Sarbanes-Oxley Act
Murray v. UBS Securities LLC.
Date: Feb. 8, 2024
Issue: Whether an employee must prove “retaliatory intent” on behalf of an employer to receive federal whistleblower protection under the Sarbanes-Oxley Act.
Case Summary: The U.S. Supreme Court determined that employees need not prove “retaliatory intent” to receive federal protection under the Sarbanes-Oxley Act (SOX).
Under 18 U.S.C. §1514A(a), employers may not “discharge, demote, suspend, threated, harass or in any other manner discriminate against an employee in the terms and conditions of employment because of protected whistleblowing activity.” UBS argued this section requires an employee to prove a “retaliatory animus” on behalf of the employer to succeed.
In 2012, Trevor Murray sued UBS Securities, alleging it terminated him for protected whistleblowing activity in violation of the SOX. Murray allegedly reported to his supervisor two leaders of the commercial mortgage-backed securities (CMBS) trading desk at UBS pressured him to skew his reports to support their decisions, which conflicted with his Securities and Exchange Commission (SEC) requirement of independent reporting. Murray’s supervisor then asked his own supervisor that Murray be “removed from UBS’s headcount” or be transferred. This allegedly led to Murray being fired in February 2012.
Murray then filed a complaint with the National Labor Relations Board (NLRB). NLRB made no final decision and Murray’s case was examined in a New York district court. The district court denied UBS’s motion to dismiss for judgment as a matter of law, ruling the jury did not need to be instructed that the SOX requires Murray to prove “retaliatory intent” on behalf of the employer. The Second Circuit reversed, holding the SOX requires whistleblowers to prove retaliatory intent. The Second Circuit’s decision split from the Fifth and Ninth Circuit’s position on the issue. The Second Circuit’s holding that retaliatory intent is required was “expressly predicated” on the word “discriminate” in §1514A(a).
In a unanimous opinion delivered by Justice Sotomayor, the U.S. Supreme Court ruled the plain language of SOX contains no retaliatory intent requirement. Considering both the statute’s purpose and the fact that “discriminate” was meant as a catch-all phrase to cover additional disparaging actions on behalf of employers, the word could not be found to impose another requirement on behalf of the whistleblower. The Court reasoned “an animus-like retaliatory intent requirement is simply absent from the definition of the word discriminate, making it absent from the statute. The Court noted to “discriminate” only means to treat differently and, if an employee can prove he was treated differently because of protected conduct, the “why” the employer discriminated does not matter.
The Court also focused on the burden-shifting framework of the statute. This framework provides an employee must first prove that the employer made an adverse employment decision based on the employee’s protected whistleblowing activity. The employer must then show by clear and convincing evidence it would have made the same decision had the protected activity not occurred. According to the Court, the correct way to evaluate this “same action causation analysis” is to “change one thing at a time and see if the outcome changes.” In the Court’s view, “the question is whether the employer would have retained an otherwise identical employee who had not engaged in the protected activity.” In other words, if an employer can show removal of the protected activity would not have changed the outcome, the employer can still win.
Bottom Line: The Supreme Court’s decision confirms SOX has a lesser intent burden for whistleblowers alleging their employers took adverse action against them for protected whistleblower activity.
Documents: Opinion
