Landmark U.S. Supreme Court Decision Expands Whistleblower Protections in Murray v. UBS Securities, LLC.

In a landmark decision, the U.S. Supreme Court expanded protections for whistleblowers under the Sarbanes-Oxley Act (“SOX”).  In February 2024, the Court decided Murray v. UBS Securities, LLC.  It held that a whistleblower does not need to prove that their employer acted with “retaliatory intent” in taking an adverse action against the employee.   

For workplace investigators, this decision impacts how we assess the evidence regarding the employer’s motive for the adverse action.  Evidence that previously fell short of demonstrating “retaliatory intent” may now be enough to satisfy the plaintiff’s burden.

Sarbanes-Oxley Act

In this case, Research Strategist Trevor Murray sued under the Sarbanes-Oxley Act of 2002, 18 U.S.C. § 1514A.  The federal statute protects employees of publicly traded companies from retaliation when the employee reports actions they reasonably believe to be criminal fraud or securities law violations. 

The Case

Murray alleged his employer violated SOX.  Murray worked for UBS as a research strategist.  In this role, he certified reports to UBS customers on the firm’s securities business.  Murray believed UBS leaders engaged in “unethical and illegal efforts” to alter his reports.  Murray reported this to his supervisor.  Then, his employment was terminated. 

The District Court found in favor of Murray.  The jury found that Murray established by a preponderance of the evidence that his “protected activity was a contributing factor in the termination of his employment.”  They further found that UBS failed to show by clear and convincing evidence that “it would have terminated Murray’s employment even if he had not engaged in protected activity.”  UBS appealed.

Circuit Split

Following the appeal by UBS, the Second Circuit vacated the judgment and remanded the case with instructions.  The Circuit court held that the jury instructions should have included “Murray’s burden to prove UBS’s retaliatory intent.” 

The Second Circuit’s holding created a circuit split.  The Fifth and Ninth Circuit previously held that the whistleblower need not prove the employer’s “retaliatory intent.”  Thus, the United States Supreme Court granted certiorari.

Supreme Court Holding

The Court’s unanimous ruling resolved the circuit split.  The Court reversed the Second Circuit’s decision, and held that a whistleblower suing under SOX need not prove that their employer acted with “retaliatory intent.”

The Court first relied on textualist principles in reaching its decision.  First, it reasoned that the plain language of SOX does not reference a “retaliatory intent” requirement.  Second, the word “discriminate” does not impose a “retaliatory intent” requirement on the plaintiff.  Instead, “discriminate” acts as a catchall provision and functions to include other adverse employment actions not listed in the text.  Further, the normal definition of “discriminate” does not require retaliatory intent, only differential treatment.

The Court also relied on contextualist principles in reaching its holding.  It reasoned that requiring the plaintiff to prove “retaliatory intent” ignores the burden-shifting framework of the statute.  Under SOX, the plaintiff must prove that the protected activity was a “contributing factor in the unfavorable personnel action.”  Then, the burden shifts to the employer to “demonstrate, by clear and convincing evidence, that the employer would have taken the same unfavorable personnel action in the absence of that behavior.”  Plaintiffs may meet their burden by showing retaliatory intent, but it is not the only way.  

Conclusion

When conducting a whistleblower investigation under the newly developed standard, investigators should scrutinize the evidence to determine whether the protected activity played a role in the adverse employment action.  Some key takeaways for investigators include:

• Develop a clear timeline to assess the closeness in time of the protected activity and the adverse employment action;

• Document all relevant communication, actions, and events to assess patterns of behavior that may suggest an ulterior motive;

• Scrutinize the employer’s offered rationale for the adverse action, and

• Challenge inconsistencies and consider alternative explanations for the adverse action taken.