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.