The whistleblower-protection provision of the Sarbanes-Oxley Act of 2002 prohibits covered employers from discharging, demoting, suspending, threatening, harassing, or in any other manner discriminating against an employee because of protected whistleblowing activity.
In 2011, Trevor Murray was a research strategist at securities firm UBS. Murray worked for UBS’s commercial mortgage-backed securities (CMBS) business. Murray reported on CMBS markets to current and future UBS customers. Federal Securities and Exchange Commission (SEC) regulations required him to certify that he independently produced his reports and his reports accurately reflected his own views.
Two leaders of the CMBS trading desk pressured Murray to skew his reports to be more supportive of their business strategies. They instructed Murray to clear his research articles with the trading desk before publishing them. Murray advised his direct supervisor, but the pressure from the trading desk only increased. Murray’s supervisor recommended to his own supervisor that Murray be removed from UBS’s head count, or alternatively, transferred to a trading desk position where he would not have SEC certification responsibilities. When the trading desk declined to accept his transfer, and despite a strong performance evaluation, Murray was fired.
Murray filed a complaint with the US Department of Labor (DOL) alleging that his termination violated §1514A of Sarbanes-Oxley Act because he was fired in response to his internal reporting about fraud on shareholders. When the DOL did not issue a final decision on his complaint within 180 days, Murray sued in US District Court. The jury found that Murray had established his §1514A claim and that UBS had failed to prove, by clear and convincing evidence, that it would have fired Murray even if he had not engaged in protected activity.
UBS appealed the decision, and Murray cross-appealed for back pay, reinstatement, and attorney’s fees. A panel of the US Court of Appeals for the Second Circuit vacated the jury’s verdict and remanded for a new trial. The appellate court concluded that the Sarbanes-Oxley Act’s anti-retaliation provision requires a whistleblower-employee to prove “retaliatory intent”, and that the trial court failed to so instruct the jury. The US Supreme Court granted certiorari because the Fifth and Ninth Circuit Courts had rejected the retaliatory intent requirement. The USSC reversed to align with the Fifth and Ninth Circuits.
The Court held that when whistleblowers invoke the protections of the Sarbanes-Oxley Act, they bear the initial burden of showing that their protected activity was a contributing factor in the unfavorable personnel actions at issue. But the whistleblower need not prove that the employer acted with retaliatory intent. The burden then shifts to the employer to show that it “would have taken the same unfavorable personnel action absent the protected activity.”
The Court found that the term “discriminate” did not impose a requirement that a whistleblower prove the employer’s “retaliatory intent” or animus. The Court reasoned that burden-shifting frameworks have long provided a mechanism for getting at intent in employment discrimination cases, and the contributing-factor burden-shifting framework is meant to be more lenient than most. Finally, the Court rejected UBS’s argument that without a retaliatory intent requirement, innocent employers will face liability for legitimate, nonretaliatory personnel decisions. The Court stated that the employer may avoid liability by demonstrating by clear and convincing evidence that it would have taken the same personnel action in the absence of the protected behavior.
Murray v. UBS Securities, LLC., 217 L.Ed 2nd 343 (2024).
Note: One of California’s whistleblower statutes also requires an employer to submit “clear and convincing” evidence that it would have taken the same unfavorable personnel action in the absence of the protected behavior. (Labor Code sections 1102.5- 1102.6.) The USSC gave this advice to employers to determine if this standard has been met: The right way to think about that kind of same-action causation analysis is to change one thing at a time and see if the outcome changes. The question is whether the employer would have retained an otherwise identical employee who had not engaged in the protected activity.