On February 8, 2024, the U.S. Supreme Court issued Murray v. UBS Securities LLC, No. 22-660, which addressed the proper framework for establishing a whistleblower claim under the Sarbanes-Oxley Act of 2002 (SOX). Under SOX, an employee who works for a covered company is protected from retaliation if they disclose information that the employee reasonably believes shows a violation of federal securities law, SEC rules, or any federal law related to fraud against shareholders. In Murray, the Court held that an employee is not required to prove that their employer acted with animus when it engaged in an adverse action against the employee.

In Murray, a research strategist at a securities firm voiced concerns to his supervisor about leaders of the firm’s trading desk purportedly engaging in unethical and illegal efforts to skew his independent reporting on commercial mortgage-backed securities. Despite receiving a strong performance review, the employee was subsequently terminated, which the employer alleged was a result of reduction in force. The employee then filed a SOX complaint with the Department of Labor (DOL) and, after the 180-day waiting period passed without a final decision from the DOL, subsequently filed suit in federal district court.

The district court instructed the jury that the employee had to establish by a preponderance of the evidence that his protected activity was a contributing factor in the termination of his employment. If he did so, the burden shifted to the employer to demonstrate by clear and convincing evidence that it would have terminated the employee even if he had not engaged in the protected conduct. With respect to the contributing factor element, the district court specifically advised the jury that for a protected activity to be a contributing factor, it must have either alone, or in combination with other factors, tended to affect in any way his employer’s decision to terminate his employment and that the employee was not required to prove that his protected activity was the primary motivating factor in his termination. The jury found that the employer had violated SOX’s whistleblower protections.

The Second Circuit vacated the jury verdict and remanded for a new trial. The Second Circuit reasoned that based on the statute’s use of the phrase “discriminate . . . because of”, retaliatory intent is an element of a SOX whistleblower claim and the district court’s jury instruction erred by not instructing the jury on the employee’s burden to prove retaliatory intent as part of the contributing factor element. The Second Circuit’s decision conflicted with the Fifth and Ninth Circuits, which had rejected a retaliatory intent requirement for SOX whistleblower claims.

The Supreme Court reversed the Second Circuit, holding that while an employee must prove that the alleged protected conduct was a contributing factor in the employer’s adverse employment action, SOX does not require employees to establish a specific showing of retaliatory intent. The Supreme Court reasoned that “retaliatory intent” is not included anywhere in the statute’s language and that the statute’s reference to “discriminate” did not require a discriminatory intent. The Court further reasoned that requiring the employee to establish discriminatory animus would be inconsistent with SOX’s burden shifting framework, which is designed to address the question of intent, not just causation. The Court expressly stated that a contributing factor framework is designed to be more employee-friendly than the motivating factor framework used for other employment laws, like Title VII.

Although Murray is specific to SOX, it is likely to have repercussions beyond SOX claims as the contributing factor burden-shifting framework applies to other statutes that regulate industries where whistleblowing plays, “an especially important role in protecting the public welfare.” This includes whistleblower claims under the Wendell H. Ford Aviation Investment and Reform Act for the 21st Century (AIR 21), the Energy Reorganization Act, the Motor Vehicle and Highway Safety Improvement Act of 2012, the FDA Food Safety Modernization Act, the Consumer Product Safety Improvement Act of 2008, and the Energy Policy Act of 1992.

In sum, Murray will likely make it easier for employees to prove their claims of retaliation under SOX and other federal laws that address the health, safety, or well-being of the public. In light of Murray, employers subject to laws with a contributing factor framework for retaliation claims should ensure robust internal policies and procedures for addressing whistleblower complaints and strong documentation of adverse employment decisions.