On March 17, 2016, the Eastern District of Kentucky dismissed whistleblower counter-claims against Allstate Insurance Company (“Company”), ruling that Defendant Kevin Keefe’s (“Plaintiff”) SOX claim was untimely and that his Dodd-Frank claim failed to allege a causal connection between the alleged whistleblowing and any alleged adverse employment action.  Allstate Ins. Co. v. Zeefe, No. 15-159.

The Company brought suit against two of its former employees, contending that they breached their employment contracts, misappropriated trade secrets and tortiously interfered with the Company’s client relationships.  Plaintiff counter-claimed, alleging, among other things, that the Company violated the SOX and Dodd-Frank whistleblower retaliation provisions by retaliating against him for reporting allegedly unlawful activity to the Kentucky Department of Insurance (“KDI”) and FINRA.

The Court dismissed the SOX claim as untimely since it was beyond the statute’s 180-day statute of limitations. The Dodd-Frank claim, however, survived the Company’s statute of limitation attack.  However, the Dodd-Frank claim was dismissed, as the Court rejected Plaintiff’s attempt to rely on his report to FINRA as protected whistleblowing.  The Court noted in this regard that Dodd-Frank’s plain language reflects that the whistleblower protections only extend to employees and Keefe’s employment with Allstate had ended nearly a year prior to the FINRA complaint.  The Court also rejected Keefe’s allegation that he was retaliated against for reporting allegedly illegal conduct to KDI because he alleged that the adverse action occurred before the alleged whistleblowing.

This decision serves as a reminder of the implications of the differences between the statute of limitations in Dodd-Frank versus those in SOX.  And it reaffirms the basic, common sense principle that a viable whistleblowing claim requires that an alleged adverse action occur after any alleged whistleblowing activity occurs.

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