February 22, 2024
In a landmark ruling, the U.S. Supreme Court delivered a significant victory for whistleblowers. It affirmed that retaliatory intent is not a prerequisite for whistleblower protection under federal law. The unanimous decision, in favor of former UBS employee and whistleblower Trevor Murray (Murray), reinstated a $900,000 jury verdict. In addition, the Court clarified an essential aspect of whistleblower protection under the Sarbanes-Oxley Act of 2002 (SOX), a critical law governing corporate financial reporting and recordkeeping.
Murray was a research strategist in UBS’s commercial mortgage-backed securities (CMBS) division. He was tasked with providing unbiased reports on CMBS markets to UBS clients according to securities regulations. Murray alleged that despite these regulations, two leaders from the CMBS trading desk pressured him to manipulate his reports to align with their business strategies. Murray raised concerns about this conduct to his supervisor, citing it as unethical and illegal. The supervisor acknowledged Murray’s concerns but stressed the importance of not upsetting the trading desk, UBS’s internal client. Murray continued to face pressure and exclusion from meetings. Murray’s supervisor repeatedly advised him to comply with the trading desk’s wishes. Murray refused. A short time later, UBS terminated Murray despite giving him a positive performance review just a few months earlier.
As required by SOX, Murray first filed a complaint with the Department of Labor after his termination. The Department of Labor failed to issue a final decision within 180 days allowing Murray to file a lawsuit in federal court. The lawsuit alleged that UBS fired Murray for engaging in protected whistleblower activity in violation of 18 U. S. C. §1514A(a).
Under the SOX whistleblower-protection provisions, no covered employer may “discharge, demote, suspend, threaten, harass, or in any other manner discriminate against an employee in the terms and conditions of employment because of ” protected whistleblowing activity. 18 U. S. C. §1514A(a).
When a whistleblower invokes this provision, he or she bears the initial burden of showing that the protected activity “was a contributing factor in the unfavorable personnel action alleged in the complaint.” 49 U. S. C. §42121(b)(2)(B)(iii). The burden then shifts to the employer to show that it “would have taken the same unfavorable personnel action in the absence of ” the protected activity. §42121(b)(2)(B)(iv).
At the conclusion of trial, the jury found in Murray’s favor and awarded him approximately $900,000. UBS appealed.
The Second Circuit subsequently vacated the jury’s verdict and remanded for a new trial. The court identified the central question as “whether the Sarbanes-Oxley Act’s antiretaliation provision requires a whistleblower-employee to prove retaliatory intent?” Contrary to the trial court, the Second Circuit concluded that the answer was yes.
In a unanimous decision, the U.S. Supreme Court sided with Murray and solidified the protections afforded to whistleblowers under SOX. Justice Sotomayor delivered the opinion for the Court and underscored the clarity of Section 1514A(a):
Section 1514A(a)’s text does not reference or include a ‘retaliatory intent’ requirement, and the provision’s mandatory burden-shifting framework cannot be squared with such a requirement…. When an employer treats someone worse … ‘because of’ the employee’s protected whistleblowing activity’, the employer violates §1514A.
This statement affirms the fundamental principle that whistleblowers are protected when adverse employment actions are taken against them due to their protected whistleblowing activities, regardless of the employer’s motive.
The significance of this ruling extends beyond Murray’s individual case. It reaffirms the broader legal framework protecting whistleblowers and underscores the crucial role they play in uncovering misconduct, fraud, and violations of the public trust. By removing barriers to protection and clarifying the law’s intent, the U.S. Supreme Court’s decision empowers whistleblowers to come forward without fear of retaliation, thereby promoting a culture of integrity and compliance within organizations.
Whistleblower Law Collaborative LLC, based in Boston, represents clients nationwide in bringing actions under the SEC and other whistleblower programs. The Whistleblower Law Collaborative has secured awards for clients in several SEC whistleblower cases, including a $17 million award to one whistleblower. If you know of financial fraud, contact us for a free, confidential consultation.
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