Sardiga v. Northern Trust Company ( 2011 )

SECOND DIVISION
March 15, 2011
No. 1-09-2930
DARREN SARDIGA, ) Appeal from the
) Circuit Court of
Plaintiff-Appellant, ) Cook County
)
v. ) No. 05 L 8856
)
THE NORTHERN TRUST COMPANY, ) Honorable
) Allen S. Goldberg,
Defendant-Appellee. ) Judge Presiding.
JUSTICE HARRIS delivered the judgment of the court, with opinion.
Justices Karnezis and Connors concurred in the judgment.
OPINION
After less than a year on the job, Darrren Sardiga, the plaintiff-appellant, was fired from
his position as vice-president of defendant Northern Trust’s Financial Consulting group. He filed
a two-count complaint alleging retaliatory discharge and a violation of the Illinois Whistleblower
Act (740 ILCS 174/1 et seq. (West 2004)). He claims that he was fired as a result of his repeated
complaints and questions to supervisors which expressed his belief that Northern Trust was
engaged in deceptive illegal practices. Sardiga appeals from the trial court’s summary judgment
to Northern Trust on the Illinois Whistleblower Act count. The court held that the Act requires a
“refusal to participate” and Sardiga failed to plead facts showing his refusal to participate in an
alleged illegal activity. Further, the court found that no material issue of fact existed
demonstrating Sardiga’s refusal to participate. We are now called upon to resolve a matter of
No. 1-09-2930
statutory interpretation and determine whether Sardiga’s repeated complaints and questions to
his supervisors about what he believed to be illegal practices are sufficient to meet the Act’s
requirement of “refusal to participate.” For the following reasons, we find Sardiga’s actions fail
to meet the Act’s required refusal to participate. Because Sardiga has failed to establish an issue
of material fact regarding whether he refused to participate in an activity that would result in a
violation of a state or federal law, rule, or regulation, we affirm the summary judgment of the
circuit court of Cook County.
JURISDICTION
The trial court entered summary judgment in favor of Northern Trust with respect to
count II of Sardiga’s complaint on March 12, 2009, and denied Sardiga’s motion to reconsider
that judgment on September 1, 2009. The trial court subsequently issued a Rule 304(a) (Ill. S. Ct.
R. 304(a) (eff. Jan. 1, 2006)) finding on October 15, 2009, and Sardiga filed his notice of appeal
on October 21, 2009. Accordingly, this court has jurisdiction pursuant to Illinois Supreme Court
Rules 301 and 304(a) governing appeals from final judgments entered below. Ill. S. Ct. R. 301
(eff. Feb. 1, 1994); R. 304(a) (eff. Jan. 1, 2006).
BACKGROUND
Sardiga began working as a vice-president and senior financial consultant in Northern
Trust’s financial consulting group on February 28, 2004, and he was fired less than a year later
on January 3, 2005. During his tenure at Northern Trust, Sardiga repeatedly complained to his
supervisor, Thomas Hines, about what he believed to be illegal or improper practices there.
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Sardiga’s concerns touched upon several different aspects of Northern Trust’s business
practices. First, Sardiga questioned whether financial planners such as himself, who were not
licensed to sell securities, should be presenting clients with investment sales literature. Sardiga
approached Hines on multiple occasions to raise his concerns about securities licensing for
financial planners at Northern Trust.
Second, Sardiga complained to Hines that members of the wealth strategy department
were sometimes present during meetings between financial planners and their clients. Because
financial planners’ role is to give objective investment advice and wealth strategists instead seek
to sell various securities, upon which sale they would earn a commission, Sardiga believed that
the presence of both a financial planner and a wealth strategist at a client meeting posed a
conflict of interest. Sardiga complained to Hines that the presence of wealth strategists at his
meetings with clients interfered with his ability to provide independent, objective advice to the
clients.
Third, Sardiga requested that Hines disclose to financial consulting clients that financial
planners received bonuses derived from sales of Northern Trust financial products. Although
Northern Trust’s bonus policy did not state that this was the case, Sardiga believed that financial
planners such as himself had their bonuses calculated in part based on how much sales revenue
they generated for Northern Trust. Sardiga never received any bonus during the course of his
employment with Northern Trust.
Fourth, Sardiga informed Hines that he believed Northern Trust’s marketing literature to
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be misleading. Subsequently, Hines allowed Sardiga to revise the marketing literature that he
used in his presentations to clients.
Finally, Sardiga spoke with Hines regarding his concerns about a lack of confidentiality
protections in Northern Trust’s contact management system, a computerized database containing
information about Northern Trust clients. The generally accepted practice at Northern Trust was
to place confidential client information into the contact management system unless a client
specifically requested otherwise. Members of various departments within Northern Trust had
access to this data. After making Hines aware of his concerns, Sardiga continued to use the
contact management system but did not input confidential information. Instead, he put in a note
stating that he had conducted a confidential meeting with a the client and that notes from the
meeting could be found in the confidential file.
Sardiga testified at his deposition that he did not consider Northern Trust’s use of the
contact management system to be illegal; he merely considered it to be a “poor business
practice.” In addition, Sardiga testified that he never spoke with anyone from Northern Trust’s
legal or compliance departments about his concerns with the system.
During Sardiga’s tenure at Northern Trust, he reported his concerns about the various
business practices only to Hines. Hines would usually respond by either saying that he would
bring Sardiga’s concerns to the attention of the legal department or informing Sardiga that the
legal department had already approved of the practice and directing Sardiga to leave matters
alone.
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On December 5, 2004, Sardiga approached Hines and threatened to take his concerns to
the National Association of Securities Dealers (NASD) if Hines did not adequately address
Sardiga’s concerns about Northern Trust’s rules about who could sell securities. Specifically,
Sardiga threatened to approach the NASD over the fact that financial planners at Northern Trust
were not licensed. Northern Trust terminated Sardiga’s employment on January 3, 2005, and
Sardiga argues that his threat to contact the NASD was the catalyst for his termination.
Northern Trust presented a more complex version of events in its motion for summary
judgment. In addition to Sardiga’s repeated complaints about Northern Trust’s business
practices, Hines also received numerous complaints from employees and clients of Northern
Trust about Sardiga’s job performance. Sardiga’s troubles began in his first weeks of
employment with Northern Trust when he made a presentation that even he agrees was not of
professional quality to a group of some 200 executives at a large prospective corporate client.
Sardiga also arrived over half an hour late to an important client meeting. In addition, he made
remarks to several different clients or prospective clients that the clients found offensive or
objectionable and complained about to Northern Trust.
Hines documented complaints that he had received about Sardiga’s performance in
Sardiga’s mid-year performance review in August 2004. As the year progressed, Hines informed
his immediate supervisor and the human resources department at Northern Trust of continuing
complaints against Sardiga and Hines’ lack of confidence in Sardiga’s ability to successfully
complete client engagements. In October 2004, Hines gave Sardiga a written final warning and
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performance improvement plan. Hines continued to receive complaints about Sardiga’s
performance and interaction with clients in November 2004, and he recommended that Northern
Trust terminate Sardiga’s employment.
Sardiga filed the instant lawsuit on August 12, 2005, with a two-count complaint. Count I
alleged a common law claim of retaliatory discharge. Count II alleged a violation of the Illinois
Whistleblower Act (740 ILCS 174/1 et seq. (West 2004)). In support of his allegations under
count II, Sardiga asserted that “Plaintiff refused to participate in Northern Trust’s violations of
public policy against its customers, to which Northern Trust responded by terminating Plaintiff
in retaliation for his refusal.” No more specific allegations appear in the complaint.
On March 12, 2009, the trial court granted summary judgment in favor of Northern Trust
on count II of plaintiff’s complaint. Count I remains pending with the circuit court. Sardiga filed
a motion to reconsider the trial court’s order granting summary judgment, which the trial court
denied on September 1, 2009. The trial court made a Rule 304(a) finding on October 15, 2009,
and Sardiga filed this timely appeal. Ill. S. Ct. R. 304(a) (eff. Jan. 1, 2006).
ANALYSIS
On appeal, Sardiga argues that the trial court erred in granting summary judgment in
favor of Northern Trust on count II of his complaint, which alleged a violation of the Illinois
Whistleblower Act. 740 ILCS 174/20 (West 2004).
We review a trial court’s granting of summary judgment de novo. Zuccolo v. Hannah
Marine Corp., 387 Ill. App. 3d 561, 564 (2008). Under this standard of review, we may affirm
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the trial court’s ruling on any basis in the record. State Automobile Mutual Insurance Co. v.
Habitat Construction Co., 377 Ill. App. 3d 281, 291 (2007).
Summary judgment is a drastic means of disposing of litigation and thus should only be
used where the pleadings and other evidentiary material in the record, when viewed in a light
most favorable to the nonmoving party, demonstrate that no genuine issue of material fact exists
and that the moving party is entitled to judgment as a matter of law. Zuccolo, 387 Ill. App. 3d at
564. A genuine issue of material fact exists where either the material facts are disputed or the
material facts are undisputed but reasonable people may draw different inferences from those
facts. Williams v. Manchester, 228 Ill. 2d 404, 417 (2008).
Sardiga argues on appeal that the trial court erred in finding that he failed to create a
material issue of fact regarding whether he refused to participate in an illegal or improper
activity in the course of his employment at Northern Trust. The Illinois Whistleblower Act
provides: “An employer may not retaliate against an employee for refusing to participate in an
activity that would result in a violation of a State or federal law, rule, or regulation.” 740 ILCS
174/20 (West 2004). Thus, in order to sustain a cause of action under the Act, a plaintiff must
establish that (1) he refused to participate in an activity that would result in a violation of a state
or federal law, rule, or regulation and (2) his employer retaliated against him because of that
refusal. 740 ILCS 174/20 (West 2004).
The parties dispute what “refusing to participate” means under the Act. Sardiga argues
that the statute does not require outright refusal; instead, he contends, repeated complaints and
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questions about the activity in question should suffice. Northern Trust responds that the language
of the statute is clear and that a plaintiff must refrain from participating in the activity in order to
qualify under the Act. This is an issue of statutory interpretation, which we review de novo.
County of Du Page v. Illinois Labor Relations Board, 231 Ill. 2d 593, 603 (2008). Thus, we must
ascertain and give effect to the intent of the legislature. Du Page, 231 Ill. 2d at 603-04. the most
reliable indicator of that intent is the statutory language, which must be given its plain and
ordinary meaning. Id. at 604. We do not consider individual words and phrases in isolation;
instead, we interpret them in light of other relevant provision and the statute as a whole. Id.When the language of the statute is unambiguous, we apply that language as written and without
resort to other aids of statutory construction. Taylor v. Pekin Insurance Co., 231 Ill. 2d 390, 395
(2008).
Here, the language of the statute is unambiguous. “Refusing to participate” means
exactly what it says: a plaintiff who participates in an activity that would result in a violation of a
state or federal law, rule, or regulation cannot claim recourse under the Act. 740 ILCS 174/20
(West 2004). Instead, the plaintiff must actually refuse to participate. Black’s Law Dictionary
defines “refusal” as “[t]he denial or rejection of something offered or demanded.” Black’s Law
Dictionary 1394 (9th ed. 2009). Indeed, the very title of section 20, “Retaliation for certain
refusals prohibited,” suggests that not every refusal qualifies for protection under the Act. 740
ILCS 174/20 (West 2004). Furthermore, the Act protects employees who complain to a
government agency about an activity that the employee reasonably believes constitutes a
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violation of a state or federal law, rule, or regulation. 740 ILCS 174/15 (West 2004). Thus,
“refusing” means refusing; it does not mean “complaining” or “questioning,” as Sardiga would
have us believe.
Sardiga argues that if we were to find that “refusing” does not mean “complaining,” as
we have done above, where a supervisor promises an employee that he will look into the legality
of an activity after the employee complains about it, then this would create a loophole in the Act
contrary to public policy. We are not persuaded by this argument. The Act protects employees
who call attention in one of two specific ways to illegal activities carried out by their employer.
It protects employees who either contact a government agency to report the activity or refuse to
participate in that activity. An employee who does not perform either of the specifically
enumerated actions under the Act cannot qualify for its protections. We fail to see how the plain
meaning of the Act creates a loophole when the Act does not purport to cover the situation
described in the instant case. When an employee complains to a supervisor, as opposed to a
government agency, and is terminated as a result, a common law claim of retaliatory discharge
arises, with which the Act does not interfere. Callahan v. Edgewater Care & Rehabilitation
Center, Inc., 374 Ill. App. 3d 630, 635 (2007) (“the enactment of the Whistleblower Act did not,
either explicitly or implicitly, preempt or repeal the common-law right of action in favor of an
employee discharged in retaliation for reporting illegal activities to her superior under
circumstances where her discharge violates a clearly mandated public policy”).
The parties have not cited, nor have we been able to find, any Illinois case law
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interpreting the language of section 20. The only case discussing the meaning of section 20 that
we have come across is Robinson v. Alter Barge Line, Inc., 513 F.3d 668 (7th Cir. 2008), which
supports our analysis above. In Robinson, the plaintiff, a dockhand, complained on multiple
occasions to his employer that other crew members were using illegal drugs. 513 F.3d at 670.
Shortly after the plaintiff made his third complaint, he was fired and he subsequently sued his
employer for retaliatory discharge and a violation of the Act. Id. The court explained that the
plaintiff’s claim under the Act failed because plaintiff failed to establish that he refused to
participate in the illegal activity. The court stated:
“[The Act] forbids an employer to ‘retaliate against an employee
for refusing to participate in an activity that would result in a
violation of a State or federal law, rule, or regulation.’ Using
illegal drugs would be such an ‘activity’ but there is no evidence
that the plaintiff refused to engage in it. The district judge thought
‘activity’ could be stretched to include working with drug users or
on boats on which drugs were being used, but the stretch is
implausible, because neither would be an illegal activity. Nor did
the plaintiff refuse to work because of the presence of drugs or
drug users, or indeed for any reason. And, critically, there is no
indication that he refused to use drugs himself. That is not to say
that he did use them; there is no indication of that either. The point
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is that he did not refuse to use them - as far as appears, he was
never invited to use them. Anyway there is no indication that the
defendant fired him because he refused to use drugs. (That would
be bizarre conduct - firing an employee for refusing to use illegal
drugs on the job.) And so he has no claim under the statute, as the
district judge correctly concluded.” (Emphasis in original.) Id.Thus, we must determine whether the pleadings and evidence in the record establish that
Sardiga refused to participate in an activity that would result in a violation of a state or federal
law, rule, or regulation. Sardiga’s brief and his pleadings below detail five areas about which
Sardiga complained to Hines: (1) licensing of financial planners, (2) the presence of wealth
strategists at meetings between financial planners and their clients, (3) lack of disclosure to
clients regarding how financial planners’ bonuses are calculated, (4) misrepresentations in
marketing materials used by financial planners, and (5) use of the contact management system.
However, the evidentiary materials in the record establish that Sardiga never actually refused to
participate in any of these activities.
Sardiga comes closest to satisfying the refusal requirement of the Act in his dealings with
the contact management system. He noted confidential client information in the contact
management system by including notations that confidential meetings had taken place and that
his notes from the meetings could be found in the confidential client files. This modified use of
the system is a stretch in establishing a refusal, but assuming for the sake of argument that it
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satisfies, Sardiga has not established the other two requirements of the Act, namely, that the
activity “result[ed] in a violation of a State or federal law, rule, or regulation” and that he was
terminated as a result of his refusal to participate in the activity. 740 ILCS 174/20 (West 2004).
The pleadings, briefs, and the evidentiary material in the record do not establish that Northern
Trust’s standard use of the contact management system violates any state or federal law, rule or
regulation. In his deposition, when asked whether he believed this use of the contact
management system to be illegal, Sardiga testified that he thought it merely a “poor business
practice.” Refusal to participate in a poor business practice is not sufficient to satisfy the
requirements of the Act. Furthermore, Sardiga does not argue that he was fired for refusing to
follow Northern Trust’s standard practices with respect to the contact management system.
Instead, he admits that Hines allowed him to modify his use of the contact management system
and deviate from Northern Trust’s standard practices. Sardiga never argues that this modified
use - or refusal to follow standard practices - resulted in his termination.
Instead, Sardiga argues that he was terminated because he threatened to raise his
concerns with the NASD unless Hines answered Sardiga’s questions about the legality of the
other four complained of activities. However, Sardiga never argues that he actually refused to
participate in any of the activities about which he complained to Hines or threatened to report to
the NASD. As we discussed above, merely complaining about an activity - as opposed to
actually refusing to participate in it - is not sufficient to entitle a plaintiff to relief under the Act.
740 ILCS 174/20 (West 2004); Robinson, 513 F. 3d at 670.
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Sardiga attempts to make an end run around the plain meaning of the Act by arguing that
Northern Trust should be estopped from arguing that Sardiga did not refuse to participate in what
he perceived to be illegal and unethical activities during his employment with Northern Trust.
Specifically, Sardiga argues that because Hines assured him either that the complained-of
activities were legal or that Hines would inquire as to their legality, this prevented Sardiga from
performing his own investigation or actually refusing to participate in the activities. We are not
persuaded by this argument. First, this argument fails to take into account the burden of proof. In
order to prevail under the Act, it is the plaintiff who must establish that his employer retaliated
against him for his refusal to participate in a qualifying activity. 740 ILCS 174/20 (West 2004).
Nothing in the plain language of the Act suggests a defendant employer bears the burden of
proving that the plaintiff employee did not satisfy the requirements of the Act.
Second, we fail to see how Hines’s assurances to Sardiga prevented Sardiga from
independently verifying what Hines told him. Nothing in the record indicates that Sardiga could
not approach or communicate with Northern Trust’s legal or compliance department with his
questions; instead, he merely chose not to do so. What is more, Sardiga does not show how
Hines’s assurances prevented him from refusing to participate in activities that he believed were
deceptive and illegal. Sardiga repeatedly argues, both here on appeal and in his pleadings and
motions below, that Hines would not answer Sardiga’s questions to his satisfaction. However,
Sardiga does not explain how this prevented Sardiga from actually refusing to participate.
Third, Sardiga has not shown how the elements of estoppel are satisfied in the instant
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case. Indeed, Sardiga does not even mention the elements in his brief. In order to establish
estoppel, Sardiga must show that (1) Hines misrepresented or concealed material facts; (2) Hines
knew at the time he made the representations that they were untrue; (3) Sardiga did not know
that the representations were untrue when Hines made them or when Sardiga acted upon them;
(4) Hines reasonably expected that Sardiga would act upon those representations; (5) Sardiga
reasonably relied upon Hines’s representations to his detriment; and (6) Sardiga would be
prejudiced by his reliance on the representations if Hines were permitted to deny their truth.
Campos v. Campos, 342 Ill. App. 3d 1053, 1066 (2003). The record does not clearly establish
that Hines misrepresented or concealed material facts or that he knew at the time he made the
representations that they were untrue. More importantly, the record does not establish that
Sardiga would be prejudiced by his reliance on the representations if Hines were permitted to
deny their truth. Sardiga argues that he was prejudiced because he relied on Hines’s assurances
regarding the legality of the complained of activities. Sardiga maintains that he did not refuse to
participate in the purportedly illegal activities because Hines assured him that they were proper,
despite Sardiga’s lingering doubts about their legality. As a result, Sardiga argues that this
reliance precluded him from maintaining a successful claim under the Act.
We are not persuaded by Sardiga’s reliance argument. As noted above, Sardiga has not
adequately explained how Hines’s assurances to him prevented him from ascertaining the
legality of the complained of activities through other methods, for instance, seeking guidance
from Northern Trust’s legal or compliance department.
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Accordingly, we find that the trial court did not err in granting summary judgment in
favor of Northern Trust on count II of Sardiga’s complaint.
CONCLUSION
For the foregoing reasons, the judgment of the circuit court of Cook County is affirmed.
Affirmed.
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REPORTER OF DECISIONS - ILLINOIS APPELLATE COURT
DARREN SARDIGA,
Plaintiff-Appellant,
v.
THE NORTHERN TRUST COMPANY,
Defendant-Appellee.
No. 1-09-2930
Appellate Court of Illinois
First District, Second Division
March 15, 2011
JUSTICE HARRIS delivered the opinion to the court.
Justices Karnezis and Connors concurred in the judgment and opinion.
Appeal from the Circuit Court of Cook County.
The Honorable Allen S. Goldberg, Judge Presiding.
Barry A. Gomberg & Associates, Ltd., 53 West Jackson Boulevard, Suite 1350,
Chicago, IL 60604, (Barry A. Gomberg, of counsel), for APPELLANT.
Vedder Price P.C., 222 North LaSalle Street, Suite 2600, Chicago, IL 60601-1003,
(Edward C. Jepson, Jr. and Elizabeth N. Hall, of counsel), for APPELLEE.
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