The Supreme Court Keeps Status Quo for SOX Whistleblower Retaliation Claims

In a unanimous decision, the U.S. Supreme Court rejected an argument that would have made it harder for whistleblowers to prevail on retaliation claims under the Sarbanes-Oxley Act (“SOX”). The decision, Murray v. UBS Securities, LLC, No. 22-660, may be welcome news to whistleblowers, but as a practical matter, employers will likely not see a significant change in SOX whistleblower retaliation claims or awards.

 

Under SOX’s anti-retaliation provision, a publicly traded company may not “discharge, demote, suspend, threaten, harass, or in any other manner discriminate against” a whistleblower who reports certain conduct to certain governmental authorities or supervisors. There are four elements in a plaintiff’s prima facie case: (1) the employee engaged in protected activity; (2) the employer knew of the employee’s protected activity; (3) the employee suffered an unfavorable personnel action; and (4) the employee’s protected activity was a contributing factor in the adverse action. Seybold v. Charter Communications, Inc., 2023 WL 7381438, at *2 (5th Cir. 2023). If the employee makes a prima facie case, SOX’s anti-retaliation provision provides that the employer then must show the personnel action would have been taken notwithstanding the employee’s protected activity.  

 

In 2022, the Second Circuit expanded the four prima facie elements by incorporating a sub-element to the “contributing factor” requirement. Murray v. UBS Sec., LLC, 43 F.4th 254, 258 (2nd Cir. 2022), holding that a whistleblower must also prove that the employer acted with “retaliatory intent” when taking the adverse action. The court’s ruling deviated from the Fifth and Ninth Circuits, which held that retaliatory intent is not an element of an employee’s prima facie case. Halliburton, Inc. v. Admin. Rev. Bd., 771 F.3d 254, 263 (5th Cir. 2014); Coppinger-Martin v. Solis, 627 F.3d 745, 750 (9th Cir. 2010). The Supreme Court sided with the Fifth and Ninth Circuits, holding that plaintiffs do not need to show retaliatory intent. 

 

The Murray decision likely will not significantly impact the SOX whistleblower retaliation landscape. The decision generally maintains the status quo—the Supreme Court endorsed the familiar four elements of a SOX retaliation prima facie case which have been embraced by a majority of courts for decades. Further, before employees can bring a SOX retaliation claim in federal court, they must first file a complaint with the Occupational Safety and Health Administration (“OSHA”), which may resolve the allegations administratively. According to the OSHA Investigator’s Desk Aid, the agency analyzes SOX retaliation claims using the standard four-element prima facie case that does not require retaliatory intent. The Supreme Court endorsed the framework, so the decision is unlikely to alter OSHA’s approach to handling SOX retaliation complaints. 

 

Regardless of whether Murray shifts SOX whistleblower behavior, the opinion is a good reminder for employers to review their whistleblower policies and practices. Employers can best position themselves against whistleblower retaliation claims by maintaining a strong anti-retaliation policy, ensuring that employment decisions are well documented and supported by legitimate, non-retaliatory business reasons, and applying policies and practices consistently.