Tackling the tricky issue of how a plaintiff proves an employer's “intent,” in an opinion issued today, the United States Supreme Court unanimously held that under the Sarbanes-Oxley Act of 2002, corporate whistleblowers have to prove that their whistleblowing contributed to their employers' actions against them, but that burden does not require proof that an employer's specific motive was retaliation.
Sarbanes-Oxley was passed in the wake of the Enron scandal to identify and remedy corporate fraud, with a specific focus on preventing “corporate codes of silence” from discouraging employees from reporting corporate wrongdoing. Sarbanes-Oxley prohibits publicly traded companies from retaliating against employees – discharging, demoting, harassing, etc. -- “because of” protected whistleblowing activity. The whistleblower employee initially must demonstrate that his or her protected conduct was a “contributing factor” in the unfavorable action. The burden then shifts to the employer to show that it would have taken the personnel action irrespective of the protected whistleblowing activity.
Murray was a UBS employee responsible for reporting on commercial mortgage-backed securities markets to current and future UBS customers. Securities and Exchange Commission (SEC) regulations required that Murray's reports be independent and accurate reflections of his own views. Murray alleged that he was pressured to alter the content of his articles and clear them with the trading desk before publishing, and that he was terminated after reporting the pressure to UBS management. Murray pursued legal action and prevailed at trial. On appeal, however, the Second Circuit Court of Appeals held that the trial court erred by not requiring Murray to prove that UBS terminated him with “retaliatory intent.” The Second Circuit's decision conflicted with decisions from other circuit courts of appeal, and the Supreme Court granted certiorari to resolve the conflict.
Essentially defining “retaliatory intent” to mean a retaliatory “motive,” the Supreme Court held that Sarbanes-Oxley's burden shifting framework was designed to get at the question of “intent” or “motive," and the Second Circuit erred in imposing a separate “retaliatory intent” requirement. The Supreme Court compared Sarbanes-Oxley's burden shifting framework to the one used in Title VII employment cases, noting that it, too, was designed to get at the “elusive factual question” of whether an employer engaged in intentional discrimination. As to Murray, the Supreme Court held that under Sarbanes-Oxley, it did not matter whether UBS fired Murray only because he made a complaint or because it might have believed he would be happier in a role without SEC regulations. In either case, Murray's protected whistleblowing conduct “contributed” to the termination decision.
The decision serves as a reminder that although many different laws prohibit retaliation, the proof required to prove retaliation can differ from one law to the next. Moreover, an employee does not necessarily need to prove that the employer acted with bad intent to prevail on a retaliation claim.
Sherman & Howard's labor and employment attorneys can help you evaluate potential retaliation risks in any workplace situation.
The case is Murray v. UBS Securities, LLC, et al., No. 22-660 (Feb. 8, 2024).