Supreme Court Clarifies and Expands Statutory Whistleblower Protections


In a case under the Sarbanes-Oxley Act but applicable to certain other federal whistleblower laws, the U.S. Supreme Court held that, in order to establish a retaliation claim, a whistleblower must prove that their protected whistleblowing activity was a contributing factor in the employer’s decision to take an adverse employment action, but they need not prove that the employer acted with “retaliatory intent.”

Background of the Case. The Sarbanes-Oxley (SOX) Act was passed in the wake of the Enron and WorldCom corporate and accounting scandals to impose greater accountability in financial recordkeeping and reporting for public companies. It also prohibits retaliation against employees “because of” protected whistleblowing activity. Such claims are subject to a burden-shifting framework, in which the whistleblower must first show that the protected activity “was a contributing factor in the unfavorable personnel action.” If the whistleblower makes that showing, then the burden shifts to the employer to show “by clear and convincing evidence” that it would have taken the same action absent the protected activity.

In Murray v. UBS Securities, LLC, a research strategist was required by certain Securities and Exchange Commission regulations to certify that his reports to UBS customers were produced independently and accurately reflected his own views. The research strategist was terminated shortly after reporting to his supervisor that two UBS trading desk leaders pressured him to skew his reports, which he believed to be unethical and illegal. He subsequently filed suit, alleging violations of the whistleblower provisions of SOX.

The Court’s Decision. The Supreme Court addressed the issue of what a whistleblower-employee must prove in order to sustain a retaliation claim under the SOX Act’s antiretaliatory provision. It held that the employee must establish that the protected activity was a contributing factor in the unfavorable employment decision but need not prove retaliatory intent on the part of the employer. The Supreme Court noted that the statutory language of the retaliation provision does not include a “retaliatory intent” requirement. Moreover, imposing a retaliatory intent requirement would ignore the burden-shifting framework by imposing a heavier burden on the employee.

The Supreme Court rejected the employer’s argument that, “without a retaliatory intent requirement, innocent employers will face liability for legitimate, nonretaliatory personnel decisions.” It noted that the burden-shifting framework ensures that an employer will not be held liable where it can demonstrate that it would have taken the same action absent the protected activity.

Lessons Learned. Although employers likely would have preferred that the Supreme Court impose the heightened “retaliatory intent” standard in whistleblowing cases under SOX, which would have made it more difficult for whistleblowing plaintiffs to prove, the silver lining is that we now have a definitive ruling that the “contributing factor” standard should apply. Moreover, because the statutory language at issue in SOX’s retaliatory provision is mirrored in a number of other federal whistleblowing statutes applicable to private employers (e.g. the Motor Vehicle and Highway Safety Improvement Act, the FDA Food Safety Modernization Act, and the Consumer Product Safety Improvement Act, among others), we also now have clarity around the applicable standard for whistleblowers under those laws as well.