The US Supreme Court heard oral arguments on Tuesday in a landmark whistleblower case, Murray v. UBS Securities, LLC, in which the court was asked to consider whether publicly traded companies can discriminate against employees who report wrongdoing within the company.
Back in 2011, Trevor Murray joined UBS’s commercial mortgage-backed securities department. Adhering to Securities and Exchange Commission regulations, Murray was obligated to confirm the authenticity and independence of his financial reports. However, during his tenure, Murray made allegations against certain UBS senior figures, asserting they inappropriately influenced him to distort his reports. Murray raised concerns with the practice. When he was later dismissed from the company, Murray believed it to be retaliation for raising his concerns in the first place.
Murray took legal action in 2014, accusing UBS of retaliatory termination in violation of the Sarbanes-Oxley Act‘s whistleblower protections. This act is designed to shield whistleblowers from retribution when they unveil potential legal breaches within publicly traded companies. The core issue before the US Supreme Court on Tuesday dealt with how the act should be interpreted, particularly regarding who bears the burden of proof. Does the whistleblower need to demonstrate the employer’s “retaliatory intent.”
The federal district court originally ruled in favor of Murray. However, UBS challenged this, asserting that the jury should have been informed about the necessity for Murray to prove the firm’s retaliatory intent. The US Court of Appeals for the Second Circuit supported UBS’s argument and overturned the district court’s decision. Recognizing the case’s importance and implications for whistleblower protections, the US Supreme Court took up the appeal, culminating in today’s oral arguments.
During the oral argument, a distinct demarcation between “cause” and “intent” became a focal point of discussion. Representing UBS was Eugene Scalia, who posited that the Sarbanes-Oxley Act’s approach parallels other laws dealing with employment discrimination. He emphasized that to establish their case, whistleblowers need to prove retaliatory intent on the part of employers. He further highlighted that Murray’s release was not directly related to his concerns but was more aligned with larger cost-reduction strategies the company was pursuing. He also drew attention to earlier judicial decisions, which he believed necessitated showcasing intent in such matters.
In opposition, Murray’s representative Easha Anand accentuated that the US Congress, keeping the best interests of employees in mind, intentionally lowered the proof threshold in Sarbanes-Oxley whistleblower cases. She argued that Murray needed to demonstrate that his whistleblowing was a determining factor in his termination. The onus would then shift to UBS to validate that the same action would have been taken irrespective of his whistleblowing stance.
With arguments concluded, the next step is the Supreme Court’s much-anticipated decision, which may not only shape the trajectory of whistleblower protections but also redefine corporate accountability measures.
