The U.S. Supreme Court has agreed to hear arguments in a case that has brought attention to the burden of proof faced by whistleblowers reporting internal misconduct to establish retaliation by their public company employer.
The case, Murray v. UBS Securities, made its way onto the court's docket in May following a decision by the U.S. Court of Appeals for the Second Circuit in August that overturned a lower court ruling favoring the whistleblower, Trevor Murray.
Murray, who was hired by UBS in 2011 to write research reports on mortgage-backed securities, accused his employer's sales team of pressuring him to write reports that favored UBS's products and sales strategies. When he refused, Murray blew the whistle on potential securities law violations to UBS senior management in January 2012, and he was fired a month later.
In 2014, Murray filed a lawsuit against UBS, alleging that he was terminated for whistleblowing. In 2017, a federal jury awarded him $903,300, according to his brief submitted to the court on June 27.
However, the appeals court overturned the decision, stating that the jury should have considered whether UBS displayed "retaliatory intent" in firing Murray for his whistleblowing to his superiors.
The case revolves around the burden of proof that whistleblowers must meet to establish retaliation by an employer, as set by the Sarbanes-Oxley Act of 2002 (SOX). Congress established a low standard of proof, known as the "contributing factor" standard, for employees to claim retaliation.
In an amicus brief filed on July 5, U.S. Solicitor General Elizabeth Prelogar, along with representatives from the Department of Labor and SEC, argued that the appeals court erred in requiring proof of retaliatory intent. They asserted that if Congress intended to impose such a requirement, it would have explicitly included it in the law's text.
Senators Chuck Grassley and Ron Wyden also filed an amicus brief on June 30, stating that the appeals court's interpretation placed an additional burden on SOX whistleblowers that differed from the burden specified by Congress.
The Supreme Court's decision in this case could have significant implications, potentially discouraging employees from reporting misconduct internally and instead encouraging them to file claims with the SEC. Whistleblower attorney and chairman of the National Whistleblower Center, Stephen Kohn, highlighted the importance of the case, stating, "The safest way to make a disclosure would be to avoid compliance programs and go directly to the SEC."
The court has granted an extension for the submission of briefs on the merits of the case until August 8.
The outcome of this case will not only impact Trevor Murray's situation but could also shape the burden of proof and protection for all whistleblowers reporting internal misconduct within public companies.
By fLEXI tEAM