Supreme Court Rejects Retaliatory Standard For Firing A Whistleblower

In a decision with implications for Department of Labor cases, the US Supreme Court ruled in Murray v. UBS Securities LLC that whistleblowers under the Sarbanes-Oxley Act don’t need to prove retaliatory intent.

Morgan Lewis reports that the Feb. 8 decision concerns an employee at a publicly traded company who was fired after complaining about pressure he received from colleagues to skew required Securities and Exchange Commission reports. 

He filed a suit under Sarbanes Oxley, with the Dept. of Labor. The DOL failed to reach a final decision within 180 days, so he filed in federal district court under a removal provision similar to that one applicable to claims under the Energy Reorganization Act.

That provision requires a showing that the protected activity “was a contributing factor in the unfavorable personnel action alleged in the complaint.” If it is met, the burden is on the employer to prove that it would have taken the same personnel action irrespective of the protected activity

A jury found in the employee’s favor, but the Second Circuit remanded the case, holding that he was required to prove that UBS acted with retaliatory intent.

The Supreme Court reversed, ruling that Sarbanes Oxley’s retaliation provision does not require a specific showing of retaliatory intent. It opined that public policy supports requiring the employer to bear the burden of intent. It reasoned that the employer is sufficiently protected because the statute states that it won’t be held liable if it presents “clear and convincing evidence” that it would have fired the employee anyway.

The ruling is specific to Sarbanes Oxley, but the Morgan Lewis attorneys call it likely that the courts and the Dept. of Labor will apply it in cases decided in those forums.