Court Refuses To Dismiss In-House Lawyer’s Statutory Whistleblower Claim Based On Attorney Confidentiality Obligations

Posted: November 2, 2026 / Written by: Samuel L. Butt / Categories Motion to Dismiss, Confidentiality, Commercial

Court Refuses To Dismiss In-House Lawyer’s Statutory Whistleblower Claim Based On Attorney Confidentiality Obligations

On October 1, 2026, in Abramov v. Capula Investment US LP, Index No. 651251/2026, Justice Joel M. Cohen denied defendants’ motion to dismiss a whistleblower retaliation claim under Labor Law § 740.

Plaintiff was Capula’s U.S. Chief Compliance Officer and Head of U.S. Compliance and Legal. He alleged that Capula fired him after he raised concerns with senior management about certain matters. Capula argued that the claim had to be dismissed because prosecuting it would require plaintiff to reveal client confidences in violation of the Rules of Professional Conduct. In denying the motion, the Court explained:

While the confidentiality concerns expressed in Johnson are legitimate, the Court respectfully declines to apply them to preclude Abramov’s statutory whistleblower claim under New York law. Under Defendants’ proposed rule, a standard confidentiality agreement would be sufficient to broadly foreclose whistleblowing by a compliance officer/in-house counsel. Moreover, companies could largely foreclose protected disclosures by their compliance officers simply by choosing to hire only lawyers for those roles. In sum, categorically denying statutory whistleblower remedies to attorneys who serve as compliance officers could substantially undermine the effectiveness of the statutory regime.

To be sure, the Court recognizes the importance of preserving client confidences and does not suggest that a lawyer should be free to reveal such confidences absent an extraordinary justification. As this case progresses, the Court may rule that certain communications and testimony are inadmissible and may also entertain appropriate sealing motions to address legitimate confidentiality concerns. However, the Court finds that the legislature’s clear policy favoring robust whistleblower protections weighs against imposing a per se rule requiring summary dismissal of a statutory whistleblower retaliation claim simply because the plaintiff is an attorney.

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The attorneys at Schlam Stone & Dolan LLP frequently litigate whistleblower disputes. Contact the Commercial Division Blog Committee at commercialdivisionblog@schlamstone.com if you or a client have questions concerning such issues.