsel and canvass the factual and legal landscape before asserting a counterclaim. 

 

 

Thank you for reaching out to contact Choate. Before you send your message, we wanted to make sure you are aware of the following. Please do not send any confidential information in response to this link. Sending an e-mail to Choate does not give rise to an attorney-client relationship, and will not be deemed to disqualify Choate from undertaking any engagement for a current or future client.  Before any attorney-client engagement may be formed, Choate will need to check for possible conflicts of interest, you will need to consider whether you wish to retain Choate as counsel, and we will need to consider whether we wish to accept the potential engagement. In the meantime, Choate reserves the right to represent parties with interests adverse to you.

AcceptDecline