Key Takeaways:
- In its decision in Murray v. UBS Securities, LLC., the Supreme Court ruled that an employee may prove a whistleblower retaliation claim under the Sarbanes-Oxley Act without showing that his employer acted with retaliatory intent.
- As a result of the Murray decision, it will now be easier for employees to succeed on whistleblower retaliation claims under the Sarbanes-Oxley Act.
- Employers must exercise caution when taking adverse actions against employees who have or are suspected to have engaged in activity protected by the law.
On February 8, 2024, the Supreme Court of the United States clarified the standard for proving causation under the whistleblower protection provision of the Sarbanes-Oxley Act (the "Act"), easing the burden of proof employees must meet for achieving protection under the Act. In Murray v. UBS Securities, LLC, the Supreme Court rejected the lower court's ruling that an employee seeking protection as a whistleblower under the Act must show that their employer acted against them with "retaliatory intent." Going forward, employees need only show that their whistleblower activity was a contributing factor in their employers' actions against them. As a result of the ruling, employees who allege whistleblower status under the Act will have an easier time pursuing retaliation claims against their employers.
Murray involved a former UBS employee who claims he was unlawfully fired in 2012 for refusing to publish misleading research reports, and then reporting the misleading reports to his supervisor. Under the Act, publicly traded companies are prohibited from retaliating against employees, i.e., whistleblowers, who report cases of criminal fraud or securities law violations. The Act specifically prohibits publicly traded companies from taking adverse employment actions against an employee "because of" the employee's protected whistleblower activity. After Murray reported his concerns, he was terminated. Murray then sued UBS, alleging a violation of the whistleblower provision of the Act.
At trial, the District Court instructed the jury that, to successfully invoke the whistleblower protection of the Act, Murray needed to prove, among other things, that his "protected activity was a contributing factor in his termination." At that point, the burden would then shift to UBS to prove that it would have terminated Murray whether or not he reported his concerns. The jury ruled for Murray, but the Second Circuit overturned the jury verdict in 2022. The Second Circuit found that to prove protected activity was a contributing factor in the termination of his employment, Murray had to show that UBS acted with retaliatory intent, i.e., acted "out of prejudice, animus, or hostile" intent.
The Supreme Court disagreed. In a unanimous decision, the Court reasoned that, taken together, the Act's language and analytical framework confirmed that an employee does not need to prove that their employer acted with retaliatory intent to invoke the Act's whistleblower provisions. The employee need only show that their protected activity was a contributing factor in the adverse employment action. The Supreme Court did not reach the underlying merits of Murray's claim, choosing instead to remand the case back to the District Court for further proceedings.
Going forward, the Murray decision lowers the threshold for employees to invoke the whistleblower protections of the Act and pursue retaliation claims against their employers. As a result, employers should be cautious in taking any action against employees that could claim they have engaged in protected whistleblower activity, including ensuring that they have legitimate business reasons for any adverse actions taken against such employees.
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