Hunton Employment & Labor Perspectives

On February 8, 2024, the U.S. Supreme Court issued a unanimous opinion holding that a whistleblower with a retaliation claim under the Sarbanes-Oxley Act of 2002 (“SOX”) does not need to establish that their employer acted with “retaliatory intent” to succeed on their claim. An employee must merely show that their protected whistleblowing activity was a “contributing factor” in an adverse employment action against them by their employer. Murray v. UBS Securities, LLC, 144 S.Ct. 445 (2024). An employer’s retaliatory intent or lack of animosity is “irrelevant.”  Id. at 446.

Congress enacted SOX’s whistleblower retaliation provisions after the Enron scandal “to prohibit publicly traded companies from retaliating against employees who report what they reasonably believe to be instances of criminal fraud or securities law violations.” Id. SOX’s retaliation provision states that employers 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” an employee’s protected whistleblowing activity. Title 18 U.S.C. § 1514A(a). 

Trevor Murray—a research strategist for UBS Securities, LLC—reported to his supervisor that other employees were pressuring him to unethically and illegally “skew” reports regarding the company’s securities business. His employment was soon terminated, and he filed a SOX whistleblower retaliation lawsuit in federal District Court.

UBS argued to the trial court that, under the statute, Murray must show “retaliatory intent” to succeed on his claims and moved for judgement as a matter of law on those grounds.  The court rejected UBS’s argument and the matter was tried to a jury. The court instructed the jury that, to prove his claim, Murray must first establish by a preponderance of the evidence that his “protected activity was a contributing factor in the termination of his employment”—but did not instruct the jury that Murray must prove retaliatory intent. Murray, 144 S.Ct. at 446. The jury was also instructed that, if Murray could show his protected activity was a contributing factor in UBS’s decision, then the burden would shift to UBS to “demonstrate by clear and convincing evidence that it would have terminated Murray’s employment even if he had not engaged in protected activity.”  Id. 

The jury found that a) Murry adequately showed that his protected whistleblowing activity was a contributing factor in the termination decision, and b) UBS did not adequately prove it would have made the same decision absent Murray’s whistleblowing. UBS appealed the verdict and the Second Circuit vacated and remanded for a new trial, holding that retaliatory intent is an element of a SOX retaliation claim, and that the trial court erred by not so instructing the jury.

Taking the case on certiorari, the U.S. Supreme Court held that “retaliatory intent” is not an element of a SOX whistleblower retaliation claim.  The Court reasoned that:

• the plain language of Section 1514A(a) does not reference “retaliatory intent”;
• requiring an employee to prove retaliatory intent “ignore[s] the statute’s mandatory burden-shifting framework”; and
• Congress intended for the statute to include the “same-action causation inquiry”—i.e., would the employer have made the same decision absent the protected whistleblowing activity—and the Court could not “override Congress’s policy choice by giving employers more protection than the statute provides.”

Id. at 447.

The Supreme Court’s holding clarifies and reinforces Congress’s intention for SOX retaliation cases to be evaluated based on the more employee-friendly “contributing-factor” framework as opposed to the more employer-friendly “motivating-factor” framework. Thus, employers should take heed and ensure that, if they are going to make an adverse employment decision with respect to a SOX-protected whistleblower, they can show that they would have made the same decision absent any protected whistleblowing activities. Not only should employers be prepared to articulate a legitimate, non-discriminatory reason for an adverse employment action, but also, to the extent possible, they should preserve evidence showing that they take similar adverse actions with respect to other similarly-situated employees who did not participate in protected whistleblowing activity.