An Illinois appeals court stripped nearly $1 million in attorneys’ fees from a prolific tax whistleblower, pointing to the recent precedent established by the Illinois Supreme Court in its landmark My Pillow ruling.

The Appellate Court of Illinois on Dec. 4 showed little patience for Chicago plaintiff attorney Stephen B. Diamond, regarded by many as the “king of qui tam,” rejecting his demand for $974,914 in fees and expenses from the online sales division of the footwear company Stride Rite Children’s Group Inc.

The court acknowledged Diamond had already collected a bounty of $283,751 against Stride Rite by serving as...