Murray v. UBS: The Second Circuit Creates A Circuit Split On Whistleblower Claim Standards

• Published date: 12 August 2022
• Subject Matter: Employment and HR, Whistleblowing
• Law Firm: Seyfarth Shaw LLP
• Author: Mr Gregory Markel, Christopher Robertson and David J. Winkler

In a decision with potentially wide-ranging implications for federal whistleblower protection law, the Second Circuit has held that plaintiffs who allege they were punished by their employers for whistleblowing activity, and who then file suit under the Sarbanes-Oxley Act, must now put forward specific proof of the employer's "retaliatory intent" to prevail. In addition to raising the bar for such lawsuits, the court's August 5, 2022 decision in Murray v. UBS Securities LLC et al. also creates a circuit split, pitting the Second Circuit against two other federal circuits that have specifically held retaliatory intent not to be an element of Sarbanes-Oxley whistleblower claims.

Background

Under Sarbanes-Oxley's antiretaliation provision, a publicly-traded company may not "discharge, demote, suspend, threaten, harass, or in any other manner discriminate against an employee in the terms and conditions of employment because of" the employee's participation in either an investigation or a formal proceeding regarding alleged violations by the company of certain securities and antifraud laws. 18 U.S.C. ' 1514A(a). An employee who feels he or she has faced such retaliation may, after first seeking redress from the Department of Labor, sue the employer in federal court. Id. ' 1514(b)-(c).

Trevor Murray was one such employee. Hired in 2011 as a strategist in UBS's commercial mortgage-backed securities ("CMBS") business, Murray's job was to research and report on CMBS products for current and potential clients. He was also required by federal regulation to certify that the views expressed in the reports accurately reflected his own, and were not tied to his compensation. Yet Murray was pressured, he would later allege, by two senior employees at the CMBS desk to skew his research and reports in favor of their business strategies. After he complained about this pressure to his direct superior, he alleged he was excluded from routine meetings and ultimately terminated. For its part, UBS claimed that Murray was laid off as part of a strategic reorganization prompted by the company's financial difficulties.

Murray took UBS to court, and eventually before a jury, on a Sarbanes-Oxley antiretaliation claim. The court instructed the jury that to find for Murray, it must find (among other things) that his whistleblowing activity was a "contributing factor" in his termination, which meant that the protected activity "must have either alone or in combination with other factors...