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Retaliatory Intent Is Element of SOX Whistleblower Claim: Second Circuit
Practical Law Legal Update w-036-5435 (Approx. 4 pages)
Retaliatory Intent Is Element of SOX Whistleblower Claim: Second Circuit
by Practical Law Labor & Employment
| Law stated as of 08 Feb 2024 • USA (National/Federal) |
In Murray v. UBS Securities, LLC, the Second Circuit held that retaliatory intent is an element of a Section 1514A Sarbanes-Oxley Act of 2002 (SOX) antiretaliation claim.
NOTE: On February 8, 2024, the US Supreme Court overturned this decision and held that retaliatory intent is not required (Murray v. UBS Secs., LLC, (U.S. Feb. 8, 2024)). For more information, see Practice Note, Whistleblower Protections Under Sarbanes-Oxley and the Dodd-Frank Act.
On August 5, 2022, in Murray v. UBS Securities, LLC, the Second Circuit held that retaliatory intent is an element of a Section 1514A Sarbanes-Oxley Act of 2002 (SOX) antiretaliation claim based on:
- The unambiguous statutory language.
- The court's interpretation of nearly identical language in another statute.
The court held that the failure to instruct the jury that the plaintiff had to prove retaliatory intent was not harmless error and remanded the case for a new trial.
The Second Circuit noted that:
- Section 1514A provides that "no covered employer may discharge, demote, suspend, threaten, harass, or in any other manner discriminate against an employee ... because of whistleblowing" (18 U.S.C. § 1514A(a) (emphasis added)). The plain meaning of this statutory language of Section 1514A makes clear that retaliatory intent is an element of a Section 1514A claim.
- Discriminatory actions caused by whistleblowing are discriminatory when they are based on the employer's conscious disfavor of an employee for whistleblowing (Vega v. Hempstead Union Free Sch. Dist., 801 F.3d 72, 85 (2d Cir. 2015)).
- A SOX antiretaliation plaintiff must prove by the preponderance of the evidence that:
- the plaintiff engaged in protected activity;
- the employer knew that the plaintiff engaged in the protected activity;
- the plaintiff suffered an unfavorable personnel action; and
- the protected activity was a contributing factor in the unfavorable action.
- To show the contributing factor element of a SOX antiretaliation claim, an employee must prove that the employer took the adverse employment action against with an intent to discriminate because of lawful whistleblowing activity.
- There is nearly identical statutory language in the antiretaliation provision of the Federal Railroad Safety Act (FRSA) (49 U.S.C. § 20109(a)). The Second Circuit has held that FRSA whistleblowers must demonstrate "some evidence of retaliatory intent" (Tompkins v. Metro-N. Commuter R.R. Co., 983 F.3d 74, 82 (2d Cir. 2020)). Identical language in different statutes is generally interpreted to have the same meaning (Northcross v. Bd. of Educ., 412 U.S. 427 (1973)).
This decision created a circuit split with the Fifth and Ninth Circuits regarding SOX antiretaliation claims. However, it is consistent with the Second, Seventh, and Eighth Circuit's interpretation of similar language in the FRSA.
UPDATE
On February 8, 2024, the US Supreme Court resolved the circuit split and reversed the Second Circuit's decision. The court unanimously held that a whistleblower bringing a claim under SOX must prove that their protected activity was a contributing factor in the unfavorable personnel action, but need not make a further showing that their employer acted with retaliatory intent. (Murray v. UBS Secs., LLC, (U.S. Feb. 8, 2024).)