U.S. Supreme Court Endorses Low Burden Of Proof For Whistleblowers

• Published date: 23 February 2024
• Subject Matter: Employment and HR, Litigation, Mediation & Arbitration, Trials & Appeals & Compensation, Whistleblowing
• Law Firm: Sheppard Mullin Richter & Hampton
• Author: Melissa Hughes and Christopher Bosch

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In a landmark unanimous ruling late last week, Murray v. UBS Securities, LLC, et al. 601 U. S. ____ (2024), the U.S. Supreme Court held that whistleblowers do not need to prove their employer acted with "retaliatory intent" to be protected under the Sarbanes-Oxley Act. Instead, all whistleblower plaintiffs need to prove is that their protected activity was a "contributing factor" in the employer's unfavorable personnel action.

Background

The Sarbanes-Oxley Act is a federal law that was passed in 2002 with the goal of improving auditing and public disclosure in response to several accounting scandals which shook financial markets.

In recognition of the role whistleblowers played in exposing the accounting scandals of the early-2000s, Congress passed Section 806, codified at 18 U.S.C. ' 1514A, which prohibits publicly-traded companies from retaliating against whistleblowing employees. The U.S. Supreme Court in Lawson v. FMR, 571 U.S. 429 (2014), thereafter extended the whistleblower protections in ' 1514A to employees of non-public contractors and subcontractors of a public company.

The language of the Sarbanes-Oxley Act at issue in the Murray v. UBS Securities, LLC case was no employer subject to Sarbanes-Oxley "may 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 protected whistleblowing.

Many statutes dealing with employment discrimination and retaliation apply a relatively high bar for employee-plaintiffs, requiring the plaintiff to show that the protected activity was a substantial factor in, or the "but-for cause" of the adverse employment action.

Ruling

The case involved the termination, in 2012, of a research strategist working for a New York securities firm, UBS Securities, LLC ("UBS"). After his termination, the research analyst filed a lawsuit against his former employer claiming his termination was retaliatory. The case went to trial and the jury found in favor of the plaintiff and issued an advisory verdict on damages, recommending that the plaintiff receive nearly $1 million. The court then adopted the jury's advisory verdict on damages and awarded an additional $1.769 million in attorney's fees. UBS appealed the decision to the Second Circuit, which vacated the jury's verdict and remanded for a new trial. The appellate court identified the central question as whether the Sarbanes-Oxley Act's...