The Supreme Court Rejects the Second Circuit’s “Retaliatory Intent” Element in SOX Whistleblower Case

Yesterday, in Murray v. UBS Securities, LLC, the Supreme Court unanimously held that whistleblowers pursuing claims under the anti-retaliation provisions of the Sarbanes-Oxley Act of 2002, 18 U.S.C. § 1514A (SOX) do not need to prove retaliatory intent to prevail. The decision resolves a federal circuit court split of authority. The United States Courts of Appeals for the Ninth Circuit (in 2010) and for the Fifth Circuit (in 2014) had held that retaliatory intent was not an element of a SOX anti-retaliation claim. In 2022, the United States Court of Appeals for the Second Circuit disagreed, and its decision was the subject of yesterday’s case.

What happened in Murray?
Trevor Murray worked as a strategist for UBS Securities, LLC (UBS), a financial services provider. He researched and created reports about commercial mortgage-back securities products, services, and transactions. Murray had to certify to the Securities and Exchange Commission (SEC) that his reports were independently produced and accurately reflected his views. Murray twice told his supervisor that individuals on the trading desk were pressuring him to be more supportive of their business strategies and had asked to see his work before he published it. Murray explained that he thought these efforts to skew his research were unethical and illegal. His supervisor advised him not to alienate his internal clients and to write what they wanted. His supervisor then sent an email recommending that the Company terminate Murray or move him to a role where he did not have SEC certification responsibilities.

After being terminated, Murray brought a SOX whistleblower retaliation claim against UBS and was awarded $2.77 million at trial. UBS appealed, and the Second Circuit held that the lower court should have instructed the jury that retaliatory intent was an element of the claim.

The Supreme Court’s Ruling
In rejecting the Second Circuit’s conclusion that a plaintiff must show retaliatory intent, the Court examined the statute's text. Under SOX’s anti-retaliation provision, an employer 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” protected activity. The Court highlighted that the statute does not reference retaliatory intent and rejected the argument that the word “discriminate” as used in the statute requires retaliatory intent. The Court explained that “discriminate” means treating someone worse based on a protected characteristic.

Moreover, the Court held that a retaliatory intent requirement places a heavier burden on the plaintiff than the statute’s mandatory burdenshifting framework. Under that framework, the plaintiff needs to show only that the protected activity was a contributing factor in the adverse action. Then, the employer has the burden to show, by clear and convincing evidence, that it would have taken the same action regardless of the protected activity. Thus, “the only intent [the statute] requires is the intent to take some adverse employment action against the whistleblowing employee ‘because of’ his protected whistleblowing activity.”

Looking Forward

• Employers should keep in mind that unlike in employment discrimination claims, the burden-shifting framework used in SOX’s anti-retaliation claims does not include a showing of pretext.
• To mitigate risk, employers should carefully assess any proposed adverse action against a whistleblower and determine whether the individual’s whistleblowing activity is arguably a contributing factor in the decision.
• The contributing factor standard used in SOX’s anti-retaliation provision is used in many federal whistleblower statutes, including the Whistleblower Protection Act of 1989, the Wendell H. Ford Aviation Investment and Reform Act for the 21st Century, the Motor Vehicle and Highway Safety Improvement Act of 2012, the FDA Food Safety Modernization Act, the Consumer Product Safety Improvement Act of 2008, and the Energy Policy Act of 1992. Employers should expect courts to apply Murray to these statutes as well.