Jimmy Starke
On February 8, 2024, the Supreme Court unanimously affirmed protections for whistleblowers with their ruling in Murray v. UBS Securities, LLC. The case hinged on a law called the Sarbenes-Oxley Act (SOX), passed in 2002 as a result of the Enron and WorldCom scandals, which provides protections to employees of publicly traded companies who blow the whistle about securities fraud. 18 U.S.C. § 1514A. SOX prohibits an employee’s whistleblowing from being a “contributing factor” in an unfavorable personnel action. The Supreme Court held that, under this standard, employees do not have to prove that the employer intended to retaliate against them for the protected activity. They must only prove that the whistleblowing was a contributing factor in the adverse employment action. The rule announced by the Court makes it easier for employees to meet their burden of proof on these claims and be protected when they do the right thing.
In this particular case, Trevor Murray was fired after he refused to skew his reports to help UBS’s commercial-backed securities business. When managers and colleagues pressured Trevor to write positive assessments of investment products contrary to his independent conclusion, he reported it to higher ups at the organization. He was ultimately fired. Mortgage-backed securities were at the heart of the 2008 financial crisis. Ensuring the integrity of those investment products is critical for the financial security of individuals and families that rely on the integrity of people like Trevor. Refusing to be dishonest and reporting the conduct internally is exactly the type of activity that Sarbenes-Oxley sought to protect.
The Second Circuit had reversed a jury’s finding that UBS had fired Trevor for whistleblowing activity in violation of SOX, holding that the jury was not adequately instructed to determine whether Trevor proved retaliatory intent by UBS in their termination decision. In a unanimous decision, the Supreme Court rejected the Second Circuit’s reasoning and reinstated the jury’s finding. Under SOX’s “contributing factor” standard, the Court held that the plaintiff has no burden to prove retaliatory intent, only that the protected activity “either alone or in combination with other factors tended to affect in any way UBS’s decision to terminate [their] employment.” Once an employee meets their burden, the burden is on the employer to show it would have taken the same adverse personnel action regardless of the protected activity. This framework of proof is known as burden shifting and can be used by courts as a method of deciphering the intent behind actions in employment discrimination cases.
Sarbenes-Oxley’s particular use of burden shifting is intentionally favorable to employees by only requiring them to prove that the whistleblower activity contributed to the adverse action, rather than it being the motivating factor or sole reason for the adverse action. As the Court acknowledged, a “contributing-factor burden-shifting framework is meant to be more lenient than most.” The intent of the act seemed clear to Justice Sotomayor; in writing the unanimous decision, she explicitly states that the language in Sarbenes-Oxley reflects Congress’s judgment that ‘“personnel actions against employees should quite simply not be based on protected [whistleblowing] activities’ –not even a little bit.” Whistleblowers often engage in activity that may put their careers at risk, but is beneficial for the public good. Congress intentionally rewarded that courage with protection from adverse actions by their employers. Raising the burden of proof, as the Second Circuit had done, would disincentivize individuals from doing the right thing and bringing their concerns to their companies, regulatory agencies, and law enforcement. Justice Sotomayor is explicit in saying “the Court cannot override that policy choice by giving employers more protection than the statute itself”.
The ruling in Murray v. UBS, goes beyond the narrow facts of this case and upholds contributing-factor burden-shifting mechanisms in numerous whistleblower statutes. Not only does this holding protect securities whistleblowers, like Murray, but it also applies to the whistleblower statues that cover airline employees, civil servants, product safety whistleblowers, and more. By affirming the employee-friendly contributing-factor standard, these workers are protected when they raise concerns about potentially dangerous or illegal conduct.
Correia & Puth represents individuals with federal and private employer whistleblower claims and employees who have been retaliated against for whistleblowing activity. If you have concerns regarding waste fraud and abuse, or retaliation due to whistleblowing activity, please contact us.
