On October 10, 2023, the Supreme Court heard oral arguments in Murray v. UBS Securities, LLC. Employers and HR professionals throughout the United States should keep a close eye on the Court's eventual decision, which is expected soon. The Court's decision could reshape the standard for whistleblower retaliation claims under the Sarbanes-Oxley Act (SOX). Depending on how the Court rules, employers and HR departments should be ready to revamp their whistleblower policies, training programs, and internal investigation procedures.
The case centers on Trevor Murray, who was formerly employed by UBS as a strategist in the bank's commercial mortgage-backed securities (CMBS) business. Murray alleged that he complained to his supervisor that certain UBS CMBS traders were improperly attempting to influence his reports, in violation of applicable regulations. Murray further alleged that he was fired after reporting this conduct, which Murray asserted was retaliation in violation of SOX. UBS contended that it terminated Murray as part of a wider reduction of staff, rather than because of his whistleblowing activity.
The case has progressed through a federal court in New York and the Second Circuit Court of Appeals. Most recently, the Second Circuit agreed with UBS, holding that the SOX anti-retaliation provision necessarily requires a showing of retaliatory intent. Murray has sought review of the Second Circuit's decision by the Supreme Court. Several outside parties have submitted amicus briefs in support of Murray, including Senator Charles Grassley and Public Citizen. In support of UBS, our firm submitted an amicus brief on behalf of The Society for Human Resource Management (SHRM).
Arguments on either side
Murray has contended that SOX requires only that a whistleblower plaintiff show that the whistleblowing activity “tended to affect” the employer's decision to fire the plaintiff. Murray argued that once a plaintiff makes this showing, the burden shifts to the employer to show that it would have taken the employment action it did when it did even without the whistleblowing activity. According to Murray, the employer's motivation only becomes relevant once the burden shifts to the employer to demonstrate its affirmative defense.
UBS argued that the Second Circuit's decision was correct. UBS contended that the Supreme Court and other courts have interpreted similar statutes as requiring the plaintiff to show that the employer engaged in intentional discrimination because of the whistleblowing activity. In the amicus brief we submitted for SHRM, we argued that HR professionals are often caught in a tug-of-war between the need for compliance with federal law and the need to make day-to-day employment decisions.
SHRM noted that SOX added to the complexity facing human resource professionals because the standard for retaliation claims was unclear.SHRM argued that the Second Circuit's decision added much-needed clarity. It contended that the Second Circuit's decision was consistent with other anti-retaliation statutes and that this consistency was important so that employers would not have to struggle to figure out which legal standard applied in a particular situation. SHRM also asserted that without an intent requirement, the “contributing factor” standard would be nebulous and leave employers guessing as to what conduct is prohibited.
Based on the questioning during the oral arguments, it appears that a majority of the Supreme Court is unlikely to agree with the Second Circuit, although it did not appear that they were fully in agreement with Murray's arguments either. It appeared from questioning that the Court was inclined to forge a middle ground between the district court's “tending to affect” instruction and the Second Circuit's “retaliatory intent” holding. The importance of this holding lies in how it might affect how companies and HR professionals conduct internal investigations and make employment decisions.
If the standard adopted by the Court aligns more closely with the plaintiff's arguments, this could increase the need for specific investigative procedures and policies regarding termination decisions where an employee might raise an issue that implicates SOX. If the standard adopted by the Court aligns more closely with the defendant's arguments, as argued by SHRM in its amicus brief, then existing policies may only need minor modifications to limit the liability risk with regard to potential SOX claims. Regardless, employers and HR professionals throughout the United States should brace for the Court's decision and be ready to adapt depending on how the Court rules.
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