On February 8, 2024, the U.S. Supreme Court unanimously decided in Murray v. UBS Securities, LLC, et al. that employees bringing whistleblower claims against their employer under the Sarbanes-Oxley Act (SOX) need not prove that, in taking adverse action against them, their employer intended to retaliate against them due to their protected whistleblowing activity. The case is No. 22-660.

Congress enacted SOX in the wake of the Enron scandal to prevent corporate fraud and encourage reporting of corporate misconduct. Under SOX, covered employers are prohibited from retaliating against employees—e.g., discharging, demoting, harassing—who report what they reasonably believe to be instances of criminal fraud or securities law violations. In making a SOX whistleblower claim, a plaintiff must first show that their protected activity was a “contributing factor” in the adverse employment action. The burden then shifts to the employer to prove that it would have taken the same action in the absence of the employee’s protected conduct.

In 2011, Trevor Murray, a research strategist, filed an action in District Court alleging that UBS, a securities firm, terminated him in retaliation for his refusal to skew his research reports in UBS’s favor and complaining to his supervisor about being pressured to do so. Securities and Exchange Commission (SEC) regulations required Mr. Murray to certify that his reports were independent and accurately reflected his views. Mr. Murray sued UBS, alleging that it terminated his employment for engaging in conduct protected by SOX.

At trial, the jury was instructed that Mr. Murray needed to prove four elements of his SOX whistleblower retaliation claim: (1) that he engaged in protected whistleblowing activity, (2) that UBS knew of the protected activity, (3) that he was terminated and (4) that his protected activity was a contributing factor in his termination. On the last element, the court further instructed the jury that protected activity is a contributing factor if it “tended to affect in any way UBS’s decision” to terminate his employment. Under these instructions, the jury found in Mr. Murray’s favor.

However, in 2022, the U.S. Court of Appeals for the Second Circuit vacated the jury’s verdict, holding that the trial court erred by requiring only that his protected activity contributed to UBS’s actions, and not requiring Mr. Murray to prove that UBS acted specifically with retaliatory intent. Mr. Murray appealed that decision to the U.S. Supreme Court, which agreed to hear his case in order to resolve a disagreement between the Second Circuit’s opinion and opinions from the Fifth and Ninth Circuit which do not require proof of retaliatory intent.

Defining “retaliatory intent” as something akin to a retaliatory “motive,” the Court held that the Second Circuit erred in imposing an additional intent requirement, explaining that SOX’s burden shifting framework already provides a means of addressing the issue of intent. The Court noted that burden shifting frameworks have long provided a mechanism for getting at employer’s intent in employment-discrimination cases, and SOX’s contributing-factor burden shifting framework is “meant to be more lenient than most.”

As to Mr. Murray, the Court held that it did not matter whether UBS fired him because he made a complaint or because it may have believed he would be happier in a position where he would not have SEC certification responsibilities. In either case, his protected whistleblowing activity was a contributing factor to the termination of his employment, which was, according to the Court, enough to satisfy Mr. Murray’s burden of proof under SOX.

Murray v. UBS Securities, LLC makes it clear that the only “intent” a SOX whistleblower plaintiff must prove is “simply to show that the protected activity was a contributing factor in the unfavorable personnel action.” Justice Sonia Sotomayor explained: “Showing that an employer acted with a retaliatory animus is one way of proving that the protected activity was a contributing factor in the adverse employment action, but it is not the only way.”

The opinion resolves a circuit split between the Second Circuit—which hears cases coming out of Connecticut, New York and Vermont—and the Fifth and Ninth Circuits—which collectively cover Mississippi, Louisiana, Texas, Alaska, Arizona, California, Hawaii, Idaho, Montana, Nevada, Oregon, Washington, Guam and the Northern Mariana Islands. The Court ultimately agreed with the Fifth and Ninth Circuits.

This article was authored by Gabrielle Martin.